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Tim Small's avatar

Interesting analysis that seems quite plausible. At this point it’s striking that no one can deny the exorbitant overhead of AI - including, of course, its effect on the labor market - but almost everyone assumes it’s prospects are rosy and ascendance inevitable. That the pieces don’t actually fit very well long-term is ignored because long-term thinking is a practice that doesn’t mesh well with the gung-ho materialism we’re living with. The inflated housing market also seems attenuated. How easily people forget: in 1989 my in-laws helped us buy a starter home and the common sense of the moment here in LoCali was ‘jump in now while you’ve still got a chance.’ Then the Cold War ended a couple months later. Within 2 years the defense industry went into a severe contraction and regional housing appreciation was stopped cold. We outgrew our place when our third kid was born in ‘94. Five years later we finally managed to sell for $15k more than our original purchase price, with all of that appreciation coming in the last six months. The take away for me was that real estate inevitably moved on cycles and that appreciation wasn’t inevitable but could be drastically effected by black swans and unicorns. So it’s good to see recognition of that. But one note / question: what info are you using about 80s interest rates? They were often high; Paul Volcker saw to that in the early part of the decade. In ‘89 when we bought our place our mortgage was over 10%.

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