Author: Global Macro

  • How PageRank Destroyed the World

    For most of human history, humanity lived in small communities of no more than 150 people. Information was transmitted peer-to-peer. You knew the people in your tribe, and that was all. Over time, through a combination of evolution, technology, and climate changes, we began moving into cities and organizing ourselves into increasingly larger groupings.

    In these local communities, you might occasionally hear stories of distant places, but for most people, their experiences were confined to their immediate surroundings. Information was largely localized—what you knew came from the collective experience of those around you, with rare input from outsiders. Your beliefs were shaped by your immediate circle, as alternative perspectives were limited.


    Writing Changes Everything (~10,000 BCE)

    Writing emerged as a transformative tool. For the first time, humans could accurately pass information across generations. Yet access to this new reservoir of knowledge was limited. Only a select few could read or write, and those who controlled this knowledge—governments and religious institutions—filtered it based on their context and motives.

    Information flowed hierarchically: from leaders, through intermediaries, to individuals. Due to low literacy rates and scarce availability of writings, information traveled slowly. For example, if a war broke out, news might take months to reach its destination. In this world, the information you consumed was what existed around you, supplemented by the filtered knowledge passed down from leaders.


    The Printing Press Revolution (1450 CE)

    The printing press shattered these constraints, enabling information to flow more rapidly between individuals. For the first time, books and ideas became accessible to broader audiences. While governments and religious institutions still exerted control over what could be printed, new concepts and ideologies began to flourish.

    This shift was monumental: the Catholic Church lost its monopoly over Western thought, and individuals started questioning established norms. However, the bulk of information remained regulated. You consumed knowledge from your immediate environment, your local government or church, and approved books—a significant expansion, but still controlled.


    Radio and Television: The Global Stage

    With the advent of radio and television, information flow became global and instantaneous. Ideas could now spread across the world in real-time, connecting billions. These technologies fundamentally altered how societies interacted with information by making it more immediate, impactful, and widely distributed. Political speeches, major events, and cultural moments could be broadcast directly into people’s homes, fostering a sense of shared experience on an unprecedented scale.

    Radio revolutionized how wars were fought and perceived. For example, during World War II, governments used radio for propaganda, while ordinary people relied on it for updates on the conflict. Similarly, television became a critical tool for shaping public opinion during significant events like the civil rights movement and the moon landing, bringing these moments vividly to life.

    Yet again, institutions acted as arbiters, controlling what was broadcast for reasons ranging from public interest to propaganda. While the immediacy of radio and television allowed for faster dissemination of information, the content was still curated by editors and gatekeepers, ensuring that narratives aligned with institutional priorities. The information you consumed now included local sources, government or religious narratives, and curated mass media content—a mix that set the stage for modern media ecosystems.


    The Internet: A Paradigm Shift

    Then came the internet. Suddenly, information was nearly unlimited, and its creation equally boundless. Humans, for the first time in history, had instant access to almost every other human on the planet. Ideas could flow at the speed of light, and a single concept could reach nearly the entire world in a day.

    This unprecedented connectivity birthed new industries, raised living standards, and accelerated technological innovation. But with this free flow of information, humanity lost its traditional arbiters—the gatekeepers who once filtered and curated what we consumed.

    Unlike radio or television, where misinformation was curtailed by oversight, the internet’s design prioritized freedom of information over quality or accuracy. Humanity had not developed the skills to self-filter this flood of data. For most of our existence, we relied on institutions—governments, churches, academic bodies—to judge the veracity of information.


    Enter PageRank: The Algorithm That Changed Everything

    The original Google PageRank algorithm, developed by Larry Page and Sergey Brin in the late 1990s, was revolutionary. It ranked web pages based on their importance and relevance, using backlinks as a proxy. Put simply, the more people “talked” about a page through links, the more important Google deemed it.

    This system was highly effective for organizing the web but also introduced profound changes. The concept of “how many people are talking about this” became the foundation for filtering information online. Social media platforms later adopted similar algorithms, amplifying the voices of those who could generate the most engagement—whether human or bot-driven.


    The Consequences of Infinite Choice

    The internet’s vastness presents infinite choices of what to believe. Our ability to self-filter is limited by history, education, intellect, and experiences. With so much information, we often outsource filtering to others. Religion, political parties, schools, Google, and social media act as our modern gatekeepers.

    PageRank’s emphasis on popularity—how many are “talking” about something—dictates what you see. What you see influences what you think. And because humans tend not to rigorously fact-check claims, the truth becomes secondary to visibility. Misinformation thrives, amplified by the very algorithms designed to organize the web.


    The Rise of Tribalism in the Digital Age

    Without traditional arbiters, humans began reverting to tribal instincts. But these tribes are no longer defined by geography. They are groups united by shared ideas and concepts, often insulated from opposing views. Algorithms reinforce these bubbles, showing you content that aligns with your existing beliefs.

    This shift has fragmented society, eroded trust in shared truths, and enabled misinformation to thrive. The lack of universal arbiters leaves individuals to navigate a chaotic information landscape, often ill-equipped to separate fact from fiction.


    Conclusion: Where Do We Go from Here?

    PageRank and similar algorithms were built to solve a problem: organizing the overwhelming amount of information on the internet. But in doing so, they created new challenges. As arbiters of truth disappeared, humanity was left to navigate a sea of data, struggling to discern fact from fiction.

    To rebuild trust and mitigate these challenges, we must develop tools and skills to critically evaluate information. Whether through education, improved algorithms, or decentralized systems of trust, society must adapt to the realities of infinite information—lest we remain trapped in a world where PageRank’s unintended consequences continue to shape our reality.

  • What’s Next: Refactoring for the AI Revolution

    When it comes to AI, I’ll admit—I wasn’t an early adopter. In its early days, AI felt like a clever parlor trick: impressive, but not earth-shattering. You could ask it a question, and it might give you a decent answer, but it seemed more like a curiosity than a transformative tool. I figured it had potential but thought, “We’re not there yet.”

    Then December 2024 happened. After reading Yuval Noah Harari’s book and playing with Google’s Gemini model, I realized we weren’t just “there”—we’d crossed the Rubicon. This wasn’t a gradual shift; it was a paradigm leap. I immediately called friends to screen-share my findings. Some were equally floored; others shrugged it off.

    Here’s what I saw: AI isn’t just a tool for automating tasks—it’s a disruptor for entire industries. But disruption isn’t a one-way street. While AI promises to open new doors, it’s equally poised to shake the foundations of the labor market, creating winners, losers, and opportunities for reinvention.

    Tempered Expectations, Transformative Potential

    Let’s address the elephant in the room: AI isn’t magic. It can’t solve every problem or replace every job, at least not yet. Complex tasks requiring deep empathy, creative intuition, or domain-specific judgment still require human expertise. And for now, AI outputs are only as good as the inputs—and the data behind them.

    But here’s where AI is already making waves: standardized tasks, repetitive processes, and analytical work. It’s not just about replacing people; it’s about augmenting what they do. The potential is transformative, but not without turbulence.

    Refactoring for the Future

    In software development, there’s a concept called refactoring. It’s what you do when your old framework can’t handle the demands of the future. You strip it down, optimize it, and rebuild with an eye on scalability.

    That’s where we are with AI. The frameworks of our labor markets, businesses, and even personal skillsets need a fundamental overhaul. This isn’t just about adaptation—it’s about survival.

    The labor market, in particular, is entering a phase of accelerated change. The jobs we’ve relied on for decades are evolving—or disappearing. And while new opportunities will emerge, the transition will be anything but smooth.

    Labor Market Dislocations: The Coming Shifts

    Every technological revolution disrupts labor markets. AI is no different. Here’s what we should expect:

    1. Automation of Lower-Level Tasks
      Routine tasks—from customer support to data entry—are being automated at scale. This will increase productivity but displace workers in roles traditionally seen as “safe.”
    2. Consolidation of Intellectual Service Markets
      Research firms, consulting agencies, and software development companies face a reckoning. With AI handling repetitive intellectual tasks, the demand for large, human-intensive teams will shrink.
    3. Data as the New Currency
      For AI to work effectively, businesses need clean, structured, and actionable data. This shift will create new roles focused on data management but may also render companies with poor data practices uncompetitive.
    4. Winners and Losers in the Labor Market
      Jobs requiring creativity, adaptability, and leadership will thrive. But roles that rely on routine intellectual labor will face intense pressure. AI will amplify inequality unless we actively address this imbalance.
    5. Generational Wealth Creation
      The biggest financial gains will go to those who pioneer AI-driven innovations, especially in automating repetitive work. Entire industries will be reshaped by those who adapt first.

    Opportunities Amid Disruption

    While AI will displace some jobs, it’s also poised to create new industries and roles. Companies specializing in AI integration, data analysis, and human-AI collaboration are set to thrive. We’re also likely to see growth in niche markets that require tailoring AI to specific industries.

    The challenge—and opportunity—lies in navigating this transition. Those who can identify gaps and invest in the future will be positioned for success.

    How to Prepare for What’s Next

    1. Understand What AI Means for Your Industry
      Don’t just follow the headlines—dig into the specifics. How is AI impacting your sector, and where are the opportunities for growth?
    2. Invest in Adaptation
      This applies to both skills and capital. Workers need to reskill, and businesses need to invest in AI adoption.
    3. Leverage Data Effectively
      Your data is only as good as your ability to use it. Focus on building the infrastructure needed to make AI work for you.
    4. Stay Agile
      The AI landscape is evolving quickly. Flexibility and a willingness to pivot will separate the winners from the losers.

    Final Thoughts

    AI is here to stay, but the transition won’t be seamless. It’s going to disrupt jobs, create new markets, and fundamentally change the way we work. The question isn’t whether AI will impact your life and business—it’s how you’ll respond.

    The winners of this new era will be those who embrace change, refactor their approach, and invest in the future. The labor market of 2024 won’t resemble that of 2030, and that’s both a challenge and an opportunity.

    Will you be ready to rebuild your framework—or will you be clinging to the old way as the ground shifts beneath your feet?

  • The Pendulum Swings

    The Pendulum Swings: Is the “America Bubble” about to end?

    The beauty of tools like ChatGPT is that they can take the ramblings of a fool like myself and transform them into something readable. Yet, even polished words can’t shake my uneasy feeling about the state of the world in 2024. Society has a habit of veering too far in one direction, often mistaking momentum for permanence, and I can’t help but feel we’re repeating history.

    Edward Chancellor’s Devil Take the Hindmost provides a rich history of financial speculation, chronicling the highs and inevitable lows of market mania. From the South Sea Bubble to the Dot-Com crash, the book is a reminder that financial excess often comes with a price. And as I observe the current state of the U.S. market, I wonder: Should we be preparing for the end of the era of the “America Bubble”?


    A Historical Perspective on Speculation

    Chancellor’s book serves as a cautionary tale, exploring speculative frenzies that once seemed unstoppable but ultimately collapsed under their own weight. The South Sea Bubble of the 18th century, for example, saw investors pouring money into promises of wealth tied to dubious trade monopolies. At the height of the mania, shares soared by over 1,000%, only to plummet as reality set in. Absurd ventures, such as “a company for carrying out an undertaking of great advantage, but nobody to know what it is,” highlight just how irrational markets can become when swept up in euphoria.

    The Mississippi Bubble in France followed a similar trajectory, as speculative fever drove up the value of the Mississippi Company, only to leave financial ruin in its wake. Fast-forward to 19th-century Britain, where Railway Mania gripped the nation. Investors sunk fortunes into railway projects, many of which were neither practical nor profitable. When the bubble burst, it wiped out years of wealth in an instant.

    The 1920s stock market boom in the United States epitomized the belief in perpetual growth. A decade of prosperity fueled confidence that stock prices could only go up—until they didn’t. The infamous crash of 1929 not only decimated the market but also ushered in the Great Depression.

    In the 1980s, Japan experienced an asset bubble so extreme that the land beneath Tokyo’s Imperial Palace was valued higher than the entire state of California. This speculative fervor led to Japan’s “Lost Decade,” a prolonged period of economic stagnation.

    And who can forget the Dot-Com Bubble of the early 2000s? Companies with no revenue and shaky business models commanded astronomical valuations. Cisco Systems reached a market cap of $555 billion, making it more valuable than all of Germany’s stock market and three times the GDP of Saudi Arabia. When the bubble burst, it erased trillions in market value.


    2024: The World Doesn’t Make Sense Anymore

    As I reflect on 2024, I can’t shake the feeling that we’re on the brink of another inflection point. The total market capitalization of the top 500 U.S. companies now exceeds $50 trillion, accounting for 60% of the world’s total stock market value. Apple alone is valued at over $3 trillion, making it worth more than twice Germany’s GDP and half the combined market cap of every public company in China.

    These comparisons are staggering. To put it another way, Apple’s valuation is greater than the GDP of India or the total output of the African continent. Microsoft, another tech giant, similarly dwarfs the economies of major nations. At some point, these massive valuations become untenable relative to other assets worldwide.

    While there are valid reasons for America’s market dominance—strong corporate earnings, technological innovation, and a resilient economy—such disparities create imbalances that markets have historically corrected. For example, Japan’s economy in the 1980s similarly held a disproportionate share of global wealth, only to see it contract dramatically in the years that followed. Similarly, during the Dot-Com era, U.S. tech valuations outpaced global counterparts, but the market ultimately rebalanced.


    Why American Exceptionalism Feels Unsustainable

    The market, news outlets, magazines, business leaders, and even CEOs I know personally seem unanimous in their belief that American exceptionalism will not only continue but accelerate. This one-sided wagon has been rolling along for years, but how long can it defy gravity? History has taught me that just because something is overvalued doesn’t mean it can’t become even more extreme before reality sets in.

    Yet, there are cracks in the foundation. The U.S. operates on a two-year election cycle, which leaves little room for long-term planning. Politicians spend one year governing and the next raising funds. In 2024, we face the possibility of a returning president who previously refused to accept election results. If any of Donald Trump’s proposed policies were to come to fruition—such as massive government spending cuts, mass deportations, or broad tariffs—the very factors underpinning America’s market outperformance could be at risk.


    The Risk of Reallocation

    Markets don’t exist in a vacuum, and global capital allocation matters. A simple shift of funds away from U.S. markets toward other regions could have profound implications. For decades, America has been the beneficiary of global investor confidence, but as valuations become increasingly lopsided, the incentive to diversify grows stronger. If even a fraction of the capital concentrated in the U.S. market were to flow elsewhere, the ripple effects would be significant.

    Europe and Asia, for instance, have seen their share of speculative booms and busts, but they also offer opportunities for growth and diversification. The idea that America’s dominance will remain unchecked forever ignores the lessons of history. No market or economy can maintain such an imbalance indefinitely.


    The Pendulum Begins to Swing

    In many ways, the pendulum already seems to be swinging back. Geopolitical tensions, inflationary pressures, and slowing global growth suggest that the current trajectory is unsustainable. Capital flows, which have propped up U.S. markets, could begin to favor other regions. And while America has been seen as a stable bastion of capitalism, the reality of short-term political cycles and internal divisions may challenge that perception.

    One lesson I’ve learned the hard way is that markets can remain irrational longer than we expect. Overvaluation doesn’t mean immediate collapse, and bubbles often expand beyond what seems possible. But when they burst, the consequences are swift and unforgiving.


    Lessons from History

    What can history teach us about today’s market dynamics? First, speculative manias are often driven by a mix of innovation and greed. Whether it’s railroads, the internet, or artificial intelligence, each era has its catalysts for euphoria. Second, bubbles don’t always burst due to a single event; often, it’s a gradual erosion of confidence that leads to collapse. Finally, the aftermath of a bubble can be long and painful, as markets and economies work to rebuild.

    As I consider the state of the world in 2024, I’m reminded of the adage: “History doesn’t repeat itself, but it often rhymes.” The parallels between past speculative manias and today’s market environment are striking. Whether this is the start of the next great bubble or simply another chapter in America’s market dominance remains to be seen.


    Preparing for the Future

    My role is not to predict the exact timing of market tops or bottoms but to think 2-3 years ahead and probability-weight potential outcomes. While it’s tempting to assume that current trends will persist, history reminds us that no era of excess lasts forever. The challenge lies in staying vigilant, identifying shifts as they occur, and preparing for a range of scenarios.

    The pendulum always swings, and when it does, it often surprises those who assumed it wouldn’t. Whether we’re witnessing the “America Bubble” of 2025 or simply the next phase of market evolution, one thing is clear: the world doesn’t make much sense right now, but clarity often comes only in hindsight.