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Circle of Competence Issue #110

QUOTE OF THE WEEK

"Indeed, in the seven weeks since the March 23 announcement of various lending and asset purchase programs, Fed purchases have accounted for 85% of Treasurys net debt issuance." - Adam Grant

FOOD FOR THOUGHT

Connecting

My favorite part of Circle of Competence is always the emails I receive in response to the newsletter - especially from people I've never met before. This week I had the pleasure of connecting with a fellow Tar Heel, Sean Delaney, on what he's been up to with his podcast 'What Got You There' among other ventures. He's had guests on the show ranging from venture capitalists to New York Times best-selling authors to crossfit athletes. I'd also highly recommend checking out his resources page for book notes and more! Finally, Sean was kind enough to introduce me to Blas Moros, better known for his work summarizing and taking notes on nearly 500(!) books over the past 5+ years. You'll want to take a look at his work here. If you're looking for a great summary on a well-known book, Blas has probably already read it.

Inflation or Deflation?

I've been reading and thinking about the debate between two camps recently: the larger camp who believes that (hyper)inflation is inevitable given the large-scale monetary and fiscal stimulus that is ongoing, and the smaller camp that believes we will see deflation due to the economic demand collapse that has been forced upon the nation due to the coronavirus outbreak. I'd like to point you to two pieces espousing opposite views that are worth your time.

Ray Dalio's latest thinking shows historical examples of fiat currency devaluations and the underlying currency's value against hard assets such as gold and silver. He has put out multiple pieces lately on how he views the world economic order and what he believes will change going forward.

"While people tend to think that a currency is pretty much a permanent thing and believe that “cash” is the safe asset to hold, that’s not true because all currencies devalue or die and when they do cash and bonds (which are promises to receive currency) are devalued or wiped out. That is because printing a lot of currency and devaluing debt is the most expedient way of