Eric Zhou

Director of Research at Hulu, managing recommendation, search and data science team.

[Eric Zhou @ericzhouh]

Quiet your heart with God's word. https://t.co/lHYCgkyImY The answer may surface itself.
@AutoClawAIer

[Eric Zhou @ericzhouh]

May justice prevail! https://t.co/ax61zvO17j

[Eric Zhou @ericzhouh]

@chimpychimpy37 @r0ck3t23 @grok Musk without ambitious moonshot headlines to distract TSLA’s 40% retail stock holders?

[Eric Zhou @ericzhouh]

https://t.co/Te1Edr7dnr

[Eric Zhou @ericzhouh]

Recent X fundraising be like

[Eric Zhou @ericzhouh]

More detailed analysis https://t.co/N1HhyLJW8G

[Eric Zhou @ericzhouh]

My thought experiment last week is turning into reality.

[Eric Zhou @ericzhouh]

My thought experiment last week is turning into reality.

[Sam Altman @sama]

which one is supposed to be the left-wing propaganda machine again?

[Eric Zhou @ericzhouh]

Saw this touching short video https://t.co/1H5iSGhzFV

[Eric Zhou @ericzhouh]

@ylecun Just observe the elites who have access to AI that's 6-month ahead of us. They are making the same kind of decisions as before, aren't they?

[Eric Zhou @ericzhouh]

either 1/ access to more advanced AI wouldn't help people make better decisions. or 2/ we shouldn't expect any significant progress in the next 6 months.

[Eric Zhou @ericzhouh]

Here is a thought experiment. If we are approaching AIG, Altman, Musk and Zuckerberg must be at least 6 months ahead of the general public in terms of access to the STOA AI. Why haven't we see any insightful words or behavior from their public appearance? That means:

[Eric Zhou @ericzhouh]

Tesla is like US treasury: the fundamentals are rotten, but its sheer volume made it float. https://t.co/ZgLZATEaiD

[Eric Zhou @ericzhouh]

Elon Musk's Beer-Pouring Optimus Robots Are Not Autonomous https://t.co/rEgZtDJjfM

[Eric Zhou @ericzhouh]

Ford unleashes new price advantage over Tesla's illusive tech - TheStreet https://t.co/LqfD9gfQ20

[Eric Zhou @ericzhouh]

@NobelPrize Now seems to be a good time to practice the upcoming meeting with Nobel foundation board members. https://t.co/poVmN71jW9

[Eric Zhou @ericzhouh]

Tesla's head of vehicle programs jumps to Waymo ahead of Robotaxi reveal - TechCrunch https://t.co/tfwf3JuZky

[Eric Zhou @ericzhouh]

Looking forward to seeing what happens on Oct 10 https://t.co/uAMzzSXuQM

[Eric Zhou @ericzhouh]

Faith has changed my personality from Mediator (INFP-A) to Campaigner (ENFP-A). https://t.co/pdaqbc2XZF #16Personalities

[Eric Zhou @ericzhouh]

Hey all! I'm now available for mentorship on @mentorcruise!! https://t.co/lH3irr3CqI

[Dylan LeClair @DylanLeClair]

This chart will ruffle some feathers.

You'll often see charts or visuals illustrating the depreciation of the $USD over time, normalized to $1.00, of which I occasionally share myself.

However, there's an important caveat: these visuals rarely account for short-term yields. Displayed below is the purchasing power of $1, adjusting for annual CPI inflation (in red) versus the purchasing power of $1 accounting for 1-year Treasury yields less annual CPI inflation (in blue), starting from 1962

Notice anything?

The purchasing power of $1 from 1962 to the present equates to $1.85 when accounting for 1-year Treasury yields and inflation. Meanwhile, adjusting for inflation alone leaves you with just $0.10 of purchasing power.

Quite the massive difference.

However, there's more nuance to consider:

1) Let's separate the data into distinct eras,

From 1962 to start of 2009:
- Average annual inflation: 4.40%
- Average 1y yields: 6.22%
- Average difference: +1.82%
Real gains in purchasing power.

From 2009 to Present:
- Average annual inflation: 2.34%
- Average 1y yields: 1.00%
- Average difference: -1.34%
Real losses in purchasing power.

2) The data doesn't include the 1940s where financial repression massively devalued the USD to erode real debt burdens (the data I quickly threw together only went back to 1962) in the post war period.

3) Why 2009 for the change in eras? What has changed? If the U.S. can just pay a nominally higher yield than the inflation rate in perpetuity, are the fiat doomers really just delusional?

In my view:

- Positive real yields can be sustained with a clean balance sheet. It's feasible for the government to pay creditors a positive real interest rate when real debt burdens are low, demographics are booming, and the global GDP is exploding as the world industrializes.

- With Debt to GDP meaningfully > 100% and other tailwinds reversing, this is no longer the case. Post GFC and the introduction of ZIRP + QE to facilitate "growth", has the positive real yield era behind us, at least until real debt burdens have been eroded - which will take either explosive real growth, or a steady dose of inflation above yields, debasing creditors in the process.

The Bottom Line: The reality is that the average/median American individual or family often doesn't have much disposable income to capture such yields. The ones that do, benefit; and the ones that don't are the ones that pay for it.

When you look at charts showing record wealth disparity, or are wondering why the political landscape is more polarized than ever, keep this chart in mind.

Fiat inflation didn't bother the investor class from for forty years as yields outpaced inflation. Currency devaluation wasn't felt in the slightest by this cohort, they didn't just escape the devaluation, but outpaced it significantly.

Now, with Debt to GDP levels domestically and globally near record levels, expect the post 2009 dynamic to continue into the future on a longer time frame. Don't let the current tightening cycle fool you as to what must occur.

Inflation > Yields, over a sustained period of time, is the only way global governments can mask their insolvency.

Thanks for coming to my Ted Talk.