John Cochrane, a finance economist and Senior Fellow at the Hoover Institution, discusses the intertwining of his gliding passion and economic theories. He tackles intriguing puzzles like real interest rate disparities, the ongoing viability of Bitcoin, and his insights on health-status insurance. Cochrane dives into the complexities of government debt and inflation, critiques economic forecasting, and shares personal stories about his influential parents. His unique mindset seeks simplicity and logic in diverse fields, making for a captivating conversation.
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insights INSIGHT
Real Interest Rate Disparities
Real interest rates don't equalize across countries due to various risks like currency risk and legal risks.
These risks, combined with market sentiment and speculation, influence investment decisions and prevent perfect arbitrage.
insights INSIGHT
Risk and Arbitrage
High real interest rates in countries like Brazil don't represent a pure arbitrage opportunity due to associated risks.
These risks, similar to those influencing tech stocks or value stocks, explain why seemingly profitable opportunities aren't fully exploited.
insights INSIGHT
Active Management and Trading
Active fund management persists because markets can't be perfectly efficient; someone needs to gather information.
High trading volume is puzzling, as information integration shouldn't require excessive stock turnover.
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A History of Florence and the Florentines in the Age of the Grand Dukes
Eric Willam Cochrane Jr.
This book provides a detailed account of Florence's cultural, political, and intellectual developments during the Age of the Grand Dukes. It explores how the Florentines maintained their creativity and innovation despite losing their position as cultural leaders of Europe. The work covers various aspects of Florentine life, including politics, art, music, and the natural sciences.
Plus One
Elizabeth Fama
Plus One is set in an alternate America where society is rigidly divided between those who live during the day (Rays) and those who live at night (Smudges). The story follows Sol, a Smudge, who embarks on a dangerous journey to fulfill her grandfather's dying wish, leading her into a government conspiracy and an unexpected romance with a Ray named D'Arcy. The novel explores themes of individual liberty, civil rights, and the complexities of human relationships within a divided society.
Monstrous Beauty
Elizabeth Fama
Monstrous Beauty by Elizabeth Fama is a dark fantasy novel that intertwines the stories of Hester and the mermaid Syrenka across different timelines. It explores themes of love, curses, and the darker side of mermaid mythology. The novel is praised for its unique blend of history, legend, and haunting ambiance, making it a compelling read for those who enjoy a more sinister take on mermaid tales.
What unites John Cochrane the finance economist and “grumpy” policy blogger with John Cochrane the accomplished glider pilot? For John, the answer is that each derives from the same habit of mind which seeks to reduce things down to a few fundamental principles and a simple logical structure. And thus, piloting a glider can be understood as an application of optimal portfolio theory, and all of monetary policy can be made to fit within the structure of a single equation.
John joined Tyler to apply that habit of mind to a number of puzzles, including why real interest rates don’t equalize across countries, what explains why high trading volumes and active management persist in finance, how the pandemic has affected his opinion of habit formation theories, his fiscal theory of price level and inflation, the danger of a US sovereign debt crisis, why he thinks Bitcoin will eventually die, his idea for health-status insurance, becoming a national gliding champion, how a Renaissance historian for a father and a book translator for a mother shaped him intellectually, what’s causing the leftward drift in economics, the need to increase competition among universities, how he became libertarian, the benefits of blogging, and more.
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