A) Have you considered writing about US payment rails from the perspective of vested interests? There seems to be no good reason on earth that an ACH transfer takes 1-3 days, while the UK (for example) has had instant domestic transfers (the faster payment scheme) for over 10 years. But when you think that US banks make interest on these funds while they sit in limbo, it makes more sense. Same goes for the timing of banks receiving and distributing people's paychecks.
B) Have you considered a broader exploration of internet regulation vs financial regulation in key geographies? For example, it seems to me that the US has very open internet regulation but antediluvian financial regulation, while Europe is close to the other way around. Seems like it could be an interesting topic.
A) Yes! I'm working on something in this vein. I'm not sure how much of it is interest on float these days, vs the cost of implementing a new standard.
B) Interesting point. I'd have to think about that some more. Someone once pointed out to me that Europe is one insurance market, but the US is fifty insurance markets, at least in some respects. Not sure how true that is, but it's directionally right.
Could you clarify what you mean by “much of the economy is mean-reverting”? That claim must vary by industry —> could you also name an industry where that claim applies and an industry where it does not (Sorry/new to the Diff concepts here)
Sure. Some industries go through a cycle where they're secular growers, and they either slow down, turn into cyclicals, or disappear. e.g. in the 50s the hot growth stocks were aluminum and chemicals (The Graduate was an accurate portrayal of what an older person would have recommended at that time); in the 60s electronics, conglomerates, and airlines; in the 70s commodity producers, etc. In many cases, these industries stuck around in some form, but got less interesting.
Over very long periods, what people spend money on changes, but in many cases the process of losing aggregate wallet-share is not unpleasant. Food expenditures have gone down as a percentage of the total consumption basket over the generations, but food companies have gotten better at creating durable brand names (and monetizing new fads), so it's been a decent business to be in despite that.
An industry that doesn't mean-revert: so far, there hasn't been an extended period where the world needs fewer chips, or doesn't find new uses for the most cutting-edge ones. Same with software; demand hasn't gone down yet. Another case would be companies that go to zero. Vacuum tube companies used to have ups and downs due to demand for radios/TVs and the military, and then in a surprisingly short period, it all disappeared.
Fascinating piece on payments, thank you!!
If I could ask two broad questions:
A) Have you considered writing about US payment rails from the perspective of vested interests? There seems to be no good reason on earth that an ACH transfer takes 1-3 days, while the UK (for example) has had instant domestic transfers (the faster payment scheme) for over 10 years. But when you think that US banks make interest on these funds while they sit in limbo, it makes more sense. Same goes for the timing of banks receiving and distributing people's paychecks.
B) Have you considered a broader exploration of internet regulation vs financial regulation in key geographies? For example, it seems to me that the US has very open internet regulation but antediluvian financial regulation, while Europe is close to the other way around. Seems like it could be an interesting topic.
A) Yes! I'm working on something in this vein. I'm not sure how much of it is interest on float these days, vs the cost of implementing a new standard.
B) Interesting point. I'd have to think about that some more. Someone once pointed out to me that Europe is one insurance market, but the US is fifty insurance markets, at least in some respects. Not sure how true that is, but it's directionally right.
Awesome, look forward to it!
Could you clarify what you mean by “much of the economy is mean-reverting”? That claim must vary by industry —> could you also name an industry where that claim applies and an industry where it does not (Sorry/new to the Diff concepts here)
Sure. Some industries go through a cycle where they're secular growers, and they either slow down, turn into cyclicals, or disappear. e.g. in the 50s the hot growth stocks were aluminum and chemicals (The Graduate was an accurate portrayal of what an older person would have recommended at that time); in the 60s electronics, conglomerates, and airlines; in the 70s commodity producers, etc. In many cases, these industries stuck around in some form, but got less interesting.
Over very long periods, what people spend money on changes, but in many cases the process of losing aggregate wallet-share is not unpleasant. Food expenditures have gone down as a percentage of the total consumption basket over the generations, but food companies have gotten better at creating durable brand names (and monetizing new fads), so it's been a decent business to be in despite that.
An industry that doesn't mean-revert: so far, there hasn't been an extended period where the world needs fewer chips, or doesn't find new uses for the most cutting-edge ones. Same with software; demand hasn't gone down yet. Another case would be companies that go to zero. Vacuum tube companies used to have ups and downs due to demand for radios/TVs and the military, and then in a surprisingly short period, it all disappeared.