There are protests across Europe. In France, Belgium, Italy, Spain, Serbia, Georgia, Romania and Greece. India is seeing widespread protests. There are protests also in Chile and Argentina.

Interestingly, the common thread across all of these protests is that they are student-led and primarily youth-driven.

What is causing this?

Over the last 4 decades, there is a consistent story that has been told: get a good education and move up in society.

Source: Nature

Clearly, most kids heeded the advice and went to universities to get educated. In regions such as Asia, that jump has been threefold over the past 20 years. At the same time, the population across the world has also gone up 33%. The global population in 2000 was 6 billion; now we are well past 8 billion.

A lot of kids are going to university and joining the workforce.

During that same period, wealth inequality and wealth concentration have become extreme. There is more and more wealth concentrated in the hands of fewer and fewer people.

Source: Wealth Inequality Report

This year we minted out the first Trillionaire.

There are a very small number of people who control the equivalent of the GDP of a small country and hence have influence over how they get taxed. They pay some of the lowest taxes on the planet while also making it harder for younger people to move up.

If you are born into privilege, you will be wealthy, but the chances of rising on the wealth curve have completely diminished.

The rich have built systems of rent extraction that make them richer and also raised the wall higher so few can break through.

A large number of educated young adults are realising that the “get educated, work hard” mantra will deliver nothing for them.

The Narrative

In the West, the popular narrative has been that immigrants are taking away the jobs of locals, and that is why many university graduates are unable to find jobs, or even if they do find jobs, they do not pay enough.

No political party is going to announce that they are in cahoots with the moneyed class and bending the policy/laws in their favour every day.

The immigrant has been the fall guy.

There are two categories of immigrants.

The well educated coders, consultants, finance professionals. They possess Ivy League or equivalent degrees. They come from privilege in their own countries and have access to networks that non-Ivy League students will never be able to access.

The other kinds of immigrants are poor, sometimes illegal immigrants who undertake menial or low-paying jobs in these countries, such as waiting tables, housekeeping or labour.

University graduates unable to get jobs are not trained to go after Ivy League jobs and do not want to do other categories of jobs. They want jobs that will pay them a middle-class income.

The Middle Class

A middle-class income used to be one which would allow you to buy a house, afford a car, and bring up 2 kids, even in a single-earner household. To do that in the US, you would have to earn $300,000 per year today.

But the median annual income in the US is $87,460, and that of France is Euro 26,280. In India, that number is Rs. 1,21,000.

Most of us city dwellers in India do not realise this, but the maid who comes to our homes is probably in the top 10% of the country by annual income.

The median-income earners, the middle class, need to earn 4 times what they are able to earn today.

They save, scrounge, and borrow to get their kids educated, only to realise that the education is not going to get them a good middle-class job.

COVID + AI

Source: India Macro Indicators

There is this thing called the base effect. Say, India was at a GDP of 100 in FY 2020 and expected to grow by 7% in the subsequent year. Its GDP was expected to reach 107. Instead, because of COVID, the GDP fell by 5.8% before recovering by 9.7%. Does that mean we got back to business as usual?

The 5.8% drop meant that the GDP went from 100 to 94.2. A 9.7% growth on 94.2 gives us 103.3. As you can see, below the 107 we would have otherwise reached. This created a job gap. Most estimates at the time agreed that it would be 2030 before India made up for what was lost due to COVID.

In 2022, this company, OpenAI, announced itself with a chatbot called ChatGPT. The only selling point of every AI company is that you will be able to reduce your staff and instead pass that staff salary on to the AI company.

Source: Roger Wong

The entire startup ecosystem has joined the bandwagon, and everyone is trying to build a product which will bring AI to businesses and change their business dynamics completely.

COVID delivered a systematic job contraction across the economy, but AI will not exist unless it delivers a job contraction across the economy.

Cliodynamics

If you have read or watched Foundation by Isaac Asimov, it deals with the subject of Cliodynamics, which uses history as a mathematical model to study societal evolution. Peter Turchin is a student of Cliodynamics and writes extensively about this.

There is a concept of elite overproduction. If you have a large number of people who are competing for a small number of positions of power, expect a revolution. Pushing an entire generation of people towards education has resulted in elite overproduction. They all aspire to move up the class hierarchy, but the concentration of wealth has left little room up there. Many of these people will never be able to rise up in society.

As Amitabh Ghosh wrote in his book The Nutmeg’s Curse, revolutions rarely start on the street; they usually start in the courtyards of palaces, before they spill onto the streets.

You need someone to have the credibility to lead a revolution. This is usually an elite who has been denied access to the corridors of power. When a spurned elite realises that they cannot be part of the system, they decide to tear it apart.

They just need to find the anger and harness it.

Fast forward a decade to 2010, and the machines were ubiquitous. Internet and mobile penetration had skyrocketed, and the first internet businesses such as Naukri.com, Bharatmatrimony.com, makemytrip.com and several others had found their way to being listed on the market. The payment rails were still run by two American companies: Visa and Mastercard. The RBI had launched both NEFT and RTGS in 2005 and 2004, respectively, but the transaction volumes that they processed were smaller than those of Visa and Mastercard.

One of the ways to grow an economy is by reducing transaction costs. Reducing that friction means making processing faster, easier, ubiquitous and secure. The RBI had been experimenting with Mobile payments, and the MMID was introduced, but it never took off.

In 2008, the RBI, along with some of the largest banks in India (Indian Bankers Association), launched a company called the National Payments Corporation of India. This organisation was tasked with producing protocols that would run the payment rails for the future. A future where the internet and the mobile phone are ubiquitous.

2008 was a time of great change; the iPhone was launched. The world was introduced to something called 3G that made desktop-quality web access possible over the phone. It would go on to upend business models and reshape entire industries over the next decade. You would not hail a cab the same way again, shopping would mean something totally different, and travel agents who sold airline tickets would disappear.

In March 2009, the RBI reported a mere 6 non-cash transactions per capita. At the time, 10 million retailers accepted payments through cards.

The RBI decided that there was a need to create a mobile protocol for transactions to smooth the flow of money.

Also in 2009, 50% of the Indian population was unbanked. They had never had a bank account. This meant that they could never participate in formal channels of credit and were ripe for exploitation by local moneylenders who would charge interest rates as high as 500% per annum.

On 11 April 2016, UPI was launched in India. I would not be surprised if you had not heard of UPI even after the demonetisation in 2016.

Some would have you believe that the success of UPI was a masterstroke by the government or that demonetisation had a huge role to play in the success of UPI.

UPI was indeed kept free by the government. The reason for this was to keep it from failing, much like MMID did. If 15 people are transacting Rs 5000 amongst themselves, even if you have a 2% MDR, what are you going to make? You would be better off sitting with a bowl at the corner of a street. The government’s contribution to the success of UPI ended with making it free.

In August 2010, two companies were founded just days shy of each other. One was based out of Noida and another in Bangalore. Paytm and Freecharge were working on the same thesis. Making payments for phone recharge is difficult. At the time, the use of prepaid connections was very high, ~90% of the market. In order to recharge the phone, you would go to any kirana store, where you would have to spell out your mobile number and pay the amount you wanted to recharge your phone. Sometimes the shopkeeper would get the number wrong and process the payment to the wrong number. If you needed to recharge your phone at 11 pm, LOL.

Both companies wanted to make this easy, and with the rising use of mobile internet, the introduction of the smartphone and the use of debit cards in India, they had a clear case.

In 2009, the RBI had also introduced a draft guideline for what they called a Pre-Paid Instrument (PPI). We all know them as wallets. Paytm did not launch one till 2014, and it was a huge success. Their masterstroke at the time was to integrate it with Uber, which had just launched in India. Credit card penetration was very low in India, and Uber unfortunately worked only with credit cards because debit cards did not allow pre-authorisation (Blocking the sum in advance). The Paytm wallet expanded its market in a huge way.

So by the time that the demonetisation swept around in 2016, Paytm was the default payment method across the country.

I remember landing in Mumbai the day after demonetisation. I had taken a cab to a venue. Along the way, every bank had hundreds of people standing in line. I did not have the time. I asked the driver, ‘Paytm loge’. He told me he did not have an account on Paytm. I had to find the one cab driver still living in the Stone Age. I implored him to create an account. He was very resistant. I realised that the app was in English, and he did not read or write English. He was afraid that he would be locked out of the account because he could not remember the password.

Paytm played loose and dirty, so all I needed was a phone number to get his account opened at the time. I got his account set up in a couple of minutes. Wrote the password on a piece of paper he had, transferred it, and left.

Post-demonetisation, the Paytm wallet was the urban lifeline.

UPI was not even on the horizon. But Venture Capitalists were.

Sameer Nigam was an employee at Flipkart who was thinking of creating a payment solution at the company. The founders had given him the latitude to experiment with ideas. In 2015, he incorporated a company called PhonePe, and it was almost immediately acquired by Flipkart. Paytm had a huge jump on him, so instead of a wallet, he chose to build his product for UPI.

The Indian payment space was ripe for disruption. VCs were pouring money into the space. Many of the companies, including Razorpay, Mobikwik, and Pine Labs, raised a lot of money during this time and the payments race began to heat up.

PhonePe had hitched its wagon to UPI and started heavily promoting UPI codes - the QR code that you find everywhere in India these days. At the same time, the government of India released its own product called BHIM. This pushed Paytm to take notice and act. They also integrated UPI into their product. By the end of 2017, thousands of salespeople were out on the streets with missionary zeal, trying to get every shop, every establishment and even pushcart vendors to get their QR code in place.

This push, financed mainly by VC cash, is the true reason for UPI’s success. They call UPI a Digital Public Infrastructure. Without the QR codes that are present everywhere, there is no ‘public’. It would merely be digital infrastructure, much like the failed MMID.

The true heroes of the UPI success are the VCs and the startups that innovated and made it ubiquitous.

The QR Code is the visible part; the invisible part is all the servers and code that make UPI possible. That costs money.

Today, 752 banks process payments through UPI. There are over 24 billion transactions that are processed each month, and the value transacted is close to Rs 30 lac crore. This is over $300 billion. A month. Or $3.6 trillion a year. Just for perspective, India’s GDP is $4.1 trillion.

Source: NPCI

UPI has reduced the friction of transactions incredibly. The unbanked in India, which sat at 50% in 2009, is now down to 10%.

Low-value transactions have become incredibly simple. Before UPI, if you did not have change, you had to simply forfeit the balance to an auto driver or several such merchants. How many of us were handed a couple of candies by a shopkeeper because he did not have change? So much so that Parle, a company that manufactures a lot of toffees in India, saw a decline in its business after UPI was introduced.

Coming to MDR on UPI. The government has proposed a 0.4% MDR, which is a fifth of what every merchant pays today for each card transaction. I do not know what the brouhaha is all about. The benefits that the technology has already delivered to the country are phenomenal. The technology that powers UPI has an underlying cost, and this cost cannot be wished away.

If you process Rs. 1 Crore in transactions at 0.4%, the total revenue generated is Rs 40,000, assuming all transactions are above Rs 2000 and below Rs 75000. All transactions below Rs 2000 are not chargeable; all transactions above Rs 75000 will trigger the Rs 300 max limit, and all peer-to-peer transactions are exempt. Essentially, you have to be a registered business running a payment gateway and receiving money in your current account to trigger the MDR. In value terms, that represents merely 30% of the transaction value.

So in reality, a company processing Rs 1 Crore in transactions will generate a revenue of Rs 12000 through MDR. Do you know how much an engineer in Bangalore costs?

So the transfers you make to the auto guy, the kirana shop, etc., are not subject to MDR. A business that either uses a PoS machine or a payment gateway is a business that would be subject to the MDR.

So the hue and cry!

I suppose this was bound to happen anytime the government chose to pass on the cost of running UPI. You would be foolish to believe that there are no transaction costs of using other modes.

All card transactions, as already explained, are subject to 5 times the MDR.

NEFT, RTGS, etc all attract their own charges, albeit lower; they are also high-friction modes of transfer. I would love to see people standing around at a store adding the store’s account details to make NEFT transfers.

Cash has its own transaction cost, and an associated toffee economy.

There are a bunch of things that this government does that I do not like. But this is a very calibrated, thoughtful and necessary step taken, in my opinion.

The same is true for hackers. Your system can prevent them a hundred times, but they just need to get through once.

On the 31st of August this year, the IT infrastructure of Jaguar Land Rover (JLR) was attacked. The company had to stop production by the 1st September, and the production did not resume till last week. A group calling itself Scattered Lapsus$ Hunters on Telegram claimed responsibility for the attack. This suggested collaboration between Scattered Spider, Lapsus$ and ShinyHunters, three English-speaking cybercrime groups.

Now, JLR is not a small company. With a turnover of close to £30 billion, it is amongst the larger companies in the UK. It contributes about 0.6% of the UK GDP and produces close to 500,000 vehicles every year. The company has close to 700 direct suppliers within the UK alone. The £30 billion cascades into several other entities and creates a hundred thousand jobs in the UK.

As the systems at JLR froze, the orders that would have normally gone out stopped going out. They just could not place the others with their systems down! The whiplash was such that the UK government stepped in and promised a line of credit of £1.5 billion to JLR, just to keep the suppliers alive.

The government will underwrite a £1.5bn loan guarantee to Jaguar Land Rover (JLR) in a bid to support its suppliers as a cyber-attack continues to halt production at the car maker.

[…]

About 30,000 people are directly employed at the company’s UK plants with about 100,000 working for firms in the supply chain. Some of these firms supply parts exclusively to JLR, while others sell components to other carmakers as well.

[…]

The government will underwrite the loan through the Export Development Guarantee (EDG), a financial support mechanism aimed at helping UK companies who sell overseas.

The loan will be paid back by JLR over five years, in an effort to boost the firm’s cash reserves as it makes a “backlog of payments” to its suppliers.

Source: BBC

So how did this all happen?

The HELLCAT ransomware group claimed responsibility for a major data breach against Jaguar Land Rover (JLR), in which gigabytes of sensitive information were leaked, including proprietary documents, source code, and employee and partner data. The attack, attributed to a threat actor known as “Rey” [identified by breach tracking platforms as an active member of HELLCAT] on a dark forum, on March 10, 2025, posted roughly 700 internal JLR documents that were compromised. The breach was enabled through stolen Jira credentials harvested via Infostealer malware, a known hallmark of HELLCAT’s operations. The exposed data includes development logs, tracking information, source code, and a large employee dataset with usernames, email addresses, display names, and time zones. The presence of verified employee information from JLR’s global workforce raises significant concerns about identity theft and targeted phishing campaigns.

Source: Cyfrima

Jira is a popular ticket management software developed by a company called Atlassian, which is an Australian startup success story. Using a Jira credential, the hackers found a way in and downloaded several internal documents. They sat pretty with access to the system, which the company was unaware of. When the time was right, they released the malware. Think of Jira as the complaint register. Someone handling the complaint register let their credentials slip out.

There are larger companies than JLR in the UK. Take Shell, which is the largest company. They pump oil in places that are miles away from the UK. Say, Shell’s operations were to stop for some reason, such as this, it would not put as many jobs at jeopardy in the UK as JLR did.

Cyberattacks are growing more and more sophisticated, and they are also being used as a means to engage in warfare with another country. It is not like cybersecurity is not being taken seriously, but your security is only as strong as your weakest link. When you have 30,000 people working in an organisation, you only need one of them to slip up with something as inane as Jira for your entire operations to grind to a halt.

Going back to where I started. Companies need to protect themselves from 10,000 instances every day. The hacker needs to get through once.

While the cloud has proved to be incredibly helpful from the perspective of scaling systems, it also remains the greatest source of threats.

This is not just for large companies to worry about. A couple of weeks ago, a nursery school was hacked in London, and the attackers threatened to release the details of the children on the internet.

Trillions of market cap sit in companies that have been built on the cloud. Will this lead to a re-evaluation amongst the larger companies?

The need to pay for certain things only through that tender.

Say, I invite you to my private island and you graciously accept my invitation. Once you arrive there, to your dismay, you find out that instead of a guest, I treat you as a servant. You need to undertake work around the property to earn a currency that I issue called Vivek’s Coupons. You need the coupons to pay for the food whose supply I control. Also, the boat that you need to take to get off the island has to be paid for as well, with the same Coupons.

If I had invited 4 people, you would probably start trading for goods and services using the coupons. Suddenly, Vivek’s Coupon has become a currency.

In the case of any government, by accepting taxes only in its currency, it makes it necessary for a person to earn that currency. The other way to make a currency really valuable is to issue debt in the currency.

For the longest time, I thought the Dollar Supremacy was the result of the Bretton Woods agreement and the subsequent agreement with Saudi Arabia for dollar-denominated oil trade. Turns out it was the Marshall Plan which provided the dollar with its supremacy.

America had become the production powerhouse of the world by the end of the Second World War. In the aftermath of the World Wars, the capacity to produce still existed, but with Europe lying in tatters and with the rest of the world barely beginning to get over the colonial hangover, no nation could buy all the stuff that the US could produce.

The population of the US in 1950 was 154 million, and there was only so much that those people could consume. The growth fuelled by the War Economy was gone.

George C Marshall, the US Secretary of State at the time, introduced the European Recovery Program, also known as the Marshall Plan. Over 4 years, from 1948 - 1952, a total of $13 billion was given to 14 countries in Grants and Loans. This equates to about $175 billion in today’s money.

Source: Wikipedia

Grants were essentially goods produced in the US that were exported to Europe free of cost. The grants kept the US economy chugging along smoothly with a captive market available across the Atlantic.

Loans had to be gradually repaid. If you have to repay loans in US dollars, you need to earn US dollars. This implied that many of the Western European nations had to build a US-centric economy.

FRANCE PREPAYS BIG DEBT TO U.S.; Most of $293,400,000 Is for Marshall Plan Loan-- $112,500,000 Gold Bought FRANCE PREPAYS BIG DEBT TO U.S.

Source: New York Times Archives, 1962

Germany paid back a billion dollars to the US by 1966. Britain was the last to clear all the World War debt, which it did in 2006.

The payments of $83.25m (£42.5m) to the US and US$22.7m (£11.6m) to Canada are the last of 50 instalments since 1950.

The amount paid back is nearly double that loaned in 1945 and 1946. “This week we finally honour in full our commitments to the US and Canada for the support they gave us 60 years ago,” said Treasury Minister Ed Balls.

Source: BBC

And like that, with a mere 1 billion in loans, half of the European continent was forced to earn the American currency to repay it. This, coupled with the ready use of the USSR as the boogeyman, thanks to the Cold War dynamics, resulted in ever greater alignment with the wishes of the US.

The Hangover

The European nations paid off the loan, and by the 1990s, the USSR had split. Despite this, Western Europeans have not shown the backbone to go against the Americans since the Marshall Plan. Despite the large number of protests against the genocide in Gaza, the governments have been reluctant to come forward and call it out. The only reason I can see is the American alignment with Israel.

The EU capitulated the moment Trump mentioned tariffs and signed an extremely one-sided agreement within a matter of weeks.

The EU has forgotten that there once was a time when each of those nations made decisions without the shadow of America hanging over them.

The result: A secular decline on the world stage.

Share of Global GDP - UK

Source: Statista

Share of Global GDP - Germany

Source - Statista

Share of Global GDP - France

Source: Statista

In 1956, Britain and France were upset with the nationalisation of the Suez Canal by Egyptian president Gamal Abdel Nasser. To take control of the Suez, Britain encouraged David Ben-Gurion, Prime Minister of Israel, to stage a war with Egypt. Britain and France would then send their fighters in and pretend to diffuse a war that never was and take control of the Suez Canal.

The plan was filled with several assumptions and failed spectacularly with the British Air Force bombing the Cairo civilian airport instead of the Air Force Base near Cairo.

The US was not informed of this covert plan, and they threatened to impose tariffs on Britain, which eventually ended not just the war but, in the opinion of some, the British Empire.

The US government today would simply comply, knowing Israel’s tangential involvement.

In 1973, fed up with the expansionist tendencies of Israel and backed by the USSR, Syria and Egypt entered into a war with Israel. Known as the Yom Kippur War, this was a pivotal moment in the last century that changed the trajectory of the United States of America.

Thanks to the Cold War calculus, the US entered the war on the side of the Israelis. The war ended in a retreat for both the Syrians and the Egyptians. Almost immediately after, the Gulf states issued an oil embargo on the US. This sent Kissinger scurrying to Riyadh to get the oil flowing again. Two things happened as a part of this meeting. Saudi Arabia agreed to trade oil in US dollars alone, and the US agreed to set up military bases in Saudi Arabia to provide security guarantees to them.

Source: American Security Project

The Implicit understanding was that Israel would not attack any Middle Eastern country, and the US would keep them from acting aggressively in the region.

The past couple of presidencies have shown that, irrespective of party affiliations, America is very comfortable with genocide but also has absolutely no control over Israel and its actions. NONE.

BRIC was a term coined by British economist Jim O’Neill in 2001 to refer to the four large economies Brazil, Russia, India and China outside the G7. The BRICS was formed in 2009, which included South Africa. BRICS has been undergoing expansion over the last couple of years.

2024: Egypt, Ethiopia, Iran, and the United Arab Emirates became full members.

2025: Indonesia officially joined the group.

Expected Membership: Saudi Arabia is expected to finalise its membership.

It is interesting that countries from the Middle East started joining the organisation immediately after the Gaza Genocide began. The absolute impotence of the Americans and the willingness of the entire G7 to stand around and watch the evisceration of what they like to describe as “Rules-based Order” and “International Law” has definitely caused consternation.

Couple this with the double standards on display when it comes to Ukraine, just because the complexion of the people living there is different, has caused many countries to re-evaluate their relationship and view of America.

Trump’s tariff policies have just not helped the cause.

The recent bombing of Qatar by Israel has further worsened the perception. It has got to the point where Israel can even bomb Milwaukee and say they were targeting Hamas, and the US will just brush it off and move on.

Across the world, the United States has enjoyed influence and power over various countries and their government, at least over the last 30 years.

The Declaration of Independence of the United States says,

But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

The US assured security in the 1970s. Where is the future security coming from?

Wikipedia says, Digital Public Infrastructure (DPI) refers to digital systems and platforms that enable the delivery of services, facilitate data exchange, and support digital governance across various sectors.

India likes to consider itself the World Champion of Digital Public Infrastructure. If you ask, Aadhaar and UPI will be touted as examples of at-scale success.

When Aadhar was rolled out back in 2010. Literally nobody wanted to stand in queues at the post office to get the registration done. Countless coercion techniques were put to use. People were told that their bank accounts would be frozen if the Aadhaar was not connected to them. Income Tax filing would not be possible without connecting the account with Aadhaar. Then it turned out, there was no law that explicitly stated this.

India’s Supreme Court has come down heavily on the mandatory linking of Aadhaar for almost everything.

In a much-anticipated ruling today (Sept. 26), a five-judge bench struck down section 57 of the Aadhaar Act, which allowed corporate entities or even individuals to demand an Aadhaar card in exchange for goods or services. As a result, now no school, office, or company can force anyone to reveal the unique 12-digit number. Neither is it mandatory for opening bank accounts or for mobile connections.

Source: Quartz, July 2021

It took 10 years for the ruling to arrive, and in the intervening period of immense confusion, a billion people registered themselves on the identity platform.

The level of subterfuge and deceit involved in this Digital Public Infrastructure was not trivial. Not to mention, estimates have it that over $1 billion was spent by the government to roll out this platform.

The Internet is a digital public infrastructure. Nobody was coerced onto it. There was genuine usefulness and a large number of benefits that became inaccessible if one did not have it.

The other service that India likes to wave around is the Unified Payments Interface (UPI).

The only thing that makes UPI truly ‘Public’ is the large network of QR Codes that have been deployed by fintech companies in India. In the absence of that, UPI is no different from National Electronic Fund Transfer (NEFT) or Immediate Payment Service (IMPS). It is simply digital infrastructure. The creators of UPI had no role in making it public.

Fintech has been on the rise in India since 2015. In 2015, Credit card penetration was 1%, debit card usage was 10%; credit creation was poor, and banks were not structurally set up to address this. Micro-finance institutions had shown a path for democratisation of lending in rural areas; a similar push was envisaged towards the urban (not so poor).

Not to mention, the US had PayPal in 1999. In 2015, the collection of payments online was still quite difficult in India. The landscape was a duopoly. Even large established banks did not know what it took or how to go about offering payment gateways.

All these factors combined led to billions being poured into the fintech startups in India, which were simply bribing their customers into switching behaviour. 2%, 5%, 10% cash back. Why would one not switch?

Paytm introduced wallet-based payments that eliminated friction completely. It also introduced India to QR Code-based payments (peer-to-peer). Suddenly, it was possible to pay the fruit vendor, the autowala and many others with just a click on an app.

Against this backdrop, Demonetisation took place in 2016 and eviscerated urban India’s trust in cash.

In October 2016, INR 48.57 Crores (~ $7 million) was transacted over UPI.

By October 2017, that number was at INR 7057.78 Crores (~$1 billion).

Today, over INR 25,00,000 Crores (~USD 290 billion) is transacted each month over UPI.

Without demonetisation, I wonder where UPI would have been. I wonder where Paytm would have been!

In the case of UPI, the public interface was built by private companies. I challenge you to find BHIM QR Codes across any city in India.

Demonetisation was an opportunity to grab market share, and these companies sent out foot soldiers with missionary zeal to place QR Codes at every store and every outlet. Even the push-cart vegetable vendor has a QR Code on his cart.

Oh! Also, the foundation holding up this castle of card - Zero Merchant Discount Rate.

Typically, when you slide your card at a point of sale (POS) machine, 2% of the transaction value is deducted before payments are made to the merchant. That 2% gets shared between, say, Pine Labs, Visa, the bank which issued the card, and the bank that processed the payment. This 2% deduction is called the Merchant Discount Rate (MDR).

That is the allure of building a fintech company. So long as the infrastructure is working, you do not have to really do any work to earn the money.

After demonetisation, the government issued a diktat that reduced the MDR to zero on UPI. Every company/bank processing UPI just absorbs the cost for now. One day, someday, this will have to stop.

On the one hand, there is the fact that the infrastructure needed for UPI to operate at a USD 3 trillion a year scale can be managed with zero MDR shows the crazy margins financial companies make. On the other hand, once the diktat is removed, greed will quickly set in, and the true test of this “public good” will begin.

NPCI is a quasi-banking institution, which is a fancy way of saying that it’s not a bank but acts like one. It is owned by all of the large banks in India, which are stakeholders. The bank processing the payment and accepting UPI is private. The companies creating the final layer of QR codes to enable acceptance of payments are private. So what the hell is “public” with UPI?

The absence of the MDR creates a false sense of public ownership, while it is anything but.

In short, UPI is a digital infrastructure run but private companies for the public. You know, usually they are known as technology companies. In India, we make many banks own the technology and just call it Digital Public Infrastructure.

So when I keep coming across this term DPI, I don’t even know what they are talking about.

In the meantime, the Orissa Millet Mission, about which not even a Wikipedia page exists, managed to onboard over 200,000 farmers across more than 14,000 villages and got them to register themselves through the gram panchayats to make their produce available for the Public Distribution System.

The cropping pattern across a state was shifted from rice to millets and resulted in sustainable water abundance.

Source: Shree Anna Abhiyan

Nobody was forced or coerced; no private organisation had vested interests; no incentives or cashbacks were offered. The government, along with an NGO called WASSAN, worked to produce systems change. They spent months engaging farmers, helping them understand hydrology, agroecology and economics. They created the digital tools that could allow this to scale. The results are undeniable.

Ragi procured by the Orissa government alone went from 5,000 quintals in 2018-19 to 760,000 quintals in 2024-25. All of it was accomplished using a digital backbone. This is Digital Public Infrastructure.

No sooner was the American Revolution over, the French Revolution began.

Americans adopted air conditioning faster than anywhere in the world. Of course, the air conditioning companies wanted this, but another industry was equally interested in this - electricity companies.

Between 1946 and 1965, 31 million new homes were constructed in the US, and for the people building those houses, air conditioning was a godsend. Architects and construction companies no longer had to worry much about differences in climate – they could sell the same style of home just as easily in New Mexico as in Delaware. The prevailing mentality was that just about any problems caused by hot climates, cheap building materials, shoddy design or poor city planning could be overcome, as the American Institute of Architects wrote in 1973, “by the brute application of more air conditioning”. As Cooper writes, “Architects, builders and bankers accepted air conditioning first, and consumers were faced with a fait accompli that they merely had to ratify.”

Equally essential to the rise of the air conditioner were electric utilities – the companies that operate power plants and sell electricity to consumers. Electric utilities benefit from every new house hooked up to their grid, but throughout the early 20th century they were also looking for ways to get these new customers to use even more electricity in their homes. This process was known as “load building”, after the industry term (load) for the amount of electricity used at any one time. “The cost of electricity was low, which was fine by the utilities. They simply increased demand, and encouraged customers to use more electricity so they could keep expanding and building new power plants,” says Richard Hirsh, a historian of technology at Virginia Tech.

The utilities quickly recognised that air conditioning was a serious load builder. As early as 1935, Commonwealth Edison, the precursor to the modern Con Edison, noted in its end-of-year report that the power demand from air conditioners was growing at 50% a year, and “offered substantial potential for the future”. That same year, Electric Light & Power, an industry trade magazine, reported that utilities in big cities “are now pushing air conditioning. For their own good, all power companies should be very active in this field.”

By the 1950s, that future had arrived. Electric utilities ran print, radio and film adverts promoting air conditioning, as well as offering financing and discount rates to construction companies that installed it.

Source: The Guardian

That is how vernacular architecture met its maker. Air-conditioning.

Over the last few days, southern Europe has been - burning. From Portugal to France, the countries have been devastated by wildfires.

French Prime Minister François Bayrou says a huge, deadly wildfire sweeping through the south of France is a "catastrophe on an unprecedented scale".

He has been visiting the Aude region, where wildfires have scorched an area larger than Paris. Bayrou said the wildfire is linked to global warming and drought.

An elderly woman has been killed and at least one other person is missing as 2,150 firefighters continue to tackle the blaze, which has burnt more than 15,000 hectares (58 sq miles). At least 13 people have been injured, according to media reports.

Source: BBC

Firefighters across Spain, Portugal, Greece, Turkey and the Balkans were battling wildfires on Tuesday, with another heatwave pushing temperatures above 40 degrees Celsius (104 degrees Fahrenheit) across parts of Europe.

Global warming is giving the Mediterranean region hotter, drier summers, scientists say, with wildfires surging each year and sometimes whipping up into "whirls".

Source: Reuters

While the south is burning, for northern Europe it is a light sear.

In south-west France, records were broken on Monday in Angoulême, Bergerac, Bordeaux, Saint-Émilion and Saint-Girons. Météo France said the “often remarkable, even unprecedented, maximum temperatures” in the region were 12C above the norm for the last few decades.

In Croatia, air temperature records were set in Šibenik, at 39.5C, and Dubrovnik, at 38.9C, while large forest fires raged along its coasts and ripped through neighbouring countries in the Balkans.

The day before, Hungary broke its daily maximum temperature record when a weather station in Körösladány hit 39.9C. The capital, Budapest, also broke its daily maximum record as it sweltered through 38.7C heat.

[…]

The heatwave in southern Europe comes as Nordic countries recover from unprecedented temperatures above 30C in the Arctic Circle this month.

Source: Guardian

The homes in Europe are designed to insulate and hold in heat, but that is not turning into a curse. Therefore, the leader of a far-right French Party, Marine Le Pen, made a suggestion. Let us get everyone to buy air-conditioners! It has become a huge source of controversy.

Marine Le Pen, the far-right leader in France, declared that she would deploy a “major air-conditioning equipment plan” around the country if her nationalist party eventually came to power. Marine Tondelier, the head of France’s Green party, scoffed at Ms. Le Pen’s idea and, instead, suggested solutions to warming temperatures that included “greening” cities and making buildings more energy efficient.

Source: New York Times

The right vs left; comfort vs climate debate has arrived in France.

Even though the right highlights that 70% of electricity in France is generated through Nuclear and another 20% is renewable, the left disagrees with the idea and thinks that more climate-adaptive architecture should be adopted.

In America, the right denies climate change completely. Trump has done his best to roll back any policy that was touted as “Green” by his predecessor. The left, on the other hand, uses its Green credentials not to fix the climate problem but to further capitalism.

France is facing a similar divide, albeit a more honest one, between the right and the left. The division is about climate change, but arguably in a different mould.

Which one do you think will win out? The one that generates more revenue or the one that does not. I am not going to hold my breath but I will be greatly surprised if it is the latter.

Monsanto was manufacturing Polyurethane and DDT at the time. They came up with a chemical that would be called Agent Orange because it was stored in orange-striped drums. The company described it as a herbicide that could be used to defoliate.

The defending champions of the World War, who had recently destroyed Korea for good, found their military credentials being questioned by a group of rag-tag, poorly armed “rebels” in Vietnam. The Americans decided to use the chemical liberally.

76 million litres of it were dropped over Vietnam. It destroyed vast parts of the Vietnamese Jungles, and the health effects are felt even today. Oh! Also, Monsanto continues to sell Agent Orange to ranchers in Brazil who are clearing vast tracts of the Amazon.

Monsanto underwent a radical rebranding and reinvention after the Vietnam War in the 80s. The company projected itself as one that brought agricultural prosperity. They started producing high-yielding genetically modified seeds. But in true capitalistic style, they made it impossible for farmers to produce or use their seeds beyond one crop. The farmer needs to repurchase the seeds every season.

What is even more insidious is the herbicide regime that they suggest includes a chemical called Roundup. Roundup not just kill herbs; it kills everything. What it does can only be termed as ecocide. Any other plant, weed, herb or even bacteria cannot survive. The land becomes useless to grow any other seed but the one supplied by the corporation.

Hence,

In the face of U.S. efforts to require Mexico, under a trade agreement, to import genetically engineered corn, last week the Mexican legislature approved a constitutional amendment identifying native corn as “an element of national identity” and banning the planting of GE seeds. This brings to a head a clash over issues of food sovereignty and security, genetic integrity, health protection, and environmental safety.

In 2020, the Mexican government committed to phasing out the importation of genetically engineered (GE) corn by 2024. Mexico had also planned to ban by April 1, 2025, the weed killer glyphosate, integral to GE corn production—but recently delayed its decision. These actions by Mexico triggered vigorous pushback by the U.S., resulting in the formation of a panel under the U.S.-Mexico-Canada Agreement (USMCA) to decide which country was in the right. The USMCA, negotiated in 2018 during President Trump’s first term, replaced the North American Free Trade Agreement.

Source: Beyond Pesticide

The tensions with Mexico on trade have nothing to do with Fentanyl smuggling! It has everything to do with the poison the US is trying to sell to Mexico.

Agroecology, or the methods used to farm, has traditionally had ways to deal with weeds and pests. Humans have been farming for millennia. After the Second World War, the chemical factories that delivered victory had nothing to produce. They wanted something to kill, and they found weeds. But nobody needs them!

The farmers we work with are abandoning glyphosate one hectare at a time. With funding from Mexico’s National Research Council, we have built a team of 38 agroecology technicians and community leaders who are helping farmers develop the knowledge and skills they need to replace chemicals with other practices.

Our team supports farmers to plant legume cover crops to crowd out weeds, and we have provided thousands of weed whackers to make manual weed control quicker and easier. We are also teaching farmers to make their own products from inexpensive local materials, like agua de vidrio — a solution of ash and lime — that provides nutrients to plants and helps control pests and diseases.

Source: The Conversation

Monsanto was acquired by Bayer in 2018. Can you notice what is happening to their revenues?

Bayer revenue for the twelve months ending March 31, 2025 was $49.961B, a 2.15% decline year-over-year.

Bayer annual revenue for 2024 was $50.432B, a 2.18% decline from 2023.

Bayer annual revenue for 2023 was $51.558B, a 3.56% decline from 2022.

Bayer annual revenue for 2022 was $53.459B, a 2.5% increase from 2021.

Source: Macrotrends

Global Agriculture

Here are the top 20 countries in terms of cultivated land.

Land Use Statistics

Source: Wikipedia

Now go back and look news from the last year. If you search “US + Tariff” or “US + War”, you will find all the countries on that list. Why should the American President be bothered by what happens to Jair Bolsonaro? Well, he was allowing the use of Agent Orange in the Amazon jungles to turn them into agricultural fields!

That is what this whole trade war posturing is about. If the world turns its back on the US, it will have no other choice but to feed the nation corn and soybeans.

From Guatemala to Syria, migration to the North is a result of war, and war is a result of falling agricultural yields.

The US wants more and more control over how food is produced across the planet, and the trade war is a proxy for that.

India bans a large array of genetically modified crops, and the government has also been making a push for more millets and other crops that are, most of all, indigenous. This does not jive well with “Big-Ag”.

The US practices some of the worst agroecology. According to Bill Bryson in his book ‘The Body’, “If you live anywhere in North America, you ingest about 80 micrograms of Cadmium each day and none of it does any good to your body”.

Cadmium is toxic to the body. It is also a part of many fertilisers.

If the bans are lifted, this is exactly what we would end up eating in India as well!

I do not suppose that is the calculus driving the stoic resistance of the Indian government. Most of India still lives in villages and depends on farming for its survival. These are the very same people who have put the current government in power, and political expediency would suggest you do not want to harm that group.

Hence, trade wars it is.

These agencies rate the bonds of every country in the world. Bonds are sovereign debt and are paid for mostly through tax revenues by the government.

In a perfect world, governments would issue bonds only for development activities, since the returns produced through development would more than offset the interest paid.

Bond ratings are offered based on:

• The stability of the financial system of a nation

• The quality of their financial institutions

• Adherence to international legal frameworks (so they can be sued on foreign soil if they refuse to pay)

• They will say economic stability and a bunch of mumbo jumbo like that but it finally comes down to the stability of the tax base of the country.

If revenue = price X volume; the Income of a country = tax rate X number of payers.

Before a bank lends you money, it checks out your income stream. For most countries, taxes are its biggest income stream. It’s the basis on which the budget is built. (Tax havens make money by trading in human misery. Most of the money laundered through them is used purely for that purpose.)

Bond ratings determine how much interest a govt has to pay to raise debt. A reduction in bond ratings increases interest rates and directly takes money away from the stock market since sovereign debt is considered safer returns.

When this happens the private equity behemoths such as Blackrock, State Street and Vanguard move in and take significant positions in companies listed on the stock market. This is blatant roberry.

On the question of growth

US GDP Growth Rate

Source: Trading Economics

US Bond Yields

Source: CNBC

India GDP Growth Rate

Source: Trading Economics

Indian Bond Yields

Source: Investing.com

The Indian economic growth has outperformed the bond yield in most of the recent quarters. The reverse is true for the US. This would indicate that the Indian debt is an asset while the US debt is a liability. The debt that the US is investing provides it lower returns than the interest it pays for the debt.

Add to that, the current budget proposed in the US is “by the billionaire, for the billionaire, of the billionaire”. They are proposing tax cuts! As I mentioned already, a stable tax base is a critical cornerstone to the rating of debt. Not to mention that the current US government is eviscerating its own economy by implementing tariffs that are extremely punitive on the American people.

Indian debt is rated at BBB representing a lower or medium grade while the US debt is rated at Aa1 which is high grade.

Let us say, Greece decided to cut taxes for all of its rich and also engaged in heavy tariffs of all imports, do you think credit rating agencies would be sipping on martini and cutting their credit rating by one point.

Printing away

M1 is the money supply in the economy. This is the quantum of currency that the country is infusing into the economy.

The US has been printing its way out of trouble since 2008. In 2008, the US government engaged in something called the “Quantitative Easing” or printing money to pay bank executives fat salaries. The Money supply increased by almost 50%.

Source: Federal Bank of St Louis

What they did in 2020, would make this look like a blip.

Source: Federal Bank of St Louis

Hence inflation.

But without this infusion, all those billionaires with billions in paper valuations would have been reduced to nothing. This was done to protect the rich, not the poor. 16 trillion dollars in debt is enough to give every American 50,000 dollars.

USD 400 billion out of the $16 trillion went towards supporting the poor.

Forgive my segue - If America and Morals were two circles in a Venn diagram, the twine shall never meet.

The point is that this country does not represent anything akin to sound financial management in the best of times. Even then, its bond is premium grade. The entire bond rating business is rubbish and should undergo a thorough cleanup.

The crime committed in the name of bond ratings is severely destructive to the growth aspirations of nations outside of North America and Europe. It is a weapon that has been liberally used as a part of the neo-colonial project to keep countries down. The classification of countries into first-world and third-world countries is meant to indicate the interest regimes that they will be forced to operate under.

Getting a global ratings body that is divorced from any one country is more important than finding a global reserve currency other than the dollar.

This weapon needs to be dismantled, but it needs the cooperation of several people to achieve it.

The name "chicken" has its origins in a game in which two drivers drive toward each other on a collision course: one must swerve, or both may die in the crash, but if one driver swerves and the other does not, the one who swerved will be called a "chicken", meaning a coward.

Source: Wikipedia

On the 2nd April 2025, Trump declared “Liberation Day” for America and set a tariff of 154% on China. Think of anything you buy and then multiply its price by 1.5. Would you still buy it?

None of the businesses in the US think that the people of America would, either. This is tantamount to an embargo.

America buys $1 trillion worth of goods from China. The people of the United States would have to pay $1.5 trillion to the American government to buy those same goods, now.

So what has happened?

After Trump announced expansive tariffs in early April, ocean container bookings from China to the United States dropped 60% — and stayed there, said Ryan Petersen, founder and CEO of Flexport, a San Francisco company that helps companies ship cargo around the world. With orders down, ocean carriers have reduced their capacity by cancelling 25% of their sailings, Flexport said.

Source: PBS

US businesses have stopped buying Chinese goods. Shipments from China have declined.

Why has this not shown up at stores? The one-word answer is Inventory.

Every company maintains some inventory of stock for their business. They are using up that inventory to cater to the demand at the moment. Most businesses maintain 1-3 months of inventory. As the stock depletes, you will begin to see a lack of availability of certain products that were exclusively supplied by China. In other cases, shortages will be felt. Whatever supply materialises will get bought pretty quickly.

The summer of 2025 will be interesting in the US, to say the least.

Moving Production

The Trump administration assumed that… Well, I really do not know what they assumed. Here are the cases that could have played out.

- Trump puts up a tariff, and China comes begging to the US and cuts a deal

- Trump puts up a tariff and China says, pppffff.

There is no world where production capacity jumps continents in a matter of weeks. Not to mention, with the Trump administration chasing away all of the illegal immigrants (and some legal ones too), who is going to work at these factories?

Source: PIB

India sought to bring production to the country; It rolled out the Production Linked Incentive (PLI) scheme in 2020. In 5 years, that initiative has resulted in $150 billion in production. Apple alone produced $14 billion worth of goods in India between 2023-24.

Easily between a third and a half of that PLI achievement is thanks to one company.

It is hard to get companies to move production, and the sorts of incentives that must be offered are tremendous. Not to mention, the reason Apple shifted was because of the geopolitical tensions between China and the US. In its absence, I doubt any amount of incentivisation would have helped.

Trump is using the stick rather than the carrot. The outcomes are going to be catastrophic.

Trump likes to say every country in the world has been ripping off America. You make nothing, and you are still the richest country in the world. I would highly doubt that assertion.

Games nations play

Source: Voronoi

Barring some 20 countries, China is the largest trading partner to almost all of the world. If they have excess goods, they have plenty of markets to sell them into. The US, on the other hand, needs to fill a trillion-dollar gap in a quarter.

Who should be worried?

Chinese leader Xi Jinping has not spoken to US President Donald Trump on the phone recently, Beijing said Monday, reiterating that no talks are taking place between the two countries to resolve their tariff war.

The statement from a Chinese Ministry of Foreign Affairs spokesperson is an outright rejection of Trump’s claim in an interview with Time magazine last week that Xi had called him, as the world’s two largest economies remain locked in a dispute over sky-high trade levies.

Source: CNN

China has been talking tough. They have issues warning and told the world that they will not kneel down.

It is a message to Trump, telling him what he should be considering.

Since March, companies and individuals alike have been hoarding to beat the tariffs. Despite that…

The U.S. economy contracted 0.3% in the first quarter of 2025, the first negative reading since 2022, according to an initial measurement released Wednesday by the Commerce Department.

Source: CNBC

If there is a storm coming, you buy only what is necessary. You do not get your home redesigned. Which do you think costs more - necessities or a redesign?

Hence the contraction. Americans have started tightening their belts.

Trump has offered an excellent opportunity to embarrass the US. China will not pass up on it. They will make the most of it.

How the Game Ends

In all likelihood US will have to eat the bullet.

They may find a way around this whole tariff situation by importing goods from China via Canada or some such subterfuge. That will be a temporary fix. A fix that may have to last 4 years to soothe the ego of the greatest business mogul in the world.

The longer this lasts, the worse off the US will come out of this.

I knew that the upper class in the US entered a war with the British because Britain did not want further westward expansion. At the time, the British were engaged in a war with Spain. They did not want other expenses.

George Washington and his ilk were not satisfied with the land they had appropriated and determined that the only way to continue westward was to declare independence from the British. What I did not know was, from that point in 1770 to this day, the American story is one of class struggles where the lower class has been fighting the upper class constantly for their basic rights.

The State, on the other hand, has constantly used legal violence, also known as the police, to clamp down on those who wished to extinguish these class divides.

The book does an incredible job of highlighting the oppression of the lower classes, time and again, through the use of patriotism as a tool to subdue those who saw through the system.

Industrial Revolution

The Industrial Revolution that was embraced by the Americans went a long way towards reducing the value of the worker and making them easily replaceable. When Benjamin Franklin was growing up in the American colonies, it was normal for craftspersons to go through a period of apprenticeship to learn the skill. This was almost like slavery and would last up to a decade. Franklin himself ran away from his apprenticeship.

Once you finished your apprenticeship, you became a journeyman worker. In effect, you did exactly what an apprentice did, but got paid for it. Hopefully, at some point, you became a master and set up your own shop. This ability to rise up the ranks was disrupted by the Industrial Revolution.

In the book “Blood in the Machine”, Brian Merchant gives us the history of the Luddite movement and how the people who rose against the machine were not against technology at all. They were against the specific model of industrialisation that replaced specialisation with generalisation with the specific intent to make each person replaceable.

Over the centuries, this first caused the rise of the blue-collar workers in the early 1900s. These workers required little education and were usually trained on the job to do work that was skills-oriented. During the world wars and after them, these people drove the rise of the American manufacturing machine and had respectable work. They earned decent wages and were able to afford a respectable lifestyle. The decimation of Europe enabled this in no small part.

As we put more decades between the Second World War, we find these workers’ wages stagnating.

Source: Mother Jones

A person working a blue-collar job in 1971 earned more than they do today!

On the one hand, these workers were made replaceable by mechanising most of the tasks and eliminating skills entirely, but on the other, even those jobs were sent overseas starting in the 1980s. This practice came to be known as outsourcing. Simply put, as long as you could condense a piece of work into a manual, you could send it anywhere you wished.

The decline from the late 1970s in the graph above is an indication of the demand-supply gap resulting from outsourcing.

Like that, the blue-collar workers became the poorest in the economy. They were robbed of their skills and given work that could be shipped anywhere by anyone.

New Class Rises

With the rise of the blue-collar worker, there was the rise of another type of worker - the white collar worker. There were a large number of people who were entering the workforce and working in the areas of management, and to put it broadly, knowledge work. They did not work in factories but on a table, most often with paper and pen.

Over the second half of the 20th century, this class of work became aspirational. People were told they needed to get an education, get a white-collar job and this would be the way out of poverty.

Source: Knowable Magazine

Hence, as the wages in the first graph fall, you can see the student loans rise simultaneously. They helped those who were in poverty, also fall into debt.

At the same time, not-for-profit universities saw their endowments balloon.

Source: Harvard Crimson

And the Fall

After having driven several generations into the universities, asking them to get a degree to move up socially, another threat looms. AI will again reset the class structure and the degrees of wealth concentration.

If the Industrial Revolution was about going after the poor and exploiting them. The AI revolution is about going after the middle class and exploiting them.

The only person to have appropriately described the class system of the 20th century, which is accessible to a layman, is George Carlin. He said —

"Now to balance the scale, I’d like to talk about some things that bring us together, things that point out our similarities instead of our differences cause that’s all you ever hear about in this country is our differences.

That’s all the media and the politicians are ever talking about: the things that separate us, things that make us different from one another. That’s the way the ruling class operates in any society: they try to divide the rest of the people; they keep the lower and the middle classes fighting with each other so that they, the rich, can run off with all the fucking money.

Fairly simple thing… happens to work.

You know, anything different, that’s what they’re gonna talk about: race, religion, ethnic and national background, jobs, income, education, social status, sexuality, anything they can do to keep us fighting with each other so that they can keep going to the bank.

You know how I describe the economic and social classes in this country? The upper class keeps all of the money, pays none of the taxes. The middle class pays all of the taxes, does all of the work. The poor are there just to scare the shit out of the middle class… keep 'em showing up at those jobs."

Source: Youtube

The white collar job existed because it required unique thinking and was not easily replaceable. The AI paradigm is looking to make this job replaceable as well.

The industrialists of the early 20th century made the factory jobs dumb and replaceable and embarked on greater value capture for themselves. The tech titans of the 21st century wish to make white collar jobs dumb and replaceable and embark on value capture for themselves. They call it Agentic AI.

An AI agent for customer service, for instance, could operate beyond simple question-answering. With agentic AI, it could check a user’s outstanding balance and recommend which accounts could pay it off — all while waiting for the user to make a decision so it could complete the transaction accordingly when prompted.

Agentic AI systems ingest vast amounts of data from multiple data sources and third-party applications to independently analyze challenges, develop strategies and execute tasks. Businesses are implementing agentic AI to personalize customer service, streamline software development and even facilitate patient interactions.

Source: Nvidia

So the accountant’s job - gone!

Frederick Winslow Taylor, who is described as a mechanical engineer on Wikipedia, while that is true, he was the son of a Princeton-educated lawyer who could afford to drop out of Harvard to pursue pattern making. This man, under the innocent-sounding name of ‘Time and Motion study’, created a tool to turn factory workers into automatons whose every move was to be measured.

Today, under the excuse of averting cyberattacks and improving employee workflow, employee monitoring tools track and monitor not only what the employee is doing but also their eye movements using the cameras on the computer.

Taylor reduced the blue-collar worker into a cog. The modern monitoring tools are going to do the same to white-collar workers. Not only that their every movement is being tracked to train AI.

What happens to Society

What would this do to society? You will have the poor and the slightly less poor looking up at the extravagantly rich. How do you suppose this will play out?

When the poor were a smaller subset of society, police were routinely used to put them down. What happens when that number grows? What happens when the Police are a part of that section of society?

The Trump Presidency seems to be a step function—a step down.

A week ago, I wrote about the dollar and deficit being two sides of the same coin. Trump went after trade and found out very quickly how fragile the dollar is. In international relationships, a currency does not get hit by a sell-off on the dollar, but on the instrument used to hold the dollar - the bond.

The US Treasury bonds are the most preferred way for countries to hold dollars because they provide a return on the asset held.

When America buys stuff from China, they pay China in US dollars. China could ask for it to be converted to Yuan and transferred to China but China will need US dollars to buy petroleum. Hence they leave that money parked in a NOSTRO account at the US Federal Bank. That money often is far greater than what China needs and hence they end up investing that money in US Treasury Bonds to get some returns on it rather than sit there depreciating. This is the source of the infinite cash that seems to be available to the US for the debt that they issue.

Source

When you antagonise those who hold your debt, they no longer have any reason to hold on to it.

The USA spent a trillion dollars to kill ONE man who was sitting in an ally’s territory.

If China has to write off $1 trillion to permanently and completely decimate the American currency hegemony, do you think they will flinch? Is it really too big a price to pay?

It is a pawn sitting there to be sacrificed if it can deliver the goods!

Ultimately…

Money is imaginary. It is our imagination that gives it value! There is nothing real about it. It is not like the resources that we dig out of the ground or the food that we grow and eat.

If a country were to face 10,000% inflation, the money would not be worth the paper it is printed on.

Source

The US has 8 trillion dollars in debt owed by foreign nations. The rest of its debts are owed to Americans.

Source: US Treasury

The market fluctuates with the mood of the participants. The bonds pay a constant yield no matter what is happening in the world. At least so long as the country is liquid and not bankrupt.

The US bond is seen as a safe asset since the country is not expected to default on its bonds. Therefore, an inverse relationship exists between the market and the bond yield. When the markets rise, demand for the bond goes down, and yield rises. When the markets fall, demand for the bonds goes up, and the yield falls.

This gives the US unique powers. It can foment war, cause uncertainty and benefit from it. I am sure this was part of the Trump calculus.

There is a shared fiction that the USD is a great store of value. Everyone agrees with this fiction because they are paid in that currency. This also allows the US to engage in quantitative easing and print currency several times each year to finance itself. They call it the debt ceiling, and politicians use it as a means of engaging in one-upmanship every year.

But - In the absence of a deficit, who needs the dollar? The demand for the dollar will fall. If our books are even and I don’t have extra dollars to pay for other stuff, I would insist on paying with my own currency rather than borrowing dollars to buy petrol or any other thing.

The fiction will begin to unravel.

Source

But when a quarter of your debt is held by foreign countries you seek to antagonise, they drop your debt on the market.

They are making a deal, to screw you!

The Cause

Source: CNBC

China and Japan started selling the US bonds, causing the yield to balloon. For the first time in a long time, the markets were falling, and so was the demand for the US bond, and yields were rising.

The Effect

Source: Google Finance

Fun Fact - In the next 18 months, the US has to refinance another $8 trillion of debt, and all of that debt would then have to be issued at a higher interest rate! Do the math, half a per cent on $8 trillion, that is $40 billion more in interest payments. On a 10-year bond, it implies an increase of $400 billion in interest payments.

All of the “savings” that the Trump administration has accomplished through the myriad firings would amount to nothing compared to the rise in interest.

Pump the Brakes

So, you had Trump suddenly put the brakes on the whole tariff plan last week. The falling demand for the bonds was not anticipated. It puts the US in a very sticky position. Further, if this increase goes unchecked, it can spiral out of control, not to mention it would be in the interest of a country like China to let it spiral by providing some more impetus to the market.

So while Trump was willing to let the markets gyrate by 1000s of points, a 10% move on the bond yield took the wind out of his sails.

On the one hand, you can argue that he is using tariffs as a negotiating tactic and pushing allies and foes alike to see how far he can go. But on the other hand, he is also testing the strength of the very foundations of the US economy. Allies and foes alike can kick at that foundation and see how sturdy it really is!

This has the potential to go extremely awry for the US.

Bond has the license to kill, whether at MI6 or in the market.

I remember standing with my dad at a store designated by the Delhi Milk Scheme (DMS) to distribute milk and buying half a litre per person in the household. You had to show the ration card as proof of the number of individuals in the household.

India unleashed the white revolution from a small town in Gujarat called Anand. A cooperative called the Gujarat Cooperative Milk Marketing Federation created a brand, Anand Milk Union Limited or AMUL. AMUL, helmed by Verghese Kurian, ushered in an era of milk sufficiency in India.

Having witnessed this success, the Government of India decided that organising Indian farmers into cooperatives will help unleash the latent potential within the Indian agri-ecosystem and generate greater wealth for those living in Rural India.

The farmer producer organisations (FPO) were born.

The FPO is a company where the farmers who supply to the FPO are shareholders. They are supposed to have board meetings, et al., like any company would.

Now, before we even go into the state of the FPO sector, problems surface. The government of India reports that there are 8875 FPOs as of Aug 2024. But the government’s figures are based on how many companies have availed of government programs.

How many of you have availed of every government program you are eligible for?

There is another report by the Tata Cornell Institute in October 2024. They ran a search on the MCA database.

The table below highlights the results of the search query for 2003-2024 and 2003-2021. The results identified 45,097 FPOs, and once we removed producer companies involved in nonagricultural activities, 44,460 producer companies registered were identified. 18,723 of them contain the term ‘farmer’ in 2024.

Source: Tata Cornell Institute

So, the jury is still out. There is no source of truth about the number of FPOs in the country.

If you do not even know how to count, what are the odds you would know how to help them?

If you asked 10 organisations how many startups exist in India, you would get approximately similar answers (+/-10%). It shows the degree of understanding of the industry.

Across the board, there is a poor understanding of the FPO market on the whole.

Even though NGOs do not understand how to run a business, they are the only ones attempting to aid FPOs and their support may not be entirely useful.

FPOs are set up in villages to aggregate farmers. Most of these farmers are smallholders. The FPO is supposed to aggregate this produce and, therefore, have better negotiation power in the market. The larger volume also allows them to negotiate directly with companies and disintermediate the supply chain.

Also, every farmer who is a part of the FPO is a proportionate shareholder in the company.

Now, to a person immersed in business, this would sound simple.

Recently, at an event, I heard a question: “What if the FPO ends up exploiting the farmer?”

But the farmer has a proportionate shareholding in the organisation. It would be akin to taking money from one pocket and putting it in another. NGOs tend to approach every problem through an equity lens and do not understand businesses well enough. This kind of support is detrimental, if anything.

Different businesses have different growth models. Milk is homogenous and can be combined to deliver scale, not all tomatoes are the same size and grade.

The scaling model that worked for milk was aided by the nature of the product itself. AMUL was able to source the same product from lacs of farmers and throw it all together and pasturise it because of the nature of the product. The same may not be possible for every farm produce.

The growth model for different products would be different. In many cases, these have to be discovered. This may require some process innovation and business innovation.

Who delivers it?

Success at scale comes down to having the right processes and systems. Professionals understand how to establish them. They seem to be completely absent from the FPO landscape.

Verghese Kurian of AMUL fame was a mechanical engineer from the University of Michigan. His education was critical in helping set up the automated milk processing units that made the scale of AMUL possible. More broadly, high-calibre talent was necessary for AMUL to succeed.

The CEOs, if such a position even exists at many of the FPOs, are not of such calibre. Often, one of the farmers is asked to serve in the position.

All of the IIMs in India have been around since the 1970s. Have you wondered why they suddenly became cool in the 1990s?

Family-run businesses such as Tata, Birla, Dabur, etc., went out looking for talent to bring into the businesses. They hired “professionals”. Professional CEOs, CMOs, and other executive functions. This was triggered by Indian liberalisation. Business success was no longer a function of who they knew and how many licenses were to be issued. They needed to compete.

15 years ago, if you had gone looking for an MBA program on entrepreneurship in India, you could have counted them off on one hand. Today, every major university and even non-educational actors offer deep programs on entrepreneurship.

Of course, Flipkart’s ability to build a “not-for-profit” aided the cause significantly.

The excitement, interest and organisation of knowledge played a crucial role in the successful growth of the startup ecosystem. It created an influx of talent into the ecosystem.

Bharat Matrimony was a startup in the late 90s, startups were not cool! They were made cool by the action of several actors. We need to make FPOs cool by proselytising their importance to the Indian economy and the rural landscape. We need more professionals to enter the ecosystem.

FPOs should be run with the aim of wealth creation for farmers, not poverty alleviation.

There is a need to bring business rigour into FPOs. They need to see themselves as more than the sum of all the crops that they produce. It is impossible for anyone to realise their potential unless they understand what can be achieved.

We need to celebrate FPOs that have made it big. To highlight the successes and the possibilities. The news media needs to be encouraged to cover this segment more significantly.

There is also a potential need to engage with successful FPOs and help them story-tell so more attention can be brought to this industry.

The talent will follow, and so will success.

Few people understand long-arc narratives. The Roman Empire did not fall in a day; in the long arc, it disappeared with only some buildings left behind to show for it.

A country that does not respect intellectual property, one that is tremendously protective of its industry, does not allow too many imports and has a tax rate of 90%. This was the USA in 1900. Before the 2 world wars changed the character of the country. The debt that the US had provided to the Europeans to kill each other around the world formed the bedrock for the negotiations after the war.

This led to the capitulation by Keynes at Bretton Woods. The IMF and the World Bank were located in the US and London lost its crown as the financial heart of the world.

In the post-war years, America manufactured everything at factories built to supply the war effort. America was prospering, but its people were dying. By the 1960s, a considerable people engaged in manufacturing were dying of cancer. This led to globalisation, as I had explained in an earlier blog.

America started outsourcing production. They bought everything from everyone, so they insisted on paying in US dollars. After the Yom Kippur war, they convinced the Saudis to accept payment for crude oil in US dollars.

There was a time that petrol could only be bought with the dollar, and this established the dollar hegemony. Today, a whole bunch of countries buy petrol in currencies other than the dollar, and the dollar is used only out of inertia and expedience.

Let us say I make a bunch of shit. Capitalism says make more shit. But if I make more shit, I need somebody who will consume that shit. This is where America comes in. The country consumes like there is no tomorrow. The country invented obsolescence. The country produces drugs, guns and bombs. Oh, and also global financial disasters. Everything else comes from outside the country.

The tariffs make it far more expensive for Americans to consume. In the last 5 years, the people of the USA have already been fleeced in the name of the pandemic and the Ukraine war. They are going to get fleeced some more in the name of tariffs.

The demand for the dollar exists today because there is a trade deficit that exists with the US. That dollar gets used up to buy other things, such as oil, because a surplus exists. Not because people trust America, as Americans would like to believe.

The world is making too much stuff. That stuff will not get sold unless someone buys. Americans are the only ones who would, but they have nothing other than the USD to buy it with.

There is a shared fiction that the USD is a great store of value. Everyone agrees with this fiction because they are paid in that currency. This also allows the US to engage in quantitative easing and print currency several times each year to finance itself. They call it the debt ceiling, and politicians use it as a means of engaging in oneupmanship every year.

But - In the absence of a deficit, who needs the dollar? The demand for the dollar will fall. If our books are even and I don’t have extra dollars to pay for other stuff, I would insist to pay with a currency of my own rather than borrow dollars to buy petrol or any other thing.

The fiction will begin to unravel.

Not only that, the way Trump is playing this, he has no allies. NONE. Not a single country would want to defend the dollar.

This is not a trade war; it is a currency war, and Donald Trump is painting a big target on the greenback. His actions ensure that everyone has one common enemy.

Trump said only the weak will fail. The weak are those who make nothing. Exporting a financial disaster does not count as making something.

Best climate President

On the flip side, I would have never thought that Donald Trump would be president to usher in an era of de-growth. His actions are going to result in a shift in the consumption base. It will reduce the flow of trade and goods across the globe. At least the movement across the two massive oceans Atlantic and Pacific, are set to fall. This will reduce the overall carbon footprint in a significant way.

Additionally, if all of the production moves back to the US, finally, those responsible for the consumption will pay the environmental price. The rivers and lakes in the US will turn acidic and kill entire ecosystems on the continent. At last, the Americans will be able to see the effects of their consumption and perhaps introspect a little.

Either way, Best Climate President

We will no longer need COP. Americans will have to negotiate with themselves. It will simply become a class war within a society. The rich living is pristine habitats in upstate New York and the not-so-rich sinking in the effluents from factories in Pennsylvania.

Apart from Diplomacy, which can often fail, the menu looks like a bag of sticks.

But there are carrots too!

Almost all of those carrots come in the form of financial backing. Financial backing to the UN, the WTO, the WHO, the NATO, and the lowest on that list is USAID.

• You know how all of Europe was blind to atrocities being committed in Gaza - NATO

• You know how American tariffs are totally fine; but when others do it, it is protectionism - WTO

• You know how the war against the Weapons of Mass Destruction in Iraq got approved - UN

The only weapon of mass destruction that they found was the profound ignorance of the American populace.

No questions were ever asked. Why?

Why USAID?

America is a war-loving country

• 1950 - 1953 - Korean War

• 1950 - 1954 - Puerto Rico

• 1953 - Iranian Coup d’etat

• 1955 - 1975 - Vietnam War

• 1958 - Lebanon Crisis

• 1958 - Taiwan Straights Crisis

• 1960 - 1965 - Congo Crisis

• 1961 - Bay of Pigs Cuba

It was in this environment that John F Kennedy walked into the presidency in January 1961. The Foreign Assistance Act was passed by Congress in September 1961 and through an executive order, the USAID was created.

This was a carrot to dangle at the poor countries since most of the trouble seemed to be in that area. If we cannot convince them, confuse them with money. You see when you give poor people a lot of money, it distracts them greatly. Here, a lot is relative.

USAID is one of the best tools of soft power projection that the US has. It not only allows them to offer their carrot but also makes it possible for them to impose their morals on others.

During the first Trump presidency, organisations in Africa that were supported by USAID were forbidden from performing abortions!

Whenever there is a vacuum someone fills it. No guesses for who will fill it - China.

You can take the White Boy out of Apartheid…

Elon Musk has been given a department that has all power and no responsibility. I think the objective is to create smoke and mirrors to further the cause of SpaceX.

But this beneficiary of Apartheid South Africa took a look at the government and the first thing that struck him was an agency that was providing aid to poor countries, most of them with black and brown people.

His department which is called DOGE of Department of Government Efficiency went after USAID.

If you have to look for inefficiency in the US government, the first place you should look would be the Department of Defense. With over 750 bases across 80 countries, the department blows up $1 trillion every year. Not to mention, they advocate for another half a trillion to be shipped overseas to further proxy wars in a variety of regions.

But there is one more thing that the Department of Defense does. They launch a lot of satellites! Given that NASA does not have a single space-faring vehicle, where do all the contracts go?

SpaceX!

So USAID with a budget of $40 billion is eliminated; which by the way is less than what Musk paid for the dumpster fire called X.

Chesterton’s Fence

G.K. Chesterton was an English writer who was also known as a Christian Apologist. He wrote this in a book to justify Christianity against reforms.

In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, "I don't see the use of this; let us clear it away." To which the more intelligent type of reformer will do well to answer: "If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."

Source: Wikipedia

But it applies quite widely in the real world. Before dismantling something ask yourself why was it put there in the first place.

And Musk does not have a big-picture understanding. He claims to be first principles guy; I think he is a one-principle guy. He is in effect running DOGGI Department of God-awful Government Inefficiency.

Hard Power

Trump just froze funding for UNHCR. What goes next?

Once the carrots disappear, it becomes a lot more expensive to get people to do your bidding.

Once you abdicate the soft power, all you are left with is the hard power.

You can wage war. But war is a far more expensive option compared to the small amount of aid that was being distributed by the agency.

So there are only two scenarios that are likely to play out

Scenario 1

The US enters into more wars with countries that are disproportionately smaller. They try to decapitate countries that may be comparable in size using the CIA. In essence, they become the terrorists of the world. As an appropriate kickoff, Trump met the greatest terrorists in the world, Nut and Yahoo. He also proposed to adopt his genocide project in Gaza.

Scenario 2

Alternately, there is a saying in Hindi, ‘darzee jab tai jeeta hai, seeta hai’ (As long as a tailor lives, he stitches). Anyone can throw a real estate project Trump’s way and make him supremely happy. Looks like Nut and Yahoo gave him Gaza to redevelop.

This is the sum total of US foreign policy under Trump.

Constraints are a great way to focus your attention and force you to find new ways.

In 2012, Fei-Fei Li was working on building an algorithm that could identify pictures. She downloaded a million pictures under various categories to train the neural network. The breakthrough she made at Stanford formed the basis for many of the AI technologies that are available today. Many of the researchers on this team were later poached by a not-for-profit called OpenAI.

With no shortage of money, they started brute-force development of models. Supplying more and more parameters alongside greater processing power; they built ChatGPT.

Last year, the Biden administration placed a ban on AI chip exports to China. This restriction on computing was a beautiful constraint.

Denied the most powerful chips thought needed to create state-of-the-art AI models, DeepSeek pulled off some engineering master strokes that allowed the researchers to do more with less. The DeepSeek-V3 and DeepSeek-R1 models the company recently released achieved state-of-the-art performance in benchmark tests and cost much less time and money to train and operate than comparable models.

And the cherry on top: The company’s researchers showed their work—they explained the breakthroughs in research papers and open-sourced the models so others can use them to make their own models and agents.

The main reason DeepSeek had to do more with less is that the Biden administration put out a series of restrictions on chip exports saying that U.S. chipmakers such as Nvidia couldn’t ship the most powerful GPUs (graphics processing units, the go-to chip for training AIs) to countries outside the U.S.

Source: Fast Company

OpenAI has been running a blank cheque company with no constraints in terms of capital, or resources available. With investment from Microsoft, they had all of the data centre capacity as well as capital on the ready. Hence they built a model that maps and activates hundreds of billions of parameters to answer any question.

This is a bit like reading every book on the planet before answering the question “How do you make tea?”

Deepseek has taken an approach where they have mapped out all of these parameters but have created an architecture called the Mixture of Experts (MOE). Each expert operates in a small area and uses perhaps 10-30 billion parameters to answer a question. This makes the model radically more efficient.

Given that it is from China, I can hear the argument coming - It’s just the entire population of China hired to answer every question we toss at it. But, the model is open source. Anybody can go check out the model and build on top of it.

Source: Deepseek

Processor War

Nvidia has been the darling of the stock market because of the huge demand that AI has laid on its GPUs. The stock was trading at $5 in 2020 and at its peak was trading at almost $150 a few weeks ago.

Since OpenAI had taken a brute-force approach, it seemed the only way to get better at AI would involve adding processing capacity.

There was a processor war underway with companies trying to secure Nvidia’s processor output. Also, nuclear plants that had been shut down for years were being brought back online to cater to the vast energy needs of these models.

DeepSeek said in a research paper that its V3 model cost a mere $5.576 million to train. By comparison, OpenAI CEO Sam Altman said that the cost to train its GPT-4 model was more than $100 million.

Source: Fast Company

This is at the heart of Nvidia’s gut-wrenching downfall. If you do not need as much capacity, the investment declines and the future prospects look dim.

Only Way

In 2023, Sam Altman took a world tour to tell investors and policymakers across the world that there was no point in trying to build a similar product. He told them to “forget it”. All of the investors in India meekly complied.

He also wanted the area to be heavily regulated and a body such as the IAEA to be created to potentially kill any possible competition that could arise from any corner of the world.

The Chinese did not care what Sam Altman had to say. They not only produced a comparable product in much less time but also made it radically more efficient.

I had written at the time - building Amazon in 1995 was hard; today, monkeys can probably develop an e-commerce site. The barriers to entry erode away over time.

He wanted to make it seem that this was the only way, of course, it was not.

Open

The most radical part of this entire saga is that OpenAI is not open which Deepseek is.

Unlike its Chinese counterpart, OpenAI doesn’t disclose the underlying “weights” of its models, which determine how the AI processes information. It also has declined to make public the full “chains of thought” produced by its own reasoning models.

Source: WIRED

Americans like to tout themselves as the purveyors of freedom. They would like the rest of the world to believe that they are the only ones to operate at the cutting edge of technology.

This news certainly put a spade in the works. It makes it obvious that the reality is far different.

First of all, this whole AI business has delivered very little real-world value. Hyping it up to this extent was not needed. Now that this regurgitation technology has been hyped up to this extent, you need to be able to uphold the bar that has been set. On that front, this announcement has highlighted the spectacular failure of Big American Tech.

This coming a week after Trump’s Inauguration almost seems orchestrated. You have a president announcing imperialist ambitions and a departure from all the values Americans profess (not live by). Immediately after, their technology supremacy is questioned blatantly.

Helping the Oligarchs

China’s greatest contribution to the world has been helping its oligarchs rob American jobs. First, the manufacturing jobs were lost and now writing and coding jobs will be lost to AI. Deepseek will only help hasten this.

In reality, the discontented middle America exists because of this strategy to outsource. Having done that for decades, today, China is in a position where it produces for most of the world.

Source: UN

Chinese manufacturing has been growing by leaps and bounds while at the same time, US manufacturing has remained stunted and would have gone into inexorable decline but for the pandemic which made them realise their shortcomings and resulted in investments in that area. Earlier this year, I wrote a blog about outsourcing titled Why Globalisation Happened?, arguing that in the aftermath of the publication of Silent Spring, it was no longer possible to ignore the destruction that manufacturing brought along with it.

When you make everything, you know what it takes to make them. Most of us in cities would be incapable of growing the most rudimentary crop. We just do not know what goes into it.

China has been manufacturing for decades and have been working on manufacturing efficiency. As a consequence, they have had to source everything that is needed to manufacture those products. They began to corner the inputs required.

Electronics manufacturing uses rare earth metals. The extraction of these metals is extremely destructive to the environment. Rare earth metals are called “rare” not because they are rare, but because their concentration in the ore is extremely low. The lower the concentration, the greater the processing.

The value of any metal is proportional to the amount of ore you need to extract to generate the same quantity of metal.

Most geopolitical “strategists” condemn the abdication of the rare earth supply chain by the West. The thing is, they wanted to save their environment. How would you like it if Lake Tahoe was a toxic sludge of red goop?

China has no such concerns about its rivers and water bodies, and hence it was convenient to let them handle all the processing. Since they were the only ones processing, they were the ones buying it. Hence, they cornered all the sources!

Source: AT Minerals

To such as extent that today they practically own the supply chain.

Source: AT Minerals

Given that they control two-thirds of the key mineral supply chain, you would suppose that they have quite a bit of leverage.

Tit for Tat

America uses every multilateral organisation as a rubber-stamp. These organisations are merely meant to provide legitimacy to the illegal activities that the US engages in. The war to find the weapons of mass destruction in Iraq is one example in a long list of crimes. Currently, they are quite proactively supporting a genocide in Gaza, in contravention to every legal and moral tenet in the world.

In continuation with this kind of behaviour, America decided to bite the hand that feeds. Specifically, that of the Chinese.

US decided to ban the export of AI chips to China. Companies were decreed not to sell any advanced chips to China. There is absolutely no grounds for this ban and in a normal world, the countries that produce and export these chips would be well within their rights to ask, why?

In the world we live in, America claims that this is for the sake of “national security”. Also, they have military bases in all the countries that produce these chips.

The Americans just forgot to ask where are all the inputs coming from? This tends to happen when you are not in the business of making something.

Among the materials banned from export were the metals gallium, antimony and germanium, China’s commerce ministry said in a statement that cited “national security” concerns.

Exports of graphite, another component in semiconductors, would be subject to “stricter reviews of end-users and end-uses”, the ministry said. The curbs strengthen enforcement of existing limits on critical minerals exports that Beijing began rolling out last year, but apply only to the US market.

“To safeguard national security interests and fulfil international obligations such as non-proliferation, China has decided to strengthen export controls on relevant dual-use items to the United States,” the ministry said.

Gallium and germanium are used in semiconductors, while germanium is also used in infrared technology, fibre optic cables and solar cells. Antimony is used in bullets and other weaponry, while graphite is the largest component by volume of electric vehicle batteries.

Source: Guardian

China Flexes

Part of the reason to do this now is to create a bargaining chip when Trump walks into office.

Another way of looking at it would be - China is close to Russia; Russia is close to Iran. By cutting off the supply of rare earth metals. China will deeply curtail the US capacity to build new bombs, since all of them depend on semiconductors for guidance. This would leave both Ukraine and Israel rummaging for weapons. Of course, the US will try to route shipments through other countries to itself, but given that semiconductor production is concentrated in a small number of countries, this would prove to be challenging.

During the Vietnam War 9 out of 10 bombs dropped by the US did not get their intended targets, this contributed to their loss. The company that solved this problem was Texas Instruments. Quite possibly the only reason they are still in business.

Today, 1 out of 10 land off target thanks to silicon. Remove the silicon, and they would be back to throwing chemicals in the dark.

If there was any doubt, China is making it very clear;

China on Thursday singled out dozens of companies from the United States, including Raytheon, Boeing and Lockheed Martin, in a series of punitive trade measures that could ratchet up tensions between the two superpowers.

With weeks to go before President-elect Donald J. Trump takes the office with a promise to impose new tariffs and sanctions on China, Beijing is once again showing it is ready to strike back.

China’s Ministry of Commerce said it added 28 companies to an export control list to “safeguard national security and interests.” It also banned the export of so-called dual-use items, which have both civilian and military applications, to those companies. And it placed 10 companies on what it calls an “unreliable entities list” related to the sale of arms to Taiwan, preventing them from doing any business in China and prohibiting their executives from entering or living in the country.

Source: New York Times

In 2023, there was a pretty long writer’s strike. The reason your Netflix feed in 2024 was filled with Spanish and Korean shows was because, when such systemic shocks occur, it takes a while for the impact to become apparent.

China has cut off the US. Between the transition and Christmas and H1B controversy, the news has been lost. But we will see the effects, 6 to 12 months from now.

Also, given that the entire western media is a propaganda machine, it is not in their best interest to highlight the pain until it becomes unavoidable.

How this play out over the next couple of years could decide if a multipolar world emerges out of it, OR if men and their bruised egos take the world to war.

Courts need cases. Say, keeping the case going generated revenues.

Then courts would be selling gold membership for attorneys who file 10 or more cases in a month. Attorneys would be trying to convince people to file cases where none exist. Further, there would be an attempt to keep cases going indefinitely in court and nothing resembling justice would ever be delivered.

Thankfully, this is not the case.

Courts are not run for profit.

There are things in society that should not be for-profit. Education and healthcare are amongst those. The for-profit nature of education cloaked in trusts and societies that are “in principle” non-profits have resulted in price inflation that is crazy. So much so that today, a kindergarten education in India costs as much as I paid for my engineering 20 years ago.

Similarly, I am no longer comfortable visiting any doctor. I do not know if they are diagnosing me right, or prescribing medicines to meet the sales target set by some Pharma company. When you start to view subject-matter experts as mere salespeople, out to make a buck, you no longer want their expertise.

Henry VIII wanted a male heir and asked the pope to annul his marriage with Catherine of Aragon in 1527. The Pope was getting quite a bit of money from the Spaniards and refused to annul the marriage. To overcome this problem, he created the Church of England. This Church over the course of the next few decades underwent “reformation” and became Protestant.

Thanks to the narcissism of small difference, the kind America is experiencing today, the following century was beset with wars fought between the Catholics and the Protestants. Incidentally, these wars were the reason the people from the Island a.k.a. England, got aboard the Mayflower to America.

By the 1700s, there was the Jacobite Rebellion. The Catholics were still fighting the Protestants. While nobody cared for the widows of these wars, a couple of Scots were considering the fate of widows of clergymen.

“Robert Wallace was a hard drinker as well as a mathematical prodigy, who loved to knock back claret with his bibulous buddies at the Rankenian Club, which met in what used to be Ranken’s Inn.ag Alexander Webster’s nickname was Bonum Magnum; it was said to be ‘hardly in the power of liquor to affect Dr Webster’s understanding or his limbs’. Yet no one was more sober when it came to calculations of life expectancy. The plan Webster and Wallace came up with was ingenious, reflecting the fact that they were as much products of Scotland’s eighteenth-century Enlightenment as of the Calvinist Reformation that had preceded it. Rather than merely having ministers pay an annual premium, which could be used to take care of widows and orphans as and when ministers died, they argued that the premiums should be used to create a fund that could then be profitably invested. Widows and orphans would be paid out of the returns on the investment, not just the premiums themselves. ”

Excerpt From

The Ascent of Money: A Financial History of the World

Niall Ferguson

Actuarial Sciences were invented! They calculated the exact amount every minister had to pay as premium. The Scottish Minister’s Widow’s Fund was the first life insurance scheme in the world. It was run as a not-for-profit.

The fund morphed into what is today known as Scottish Widows, which is owned by the Lloyd’s Banking group today.

Insurance is not a business to profit from. You would be hard-pressed to find a not-for-profit insurance company today.

When forced to sell insurance, you are only selling fear coupled with a promise. But when you renege on that promise, things can go awry.

Last week, the CEO of UnitedHealthcare Brian Thompson was gunned down in New York. A manhunt is on for the killer.

The words “deny,” “defend” and “depose” were found emblazoned on the ammunition, echoing a phrase used by insurance industry critics, two law enforcement officials said Thursday.

The words were written in permanent marker, according to one of the two officials, who were not authorized to publicly discuss details of the investigation and spoke to The Associated Press on the condition of anonymity.

Source: AP News

There are a few things that you need to understand about insurance first. Millionaires and Billionaires do not go and get insurance, poor people do. Who would worry about protecting themselves from an unforeseen bill that could disrupt the house budget.

As Scott Galloway writes -

Seven years ago, I canceled all my insurance coverage — health, life, property, flood, etc. I don’t own a car, but when I did, we purchased the minimum amount required by law. This is a position of privilege (don’t cancel your health insurance), as there is no disease or property loss that would cause me financial strain. Since adopting this strategy, I’ve saved $1.4 million in premiums.

Source: No Mercy, No Malice

Insurance companies want to deliver the highest profits for their shareholders. That is not possible if they were to clear every single claim that comes their way. Sure, some of them could be an attempt at fraud, but the insurance business in and of itself is a fraud. Their strategy very simply explained by the words on the bullet.

At the same time, posts on social media have been claiming that UnitedHealthcare’s claim denial rate is the highest in the industry at 32%. This figure comes from the personal finance website Value Penguin, which said it calculated that rate from available in-network data from plans sold on the marketplace.

Source: Quartz

In the US, if you do not have insurance, and you happened to fall sick, your choice is between dying due to absence of medical care or dying trying to clear the medical debt.

On UnitedHealth Group’s Facebook post, which announced Thompson’s untimely death, more than 37,000 people posted a laughing emoji, while one commenter wrote, “I would offer thoughts and prayers but they are not covered as they are out of network.” (The comments for that post have since been turned off.) Another commenter on X wrote, “As someone covered under UnitedHealthcare, i can completely understand the actions taken.”

This lack of empathy for Thompson, and overall anger toward the healthcare system, can be seen as a measure of many Americans’ distrust of healthcare insurance companies and frustration over increasingly high costs for monthly premiums, co-pays, and access to specialists, as well as a growing list of doctor visits and tests that are not covered by insurance.

“When you shoot one man in the street it’s murder. When you kill thousands of people in hospitals by taking away their ability to get treatment, you’re an entrepreneur,” a user posted on X. Meanwhile, on Bluesky, one user joked: “My copay for thoughts and prayers is $100,000; I heard his condition was pre-existing; My ability to care was denied; My sympathy requires a referral; Submitted claim for condolences was denied.”

Source: Fast Company

No other country epitomizes, the use of healthcare to meet rapacious needs of capitalists, as much as the US does.

When you turn services that should be offered as social goods into profit seeking machines, you engage in social harm. There is a need to reconsider what should be allowed in the realms of profitable activity and what should not be.

The planet has been heating up. The temperature difference from taken from the mean in 1900 and 2024 is shown below.

Deviation from mean in 1900

Deviation from mean in 2022

Source: NASA

Source: NASA

Also, the acceleration since 1980 is striking. See what Thatcher and Reagan did to the planet. Policy can have a serious impact!

When you take water and put in on a stove, you would see vapor rising from the surface. We have the same happening on a planetary scale. Eventually, that vapor loses its energy and condenses somewhere.

Have you left a glass of cold water on the table on a hot summer day to watch water droplets condense outside the glass? Water vapor in the air, when cooled, condenses.

Air picks up vapor from the oceans. As the heat in the atmosphere increases, it picks up more and more vapor and when it reaches a colder location it dumps it instantaneously.

There is a cyclone headed for Chennai as I write this.

What a year 2024 has been! The number of countries hit by flooding is incredible. Systems carrying incredible amounts of vapor move towards land and release all of it in one go.

Here is the damage in no particular order —

Valencia - Spain

After

Before

Source: NPR

Emilia-Romagna - Italy

I knew Emilia-Romagna only because the San Marino Grand Prix was renamed Grand Prix d’Emilia-Romagna. I had no idea it referred to the region.

Source: Reuters

Crécy-la-Chapelle - France

If you drive 50 km to the east of Paris, you will cross the Marne river. An area which played a crucial role in the repulsion of the Germans during the First World War. In a region known as Seine-et-Marne rains flooded entire rural communities

Source: Reuters

Wales - UK

A hurricane swept the United Kingdom.

Let that sink in.

Source - Guardian

Jablanica - Bosnia

Yes! Go find it on the map.

Source: EuroNews

That is the Neretva River with a boat floating on it.

Source: Konjic

Neretva on any other day.

Guangdong - China

You would have heard of Guangdong only for all the manufacturing that takes places over there.

Source: CNN

Ishikawa - Japan

You have probably only heard of this name in reference to the causal diagrams introduced by Koaru Ishikawa. His parents may have hailed from the city, he himself was born and raised in Tokyo. On the other end of the island from Tokyo on the West Coast comes the city of Ishikawa.

Source: BBC

Taiwan

Was slammed by the biggest Typhoon in 30 years.

Source: Al Jazeera

India

Source: Business Standard

Published on the 12th August - This single report has the following sub-headlines

• Seven-year-old drowns in Delhi

• Rajasthan: 16 deaths due to heavy rain

• Himachal Pradesh: 288 roads closed, three dead, one missing

• Uttar Pradesh: Housing collapse in rain kills two

• Haryana: Residents flee villages, agri-fields submerged

Also, this does not include the flooding in the North East which took place in July.

Silesia - Poland

Located in south Poland bordering the Czech Republic and Slovakia, the effects of these floods were also felt in the Czech Republic.

Source: DW

USA

Most recently, Helene swept all the way from Florida right up to North Carolina. That one system alone was able to flood Florida, Georgia, South Carolina and North Carolina. It also managed to get alerts generated in Ohio and Indiana!

Source: ABC News

Apart from this you had Hurricane Francine which took out Louisiana. There was Hurricane Milton and Hurricane Debby. All of them caused a fair bit of destruction and flooding.

In addition to these there was flooding in Austria, Hungary, Luxembourg, Montenegro, Portugal, Slovakia, Ireland, Bangladesh, Kenya, Nepal, and Dubai.

The countries that pose the biggest impediment to real action on climate are the countries that feature in the list above.

In the ancient Indian epic Mahabharata contains a challenge from Krishna which has a line that goes "jab nash manush par chhata hai, pehle vivek mar jaata hai" translates to "When destruction is upon mankind, wisdom is the first to die."

80,000 people flew into Baku in November for something they call COP and spoke nonsense and returned with something they like to call a deal. That deal is non-binding and unenforceable.

In the meantime, the world is drowning.

Recently, Morgan Housel mentioned Sayre's law on his podcast -

In any dispute, the intensity of feeling is inversely proportional to the value of the issues at stake ~ Sayre's Law

This is why political disputes inside academic institutions can get far more vicious and bitter than even wars! The outcome of it would make no difference to the world.

I feel the climate conversation at COP is still reeling in this place where they feel the outcome of it makes no real difference, and hence the intense dispute rather than a willingness to find a solution.

What was needed was the ability to calculate faster and faster. After the invention of the transistor in 1948, calculations could be done at the speed of light. This dovetailed into a race to build supercomputers. This was the first computing paradigm - Computation for the sake of it.

In the 1960s and 70s, the next great leap arrived in the form of the database. Everything was turned into a database and this gave us companies like Oracle and SAP. There was so much compute available, there was a need to organise the data such that proper analysis could be performed on it.

Then came the networking paradigm, first to build at-scale networks within organisations which saw companies like CISCO rise. Then in the 90s, a protocol developed at CERN called the World Wide Web turned a DARPA project into the Internet.

The first 10 years of this millennium were spent combining the power of the database and the network to deliver connectivity and pattern identification at a scale that was never seen before. This combination made social media possible. Some entrepreneurs slapped a real-world layer on top of this to invent the sharing economy. Companies like Uber, Airbnb, Doordash, Zomato, etc combine databases and networks to interface with real-world operations to deliver services to us.

As you recognise patterns, obviously some intelligence is delivered.

In the late 90s, a couple of researchers in Sanford decided to download the entire internet to look for patterns; they created Google. Google undertook pattern recognition in a manner that no previous search engine had. But they did not go around calling their product AI.

Funded by Elon Musk a bunch of researchers in 2016 started building algorithms to look at patterns in word structure across the internet based on their context. OpenAI is nothing but an extension of the same tools to recognise patterns in content. What we call AI today is nothing but a content paradigm.

The answers that “AI” delivers are what you would get if you asked a 16-year-old to browse the internet and come up with an answer to a certain question. Only the 16-year-old would do it on a banana but the “AI” needs three nuclear reactors to deliver the answer.

Just spare a moment to understand the thinking behind this.

While Sam Altman is borrowing a page from Elon Musk and promising AI that is capable of thinking, at the same time…

OpenAI truly does not want you to know what its latest AI model is "thinking." Since the company launched its "Strawberry" AI model family last week, touting so-called reasoning abilities with o1-preview and o1-mini, OpenAI has been sending out warning emails and threats of bans to any user who tries to probe how the model works.

[…]

Along the way, OpenAI is watching through the ChatGPT interface, and the company is reportedly coming down hard on any attempts to probe o1's reasoning, even among the merely curious.

Source: ArsTechnica

As Iron Man says in Avengers - An intelligence organisation that fears intelligence. Historically, not awesome!

The reason is not competitive advantage or anything remotely like that. Given that they are based out of the US, it is lawsuits. Once the question of what it is thinking is answered, the next question is where did it gather its facts? Also, it makes it difficult for the company to claim that this entire thing is such a black box.

When companies have used algorithms to dish out credit ratings that are obviously racist, they have been able to safeguard themselves by claiming that AI is a black box and there is no way for them to know how it arrived at its conclusion.

Such biases might surface in certain cases when LLMs are questioned and this can turn into a PR nightmare.

The most interesting part is that research is starting to show that most of these models are incapable of “reasoning”.

For a while now, companies like OpenAI and Google have been touting advanced "reasoning" capabilities as the next big step in their latest artificial intelligence models. Now, though, a new study from six Apple engineers shows that the mathematical "reasoning" displayed by advanced large language models can be extremely brittle and unreliable in the face of seemingly trivial changes to common benchmark problems.

[…]

GSM8K's standardized set of over 8,000 grade-school level mathematical word problems, which is often used as a benchmark for modern LLMs' complex reasoning capabilities. They then take the novel approach of modifying a portion of that testing set to dynamically replace certain names and numbers with new values—so a question about Sophie getting 31 building blocks for her nephew in GSM8K could become a question about Bill getting 19 building blocks for his brother in the new GSM-Symbolic evaluation.

[…]

Adding in these red herrings led to what the researchers termed "catastrophic performance drops" in accuracy compared to GSM8K, ranging from 17.5 percent to a whopping 65.7 percent, depending on the model tested. These massive drops in accuracy highlight the inherent limits in using simple "pattern matching" to "convert statements to operations without truly understanding their meaning," the researchers write.

Source: ArsTechnica

Reasoning does not alter when the problem alters. Safe to say what we are referring to AI or GenAI, are smooth regurgitation machines.

What is being called AI is merely a content paradigm in a long list of paradigms that have come and gone.

Also, I have yet to come across people who are entirely comfortable with outsourcing their content to such tools.

IBM created the first database to help American Airlines build Sabre which became the industry de-facto for airline booking. Other databases were created and soon database was a commodity and there were different ones available based on the nature of the requirement.

LLMs model will also be commodified in the same way. There will be several models from several companies meant to address different purposes.

This too shall pass! In 15 years we will look back at this period and think what was all the furore about?