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About this episode

The Horse

Hello dear show notes readers!

On this week's episode I tell Dan about something that had been haunting me. The events in the Strait of Hormuz feel eerily similar to a story captured 2,800 years ago. I had just seen Nolan's version of The Odyssey and been left with the feeling that Hormuz feels a lot like a modern-day Troy. A trade civilization built on a handful of honor rules. A horse rolled up to the gates. Somebody breaks the one rule that made the whole thing work, and everything that comes after comes through that gap. Dan's answer, which I'm still chewing on: "this sounds like post-World War Two." We came back to Troy twice more. It ends the way it always ends. Rome cleans up.

That's the back half of a conversation that starts somewhere much drier. Dan opened by asking what on earth is going on with the Fed and the Treasury, and I did the responsible thing and pretended nothing was happening — thirty-year rates only back at 2007 levels, one arm of the government telling markets to speak freely and the other quietly buying bonds so they don't speak too freely. Then Dan said the quiet part out loud in the best line of the episode: Warsh says let the market speak, and Bessent says not that loudly. There are charts, an argument about whether what Bessent did counts as QE, and a detour on why a thirty-year mortgage is priced off the ten-year note — which I sent straight to the fact-checkers, because I was guessing.

Then it turns into a build episode, and Dan makes an argument about agents I haven't been able to shake: you start a new conversation, and the thing knows everything until it knows nothing. It has to be born into existence every time. Which, he points out, is also us — we just happen to run about eighty years, and none of us can checkpoint our context either. That leads to his digital Library of Alexandria, my record store you can walk into on the internet, his rebuild of the whole investment process at Kabu, and the saddest sentence in modern software: all I've got is this little blinking cursor. We close on whether "artificial" is doing any work in "artificial intelligence," and whether a person is allowed to hold two contradictory ideas at once. Reader, we are.

Go build something and contradict yourself.

Cheers, Sean

Books Discussed

• The Myth of America's Decline by Josef Joffe — Dan's find, on the pile, not yet read.
• When Reason Goes on Holiday by Neven Sesardić — arrived on Dan's doorstep the day before we recorded, still unopened.
• The Odyssey and The Iliad by Homer — the spine of the first half.
• The Republic by Plato — cited, correctly in spirit, on the permanence of nobody wanting to fix the hard thing.

Also Discussed

Watched / listened: The Odyssey (2026) · Tetragrammaton with Rick Rubin (the Tyler Cowen episode) · Odd Lots · Forward Guidance

Tools, platforms, companies: Notion · GitHub · Discogs · Audible · Claude, Codex, Grok · Number One, Boosby, Tara, Saul and Fable (the named agents on both ends of the call) · US Treasury · Federal Reserve · Anthropic · OpenAI · xAI · Kabu

Links & References

• Treasury doubles debt buybacks (CNBC, Aug 19) — the announcement the first act is built on.
• 30-year Treasury tops 5.33%, a 19-year high (CNBC) — the "levels we haven't seen since '07" number.
• Warsh's July 29 press conference — full transcript (Federal Reserve, PDF) — the actual "play the ball, not the referee" remarks.
• The typical US homeowner now stays put about 12 years (Redfin) — the number that beat both our guesses.

Unqualified Fact-Check 🔍

We said some things. Here's how we did.

🟢 = Nailed it | 🟡 = Close enough | 🔴 = Whiffed it

🟢 The 30-year really is back at 2007 levels Sean called it above 5.3%, at levels unseen since '07. It touched 5.33% on August 17–18 — a 19-year high, the highest since 2007. Correct to the decimal, from memory, in the first two minutes.

🟢 The buyback, and the date Sean put it at "middle of the week, August nineteenth." Treasury announced it August 19, raising the maximum operation size to at least $4 billion from $2 billion across 10–30 year maturities. One nuance: the 19th was the announcement. Buying starts September 9.

🟢 Yellen did it first Treasury relaunched its buyback program in May 2024, the first since the early 2000s. This is the load-bearing beam under Dan's "both sides are implicated," which was the whole point of the segment.

🟢 Two book titles, recalled cold, both exact Dan apologized for his pronunciation twice and then got both titles and both authors right. Word for word.

🟢 The Tetragrammaton episode really was last week The Tyler Cowen episode went up August 19 — four days before we recorded.

🟡 "Isn't this QE executed by Treasury?" — "Yes, sir." Buybacks are funded by issuing other debt, mostly bills, so no new money enters the system — a duration swap, closer to Operation Twist. Only the Fed can create reserves. Where we're right, and it's the part that matters: it does pull long duration out of the market.

🟡 "Warsh says 'Let the market speak'" Dan's line is the best six-word summary of Warsh's position anybody's produced, and it isn't a Warsh quote. He actually said: "Market participants are learning to play the ball, not the referee." Same argument, better sentence.

🟡 The seven-year mortgage The one Sean sent to the fact-checkers himself. The ~7-year average life is real — it's the prepayment convention that makes mortgage-backed securities trade off the 10-year rather than the 30-year, which is exactly why Dan's pricing point is correct. But homeowner tenure has stretched to about 12 years. Right convention, right conclusion, stale number.

🟡 Who came out of the horse, and who cleaned up after Not "the Spartans" — the force was Achaean broadly, Odysseus leading under Agamemnon. And Troy's destruction layer sits around 1180 BC; Rome's founding is 753 BC, four centuries later, with Archaic Greece rebuilding first. The Troy-to-Rome line is the Aeneid's — myth doing exactly the job we'd spent five minutes describing.

🟡 Something extra in the communion wine That's Brian Muraresku's The Immortality Key — a real argument that got a real hearing, not the consensus of classicists. Sean hedged twice, which is the right amount.

🟡 Revolutions start with the elites Well supported in direction (Crane Brinton's "desertion of the intellectuals," Peter Turchin's elite overproduction). The crisp 2%-envying-1% version isn't from anywhere in particular.

🔴 Why universities are called universities Sean: "the repository of universal knowledge." Lovely. Wrong. From universitas magistrorum et scholarium — "the whole body of masters and scholars." Universitas meant a guild. The original university was a labor union with better robes.

BONUS — "Nevin Sicerdic" is Neven Sesardić, roughly SEH-sar-ditch. And the new Congress is sworn in January 3, not February, which costs Dan a month of his narrative-control window.

Final Score: 5 green, 6 yellow, 1 red Two guys who told you in the first minutes they weren't masters of the Fed did considerably better on the Fed than on the Greeks. The universities one is going to sting for a while.

Chapters

00:00 - Cold Open: Which Takes Us Back to Troy 00:22 - What's Going On With the Fed and Treasury 01:59 - Bessent Buys Bonds, and the Midterm Math 03:53 - Is Hormuz a Modern-Day Troy? 06:40 - The Odyssey on IMAX, and What Survives Translation 09:23 - The Non-Rational Thing People Are Clamoring For 12:35 - Chart Time: The Three Rates That Matter 13:58 - The 30-Year Hits Levels We Haven't Seen Since '07 14:25 - August 19: QE by Another Name? 15:36 - Why a 30-Year Mortgage Is Priced Off the 10-Year 17:50 - Warsh Says Let the Market Speak. Bessent Says Not That Loudly. 19:45 - The Myth of America's Decline 21:02 - Where Revolutions Actually Start 24:12 - Precedent Is the Real Damage 28:36 - Every New Chat Is a Person Born Into Existence 31:00 - Building the Digital Library of Alexandria 36:09 - A Record Store You Can Walk Into 40:22 - Number One, Notion, and the Schema Problem 41:58 - Mr. Claw's Gone Lazy: Going Model-Agnostic 45:56 - Why Most People Still Use It Like Google 47:26 - Tetragrammaton, Tyler Cowen, and Why Prompts Matter Again 49:45 - Rebuilding the Kabu Investment Process 52:57 - Commenting Regimes and Boosby the Code Janitor 55:19 - It's Not Artificial Intelligence, It's Intelligence 57:39 - Go Build Something and Contradict Yourself