Too Clever by Half

I really enjoyed this article.<p><i>Summary</i><p>Coyotes are too clever because they know that people shaking jars full of coins can’t hurt them. Thus the animal control patrol has to get called and when they don’t shoo, the animal control person who loves animals has to shoot the coyote.<p>Coyotes are winning the mini-game of each human interaction, but they are losing the meta-game of what society will do if coyotes aren’t scared.<p><i>Personal Connection</i><p>This reminds me of a turning point that I had in high school. When I was young, I would get in trouble and try to get around the rules each time I got in trouble. &#x2F;“Well, technically…”&#x2F;<p>But at some point I realized that most of the time you aren’t getting in trouble because you are breaking the rules. You are getting in trouble because you are making the rule makers unhappy. Once I had that realization I was able to focus on relationships with the rule makers and figure out what they actually cared about. This allowed me to break the rules just as much but without getting in trouble.

I read the entire article.<p>My take: don&#x27;t bother unless you have some time and are looking to be mildly entertained (very mildly IMO).<p>It&#x27;s fluff. The central analogy is a little amusing but doesn&#x27;t even roughly fit reality.<p>In chasing its premise the article ignores a key dynamic of &quot;financial innovation&quot; schemes, which is that the schemers largely avoid the negative consequences of their schemes. Well, the money spigot stops at some point, which the schemers see as a tragedy, but they generally aren&#x27;t losing too much of what they grabbed before the end. In 2008, I think most had to endure talk of losing their bonuses (not actually loss of bonuses, just talk and sometimes a temporary delay). The real consequence is that they have to get back to work building up a new scheme so they can do it all again.

This is unrelated, but they mention The Great Financial Crisis which made me remember the Recession of my youth.<p>It devastated my family. My father was in construction. That market seriously ebbs.<p>I remember a faint feeling I had back then: resentment towards families who happened to be in industries that weren’t hit.<p>Not because I thought it was unfair that we were hit, I just resented that they didn’t even have to notice what was happening.<p>And I just had to check myself about this Great Financials Crisis. Lucky timing, I have been pretty employable the last 20 years. The “crisis” was always a political skirmish to me. I cared about it, but it seemed small compared to past crises.<p>Just now it occurred to me though, that whatever millions of people are going through exactly what I did, their families collapsing.<p>And I’m the one can not notice that.<p>I’d like to securitize those families.

Okay. Let&#x27;s slow down here:<p>The OP says.<p>&gt;&gt; And they’re not that smart. I’d put our barn cat up against a raccoon any day on any sort of cognitive test. We think raccoons are clever because they have those anthropomorphic paws and those cute little masks and even a Marvel superhero with its own toy line, but please. Raccoons are takers, not schemers.<p>From Wikipedia<p>&gt;&gt; Zoologist Clinton Hart Merriam described raccoons as &quot;clever beasts&quot;, and that &quot;in certain directions their cunning surpasses that of the fox.&quot; The animal&#x27;s intelligence gave rise to the epithet &quot;sly coon&quot;.[120] Only a few studies have been undertaken to determine the mental abilities of raccoons, most of them based on the animal&#x27;s sense of touch. In a study by the ethologist H. B. Davis in 1908, raccoons were able to open 11 of 13 complex locks in fewer than 10 tries and had no problems repeating the action when the locks were rearranged or turned upside down. Davis concluded they understood the abstract principles of the locking mechanisms and their learning speed was equivalent to that of rhesus macaques.<p>Learning speed equivalent to the macaques? You gotta be kidding me. These creatures are underestimated and the author might just not like them?<p>I mean, look at his eyes: <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;File:Raccoon_climbing_in_tree_-_Cropped_and_color_corrected.jpg" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;File:Raccoon_climbing_in_tree_...</a> That guy looks really smart and self aware.

The only issue with his metaphor is that coyotes have been doing very well at the meta game. At the time of European contact there were no coyotes anywhere near Connecticut. Lewis and Clark didn&#x27;t encounter them until they hit the great plains. Actually only a few decades ago there were no coyotes near the eastern US.<p>But coyotes are clever and they&#x27;ve learned to adapt and live in close proximity to humans. And as we&#x27;ve changed the landscape and removed &amp; added various animals and plants to the landscape they&#x27;ve found niches that work for them and have expanded their range greatly.

The true meta-gamer of the story snuck by with a single sentence reference.<p>So I&#x27;m calling you out barn cat. You think you can sneak by having your cake and keeping your solidarity and standoff distance from the humans but also benefit from the free housing + healthcare + steady food when you don&#x27;t want to kill mice + affection when you decide to wander over to the main house.<p>But I&#x27;m onto you.

When I was in school, there were the people who seemed smart and the people who seemed like they worked hard.<p>The people who seemed smart won the minigames. They got good grades with little effort. But somehow, they ended up with no institutional support -- in fact, the school hated them. Eventually one of the teachers (who was visibly insecure about her own intelligence and competence) cooked up a nonsense pretext to get some of them expelled.<p>One kid&#x27;s parents brought a legal challenge, the school settled for a year&#x27;s worth of college tuition, and last I heard his parents had withdrawn him from college to pack him off to rehab for heroin addiction. The only other expellee I&#x27;ve heard from left the country, never to return.<p>The people who seemed like they worked hard didn&#x27;t always get the best grades. But the institution went out of its way to make life easier for them, and they&#x27;re all doing alright now.

Appropriately, this article is a slightly-too-clever way of talking about three things at the same time.

The most relevant take away from this article (for me) is how the coyotes (crypto and currency experts) invented Bitcoins, raccoons over leveraged it out of dumb greed (investors) and the state took notice and acted out of sheer desperation to not lose control and once again rendered the invention useless by gaining more control than before (the part that is currently in its early stages right now).<p>Update:<p>I think the article insinuates an interesting take on the invention of cryptocurrencies (by coyotes), their bubble (by raccoons) and their suppression (by the state). But IMO in this case, the state suppressed the invention not just because they fear what the coyotes have produced but also what raccoons have done with it (with the whole ICO bubble, etc.).

&gt; The coyotes know <i>exactly</i> where the invisible fence begins and ends, without the benefit of <i>ever</i> wearing a shock collar. How do I know? Because they intentionally leave their scat on their side of the invisible fence, creating a demilitarized zone as precise and as well-observed as anything on the Korean peninsula. Occasionally a coyote will try to test our dogs by leaving its scat juuusst over the line on our side of the DMZ.<p>My question is, why does the human think coyote scat on the other side of the line was precisely placed and scat on his side of the line is an intentional provocation? A more reasonable explanation is that the coyotes don&#x27;t know exactly where the invisible line is.

I think the metaphor is a stretch, especially when applied to Bitcoin. There were many factors which played a part in the financial crisis, including the following non-exhaustive list which were not mentioned is the essay:<p>- By bailing out big banks and other institutions, the government signaled to these institutions to pile on risk because they&#x27;d just be saved by the government when things went bad<p>- Policy which gave incentives for risky mortgages under the intention of helping the poor<p>- Tax policy continuing to give incentives for people to buy houses instead of renting

&gt; Coyotes can change the world. (But) Not if they fetishize ANY financial instrument as an intrinsic aspect of a commitment to liberty and justice for all. Because it’s not.<p>This. In &lt;blink&gt; and &lt;marquee&gt; tags

I take issue with the way he describes securitization as if it&#x27;s some horrible evil. Securitization (and financialization in general) just takes big balls of intertwined risks and breaks them apart into little balls of (theoretically) consistent risk so that everyone can get the amount of risk they desire.<p>Imagine a company that has a single customer. There&#x27;s a 50&#x2F;50 chance that the customer will pay. If the customer pays then the company makes a ton of profit, if the customer doesn&#x27;t pay then the company goes out of business.<p>For the company, this is probably more risk than they want to take. But there&#x27;s probably hedge fund out there who has enough money to survive the customer not paying and is willing to take that risk for a fee. So the company can go to the hedge fund and say &quot;if the customer pays us in the future we&#x27;ll give you all the money. In exchange give us 40% of it right now&quot;.<p>And the company is happy because they have a 100% chance of staying in business. And the hedge fund is happy because (if the risk was priced correctly) they have a positive expected value in the trade.<p>That&#x27;s all securitization is.

PayPal was one of the few financial innovators to dodge animal control. They were first and they were fast.

The State still cannot tell the Coyotes from Raccoons. Especially so because neither of them show there form truly until the deed is done. Thus the Coyote population control. The utopia of a Coyote population playing the meta game will indeed happen some day - just that the time isn&#x27;t right. Yet! So the same Animal Control that goes around looking for masked men with rifles, also chases those who leak the rightful information to the People. The question is not who is right - the question is are the People ready? And what&#x27;s the ratio of Coyote&#x27;s to Raccoons. And how exactly do you tell them apart pre-facto.

Reminds me of when Andy Dufresne thought he was protecting himself when he told the warden he&#x27;d never tell anyone about cooking his books.

Closes the article by implying that the federal government is a monolithic political entity (&quot;the State&quot;) that stands apart from private financial interests.<p>And then quotes Jesus.<p>Way to stay true to your roots.

If you enjoyed this article and especially the parallel between animal populations and human behavior. I recommend reading about [1] Evolutionarily Stable Strategy and specificly the book [2] The Selfish Gene by [3] Richard Dawkins.<p>The gist of it is that survival strategies are only viable given the distribution of the behavior throughout the entire species or population. Similar to a finicial market, some strategies work only when a small percentage of the population exhibits the behavior.<p>A bonus is that, like the phrase Too Clever by Half, Dawkins is also British.<p>[1] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Evolutionarily_stable_strategy" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Evolutionarily_stable_strategy</a><p>[2] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;The_Selfish_Gene" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;The_Selfish_Gene</a><p>[3] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Richard_Dawkins" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Richard_Dawkins</a>

At least part of the point of the article seems to be about narrow specialization creating blinders that inhibit deep strategic thinking.<p>I can see very strong parallels with systems thinking and the role that systems engineers play within the V-model.

I&#x27;m not sure what the connection was, exactly, but this story talking about coyotes and raccoons in finance gave me an epiphany of understanding about Plato&#x27;s Allegory of the Cave.

He’s just saying block chain is the next CDS(credit default swaps)

Argh - please dang, can we have subtitles, or something, to reduce the numbers of clickbait non-descriptive titles.<p>Sincerely,<p>Infuriated of Norwich.

Fun article, interesting point, and I don&#x27;t even necessarily disagree (entirely, anyway), BUT: coyotes have a larger range now than they have had since long before humans showed up in North America, largely because humans cleared out their main competitors, the wolves. And raccoons are not stupid, although they are destructive.<p>So, I get what the author is trying to say with this little parable, but the fact that the central facts it is using (coyotes losing out, raccoons are stupid) are both false, it makes me more than a little suspicious of the conclusion, when I otherwise might not be.

If any animal has won the meta-game it&#x27;s the cats. Yes, those adorable, cute, dumb bastards. They badly lose on any tactical level. But man, win on the strategical level so much.

Very interesting. One might also say something like &quot;half measures break the whole.&quot; The conclusion drawn about the State getting stronger and weakening mobility for coyotes seems like a legitimate concern too.<p>In the case of Bitcoin, being such a foray into uncharted territory, I&#x27;m unsure of how you would be good at the meta game, or figure out how racoons will abuse your radical new idea. Maybe I need to improve my meta game, heh.

Perhaps the post itself is too clever by half. It was about “why Bitcoin is going to fail” and yet all anyone is discussing is its well-told animal analogy.

&gt;But the trait that ALL domesticated species demonstrate relative to their wild species is a smaller brain. I’d bet it’s happening with humans, too, but that’s just an observation for another day.<p>It is: <a href="http:&#x2F;&#x2F;discovermagazine.com&#x2F;2010&#x2F;sep&#x2F;25-modern-humans-smart-why-brain-shrinking" rel="nofollow">http:&#x2F;&#x2F;discovermagazine.com&#x2F;2010&#x2F;sep&#x2F;25-modern-humans-smart-...</a>

This reminds me of the scene in the Indiana Jones movie when someone comes up and starts challenging Indy with a bunch of flashy sword moves. Rather than engage him that level, where he is definitely outclassed, Indy simply draws his pistol and shoots him: <a href="https:&#x2F;&#x2F;youtu.be&#x2F;anEuw8F8cpE" rel="nofollow">https:&#x2F;&#x2F;youtu.be&#x2F;anEuw8F8cpE</a>

I&#x27;m curious about what people appreciate in this essay. In the end, I don&#x27;t think I learned anything valuable from it.

<i>They are, to use the wonderful Brit phrase, too clever by half...not good in the meta-game. And the meta-game has turned against the coyotes with a vengeance.</i><p>Here&#x27;s the thing about the meta-game: It&#x27;s very contextual. Coyotes can&#x27;t play the meta-meta-game of thinking about your context and possibly changing it. Some human beings can.

Slightly OT: For us on our farm back in Iowa, the clever animals were the raccoons. It got to the point where we had to put locks with keys on the grain bins; metal hooks and clasps---even some requiring refined motor skills to open---were not enough to keep the buggers out. Fortunately, they couldn&#x27;t pick the locks. :)

There is a pretty good book about the history of the Coyote - Coyote America by Dan Flores.

I&#x27;ve long had the suspicion that in domesticating animals, we&#x27;ve dumbed them down severely. And I sometimes wonder if humans were smarter before civilization replaced evolution as the driving factor for intelligence.

I&#x27;m quite amused to see all that veiled scaremongering when it comes to crypto, even if it has a grain of truth. Yeah, truly the ones who get involved in it can be thought of as either coyotes or raccoons, but I think prohibition and &quot;the war on drugs&quot; only shows how much can something be made desirable by making it unfit for public consumption, and at that point the animal simile breaks down.<p>Not to mention that, as other commenters have mentioned, coyotes have been rather successful in spite of human encroachment, just like cryptocurrencies grow stronger in the face of looming regulation and sanction. Sure, it might scare off some raccoons and kill some coyotes in the short term, but it&#x27;s going to be still there. And for all the &quot;coyote institutions&quot; that perished, there are still many more.

What do people think of his connection between Credit Default Swaps and all these ICOs?

Hands down one of the best reads I have had in a longgg while

The author describes how coyotes win the &quot;skirmish game&quot; when they casually walk into suburban yards and demonstrate that they are not afraid of the humans when they do things to scare them away such as make loud noises at them. However, they lose the &quot;meta-game&quot; when animal control shows up and puts them down because they won&#x27;t go away.<p>The author uses this analogy to compare coyotes to financial innovators. His argument is that every time financial innovation gets out of control and the economy at large is impacted, larger powers step in and squash it. He argues tha this is what happened in the 2008 financial crisis with mortage backed securities, and that this is the same thing happening now with Bitcoin and cryptocurrencies.<p>I disagree with the parallel he draws to cryptocurrencies.<p>While I don&#x27;t necessarily think cryptocurrencies will dominate the world, and Governments may even succeed in reigning them in, they aren&#x27;t in the same category as other financial innovation.<p>Mortgage backed securites were the coyotes stalking across the laws of suburban moms, hoping animal control wouldn&#x27;t interfere.<p>Cryptocurrencies are a coordinated attack by a pack of coyotes on animal control headquarters.<p>They were designed specifically to be as government-resistant as possible. Now, animal control has a lot of firepower and they can call in reinforcements. Governments have a lot of resources and powers they can draw on to stop and regulate cryptocurrencies. However, these coyotes are well aware of the meta-game, who the true enemy is and they&#x27;re gunning hard for him.<p>Before bitcoin, no currency that wasn&#x27;t backed by a government lasted long before being shut down by a government entity. Bitcoin has been going for nine years now, and in that time further innovation has given us Monero and Zcash which are even more censorship and surveillance resistant.<p>The primary attack vector, the only one that&#x27;s worked, has been made by the &quot;racoons&quot; at Blockstream and their investors from Visa and the banking industry. This is a much more subtle attack than direct government intervention. In a nut-shell, when Satoshi left the project, he left a guy named Gavin Andresen in charge. Gavin trusted the wrong person with commit access to the project, who was co-opted by the banking industry and who then booted him from access. Thos current group of developers crippled Bitcoin by repeatedly refusing to expand the block size and moving forward developing the &quot;Lightning Network&quot; which is nothing more than a copy of the current inter-bank payment system and which, quite frankly doesn&#x27;t work.[1][2] They also took over the r&#x2F;bitcoin subreddit as well as the bitcointalk forum and completely censored it.[3]<p>The fact that the racoons have taken this more subtle approach, suggests to me that the enemies of Bitcoin now believe that attempts to shut it down by more direct mean will fail.<p>However there are still a lot of coyotes working on other cryptocurrency projects. These coyotes are clearly playing the meta-game, and for now they&#x27;re winning.<p>[1] Summary of what the lightning network is: <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=UYHFrf5ci_g" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=UYHFrf5ci_g</a> [2] Discussion of a developer who tried to implement micropayments with lightning network, but had to switch because it did not work well: <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=Ew2MWVtNAt0" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=Ew2MWVtNAt0</a> [3] A (brief and incomplete) history of censorship in &#x2F;r&#x2F;Bitcoin: <a href="https:&#x2F;&#x2F;medium.com&#x2F;@johnblocke&#x2F;a-brief-and-incomplete-history-of-censorship-in-r-bitcoin-c85a290fe43" rel="nofollow">https:&#x2F;&#x2F;medium.com&#x2F;@johnblocke&#x2F;a-brief-and-incomplete-histor...</a>

Truly HN quality post!

&gt; I’d bet it’s happening with humans, too, but that’s just an observation for another day.<p>Ho Ho!<p>Tell me more brother. I am curious.<p>This links up with David Krakauer&#x27;s ideas I&#x27;ll bet.

&gt;I know, I know … it’s negative reinforcement<p>No it isn&#x27;t. It&#x27;s positive punishment.

Oh no, poor finance jerkoffs got ripped off by their own cleverness.<p>Nothing says dbag like Alabama man who now lives in Connecticut crying over dead asshole financial firms.<p>We&#x27;ve had 4 (or more) of these banking&#x2F;finance ripoffs in my fucking lifetime. Bankers and finance assholes are the scourge of mankind.<p>I got a degree in Finance just so I could avoid the bullshit these fucking assholes use to rip everyone off. A State Bank as the author is so scared of, like the one in North Dakota, won&#x27;t run into any of these issues. Because their goal isn&#x27;t profit at any cost, it&#x27;s providing banking and investment services.<p>tl;dr; fuck this guy

It&#x27;s really sad to see this article about animal abuse on the front page of HN.

I was reading this in Dwight K Shrute&#x27;s voice. lol

&gt;&gt; When the dog gets close to the wire, the receiver starts to beep, and when the dog gets all the way to the “fence” boundary, the receiver generates a small electric zap. I know, I know … it’s negative reinforcement and it’s a shock collar and all that. Don’t care. It’s fantastic for us and our dogs.<p>That&#x27;s disgusting.