E39: Mental Models and Financial Infrastructure with Patrick McKenzie

"The Riff" with Byrne Hobart and Erik Torenberg

This week, Byrne Hobart is joined by Patrick McKenzie (patio11), host of the podcast Complex Systems, to discuss the complexity and endless fascination of financial infrastructures, the role of fraud in finance, talent spotting strategies and the importance of building networks.

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LINKS:

Byrne’s writing: https://thediff.co

Patrick's Newsletter: https://www.bitsaboutmoney.com/

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X / TWITTER:

https://x.com/patio11 (Patrick)

https://twitter.com/ByrneHobart (Byrne)

https://twitter.com/TurpentineMedia (Turpentine)

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TIMESTAMPS:

(00:00) Intro

(00:20) Historical origins of financial products

(01:22) Old infrastructure in finance

(05:02) Security vs Usability trade-off

(10:49) Trust dynamics in finance

(11:58) High-trust vs Low-trust environments

(15:26) Market dynamics and reputation systems

(19:41) Sponsors: Babbel | Beehiiv

(22:15) Who's your favorite fraudster?

(25:10) Crypto and money laundering

(30:31) FTX and money laundering theory

(36:59) Collapse of FTX

(40:55) Normative Aspects of Trust

(46:27) The Starfighter Project

(53:33) Value of networking and cold emails

(58:00) Managing information flow

(01:02:31) Outro