OT I've started referring to the "efficient markets hypothesis" as a religion. I promise you, you can show this article to one of those people and they'll construct a story about how this makes perfect sense.
I did not find that quote in the linked-to interview.
The closest is at https://youtu.be/bM9bYOBuKF4?t=148 "That's the statement of the hypothesis, but it's a model, it's not completely true, no models are completely true. They're approximations to the world. The question is, for what purposes are they a good approximation. As far as I'm concerned, they're a good approximation for almost every purpose."
Humans are too closely related to chimpanzees and Capuchin monkeys to be Homo Economicus. AI will have advantages over humans except that humans still drive the economy and financial activities, and as we've seen with bubbles like real estate and dot-coms, predicting when the stupid ends requires predicting humans.
Suppose you had a bunch of decisions that needed to be made, and you would rather that (on average) they were made by smart people rather than dumb people. So you set up a system of tokens, where people with more tokens were allowed to make more of the decisions.
Then all you need is a system whereby smart people wind up with more of the tokens than dumb people. So you set it up that, when a dumb person meets a smart person, the dumb person gives the smart person some of their tokens.
But how are they supposed to know which is which? "Dunning Kruger" and all that seems to doom this plan from the start. But markets always find an answer; what we're seeing here is the efficient market resolving the question for us.
Awful. All these arguments boil down to "a large number of people couldn't possibly make decisions these bad". Can and do.
To be clear, Im not going to continue arguing this point. I find it as dull as trying to convince a fundamentalist that his arguments are circular. That was fun when I was 14 or so, but it's been a long time since.
To be clear, I was role playing an efficient market fundamentalist. Or trying to.
And (trying to steelman the argument) was careful to not specify which group of people were making the bad decisions. It is obvious that at least one side of any pure monetization trade like this are making a bad decision (and it could be both; for some such games the only winning move is to refuse to play). So I certainly wasn't claiming that people couldn't make decisions this bad since (as you note) this is clearly counterfactual.
My point is that we're seeing an intersection of "you can't cheat an honest man" and "there's a sucker born every minute," with a touch of "we cheart the other guy and pass the savings on to you"; _everyone_ involves thinks they are making a smart move, and in a case like this at least half of them must be wrong.
Your stab was good. Importantly, an efficient market isn't necessarily a rational market. "This is nuts" describes an irrational market, which may or may not be inefficient.
The problem with the reasoning is, either we already know who's a smart decision maker, in which case the mechanism isn't efficient. or else we don't know, in which case the logic is circular - whoever gets the most tokens must be the best decision maker.
in any case i think all smart decision makers have learned to stay away from crypto.
