The Second Reformation

The most powerful institution in human history was the Catholic Church. From 476 to 1517, the word of the Church was the word of God.

If the Pope was the trunk line to God, then his bishops and priests, spread throughout the continent, were his branch lines, connecting the almighty to the rulers of Europe. They were well educated, spoke Latin, and spoke for a Church that wielded more power than any army could: the keys to the gates of heaven.

Like any large organization of humans assured of their own superiority, members of the Church took advantage of their position. Over time, their reputation in earthy matters outweighed that of the divine. The Church had always used its heavenly keys to influence rulers, but it went too far when it packed them up as indulgences and put them on sale to the common man.

In 1517, a German priest named Martin Luther refused to believe that Church was the sole channel to God. He argued that there should be no gates for the common people to speak to the divine. Up until then, bibles were in Latin, a language common people didn’t understand. Luther partnered with Gutenberg to give them a bible in German to read by their own candle light. And permission to have their own relationship, no Pope involved, with God.

This meme spread like wildfire throughout Europe, forever toppling the Catholic monopoly on Christianity. The Church rose to power, ruled, abused its power, and through these abuses lost credibility with its believers. The Protestant Reformation was the mass rejection of the largest centralized authority in all of history.

I believe that we are living during a Second Reformation.

Today, the constant and withering gaze of the internet is exposing deep flaws in many institutions we have historically viewed as infallible. Perhaps the greatest institutional betrayal of the last 20 years was George W. Bush’s invasion of Iraq and Afghanistan. These wars seemed initially virtuous but, with time, turned out to be an enormous squandering of American treasure, life and credibility, that ultimately led to a less stable and more radicalized Middle East. More recently, the American Democratic Party put a senile candidate on stage to debate Donald Trump and then proceeded to tell the American people not to believe what it saw with its own eyes.

New York and San Francisco, perhaps the cities with the highest tax revenue in the country, are dirty and dangerous. In a panicked response to COVID, our government shut down the country, printed trillions of dollars. The result was distorted financial markets, shuttered main street businesses and school children cruelly deprived of socialization.

Our current president’s electoral success is largely due to his ability to diagnose our increasing distrust of our “churches” - our formerly infallible institutions. He, interestingly, makes no claims of his own virtue. In fact, he is clearly not so. Yet he is viewed as honest, and in the face of so much institutional dishonesty, this makes him popular.

I might be the first to label this trend a Second Reformation, but I’m far from the first to describe it. I first saw it in George Packer’s The Unwinding in 2013. Anyone who agreed with Packer’s thesis then could have monetized their belief with great success by purchasing (and hodling) bitcoin, the monetary manifestation of distrusting central banks.

By the 2024 election, the Second Reformation was more obvious. Though New York Times readers were shocked by Trump’s election, prediction markets - which work surprisingly well - had seen it coming for months.

Ideological memes, typically known as philosophy, take decades to sweep through people, and I believe we are still in the early innings of the Second Reformation. Here are some of the ways I think it’ll continue over the next ten years.

$1M Bitcoin

Bitcoin is the most obvious rejection of the traditional fiat financial system. At $100K a piece today, its current “market capitalization” is roughly a tenth of the total value of Gold on earth. As America grapples with its debt burden, bitcoin will increase in value. Seniors facing rising costs of living may view the 10x potential of bitcoin as their only chance to pay for retirement. Younger Americans may view it as their only chance to buy a home.

The Solar Home

My parents moved from the USSR to Houston, Texas in 1980. For the first 45 years of their life in Houston, their home was consistently powered by the electric grid. Now, my father has installed a generator so they have power when the new, Texas-only grid is down. As Tesla solar panels lower the cost of going off the grid, and as the grid becomes less reliable, people will increasingly opt for self sufficiency via solar on their roofs.

A Wave of Doogie Howsers

In the Napoleonic era, a British Man-o-war had several officers called Midshipmen. Their typical age: 11 years old. The American paradigm of extended adolescence is historically idiosyncratic. Children and teenagers will A) through AI have the best tool for learning ever B) understand that waiting to pay $100K/yr to go to college is a trap. We will see more young builders, writers, investors, and thinkers than ever before.

Personal Models

Historically, Silicon Valley has been part of the counter culture. The pioneers of the PC industry wanted to give everyone a computer to fight “the man” with the mainframe. AI is not like this. Because it’s so capital intensive, it is still in its mainframe era. It belongs to “the man” (although the man today seems cooler than in 1970). I think hackers see this and will try really hard to A) pirate models developed by frontier labs and the Mag7 B) create more efficient and more specialized/small models that require a fraction of the compute. We will be truly free when everyone can run GPT-15 locally on their own laptop and be 100% confident that Zuck, Altman, Musk, or Pichai, or Nadella are not using the data to train the next one.

Prediction Markets & Substack Replace Traditional Media

The New York Times gives its readers the proper opinions to air at boozy book clubs in the UWS. WSJ is a significantly better publication, but it’s still talking points for rich old white guys.

If you want to know what’s really going on, you read an industry-specific Substack. And if you really want to know the future, it’s in the prediction markets.

The front page of the future is a bunch of prediction markets with industry expert “Substacks” to support interesting positions.

The Rise of Trade Schools

The Ivy League broke when the President of University of Pennsylvania said that the genocide of the Jews was justified in certain contexts. Unless daddy is rich, it makes no economic sense to pay full ticket for a non-STEM education at an Ivy League school and therefore at any school. As college becomes more and more of a raw deal, learning a trade, especially with the coming data center build out, will be very appealing.

You are Invited to Think Freely Now

The Protestant Reformation was the most subversive idea to take over Europe since the advent of Christianity 1500 years prior. It opened the door to continued critical thinking, which led to the enlightenment, and modern political theory. It also caused massive geopolitical change. Much blood was spilled between Catholics and Protestants.

Just like the first, the Second Reformation will open an intellectual dam. With nuclear weapons and AI, the geopolitical risks are much greater than they were 500 years ago. Scary.

But today, there is no one who would argue that the Protestant Reformation wasn’t critical to the intellectual advancement of the human species. And 500 years from now, I doubt anyone will argue that we should have continued to keep our heads in the sand instead of embracing this brave new world.