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Drew

Just to get this conversation going, I will repeat my prediction that we will continue the halfway version of this by running deficits. I do remember an article somewhere that the Federal Reserve had worked out a way to create accounts for everyone in the US and deposit money directly in them. My assumption is that they have heard the complaints that they should avoid the impact of expanding the money supply in the way that benefits the wealthiest the most.

Geoman

"low unemployment rate presages inflation, and no other indicator matters." That does bother me. And I don't like them "predicting" inflation and taking preventative action. If inflation begins, then yes, clamp down on it. But until and unless we actually see signs of inflation, no.

And the question is - does interest rates control inflation any more? The assumption is labor shortages cause hikes in pay, which get transmitted through the economy. But hikes in pay, like recently with Ford, may result in employers laying off people to reduce costs.

Who cares about unemployment - what are commodity prices doing? Tariffs? Forget the employment rate, what is the % of the total population employed? What about automation rates?

Low employment can cause/be caused by so many factors a straight accounting doesn't capture it.

Geoman

You know the more I think about this, the more silly this is. This idea that these guys can "predict" the future and then act to prevent adverse outcomes. It's just a garbage idea.

How does the economy work? What, in fact, is capitalism?

Capitalism is a method for determining the "best" use for limited goods and services. For examples, we only have so many tons of copper - what is the best use for it? Copper statures, or copper wire? How about copper wire or solar panels? How about copper wire, and slightly thicker or thinner copper wire? How do we decide? We bid on it. Stupid and wasteful uses for the copper fall by the wayside - I can make more money making it into copper wire than the other guy can making copper statues, hence I can bid (pay) more for the copper. better still, if there is a huge need for copper, high prices tell miners to buy equipment and hunt up some more.

And all of this is happening at lightening speed billions of times each day. Attempting to maximize the benefit of each and every resource on the planet.

There is a term in nature called "Emergence". Emergence occurs when an entity is observed to have properties its parts do not have on their own. These properties or behaviors emerge only when the parts interact in a wider whole. Think of a termite mound. Each termite has around 250,000 neurons. Humans have something like 8.6×10 to the tenth neurons. Individually they are dumb. yet they exhibit complex behavior, and construct well designed homes out of dirt and spit. How is that possible?

Termites have 1-2 million individuals in a mound, and the interaction of that many individuals creates emergent behavior resembling a significant collective intelligence - almost as much intelligence as a single human being.

But take the average human being, and using social behavior like capitalism, we can generated a super intelligence. 8.6X10 to the tenth times 7.5 billion people.

That is what is controlling our economy. The more we unshackle that emergent super intelligence, the better off we are collectively and individually.

Unfortunately there is always some smart ass politician who thinks he knows better, and seeks to short circuit the collective super intelligence with his own choices. He doesn't realize that he is literally 1/7.5 billion as smart as a emergent super intelligence based in capitalism. Any correct decision he makes are pure luck.

This is fundamentally why socialism fails. the minute you get rid of the emergent super intelligence and start having a group of people, or worse, one person, make economic decisions your are toast. It's like one ant trying to build a termite colony.

The ego that 600 PhDs think they can outwit a emergent super intelligence of that size is unimaginable. No, they can't do it. Not 600 or 6,000 PhDs, it makes no difference. The emergent intelligence of the economy is vastly more intelligent than they ever will be, and worse, it will always be more intelligent. It will outwit and out maneuver them. It will make utter fools of them every time.

And predicting the future based on just one marker of the economy...has got to be the dumbest idea I've ever heard.

Kartik Gada

Geoman,


You know the more I think about this, the more silly this is. This idea that these guys can "predict" the future and then act to prevent adverse outcomes. It's just a garbage idea.

Indeed. They even completely ignored their own oft-cited metrics of a) the yield curve, and b) CPI. All because of the specter of imaginary inflation that never arrived even in the face of $23T of global QE. They jettisoned *everything* in response to the low unemployment rate, and still can't fathom why inflation has not appeared.

Macroeconomists are massively out of date regarding their own profession. Just like all the mechanical engineers in the 1880s that said heavier-than-air flying machines were not possible. When this happens, history soon sees major turning points.

Kartik Gada

Drew,

I do remember an article somewhere that the Federal Reserve had worked out a way to create accounts for everyone in the US and deposit money directly in them.

Do you remember where you read this? Do you have a link?

Technically, Congress has to expand the Fed's powers, but the Fed itself is too out-of-touch to think this way. The nature of QE that they did exacerbated distortions and non-meritocratic inequality greatly, and they aren't even curious enough to examine why.

The Fed, and by extension the entire profession of Macroeconomists, are the greatest concentration of eggheads in the world at present. Zero ability to question their assumptions, no matter how much evidence.

Drew

My first round of googling brings up articles like this suggesting the practice https://newrepublic.com/article/148998/give-everyone-government-bank-accounts as well as a scam that went around earlier, which indicates that I am probably misremembering. But I will point to this opinion piece as something in the air. Instead of sending Dues direct deposits to everyone, it would be simpler to just have them appear in a Federal Reserve account. Let the Federal Reserve figure out if people are citizens or otherwise eligible.

Drew

Here's an article on failure of negative interest rates in Europe (It's in the WSJ, so you may need to find a workaround) tps://www.wsj.com/articles/negative-rates-designed-as-a-short-term-jolt-have-become-an-addiction-11558363559
Not the same thing as DUES, but you will need to explain why DUES will be a better solution. Until a smaller econonomy like Canada or Singapore or Switzerland tries and succeeds with something like DUES, no small country will, because the assumption is that the currency will just devalue against the major currencies (maybe not Switzerland, but they are an outlier - however they could be a test case of doing dues when you want to devalue your currency, or at least slow its appreciation). The examples people will look for will be the major economies - US, China, EU, Japan. If the Chinese economy has downturn that is a version of the Japanese economy in the 90s or worse, people will see it as an argument against your monetary policy. Yet another reason to hope that China finds a way through.

Kartik Gada

Drew,

You are correct.

Singapore, for example, has a currency pegged to the British Pound, so it won't experience a currency flight.

But even if a country is not pegged, as long as the country is an advanced economy with a trade surplus, a weaker currency is not a problem at all, as their exports become more competitive. Many countries try to keep their currencies down (such as China) for this reason.

Drew

So the question and the prediction becomes when will a government do a a Quantitative easing (QE) or currency devaluation through direct issuing of money to citizens instead of asset purchases or interest rate lowering. I will say 2028 and that it will be a small country like Switzerland with a non-pegged currency. I think pegged currencies will be trickier, because they have to be more prepared if there is a run on their currency so they have less control. Thanks, Drew

Kartik Gada

Drew,

Note that :

a) It could be in the form of the Sovereign Venture Fund model, rather than DUES. DUES is better, but the SVF is easier to swallow politically,
b) If it is the SVF, it might be considerably sooner than 2028.

Also note that by 2028, the ATOM will be 5-6% of World GDP, vs. 2.5-3% now (and 2% at the time of the ATOM publication v1.0 in 2/2016).

Kartik Gada

Geoman,

The interesting thing about the superintelligence point is that on top of the fact that 7.5 billion people have 8.6^10 neurons each, technology keeps adding to the superintelligence.

As technology diffuses faster and faster, and gets more advanced across that diffusion, the caliber of the superintelligence keeps rising. It is significantly more intelligent than even a year ago.

Geoman

Exactly what I was thinking. Computer speeds are important, but so is human development.

Pulling countries out of poverty means adding more brains, more neurons, to the system. Freeing our economies adds more power to the system - it makes it work faster and more efficiently. The singularity is not about just software and hardware, but wetware.

About 2% of humans are geniuses. However, if you are born a genius in Somalia, or Chad, or Afghanistan, your chances of contributing to the world is close to zero. As these areas become more free, as they become more developed, they add more geniuses to the system.

I believe that the emergent superintellgence is really a big part of what is feeding the singularity. As it becomes more powerful, as it becomes more influential over more of the world, the pace of innovation and development will advance ever faster.

If we froze computers and software at today's level of development, but added 20 million more geniuses (IQ >170) to the mix, got every country > 80 on the index of economic freedom, and > 800 on the HDI, what would happen?

We'd see an explosion of wealth and knowledge unparalleled in human history. Art, history, literature, every science. We would solve every problem on Earth and conquer the stars, seemingly overnight.

What has been happening so far is computers have been magnifying our intelligence, our index of economic freedom, and our HDI. They are force multipliers. But instead of building better computers, we can work on the other side of the equation, and simply build a better society.

Anyway, we tend to think in terms of computers driving the singularity, but I think it is much more than that, that there are several mechanisms driving toward the singularity, and silly stuff like free economies, nutrition, human development, matter, potentially as much or more than computers do.

Kartik Gada

Geoman,

The speed of net poverty reduction has been high, and while the full extent of this has not been monetized yet, the fact that Data is now being monetized means a greater range of individuals can be meaningful participants.

Anyway, we tend to think in terms of computers driving the singularity, but I think it is much more than that,

Yes, but it is the entire ATOM that drives the Singularity. Computation is just a part of that (albeit the most central part). This leads to innovations in all other areas. Education becomes cheaper and more customizable. Nutrition trends down towards zero cost (500 gelcaps of Vitamin D cost $10, which is astonishing considering what people before the modern era had to suffer from).

Palamas

Great posts. Geoman, that post on the collective intelligence and why socialism is idiocy was a great one.

I have a question for you all though: what negative aspects of the things you call "progress" do you foresee? I don't think you put enough emphasis on this topic given the intrinsic nature of human beings.

Also, is Mr. Khan going to come back and weigh in on the "misandry bubble"? It is amazing that the 2020 date is almost here.

Kartik Gada

Palamas,

I have a question for you all though: what negative aspects of the things you call "progress" do you foresee? I don't think you put enough emphasis on this topic given the intrinsic nature of human beings.

Among other things, it is apparent that once the GDP per Capita of a country crosses $60,000 or so, there is enough ambient prosperity that a few vile individuals can devote their lives just to harassing others and demanding they comply to narratives that are in direct violation of nature. This is discussed in the ATOM publication (Chapters 9-10).

Plus, the inability of government to keep up might lead to scorched-earth policies in their mad attempt to keep power.

Also, is Mr. Khan going to come back and weigh in on the "misandry bubble"? It is amazing that the 2020 date is almost here.

Yes, he will. But we have to be careful, since all sorts of blogs are being de-platformed just for non-compliance with the far-left narrative. The newest wave of little tyrants at tech companies probably were not of age when the original Misandry Bubble came out, but will discover it if we do a follow-up, and delete this entire blog (despite all the non-political content).

Geoman

"I have a question for you all though: what negative aspects of the things you call "progress" do you foresee? I don't think you put enough emphasis on this topic given the intrinsic nature of human beings."

1) Societal disruption. I think we are going to have to re-order everything - our politics, economics, government structure, everything. It is going to be very difficult, and worse yet, the singularity will be rapidly evolving so even the best solution we select today might not be tomorrow. It is why I favor freedom - maximum freedom, since the emergent super intelligence of capitalism is the only thing that can potentially keep up with the singularity. We might just face complete anarchy, or total governmental gridlock.

2) Totalitarianism can be made to work. Look at china and their new social credit system. They are harnessing the power of the singularity for oppression. Others will figure this out as well.

3) "This business will get out of control! It will get out of control and we'll be lucky to live through it!" That is my favorite quote from the Hunt for red October. Basically things will go wrong, horribly wrong. John Barnes wrote a great collection of books called the meme wars - basically supercomputers figure out how to hack and control human beings, and use those humans to fight proxy wars. And we don't even know it is happening, because they are re-writing our memories of events as well. It is just one of the many potential bad endings we face. Elon Musk is so scared it is causing his frenzy to get to Mars - to have back-up human race in case the singularity does something awful.

It's going to be rough sledding the next few decades. But with the lows will come amazing highs. And, well, there is not a damn thing we can do to stop it. Might as well be happy about it.

Drew

I'm with Geoman, I expect things to get better with some rocky periods such as a new version of the 2008 recession as wells as likely personal professional challenges as institutions adapt.
Personally, I'm doing what I call "Enjoyable Insurance". I don't expect my wife and I to have to feed ourselves by our garden, but as we enjoy it and it helps our health, let's invest in it as we can. And if one of those longshot risks like the shutdown of the banking system happens, it will help.

Geoman

Let's follow the logic:

The universe is 14 billion years old. There are billions of galaxies and trillions of stars. There are planets around almost every star. Earth is 4 billion years old. Humans are 3 million years old. Civilization itself is maybe 10000 years old. Our modern civilization is 120 years old. In 50 years we'll certainly see the singularity, maybe less.

Therefore,

Intelligent aliens, statistically, must exist. Too many planets with too much time. Statistically they are older than us. Even slightly older civilizations (say, 500 years)would be light years ahead of us technologically. Civilizations light years ahead of us technologically would travel the stars, or send messages.

So where are they?

This is the Fermi Paradox.

Possible answer - the singularity changes every civilization that experiences it in such profound ways that none survive, or they no longer have any interest in anything outside their own planets. How's that for a possible drawback of the singularity?

Now, while statistically we are very likely not to be the first intelligent race to evolve, someone wins the lottery, why not us?

Or


While life may be common, intelligent life is very rare. Where it occurs it is so widely separated (say one intelligent race per galaxy) that they never meet.

Or

We are living in a cosmic zoo, and everyone is waiting for us to mature enough to even bother talking to.

I'm with Drew - My thing is trying to master as many survival skills as possible. Learn to make things for yourself. Even if you never need it, it's fun.

Kartik Gada

Geoman,


While life may be common, intelligent life is very rare. Where it occurs it is so widely separated (say one intelligent race per galaxy) that they never meet.

I will be of this view by 2030 unless we find something before then, simply because the Accelerating Rate of Change makes it hard for a civilization more advanced than us to remain undetected by 2030 if in this galaxy, and with this becoming ever more true each year after 2030. Detection precision/distance/depth is itself advancing at a Moore's Law-type rate.

Kartik Gada

The yield curve is solidly inverted now.

If the Federal Reserve does not get its head out of the sand and cut rates soon, it will be very hard to avoid a recession.

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