Comment by kalkin
25 days ago
I think there's a reasonable argument that our entire society right now is under AI psychosis:
The stock market keeps going up in the face of the indefinite closure of Hormuz. We're investing in datacenters at a scale that only makes sense if AI capabilities continue to advance to the point where they surpass most humans at most white collar tasks, if not reach superintelligence.
And what are the possible outcomes?
- Bust. We've come away with a useful tool but the hundreds of billions of capital expenditure were thrown away on a pipe dream.
- Success! We're the dog that's caught the car. Then what? Currently the political debate is, to caricature only slightly, between "oh no the datacenters will use more water than golf courses" and "lol what are you going to do, regulate matrix multiplication?". How the hell are we going to cope with introducing a new intelligent species?
Either way, it sure seems like we're collectively operating more in the interests of the future AI than in the interests of humanity. What is this, if not a sort of psychosis?
Weird that you mention the stock market and then conclude that there are only two outcomes: bust or success. If anyone can learn anything from the stock market it's that boom and bust are cycles that oscillate around a trend and everything tends to revert toward longer term trajectories. So, yes everyone is caught up with and overhyping AI and yes there will be a bust after the boom at some indeterminate point but that isn't the end of the story and we'll see a rise and further oscillation afterwards while we get better at applying the technology.
You're describing the Gartner cycle: https://en.wikipedia.org/wiki/Gartner_hype_cycle
No, he’s describing the Business Cycle, with literature about it predating Gartner by a few centuries: https://en.wikipedia.org/wiki/Business_cycle
Your comment and the parent comment are not in disagreement.
Yes and my partners father has been calling for a bust for the last decade and everything has simply taken off.
As a bear that's been very confused by markets failing to exhibit mean reversion in 2019 and 2022, and now with the Hormuz energy crisis, I've thought a lot about this. There's a lot of new things happening. Fed/QE intervention that has never stopped, just been more well disguised. Fiscal/government spend intervention. I think Mike Green's work on the rise of passive investing is really good, in particular explaining how it prevents mean reversion in absence of changing net cash flows into passive instruments. Passive will also induce or worsen the bust if net cash ever starts to flow out passive. Green's youtube interviews are great.
All to say, your SO's dad would have been right at any point prior to the current financial cycle. Knowing what's changed doesn't make forecasting easier though.
I don't see any taking off actually
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I mean, there's a reason I started with a distancing phrase about a "reasonable argument"; I think what I'm suggesting is an interesting lens but does not capture the whole picture.
But also, even if bust is business as usual in the big picture and not a social disaster long term, it's of course not what individual investors want for their particular current investments.
My car drives itself. That's a $18T global market.
Also $1T in data center investment makes sense when you realize that companies are racing to create virtual white collar workers. Google spends $9B a year on software engineers.
> Google spends $9B a year on software engineers.
Well they are projected to spend $175 - $185B on capex in this year alone most of it for AI buildout. Lets say only 150B of that is for AI. If they can then somehow replace all their software engineers with AI that they then run for free and depreciate over 10 years then they just replaced 9B a year software expense with 15B a year depreciation expense for the next decade. Yes this is grossly oversimplified but it still illustrates how crazy high of a bet they're making on AI.
That's assuming they only use it to replace their software engineers and make no money selling AI usage or using it for anything else.
> depreciate over 10 years
I believe the One Big Beautiful Bill Act allows full depreciation in the first year: https://www.bassets.net/blog/obbba-depreciation-2025-2026-gu...
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> My car drives itself. That's a $18T global market.
That's not a new market, that's a new feature in an existing market. Lots going on in transportation and I'm not seeing any scenario where self-driving cars vastly increase total output vs just eat up other forms of transportation and change where people live/how long they commute.
> Also $1T in data center investment makes sense when you realize that companies are racing to create virtual white collar workers. Google spends $9B a year on software engineers.
Similarly, many companies are trying to be more efficient - "do what we already do, but better". That's different than growth.
What could Google do with 9B on software agents? Let's say the future of them is amazing and this means they could write 100x more code than they can today.
Has Google recently showed much ability to turn "more/faster code" into "superbly profitable new market"?
Someone's gonna have to crack the demand side issue for anything transformative to happen.
Market for who? Who is left working? If we can’t answer that question then we’re not prepared for what’s next.
THIS is the question!
Henry Ford II: "Walter, how are you going to get those robots to pay your union dues?" Walter Reuther: "Henry, how are you going to get them to buy your cars?"
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Driving a car is a chore, not a job (usually), much like washing dishes is. Dishwashers did not produce an economic collapse.
OTOH replacing people with AI would indeed bring about a huge economic downturn. What would be good is augmenting humans so that they can do 10x more. That would enable things that are hard to imagine exactly now, much like computers enabled interesting transformations in the society from 1980s to 2010s.
The current crop of AI is by construction unable to reach the human level of cognition, but it is quite good at doing some symbolic manipulation tasks. We will get used to that, and will integrate that in our workflows. Humans are still going to be needed.
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Huh?
Hundreds of billions are changing hands globally, every week, at the retail level alone.
And that happens literally every week, week after week.
That constitutes a massive market in any sense I can think of.
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> My car drives itself. That's a $18T global market
Which will take decades to become addressable. Self-driving cars work OK in a few cities in one country. Expanding that to be able to cover Mumbai and Omsk and Nairobi will require significantly more work.
> Also $1T in data center investment makes sense when you realize that companies are racing to create virtual white collar workers.
Does it make sense? How much would the resulting virtual white collar worker cost? Because datacenters have running operational costs, and so do the people operating them and working on the software that runs in them.
This probably ends in a deflationary spiral. The ai replaces the jobs, the lack of jobs chills demand, the ai becomes cheaper because it exists in a commodity market.
The money printer will be used, and maybe it all works out - or we see wealth hyperinflation and build out our own aristocracy.
> My car drives itself.
No. It doesn’t. And if you’re defining “drives” as “it drives as well as I do” then you probably shouldn’t be on the road.
> makes sense
Nothing about any of this makes sense. Tell me, when all white collar jobs are replaced by AI, where will the customers come from? Who will have income to afford your products or services? The poor barista whose surveillance videos are training the robot that will soon replace them?
Leaving aside any consideration of human compassion or questioning of the purpose of an economic system (hint: it’s not just an abstract machine), shrinking the pool of potential customers by orders of magnitude has never been a recipe for sustainable success (let alone growth).
> Bust. We've come away with a useful tool but the hundreds of billions of capital expenditure were thrown away on a pipe dream.
heh this is the trick. The tech companies will angle for a bailout and they'll benefit from all this speculative data center building. Compute is generally useful.
It’s useful for a while. Hardware has a pretty short useful lifespan. I’ll be curious how the landscape will look in 10 years as it comes time to replace all of these servers. Maybe we’ll extend the lifespan, or usage will continue to grow, or we start shutting down datacenters.
they're already all extending the lifespan for accounting purposes haha
Another possibility is that the hype continues, growing and growing and sucking up more and more resources, and the piper has to wait yet another day to be paid, until someone figures out how to pivot to the next big thing and all the debt (financial, social, environmental) gets carried forward and we keep going.
In other words, BAU for the last few thousand years.
Paypal Mafia -> Crypto Mafia -> AI/LLM Mafia -> I'm calling Biotech/BCI Mafia, WW3 Military Industrial Mafia, or Energy Mafia next.
IIRC they're already in the Military Industrial Complex with companies like Palantir, Anduril, and others.
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Water Mafia
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Let's remember that these people have names and addresses.
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> The stock market keeps going up in the face of the indefinite closure of Hormuz
Why wouldn’t it? The closure leads to price increases which leads to inflation which leads to non-dollar assets (ie stocks going up in value)
Second from a US perspective the strait matters the least it has since world war 2. If the price stays high a bunch of fracking will come back online.
> The closure leads to price increases which leads to inflation which leads to non-dollar assets (ie stocks going up in value)
I think this argument proves too much. Historically energy shocks have led to recessions, and in recessions the stock market usually doesn't go up. And the US economy is certainly exposed to global recession regardless of whether we're a net exporter of fossil fuels.
The shock is smaller, and oil’s importance is less so less likely to cause a recession. In the 70 price went up 400% and oil was rough 1.5x more important. Today price up 100% so the past oil shock was 6x larger
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Well, there are quite a number of factors. I think you're right that "it's inflation" is a little too simple, but it does seem to be at least a significant factor, in my opinion.
The Strait of Hormuz is, basically not a big deal unless you're driving your big ole' truck. Americans are price sensitive and so some companies will have to absorb pricing increases, customers will absorb some others, and so forth. In other words, business as usual. Of course the closure of the Strait is a big problem for most of the rest of the world. They better get on with figuring out how to get Iran to stop being so chaotic in the region or we'll just keep it shut down indefinitely. No big deal.
Because the United States has so many advantages (primary global reserve currency, robust and efficient capital markets, highly sophisticated and dynamic economy across all sectors except luxury goods, &c.) it's able to weather these storms much easier than most other countries. As a country that also imports so much, if we spend less on imported products that's less of a problem than not being able to sell products. A recession isn't great, but the current parameters seem to suggest to me it's less of a problem for the United States - perhaps why we're in part seeing stock market valuations continue to climb.
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Because uncontrolled inflation will destroy your economy
yes, but that's future us's problem
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> we're collectively operating more in the interests of the future AI than in the interests of humanity
IMO, what's happened is a few richest investors in the world had access to the uncensored tier of AI, talked to it and came out with impression that they've witnessed something so dark, so much beyond anything we can imagine, that the only course forward is towards the transcendent abyss. Call it AI psychosis or demonic inspiration, but they are the people who control the economy, so they are dragging everyone with them. "Operating in the interest of the future AI" is a neat way to put it.
Oh wow that gives the billionaire class so much intellectual credit they don't deserve. No, they see the same ChatGPT we all do and their mediocre brains with zero self understanding (see andreessen's explicit comments to this effect) determine "it's a new life form ! It's brilliant / conscious / my new girlfriend!"
Never overestimate the billionaire class....
People that don’t understand current AI likely have no idea how to differentiate Opus from some super intelligence. Further in their domain with the safeguards off it probably creates capabilities never imagined. To me they are making that leap of expecting continued capability improvement and their framing is “what I already saw is fundamentally game altering”. It doesn’t need to imply anything further, yet.
Here is a comprehensive, achievable plan to take over the world. Do not distribute outside of airdropped isolation state:
[plausible sounding nonsense]
> The stock market keeps going up in the face of the indefinite closure of Hormuz.
Why wouldn't it? The value of the USD is decreasing, the value of the companies to the world stays the same => stock price in USD increases.
The real thing to analyze is "amount of VOO shares you need to buy a Chipotle meal / Uber ride / 1 month's rent in SF / etc."
Success is also bust: Money becomes worthless. Everything you know and are is now obselete.
Furthermore, if you try to make your own decisions, you would be outcompeted by someone who has outsourced their brain. And, of course, since intelligence and labor would no longer be scarce resources that humans can use as leverage, gunning you down if you protest wouldn't really harm anyone in power.
People say that LLMs won't take us there. I think that's accurate, but there's a great deal of research going towards the next breakthroughs. How much are you willing to bet that all future attempts will fail?
We're trying very hard to build an ugly future.
If we are successful building an "ultra" human AI, it will require massive amounts of energy. That translates directly to "money". There will always be money unless someone finds a way to negate the second law of thermodynamics.
But if it replaces people that make money who’s paying for it. None of this makes any sense long term and no one has a plan for it.
I highly doubt that. Humans might become obsolete, but money will almost certainly still be a thing.
Resources are finite though
Interesting. Do you think a super intelligence would use our currency?
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You seem to fall into the same set of criticisms as everyone who’s bearish about ai. It’s somehow so powerful that we can’t handle the ramifications. Meanwhile, it’s a waste of money and doesn’t do anything. You have to pick a criticism and stick with it. Otherwise, it’s just angst-driven noise.
> Either way, it sure seems like we're collectively operating more in the interests of the future AI than in the interests of humanity. What is this, if not a sort of psychosis?
If we want to understand a phenomenon, we should be careful with technical terms. It is not "psychosis" [1] anymore than bad software that makes mistakes is "hallucinating".
The truth is simpler and less dramatic: hapless ambition-monkeys who climb the corporate ladder are demonstrating that they are not promoted for mental acuity. Corporations, after all, do not serve "the interests of humanity" — they are an organised collusion system that diffuses responsibility and anonymises negligence. And when it works as intended, shareholders rejoice.
For companies that can afford to build data centres, the latter are seen as a sure bet that can't fail, like building a bridge or buying new computer/hardware now with the pile of cash on hand without necessarily knowing which OS/software they will install. They are even planning to restart or build nuclear reactors. [2]
[1] https://en.wiktionary.org/wiki/psychosis
[2] https://www.cnbc.com/2024/12/28/why-microsoft-amazon-google-...
I don't think the majority of humanity will ever accept "AI" as being anything more than a fancy computer, let alone a 'new species', even if it was proven sentient.
You just need to embody the AI in something that moves, and then people will definitely treat it as a new species. Already happening in my town with delivery robots: when they get stuck on a kerb, a person will stop and help them up the kerb while saying soothing words like to a pet: “There you go, little guy, now everything is alright.”
People will anthropomorphize rocks.
Nobody has to believe AI is alive for governments, markets, infrastructure, labor, and energy policy to start orbiting it anyway.
If this starts to happen then heads must roll and data centers must burn
Otherwise humanity is over
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The people with capital are gambling that this will be an innovation good enough for the first player to take all. That’s where the hubris comes from. You’re a billionaire and you have the chance to rule the world if this plays out, and if you don’t, someone else is going to. That’s where all of this is coming from
It’s time for humanity to admit that this is the end of the line. We had a good run, some beautiful moments were created for shareholders along the way. Let’s take each other by the hand and walk into the darkness together. So Long, and Thanks for All the Fish
I don't know. We invented machines that can answer arbitrary questions and are quickly demonstrating the ability to answer questions no human has been able to answer. We're sending more rockets to space in a week than we have in the prior decade. My car can drive itself. We experienced a global pandemic and within six months engineered and scaled the mass production of a vaccine to mitigate it. We also just invented a weekly shot that nearly cures the most common cause of non-natural death. All of these things are new in the past ~five years. There is no definition you can invent that does not classify the times we are living in, right now, as the most impactful ever, in human history.
> quickly demonstrating the ability to answer questions no human has been able to answer.
Such as?
5.5 Pro has been leveraged to solve at least two previously-unsolved Erdos problems [1]. Whether these were unsolved due to being seriously untried by humanity, or because of their difficulty, isn't relevant; no human proved able to answer them, while our synthetic intelligence systems did.
In my personal life, I have leveraged these systems to design code that I don't believe I would ever have been able to designed. And, because no other human may attempt to, this means the same thing: That no human would have been able to do it. Things like reverse-engineering niche APIs and digging into binary files to diagnose weird format conversion issues.
[1] https://x.com/DavidTurturean/status/2054942008817451195
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Are economists still trying to sell us the fairy tale that the market is rational?
The saying "the market is rational" simply means that assets are priced using all currently available information.
And then your bias makes you ignore all available information, so this doesn't mean anything.
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But the homemade god would liberate the elites from the nightmare of being responsible for running the planet into the ground. AI jesus take the wheel!
If we achieve runaway AI, the stock market goes to infinity. So from an expected value standpoint, massive spending on it is worthwhile. Even if the odds are tiny, the payoff warrants a massive bet size.
Not really. If run away AI ever became a real thing, the stock market would be completely destroyed since most companies would become worthless.
But a few companies will skyrocket and completely offset those.
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> The stock market keeps going up in the face of the indefinite closure of Hormuz. We're investing in datacenters at a scale that only makes sense
If there is a psychosis, what is it? It is not an AI psychosis - modern AI started in the 1940s, or by some definitions before, and made progress up until 15 years ago to where deep neural networks became viable. And it has been progress on every front since then. No psychosis, it is doing well.
You mention the stock market, and that is another story. Cryptocurrencies, sub-prime loans, dot-com crash, Asian financial crisis. The economy has veered from crisis to crisis, overproduction and overproduction to crashes and bailouts.
AI is doing just fine - the past 15 years are a success for it we did not see in the decades before. If the economy as constituted is dealing with this in a "psychotic" fashion, it would not be the first time.