Can someone point me to an ELI5 explainer about the mechanisms for AI to massively raise interest rates (both aligned and unaligned paths, and being careful with real vs nominal rates)?
My basic understanding is that interest rate is basically “cost of capital”, which by EMH follows the marginal return to capital. Does AI automatically make everything capital-constrained, so the marginal value of additional capital is very high?
My understanding: Think of compute (practically: GPUs) massively spiking in price because a valuable alternative use was found: crypto mining. Now imagine what happens to compute costs when something that actually impacts the global economy involving compute is discovered, say something that boosts productivity growth from 2% to 5% (!). Now extend this to more areas besides just raw compute, starting with complements of compute and branching out from there.
Unaligned: If you’re going to die soon, you probably want to spend your money soon.
Aligned: If you’re going to be rich soon, you probably don’t want to save your money.
Both scenarios depend upon the time-discounted value of money to be lower after AGI. I guess the underlying assumptions are that the value derived from aligned AGI will be distributed without respect to capital, and that capital is relatively worthless in the face of unaligned AGI.
Ah, so the mechanism is a reduction in present value of money, not an increase in future value (though it implies an increase from the reduced current value). That does fit nicely with my general finance-world outlook, which is “we’re not as rich as we think”, but I’m not sure I’m sold on the rebound part of the story.
Can someone point me to an ELI5 explainer about the mechanisms for AI to massively raise interest rates (both aligned and unaligned paths, and being careful with real vs nominal rates)?
My basic understanding is that interest rate is basically “cost of capital”, which by EMH follows the marginal return to capital. Does AI automatically make everything capital-constrained, so the marginal value of additional capital is very high?
My understanding: Think of compute (practically: GPUs) massively spiking in price because a valuable alternative use was found: crypto mining. Now imagine what happens to compute costs when something that actually impacts the global economy involving compute is discovered, say something that boosts productivity growth from 2% to 5% (!). Now extend this to more areas besides just raw compute, starting with complements of compute and branching out from there.
It is explained in the first section of the referenced post: AGI and the EMH: markets are not expecting aligned or unaligned AI in the next 30 years—EA Forum (effectivealtruism.org)
Unaligned: If you’re going to die soon, you probably want to spend your money soon.
Aligned: If you’re going to be rich soon, you probably don’t want to save your money.
Both scenarios depend upon the time-discounted value of money to be lower after AGI. I guess the underlying assumptions are that the value derived from aligned AGI will be distributed without respect to capital, and that capital is relatively worthless in the face of unaligned AGI.
Ah, so the mechanism is a reduction in present value of money, not an increase in future value (though it implies an increase from the reduced current value). That does fit nicely with my general finance-world outlook, which is “we’re not as rich as we think”, but I’m not sure I’m sold on the rebound part of the story.