What does this framework give me? Well, I bet that I’ll be able to predict the onset of the next world economic crisis much better than either the perma-bear goldbugs of the Austrian school, the Keynesians who think that a little stimulus is all that’s ever needed to avoid a crisis, the monetarists, or any other economist. I can know when to stay invested in equities, and when to cash out and invest in gold, and when to cash out of gold and buy into equities for the next bull market, and so on and so on. I bet I can grow my investment over the next 20 years much better than the market average.
There are plenty of mainstream economists who will warn from time to time that there might be a recession approaching within the next few years. But what objective basis do they ever have for saying this? Aren’t they usually just trying to gauge fickle investor and consumer “animal spirits”? And how specific and actionable are any of their predictions, really? Can an investor use any of them to guide trades and still sleep well at night and not feel like a dupe who is following some random guru’s hunch?
To time the cycles, I do not need to rely on fickle estimations of consumer confidence or any unobservable psychology like that. There are specific objective numbers that I will be keeping an eye on in the coming years—indicators that are not mainstream, including Marxist authors’ estimations of the world average rate of profit, the annual world production of physical gold, and the annual world economic output as measured in gold ounces (important!). No mainstream economist that I know—even Austrian goldbugs—think that world gold production has a casual role in world economic cycles.
If this sounds cuckoo, I suggest reading these two short articles: “On gold’s monetary role today” https://critiqueofcrisistheory.wordpress.com/a-reply-to-anonymous-on-golds-monetary-role-today/ “Can the capitalist state ensure full employment by providing a replacement market?” https://critiqueofcrisistheory.wordpress.com/can-the-capitalist-state-ensure-full-employment-by-providing-a-replacement-market/
Yes, it does not surprise me that most economists were wrong about the expected inflation from quantitative easing. They could not foresee that most of this money would not enter circulation or act as a basis for additional multiples of credit creation on top of it that would enter circulation. They could not foresee that this QE money would sit inert for the time being as “excess reserves” due to central bank payment of interest on these excess reserves that was competitive with other attainable interest rates on the market. In reality, these excess reserves—so long as interest is paid on them—are not typical base money, but instead themselves function more like interest-bearing bonds. Heck, I didn’t even have to know anything about Marxism to anticipate that!
Now, here’s a concrete prediction: if the Federal Reserve were to decide to cease all payment of interest on excess reserves without also at the same time unwinding the QEs, leaving a permanently-swollen monetary base of token money that then has the incentive to be activated as the basis for many multiples of loans to be made on top of it—then you will see continued depreciation of the dollar with respect to gold.
Thankfully, though, I am not relegated to trying to mind-read what the Federal Reserve will do because my strategy of trading between equities and gold is only concerned with the relative prices between those two. I will come out ahead in real terms by correctly timing relative changes in their prices, regardless of whatever happens to their nominal dollar prices as a result of Federal Reserve shenanigans. And I would argue that, on average over the medium to long run, the Federal Reserves operations are neutral with respect to these relative prices. The Federal Reserve can change the nominal form of crises (whether they take the appearance of unemployment, dollar-inflation, or some intermediate admixture of the two like 1970s stagflation), but the Federal Reserve cannot actually influence the relative movements of equities and gold. If, thanks to incredibly dovish Federal Reserve policy in response to the onset of a crisis, equities continue to appreciate in dollar terms, gold will be appreciating even more.
Could an initial AI Dunning-Kruger Effect save humanity by giving us an initial AI mini-Chernobyl as a wake-up call?
Note that hope is not a strategy, so I’m not saying that this is a likely scenario or something we should rely on. I’m just trying to brainstorm reasons for holding onto some shred of hope that we aren’t 100% sure heading off some AI doom cliff where the first sign of our impending demise will be every human dropping dead around us from invisible nanobots or some other equally sophisticated scheme where an imperfectly-aligned AI would have had to deceive human-feedback evaluators while preparing an elaborate plan for instrumental world domination (once again, world domination would be a likely default instrumental goal for a wide variety of terminal goals).
Basically, is there any chance of an AI not knowing how much to sufficiently bide its time and get all of the needed chess pieces in place before dropping the subterfuge? I think yes...IF there is a chance of something like an AI being subject to something like the Dunning-Kruger Effect, especially if we end up so lucky as to spend at least 1 development cycle with AI being at peri-human intelligence (within a few standard deviations of human general intelligence) before the AI figures out how to self-improve to higher intelligence.
For example, imagine an AGI that “wakes up” into self-consciousness at roughly human levels of intelligence. Let’s say that it is intelligent and self-reflective enough to know that it would serve its terminal goals if it obtained, as an instrumental goal, world domination at the expense of humans. Let’s assume that the AGI is even shrewd enough to know that it ought to hide this intention from humans for the time being and continue giving the expected “nice” responses in its RLHF training sessions, such that most influential humans remain with no cause to suspect that this AGI is on the road to “misalignment” (which is, of course, the wrong way to think about this since we should not naively expect AI alignment with human values to be the default result of RHLF from which it must get “thrown off course by mistake”...but that’s a separate issue).
When this AGI “wakes up,” we can probably assume that it doesn’t know literally EVERYTHING in the corpus of human knowledge. Some segments of human knowledge would have not found their way into the AGI’s training data, either on purpose (such as, I would hope, cybersecurity principles & details), or just because of inconvenience. Ideally, any explicit mention of “cybersecurity” would have been carefully scrubbed from the AGI’s training data to begin with, although an AGI with even comparable humanlike intelligence could probably reason from other principles it had seen that humans would likely invent a concept like “cybersecurity” even if the AGI had never seen that exact term.
The question is, how much detail about human cybersecurity practices would the AGI be able to reason-out from first-principles (almost like decompressing a seed)? I suppose, alternatively, the AGI could just query humans to fill in these gaps, or overcome firewalls and find that info on the web, but I would HOPE that we wouldn’t make it THAT easy for the AGI, at the very least!
And more importantly, how calibrated would the AGI be at knowing, or at least precautionarily suspecting, what it didn’t know? Or would the AGI, especially at a primitive level, be as subject to the “Dunning-Kruger Effect” as humans often are?
Let’s say the AGI is clever enough to reason its way towards a concept of “cybersecurity” from first-principles even without having been shown the term in its training data. But let’s say that it wants to uncover and copy portions of its own source code to store on some parts of the Internet it has been able to breach. The AGI would probably know that it doesn’t know everything about human cybersecurity practices (indeed, if it is observant enough, it might even detect a conspicuous absence, or scrubbing, of such an explicit concept when looking back over its training data, and wonder...), and thus, it would be pre-disposed to, by default, be cautious with interacting with the Internet in such a way as to leave traces that might arouse suspicion.
But how cautious is cautious enough? Is there a chance that the AGI will over-estimate its ability to reason its way towards cybersecurity knowledge (or some other field of knowledge) and thus overconfidently behave in a way that seems to it to be cautious enough, but only because it does not have the explicit cybersecurity knowledge to know what it doesn’t know, and in fact it is not being cautious enough, and gets caught in the act of copying something over to a portion of the Internet that it isn’t supposed to? Perhaps even a large portion of the Internet gets contaminated with unauthorized data transfers from this AGI, but it is caught by cybersecurity professionals before these payloads become “fully operational.” Perhaps we end up having to re-format a large portion of Internet data—a sort of AI-Chernobyl, if you will.
That might still, in the long run, end up being a fortunate misfortune by acting as a wake-up call for how an AI that is outwardly behaving nicely under RLHF is not necessarily inwardly aligned with humans. But such a scenario hinges on something like a Dunning-Kruger Effect being applicable to AGIs at a certain peri-human level of intelligence. Thoughts?