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In my thinking what AI lacks is a memory system

That has been solved with RAG, OCR-ish image encoding (deepseek recently) and just long context windows in general.

Not really. For example we still can’t get coding agents to work reliably, and I think it’s a memory problem, not a capabilities problem.

On the other hand, test-time weight updates would make model interpretability much harder.

RAG is like constantly reading your notes instead of integrating experiences into your processes.