jaqalopes

I guess you can read this as a funny, outdated text but I personally would not give it to my kid.

This seems to be the pattern for the human champions who are the first to lose to computers. What a truly singular moment in existence to experience. Both a personal loss and a loss for the whole human species, and you have to bear it alone.

For my part, I found it perfectly thought provoking; not a strict roadmap to follow, but a set of observations against which to measure my own experiences and ideas, and see if I can't improve on what works for me. I appreciate anyone who is trying to dig deeper into how human beings can better themselves and create meaning in our indifferent universe.

Most of my writing energy the last couple months is going into finishing a book projects but when that's done I will have more to write on other topics!

Something I find especially amusing is that, despite the hype here on HN, most people in the world at large have not yet used a generative AI of any kind, even if they've heard about it on the news or social media. Because these things are developing so quickly, I think the first of these "agents" are going to hit the market before most people have even tried something like a ChatGPT. And so the experience of a "normal" person who's not in the loop will be of ~1 year of AI news hype followed by the sudden existence of sci-fi style actual artificial intelligences being everywhere. This will be extremely jarring but ultimately probably very cool for everyone.

What a perfect use case for AI hallucinations!

As we discovered with some recent bank failures, it is somewhat more complicated than this. People did not just use the new money to buy stuff. They also used it to invest, and a lot of those investments would not have made sense if interest rates were higher. Somewhere I saw the example of an "AI dog-washing startup"; this fake business illustrates the type of real but not necessarily sound business that was suddenly getting investment because there was a lot of money flying around inside the economy. Now, when the Fed "raised interest rates," what actually happened was it created new investment vehicles (e.g. treasury bonds) that offered returns on investment that were much more attractive to investors than the previous generation that offered low/zero interest. Banks and others shifted towards these new, better investments and tried to sell their old, worse ones. Hence, some of the money that was flying around began to exit the economy and return to the government coffers. This was bad for banks like SVB that had a lot of "interest rate risk." It was also bad for downstream investments like the AI dog-washing startup, which were now competing with "better" businesses in an environment with less money flying around—this is where you see e.g. the current tech hiring downturn and layoffs.

So that's about what the Fed has been able to do. One assumption you've highlighted here is, to what extent is the Fed doing all this based on research and deliberation? I think the short answer is, we don't know. Interest rates are indeed a blunt instrument, but they are also the instrument the Fed can control, and so that's what the Fed is using. This leaves a lot of room for conspiracy theories and speculation. I happen to think the Fed is doing its best within the constraints of its powers, but the Fed cannot singlehandedly "fix the economy." They can print money and adjust interest rates. And doing these things affects the economy in theoretically well-understood ways.

Ultimately, raising rates is like putting an ice pack on an injury. It reduces the swelling, which is helpful, but it doesn't fix the injury per se—the fixing happens in an entirely different, more complex system, really a system of systems. Just so with "the economy." The economy ultimately exists as a sort of distributed phenomenon in the thoughts and actions of all its participants. These thoughts and actions are not aligned, and so we get the infinite omni-directional tug-of-war known as the "invisible hand of the market." The Fed certainly has a lot of ways to influence the economy, but it cannot force people to think or act in precise, coordinated ways.