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The AI Example: Pt 1

For those not fully understanding some of the inferences and examples I’ve been laying out this week on the show. I present the following example using a brand new article from my colleague Charles Hugh Smith.

First, his article. To wit:

Doom-Loop I: “Bringing Demand Forward” Will No Longer Save Us

The US economy has been saved time and again over the past two decades by this one weird trick: “Bringing Demand Forward” by lowering interest rates and lending standards so Americans could continue to buy stuff they didn’t really need because the monthly payment dropped as interest rates were pushed toward zero.

Every time the economy faltered, the Federal Reserve would push interest rates down to “Bring Demand Forward” by goosing debt-based consumption: OK, so you don’t actually need a new car, but come on, the new car loan is only 1.9%, you can afford the monthly nut. Or hey, it’s zero-percent financing for a couple years. Just go for it, get that new vehicle. Live large, you can swing it.

Flooding the economy with low-cost credit doesn’t just “Bring Demand Forward;” it also juices speculative bubbles across the entire spectrum, from cryptocurrencies to commercial real estate. As bubbles inflate, punters feel wealthier and so they’re willing to borrow and spend more–the infamous “wealth effect.”

Nothing “Brings Demand Forward” like a speculative bubble and so inflating credit-based bubbles is all part of the plan to encourage people to buy stuff they don’t need on credit to keep GDP expanding.

“Bringing Demand Forward” with speculative bubbles is joyous until the bubble pops–and all bubbles pop. When bubbles deflate, gains are replaced by losses and the reverse wealth effect kicks in.

The solution for the past two decades has been to drop interest rates even further and expand credit even more to generate a new bubble in one asset class or another.

Now that central banks have pumped up the Everything Bubble and unleashed inflation, the weird trick of dropping interest rates / juicing liquidity no longer works. It no long works in China, Japan, Europe, the US or the developing world: diminishing returns are systemic. Economies that become dependent on zero interest rates / juicing liquidity habituate to this constant stimulus and become dependent on speculative bubbles rather than on organic growth funded by earnings, savings and the advances of productivity.

“Bringing Demand Forward” always had an expiration date. You can’t bring demand forward forever. Eventually consumers tap out, bubbles pop, speculative gambles go bust, debt service eats up consumers’ disposable income, credit cards get maxed out and enterprises bloated by decades of bubbles and credit-funded spending implode under their fixed costs and debt loads.

The fantasy is that inflation will plummet to zero and we can all go back to “Bringing Demand Forward.” The reality is what’s plummeting is demand. The Everything Bubble is popping, credit is tightening, stimulus that worked in the past is no longer saving stagnating economies and the higher cost of credit is drowning consumers and enterprises that have grown complacent after 20 years of continuous “saves” via zero interest rates and tsunamis of cheap credit.

Again, to reiterate: The above was authored by Charles Hugh Smith via his website OfTwoMinds

Now onto my example…

The following was created via the AI (artificial intelligence) assistant both I and now nearly anyone across the web has access to. Ready? To wit:

The Fallacy of “Bringing Demand Forward”

Sure, those households bringing in $250,000 and up are doing just fine–if they bought houses and other assets ages ago and can reap the gains to subsidize their lifestyles. But everyone living off average earnings without the cushion of Everything Bubble gains–how much “demand” will they be able to afford after paying $300 for a couple bags of groceries?

It’s going to hurt when we hit the rocks at the bottom and unfortunately few are taking measures to reduce their risk while such measures are still within reach.

Speculative gambles falter, debt service consumes disposable income, credit cards indeed get maxed out, and enterprises bloated by decades of bubbles as well as credit-funded spending often collapse under the weight of their fixed costs and debt load.

While it is natural to anticipate that inflation will plummet to zero, and everything will return to ‘bringing demand forward’, the fact remains that demand is plummeting. The Everything Bubble is popping, the cost of credit is increasing, credit is tightening, and stimulus approaches that worked in the past are no longer useful in improving a stagnating economy. With the higher cost of credit drowning consumers and enterprises that have grown complacent after twenty years of continuous “saves” via zero interest rates as well as cheap credit, it is only those households earning $250,000 and over who are presently doing well.

While these households may have bought properties and other assets ages ago and can now make gains to sustain their lifestyles, those living off average earnings, without the cushion of Everything Bubble gains, may barely be able to afford daily essentials after paying for a couple of bags of groceries.

Inevitably, it would hurt when we hit the rock bottom, and only then would most people attempt to take measures to minimize their risk, albeit when it is already too late. While there’s limited time to reduce one’s risk, it is better late than never. As such, individuals and enterprises alike must take a proactive stance to eliminate risk today. Failure to do so could result in significantly negative consequences down the line when the ability to bring demand forward is weakened due to the diminishing returns associated with the Everything Bubble.

© 2023 Mark St.Cyr

The above (i.e., “written by me”) is for example purposes to dramatically show just how myself or someone else could post Charles’ original work on their website, newsletter, email “special report” etc., etc., etc. And no one would be the wiser

Here’s what you need to understand and why I’ve been doing this deep dive on the show this week into AI and what no one is truly understanding. Again, ready?

  • The above was generated using Charles’ article in isolation. i.e., no other resource.
  • I received the original article, read it immediately, and decided to try this experiment.
  • I copy and pasted it, told my AI to rewrite it using a different tone.
  • Total manual labor on my part to accomplish: Less than five key strokes.
  • Total time to accomplish in full, i.e., start to finish to publish live: under 60 seconds.

Let’s now discuss the reality to all the above…

Liability from copy write infringement or plagiarism odds? Near nil if not actually nil. Or said differently: Even if the author specifically knew and had documented proof (i.e., had a hidden camera recording you doing it or such) – even then I don’t believe it would either matter or even be enforceable under current law. Why?

It’s easily discernible that it is just another way of saying the same idea, not a pure copy and paste with a word here or there changed. And even that (i.e. copy, paste, word change et cetera) is still not a slam dunk for winning a suit.

It’s also very expensive (for the one claiming the infringement) if one loses. Very, very expensive. So to even bring one forth is all but vanquished unless you’re under the umbrella of some large publisher with the resources to even try, which is usually never the case. And ideas or insights are not copy write protected much like a book title. So that in and of itself is a self defeating issue because, that’s a considerable expense on its own just to see if there is truly any there there, before one even begins the process at all.

So what’s really important here is this: things touted as “original, informative expert generated analysis” going forward should all now be viewed as not only highly suspect, but if it truly is – it’s also a high probability its “stolen” via all this current AI stuff. For now we are currently head deep into the wild west of content on the web 2.0 and going ever higher in different iterations near daily – if not nanoseconds.

Again, if you don’t think the web is going to flooded with different iterations of the above, and is doing just that currently? I still have that ocean front property in KY you can have at a bargain price, just for you – trust me. And as much as I dislike the entire Bitcoin™ thingy, heck, for just you, I’ll even take your Bitcoin as payment. Because I’m just that kind of “sweetheart.”

So what’s a content creator to do in this environment? I believe it’s this…

Eventually, they’re all going to need to be behind some form of pay wall, that is, ones that have the true insight and value proposition that formulated the original work.

Charles knows the material – he’s lived it, he understands it, can pick it apart, put it back together, explain it and more. The rewrite specialist?

All they can do is re-write with no true insight or value added. Just another rendition or latest, greatest, newest, amplified, modified version into SEO manipulation for the advancement of knowledge clicks – nothing more. (aka – the scourge of the internet)

The problem is: how are you going to tell?

(Note: Charles and I are going to be doing a video interview discussing what we both see on the horizon and how to prepare in your business and personal life in the very near future. I’ll announce when we finalize the date. I’m quite sure this will also be part of that discussion, so stay tuned.)

That’s the real issue and why I’m discussing that and more, but also why I’ve stated my argument of myself and others going behind pay-walls. If you want true expert analysis in real time for this current ever shifting business environment…

Access to it will no longer be free – and the free stuff will probably not only be worth less than the digital ink it’s printed on. It may indeed end up being far more costly when applied than anyone contemplated to their business, personal or any other part of life for that matter.

17 year-old “life-coach” anyone?

Think about it.

© 2023 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.