It is 'nearly unavoidable' that AI will cause a financial crash within a decade, SEC head says : technology

[-] spudwart@spudwart.com 83 points 1 year ago

Is it because replacing employees with AI results in a never-ending cascade where your stupid system doesn't keep consuming because AI don't consume and won't get paid?

Or is it because using AI will result in the climate to continually become more inhospitable?

Maybe it will be because AI will be used to create more and more believable misinformation that results in WW3?

[-] RickRussell_CA@lemmy.world 54 points 1 year ago

OK, it is addressed in the article...

He's specifically talking about the use of AI in finance, and that an algorithm that runs amok in a particular sector:

in the after action reports people will say 'Aha! There was either one data aggregator or one model . . . we've relied on.' Maybe it's in the mortgage market. Maybe it's in some sector of the equity market

I'll throw out a microeconomic example. About a year into the pandemic, the price of used cars started going up... a LOT... in a short time. One of the reasons for the sudden changes in used car prices was that major used car resellers were using algorithms to set buying and selling prices for cars. While supply chain pressure on the new car market was unprecedented, and it trickled down to used cars, a facilitating cause is that the used car price-setting algorithms didn't really have any humans in the chain checking to see if the numbers they were kicking out made a lick of sense.

So you had companies like Carmax and Carvana buying used cars for $X, and then a month later 5X, then a month later 10X, because they were programmed to just up the offering price until they reached target stock levels. Sometimes they were buying 3+ year old used cars for more than the current price of NEW cars of similar trim level. Carvana's numbers got so whacked that it nearly sunk the company.

Now imagine that kind of a runaway algorithm in stocks, bonds, real estate, etc. It's 2008 all over again.

[-] tsonfeir@lemm.ee 27 points 1 year ago

Gosh, maybe legalized gambling is not a good way to run an economy?

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[-] eek2121@lemmy.world 17 points 1 year ago

Honestly hoping something like this happens in residential real estate, if it isn’t happening already. Housing is well overdue for a correction.

You can’t tell me that most people can afford a $400,000-$700,000 mortgage. Median incomes don’t support that price point. Median household incomes might support the lower end…barely. So I am starting to wonder just who is buying/selling all these houses. When I see a $600,000 “average” house last 3 days on the market and then sell for $760,000…I have questions.

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[-] ShittyBeatlesFCPres@lemmy.world 6 points 1 year ago

I traded in a 2014 Toyota hatchback to Carmax and got an Audi A3 when the algorithms went haywire. It didn’t cover the whole cost but it was a silly enough trade that I thought for sure someone would call me and say it was a computer error.

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[-] treadful@lemmy.zip 5 points 1 year ago

While that's really interesting, there was a lot more at play than a pricing algorithm. It was a culmination of a lot of things, starting with Cash for Clunkers that had a huge impact on the used car market. Then there were a ton of supply chain issues during COVID that squeezed the new car market. Probably some other factors I'm not aware of, too.

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[-] agressivelyPassive@feddit.de 8 points 1 year ago

Currently, I would rather guess it's the usual bubble popping. AI has attracted billions of investments and will likely pull in even more, but it's already foreseeable, that hardly any of the investments will turn a profit. So we'll end up with a third dotcom bubble.

[-] Leate_Wonceslace@lemmy.dbzer0.com 7 points 1 year ago* (last edited 1 year ago)

AI isn't a bubble. The futurist/Rationalist/transhumanist communities were saying what's happening now would happen in a few years about a decade ago, and our predictions are that the next phase is AI taking over all labor through sophisticated automation. We've been trying to warn everyone about this since the advent of Google Deep Dream, but sure stick your head in the sand again and let the world burn around you; it's worked so well so far.

This comment will probably get bombed, but w/e. 🤷‍♂️ Go ahead and be ignorant and angry at me, I'm used to it.

Edit: yes I am bitter. I've had a bad day, and I'm annoyed.

[-] agressivelyPassive@feddit.de 9 points 1 year ago

How many times has that been predicted already? Three, four? Look at the history of AI, it happens every few years.

Anyway, you're implying a dichotomy here. World domination or pipedream, but that's not the case. The dotcom bubble was without a doubt a bubble, but much of the underlying technology was used a few years later, just without the hype and fanfare.

AI will probably find its uses, and has the potential to eliminate a lot of jobs, but the current iteration of AI businesses is utter garbage. Even something as comparatively simple as Microsoft's Copilot is currently losing money - roughly as much as it costs to use. Yet, there are billions upon billions being poured into useless start-ups that will never produce anything of value in a profitable manner.

What exactly happened to self driving cars BTW? Weren't those totally on track of what experts predicted?

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[-] NegativeInf@lemmy.world 6 points 1 year ago

Yes. Definitely one of those or something else entirely.

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[-] seaQueue@lemmy.world 62 points 1 year ago

So do I collect my economic Bingo winnings after the 4th or 5th major crash of my adult lifetime?

[-] Death_Equity@lemmy.world 11 points 1 year ago

You win the chance to afford to eat human or expired cat food you found on the body of someone you shot over a pair of worn boots.

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[-] Steeve@lemmy.ca 53 points 1 year ago

Bears have predicted 100 of the last 3 market crashes

[-] andrewrgross@slrpnk.net 23 points 1 year ago

Yeah.

It's a casino, and a lot of these folks are no smarter than a retiree rubbing troll dolls on their favorite slot machine.

The solution is to realign markets to human needs. The is no productive benefit to high speed trading. There is no benefit to stock by backs. We need to reign in most of the nonsense that these financial services institutions do.

[+] trash80@lemmy.dbzer0.com 42 points 1 year ago* (last edited 11 months ago)

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[-] zbyte64 7 points 1 year ago

I'm optimistic we'll find a way to blame the poor. Just learn to code, and do rigorous statistics you ungrateful meatbag.

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[-] edgemaster72@lemmy.world 41 points 1 year ago

And then we finally eat the rich, right?

[-] seaQueue@lemmy.world 28 points 1 year ago

Sorry, the best we can do is a small marginal tax increase on income over $1M and a 50¢ bump to the minimum wage.

[-] edgemaster72@lemmy.world 18 points 1 year ago

Better spread out that wage increase over a reasonable period of time, like 10-25 years. Wouldn't want to burden the precious job creators out there.

/s

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[-] Blackmist@feddit.uk 32 points 1 year ago

They've been fucking with automated trading for decades though, unless you're going to try to convince me that there's a human investing in a trillionth of a company for a hundredth of a second at a time.

It's already caused "flash crashes" before. https://en.wikipedia.org/wiki/2010_flash_crash

The idea of investing in companies because you believe in them and want a share of their profits is sound enough I guess, but what it's morphed into is nonsense. The result is a system where you have trillion dollar companies that never actually turn a profit in favour of "growth".

[-] urist 10 points 1 year ago

Wow, they tried to blamed it on one autistic dude trading from his parent's apartment in London?

WTF
He was the most powerful man in the world for 30 minutes according to them, lmao. Why can't my personal issues give me super powers?

[-] Blackmist@feddit.uk 15 points 1 year ago

I love how they always mention the autism, as if being a mathematical genius is a common symptom, rather than just being able to remember every episode of Naruto.

[-] Restaldt@lemm.ee 5 points 1 year ago

Hey did you know the specific heat of water is 4.184 j/g°c because i learned that once in a physics class more than a decade ago and i still remember.

I am not a physicist and the memorization of that fact does not help me. Thanks brain.

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[-] Sir_Kevin@lemmy.dbzer0.com 27 points 1 year ago

Good, let it all collapse. I want to see the 1% shit themselves before climate change kills them.

[-] Copernican@lemmy.world 36 points 1 year ago

That's not who suffers most in financial collapse.

[-] Transcendant@lemmy.world 22 points 1 year ago

Bingo. The super-rich love a financial collapse, it gives them a golden opportunity to turn disaster capitalist. All those foreclosed homes & businesses available at a knockdown price, nom nom nom.

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[-] MrFlamey@lemmy.world 25 points 1 year ago

Is this before or after it destroys the economy for everyone but the super rich by replacing them and making them compete for fewer and fewer scraps? Sorry, there will be lots more new jobs created by AI probably, like AI wrangler, AI safety consultant and the like. Probably.

[-] dustyData@lemmy.world 12 points 1 year ago* (last edited 1 year ago)

I always have a laughing fit whenever I see “Prompt engineer” used unironically in a job posting on LinkedIn.

[-] bitsplease@lemmy.ml 7 points 1 year ago

I also think the term is granted way too much prestige, but a bit over a decade ago people also laughed at the notion of "Social Media Manager" being a real, high paying job

Who knows where this stuff will go

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[-] skozzii@lemmy.ca 24 points 1 year ago* (last edited 1 year ago)

The crash is already in motion and it was not AI that caused it. This is just getting us ready for who to blame when it crashes.

Many stocks have been far oversold and there is no way to reset it without the rich losing it all.

This is how they will reset it and protect the rich.

[-] teamevil@lemmy.world 22 points 1 year ago

Pretty sure that crash is more the fault of the greedy shits who think it's normal for 4 folks to own 50% of the country while 50% owns 2% of the country. Don't need AI to tell you that system isn't sustainable.

[-] Naatan@lemdro.id 19 points 1 year ago

Heavy doubt on this one.

There is still so much misunderstanding on the state of AI and its potential based on current technology (spoiler: reduce your expectations significantly). How can you expect anyone to make predictions with such misunderstanding.

That said it kinda seems like a financial crash is already happening, regardless of AI.

[-] Veltoss@lemmy.world 6 points 1 year ago

I don't know why everybody keeps downplaying where AI is already at and the speed at which it is improving. It can already disrupt multiple industries with where image, voice, and LMM AI is at right now.

[-] Naatan@lemdro.id 8 points 1 year ago

For me personally it's not that I want to downplay it, it's that I want to balance the scales. I see far more over-estimating of AI happening than downplaying.

The current form of AI is great as a tool and sadly there are definitely jobs out there that are nearly completely replaced by this tool. But that scope isn't about to change much based on where we are currently at. Many jobs require actual intelligence to make judgment calls, and the current form of AI just isn't going to cut it here as it has no real intelligence.

Of course, that won't stop dumb business leaders from still trying to use AI here, but that's an error in judgment that imo will correct itself over time.

[-] altima_neo@lemmy.zip 6 points 1 year ago* (last edited 1 year ago)

I think it's tech illiterate people being amazed by chat gpt and shit, not realizing just how janky and limited it's actual "artificial intelligence"actually is.

[-] MonkderZweite@feddit.ch 18 points 1 year ago* (last edited 1 year ago)

AI is just a convenient excuse and you know that.

[-] Destraight@lemm.ee 17 points 1 year ago* (last edited 1 year ago)

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[-] Bishma@discuss.tchncs.de 16 points 1 year ago* (last edited 1 year ago)

Financial expert predicts that (what is already) the longest bull market in world history will end within the next 10 years? And the thing that the world's largest companies are investing the most in might play a roll in that?

Bold.

[-] Sneptaur@pawb.social 5 points 1 year ago

Shock, awe, hysteria. More “AI” fear mongering headlines to boost the stock prices of tech giants. Yawn.

[-] WindowsEnjoyer@sh.itjust.works 15 points 1 year ago

Lmao yeah. They need someone to blame for upcoming crash lol.

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[-] Leate_Wonceslace@lemmy.dbzer0.com 13 points 1 year ago

I mean, a few communities I'm a part of have been warning about this since c. 2014, so I think he's actually correct in his prediction. I haven't read the article, but I don't think any solution he'd propose would be good regardless, so I think I'll just save my time. TLDR: failing a real leftist paradigm shift, we need global welfare like 5 to 10 years ago and UBI.

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[-] tiita@lemmy.world 10 points 1 year ago

then maybe they should do something about it.... its not like they do not have time...

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[-] Chee_Koala@lemmy.world 10 points 1 year ago

And? Is it something this person thinks we would avoid without AI? You would need a lot of faith that 'the market' won't dunk on itself some other way. What a non-statement..

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