this post was submitted on 16 Oct 2023
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It is 'nearly unavoidable' that AI will cause a financial crash within a decade, SEC head says::undefined

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[–] [email protected] 81 points 1 year ago (4 children)

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?

[–] [email protected] 55 points 1 year ago (9 children)

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.

[–] [email protected] 27 points 1 year ago (2 children)

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

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[–] [email protected] 17 points 1 year ago (6 children)

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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[–] [email protected] 6 points 1 year ago (2 children)

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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[–] [email protected] 7 points 1 year ago (3 children)

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.

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[–] [email protected] 6 points 1 year ago (1 children)

Yes. Definitely one of those or something else entirely.

[–] [email protected] 5 points 1 year ago* (last edited 1 year ago)

That’s an economist level reply right there

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[–] [email protected] 64 points 1 year ago (2 children)

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

[–] [email protected] 12 points 1 year ago (1 children)

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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[–] [email protected] 53 points 1 year ago (2 children)

Bears have predicted 100 of the last 3 market crashes

[–] [email protected] 22 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.

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[–] [email protected] 42 points 1 year ago (1 children)

And then we finally eat the rich, right?

[–] [email protected] 28 points 1 year ago (4 children)

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

[–] [email protected] 17 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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[–] [email protected] 35 points 1 year ago (3 children)

Fuck Gary Gensler. Dude tries to influence the market just to line his own pockets.

He should not be the head of the SEC.

[–] [email protected] 8 points 1 year ago

Market manipulation? SEC should investigate him

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[–] [email protected] 30 points 1 year ago (1 children)

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".

[–] [email protected] 10 points 1 year ago (1 children)

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

  1. WTF
  2. 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?
[–] [email protected] 13 points 1 year ago (2 children)

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.

[–] [email protected] 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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[–] [email protected] 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.

[–] [email protected] 23 points 1 year ago (1 children)

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.

[–] [email protected] 12 points 1 year ago* (last edited 1 year ago) (6 children)

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

[–] [email protected] 7 points 1 year ago (1 children)

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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[–] [email protected] 20 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.

[–] [email protected] 19 points 1 year ago (1 children)

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

[–] [email protected] 36 points 1 year ago (11 children)

That's not who suffers most in financial collapse.

[–] [email protected] 24 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.

[–] [email protected] 4 points 1 year ago (3 children)

I need to get off lemmy. Too many teenagers on here with their "burn it all down"s and "trust me, I have a super easy solution to a giant complex problem that has been plaguing humanity for generarions"s and "the bad guys are actually good guys, lol I'm so edgy"s

[–] [email protected] 7 points 1 year ago

now now, no need to be dismissive of other age groups in this matter. I'm sure there's plenty of non-teenager people that think the same way too. on the internet, nobody knows you're a 74 yr old extremist

[–] [email protected] 5 points 1 year ago (4 children)

Is this suddenly a teenager platform whenever you want to infantilize the ones you disagree with?

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[–] [email protected] 18 points 1 year ago* (last edited 1 year ago)

AI is just a convenient excuse and you know that.

[–] [email protected] 16 points 1 year ago* (last edited 1 year ago) (1 children)

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.

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[–] WindowsEnjoyer 16 points 1 year ago (1 children)

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

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[–] [email protected] 14 points 1 year ago (10 children)

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.

[–] [email protected] 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.

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[–] [email protected] 13 points 1 year ago* (last edited 1 year ago) (1 children)

The SEC means: Security, and Exchange Commission. In case anybody like myself hates abbreviations, and have to look it up on Google to see what it even means

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[–] [email protected] 10 points 1 year ago (1 children)

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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[–] [email protected] 10 points 1 year ago (1 children)

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

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[–] [email protected] 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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