AI and Interest rates

[John Clark]

I have a theory about interest rates and I'd like to know what those who know more about economics than I do think about it.

When it comes to economic forecasting the generally accepted beliefs that an economy's population has is all important, and it doesn't even matter if that belief is true. So on the day it becomes generally accepted that the  AI singularity is near and a very drastic increase in productivity is imminent I believe there will be a BIG increase in interest rates, because a dollar in your pocket right now will be more important to you than a million dollars will be in 20 years, even if you manage to survive the singularity which you very will might not. And if you don't survive then the value of a dollar to you will be precisely zero, so you might as well spend it today and have a little fun and not loan it out. So regardless of if you believe you will survive the singularity or not, for you to be willing to loan me a dollar today if you were a logical you would demand that I give you many many more dollars tomorrow as repayment. Put it another way, in a few years a dollar will enable you to buy far more stuff than it can today, so you'd want to save your money and not lend it out unless you were given a very big reason to do so, such as an astronomically high interest-rate.

If I'm right about this then that would mean those who think they are being conservative and safe by investing in low interest government or corporate bonds will be disappointed because the value of all low interest investments that are supposed to be safe will crash. But that leads to another question that I don't have a clear answer to, even if I decide to save my money and not loan it out, how am I supposed to safely do that?  I'm sure some will immediately say "gold" but I have no reason to believe that in a post singularity world that particular metal will be significantly more valuable than iron. Iron is much more common than gold but iron is also much more useful than gold. 

John K Clark See what's on my new list at  Extropolis

6bx

[Brent Meeker]

"Buy land.  They aren't making any more of it."
    --- Mark Twain

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[Jason Resch]

On Sun, Jun 4, 2023, 12:48 AM Brent Meeker <meeke...@gmail.com> wrote:

"Buy land.  They aren't making any more of it."
    --- Mark Twain

But perhaps the utility and scarcity of land will diminish after the development of superhuman AI or the singularity, for any of the following reasons:

- The potential to create more space, land, and places in virtual reality

- The diminishment of importance of location given telepresence technologies and online transactions 

- The replacement of agriculture with food synthesis, lab grown meat, underground hydroponics, etc., or the elimination of the necessity of food for robotic or virtual bodies which may replace our existing ones.

- The replacement of solar energy as a significant or the cheapest source of energy as new reactor designs are created.

Jason 

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[Jason Resch]

Interest rates have the function of marshalling the productive resources of an economy towards pursuit of the most economically productive ends. Anything with an economic return less then prevailing interest rates isn't worth taking out a loan to invest in putting resources towards that endeavor.

When there is super intelligent AI, the AI will have an understanding of its available resources as well as models of which endeavors to prioritize as having the best risk adjusted rates of return, and can choose to prioritize accordingly, and perhaps it could do so entirely freed from our present constraints money, borrowing, or interest rates.

Jason 

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[Stathis Papaioannou]

Higher productivity puts downward pressure on inflation or causes deflation. If you believe you can buy more goods in the future that you can today for your money, you will not spend it today. Instead, you will leave it in the bank, even if they offer low interest rates. Central banks also tend to lower interest rates in times if low inflation.

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Stathis Papaioannou

[John Clark]

On Sat, Jun 3, 2023 at 7:47 PM Stathis Papaioannou <stat...@gmail.com> wrote:

> Higher productivity puts downward pressure on inflation or causes deflation. If you believe you can buy more goods in the future that you can today for your money, you will not spend it today.

But you've left survival out of your thinking.  Even today it would be possible to survive on just a few hundred dollars a year, you might be living on the streets but you'd survive, and in the future it would only cost you a few pennies to do the same. So if you don't survive the singularity it won't be because you don't have enough money. And if you don't survive then money in the future will be worthless to you so you might as well spend it today and have some fun with it.  

> you will leave it in the bank, even if they offer low interest rates.

But that just kicks the problem upstairs. Forget a "low interest rate", what will the bank invest the money you give it in that allows it to give you even a zero interest rate and not a negative one?  Brent mentioned land being a good investment but if you could manufacture food directly from the elements then you wouldn't need vast amounts of land for farming and ranching, and with virtual reality getting better and better there will be no need for sports stadiums or movie theaters or office buildings or shopping malls or golf courses. And Mark Twain will be proven wrong, we will be able to make more land, they're called space settlements.  

John K Clark    See what's on my new list at  Extropolis

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[Brent Meeker]

On 6/4/2023 3:30 AM, John Clark wrote:

On Sat, Jun 3, 2023 at 7:47 PM Stathis Papaioannou <stat...@gmail.com> wrote:

> Higher productivity puts downward pressure on inflation or causes deflation. If you believe you can buy more goods in the future that you can today for your money, you will not spend it today.

But you've left survival out of your thinking.  Even today it would be possible to survive on just a few hundred dollars a year, you might be living on the streets but you'd survive, and in the future it would only cost you a few pennies to do the same. So if you don't survive the singularity it won't be because you don't have enough money. And if you don't survive then money in the future will be worthless to you so you might as well spend it today and have some fun with it.  

> you will leave it in the bank, even if they offer low interest rates.

But that just kicks the problem upstairs. Forget a "low interest rate", what will the bank invest the money you give it in that allows it to give you even a zero interest rate and not a negative one?  Brent mentioned land being a good investment but if you could manufacture food directly from the elements then you wouldn't need vast amounts of land for farming and ranching, and with virtual reality getting better and better there will be no need for sports stadiums or movie theaters or office buildings or shopping malls or golf courses. And Mark Twain will be proven wrong, we will be able to make more land, they're called space settlements. 

You need land for the solar panel power farms.

Brent

[John Clark]

On Sun, Jun 4, 2023 at 1:51 PM Brent Meeker <meeke...@gmail.com> wrote:

> You need land for the solar panel power farms.

As Freeman Dyson pointed out, you don't need land or even the Earth in order to get useful work out of the sun. 

John K Clark    See what's on my new list at  Extropolis

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