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

[William Flynn Wallace]

Yeah, I'd like to know where to put my excess money.

Gold, and not any other thing in this world, has such a very high symbolic value.  If you've got gold you are rich and safe.  It will never drop to the value of silver or anything else (Van Gogh?).   bill w

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[John Clark]

On Sat, Jun 3, 2023 at 12:56 PM William Flynn Wallace <fooz...@gmail.com> wrote:

> Yeah, I'd like to know where to put my excess money.

Gold, and not any other thing in this world, has such a very high symbolic value. 

You will never find a bigger break with tradition or of symbolic value than during the singularity.  

> It will never drop to the value of silver or anything else (Van Gogh?).   bill w

The value of silver decreased to around half the value of gold (a 2:1 silver to gold ratio) during the late Middle Kingdom (2030–1650 BC) in Ancient Egypt, and it happened more recently too. In the early 1800s in Japan when trade was just opening up with that country the ratio was nearly 3 to one. 

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

On Sat, Jun 3, 2023 at 10:52 AM John Clark <johnk...@gmail.com> wrote:

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

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