Trump has lived, existed and relied on borrowed money. That was when he could find any one who was foolish enough to lend it to him. Most of his ventures and projects have shown that he does not and has not understood any basic rules of business and finance. I remember when he drove out an analyst who pointed out that his debt offering for one his casino projects would not survive at the interest rates and leverage he had put on the casino. By the way eventually the bond holders were the ones that lost out. His business record has been abysmal and his understanding of finance and the economy lacking. Once he gets his hands on the Fed we can expect to see not only more financial chaos but an economic contraction. He has no strategy or understanding this is a government being run on the day to day on his instincts and his needs to be the head line.
I have seen some of the damage first hand and had clients that lost large amounts of money. In fact, I was able to discourage one investment and found out that the value of the assets had been inflated several hundred percent, his rejoinder was 'it has my name on it".
I think he does understand basic rules of business and finance, just in a similar way to how a leech would understand hematology. It goes something like this:
“If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem.” - J. Paul Getty
It's the same pattern over and over, whether it is Credit Suisse, Rudy Giuliani or a tradesman redoing the tile in his bathroom.
1. Borrow capital (or labor)
2. (If necessary transfer the asset to another holding)
3. Refuse to pay / go bankrupt
It's like he's religiously transactional except always welches on his end of the deal. You are useful to him as long as you keep giving him stuff. After that, you're gone.
Sometimes, like in the tariffs, it might not even be about the apparent target. Maybe he's just looking to extort the little guy (e.g. Apple or Walmart) into bribery when he goes after China. Bribes are definitely aligned with the sort of 1-way deal he strikes. Expectations of reciprocity are the other guy's foolish mistake. Just ask Musk.
I was a member of the creditor committee during Trump's Atlantic City BK's 2&3. I can say that he always wants lower rates and no covenants. He's a condo guy!
I must commend Paul for his mention of the My Pillow guy as a possible Fed Chair! Brilliant! Now what about America's Mayor?
As a country, we've seen this before. Tricky Dickie convinced the Fed to leave interest rates low in an inflationary economy and set up protective tariffs (though much lower than DonnyJon's). The result was the "stagflation" that proved incurable without triggering a serious recession.
Watching from the outside, it’s just CRAZY that your Presidents get to choose all the people who run things - including the justices on the Supreme Court. I can’t see how that’s meant to fit with separation of the powers, let alone contribute to stability…
…and evidently it doesn’t. It’s like watching a race to the bottom, and it’s infecting countries like the UK. Funded of course by the rich individuals and corporations who never pay their taxes, but instead spend on political influence, to stitch things up to suit themselves.
And that’s not to mention the poor mid-ranking civil servants who have dedicated their lives to trying to do the right thing, often with very little recompense (and a huge weight of responsibility). They are thrown on the scrapheap while the pirates fleece the nation…
It used to work, not perfectly but just enough to keep us from rebelling. The Constitution is a deeply flawed document, hence our laws, based on it, are deeply flawed. The worst flaw is that the whole thing depended on an "honor" system. It never occurred to the framers that someone with no honor and no shame would ascend to the throne.
And for nearly two and a half centuries, we bought into it without much pushback. Our politicians were already beholden to their biggest donors, and then came Citizens United. That sham of a "decision" opened the floodgates to absolute graft.
If and when we retake our country, we'll obviously have to fix the Constitution to ensure this never happens again, as well as to bring to justice the culprits who got us here.
Yeah, I don't think people appreciate how rickety the Constitution's always been. The entire thing was based on a compromise with slavers that started coming apart before the ink was dry, and the country spent the next eighty years spiraling towards civil war. It was able to pull itself together because the good guys won that war, because the bad guys were reduced to a rump state in the Southeast that couldn't dominate the nation's politics anymore, and because for the next hundred and thirty years or so, the more liberal party (first Republicans, then Democrats) was largely the one in charge (even after people like Nixon and Reagan started winning big, it wasn't until the nineties that Congress went Republican).
People look at this series of fortunate events and think it all happened because the founding fathers designed a perfect system, rather than dumb luck that inevitably runs out eventually.
After Professor Krugman posted his talk with Ada Palmer, I ordered her book on the Renaissance. She has a section that agrees emphatically with your last sentence. She says people are always asking "What caused the fall of ancient Rome?" What they should be asking is "How the Heck did it last so long?" Our system is relatively young, but many democracies have disintegrated in much shorter times. While it was a separate State, Venice held the record at roughly 1,100 years.
I read that too, George, initially out of an interest in art & a recent visit to Florence. But I got so much more out of the analyses in the conversation. Highly recommended.....
It doesn’t help that most schools (at least the ones in the South) no longer teach Civics as a stand alone subject. I’d bet 70% of those under 40 to 45 have no real understanding of how government is supposed to work let alone how it really works.
Our Congress has "advise and consent" powers, which theoretically allows them to torpedo bad nominees. But the Republican majority just rolls over and shows its belly to Trump, rubber stamping anything he wants.
Congress has lots more power than it uses. The US Constitution's language on appointments reads in Article II, Section 2:
"He [the President] ... shall nominate, and by and with the Advice and Consent of the Senate, shall appoint [various officials], whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments."
We tend to overlook the parts that say "established by law" and "but the Congress may by Law vest the Appointment." If the US wanted to have the rule of law rather than of one person, Congress could do a lot with this.
PS: The US Constitution doesn't have the word "unitary" with respect to the President or anything else. Art. II.2 sounds like "the executive Power" may be exercised by more people than just those nominated by the President.
And that's just personnel appointments. As regards policy, by the time we get to Article II, Article I has already given that to Congress in Article I, Section 8: "The Congress shall have Power ... To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof." NB: all powers vested by the Constitution in the US Government may be controlled by the law of Congress.
All Article II's references to "executive" need to be read in the context already laid out in Article I. That is, the executive carries the law into execution. Doesn't make law.
This indeed gives you leeway in the future (I fervently hope it's sooner rather than later, but it WILL come) to push things back in the right direction, and perhaps nail them down there rather harder!
One of the things I like about the American system is that it has committees WITH POWER who come from both parties (and independents?). I'm not sure about how that's constructed, but it seems to me to be a fundamentally good idea.
One thing that's better in (most of) the Westminster systems is how the role of the Speaker is framed:
"...when the Speaker becomes the Speaker they give up their party allegiance. This means that they effectively sit as an Independent MP in the House of Commons. Importantly, by convention, the major parties do not put up a candidate against the Speaker at the next General Election. This is to avoid putting the Speaker in a position whereby they have to compromise their neutrality by being forced to campaign in a General Election." Which in practice means the Speaker is often originally from the party that is sitting in opposition. Does help to keep that neutrality...
As a bit more background, during my lifetime we’ve had ‘liberal’ Republicans and ‘conservative’ Democrats, rather than the party/ideology we have now. That’s what allowed for “working across the aisle “ that no longer exists. Another oversight on the part of the Founders (according to historian Heather Cox Richardson) is they didn’t envision the future political parties, which seems to us unbelievable!
I don't have any problem with the president choosing his cabinet. How many managers in business don't get to hire their employees. The problem is it is all predicated on an president interested in doing a good faith job. Ultimately, it was up to the voters to stop this kind of stuff. They just didn't (again).
Unfortunately it’s a lot more complicated than just “it was up to the voters” between gerrymandering, the electoral college system, and even evidence that has been found after the fact that points to a strong possibility that the election was outright rigged by the very people constantly making accusations of election rigging (as usual every accusation is an admission with MAGA…..)
Every evil President wants their own Arthur Burns, unfortunately.
I've been thinking more and more about these passages from members of W Bush's admin as related by Ron Suskind.
"This is why he dispenses with people who confront him with inconvenient facts," Bartlett went on to say. "He truly believes he's on a mission from God. Absolute faith like that overwhelms a need for analysis. The whole thing about faith is to believe things for which there is no empirical evidence." Bartlett paused, then said, "But you can't run the world on faith."
....
The aide said that guys like me were "in what we call the reality-based community," which he defined as people who "believe that solutions emerge from your judicious study of discernible reality." I nodded and murmured something about enlightenment principles and empiricism. He cut me off. "That's not the way the world really works anymore," he continued. "We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do."
I remember the good old days, when America was great, and I was sure that GW Bush would be the worst president the US would ever have. Boy, was I naive.
What’s striking is Republicans regaining office only eight years after tanking the economy and bogging us down militarily in Iraq and Afghanistan. It took many decades for Republicans to recover from the Hoover administration.
That’s the power of 1.) all the money pooled into the 1% over the last 25 years 2.) propaganda 3.) steadily undermining both democracy and education.
Even the internet became horribly warped from its original form of freely available information on everything you could think of and an unprecedented technological development that educates the masses more than anything ever has just to become weaponized as the most terrifying propaganda tool the world has ever seen. The scariest part of any propaganda is that most people don’t realize it’s propaganda but in this case people don’t even realize anything changed they still think of the internet the same way that they always have.
A note of cautious optimism in the gloom: The Fed chair is the public face of the Federal Reserve, leads its work, and chairs the Federal Open Market Committee (FOMC). But he or she cannot just dictate interest interest policy because the chair has only one vote out of twelve on the FOMC. So the Fed chair's power over interest rates exactly equals their ability to persuade the other FOMC members they should follow the chair's lead. I don't know that a toady or a crank would be all that persuasive.
It also doesn't look like the Supreme Court will let Trump fire Fed governors at will, and he doesn't even have theoretical ability to fire the five members of the FOMC that are supplied by the regional Feds. So Trump's ability to bend the Federal Reserve to his will rests on the appointment of a single governor whose term ends in January of next year. (That's January by the way, not May, since the Fed chair is appointed from the sitting governors.) Also, just because Jay Powell's term as chair ends next year doesn't mean Trump will be rid of him, because Powell's term as governor is not up until January of 2028, so if he wants he can stay on as an eminence grise to potentially lead the internal opposition against whichever Fox News host Trump will appoint as his successor.
Of course, nobody can say this is what will actually happen, but it doesn't seem totally unlikely.
Powell is highly principled. We won’t see that again for a while. Low interest rates are a sugar boost to the economy but a diet of pure sugar isn’t sustainable.
Call. Write. Email. Protest. Unrelentingly. About everything ❤️🩹🤍💙
Use/share this spreadsheet as a resource to call/email/write members of Congress, the Cabinet and news organizations. Reach out to those in your own state, and those in a committee that fits your topic.
We’re in the year 2 of AI bull market. AI revolution is slow for now as all that CAPEX spending is only building an infrastructure. But just like Trump had to face COVID, he’ll likely have to face accelerating revamping of job market that can leave millions out of jobs instantly. In addition, current AI bubble can go through a massive correction phase under Trump as well.
I'm actually an AI Engineer and I'm getting a Masters in AI/ML stuff. Don't fall for the CEO hype.
Yes, AI capabilities are expanding in leaps and bounds and very stupid companies WILL be persuaded to replace a lot of junior engineers (a very bad idea), and mid-level and senior people will become MUCH more productive. But when you get into higher level stuff. For example, I used AI as a tutor for Deterministic Optimization and it was hallucinating right and left even on relatively simple (graduate level) tasks. It simply could not do it and even I, as a student learning, could catch its errors. IN NO WAY could it do the work professionally.
But what we are heading for is CEOs doing a lot of stupid things, then a crash when those stupid decisions have stupid results--as you say, a correction--and then a large reorientation and probably an AI Winter.
Thanks for the post. I am a retired IT professional. My field of expertise was system and network administration plus network security. LLMs are an interesting tech, but I agree with you that the hype goes well beyond the reality of what the tech is capable of. This is similar to the Internet bubble. You are correct that right now we are building a lot of very powerful computing infrastructure which is similar t all the fiber optic cable laid down in the 90s. That infrastructure can at least be repurposed for more productive uses. LLMs are expensive to train and expensive to run. There is no viable business model for their use at this time. So far the only way companies like Open AI stay in business is to continue to extract money from gullible investors.
Main market for AI is enterprise not direct consumers. I know for a fact that most software development firms have already replaced first lines of QC and first lines of tech support by AI. I have friends who are doing this kind of automation - building AI agents for mundane coding tasks, and they are overwhelmed with demand.
We’re not only building computing infrastructure, we’re building energy infrastructure as well, nuclear plants are making a comeback.
Everyone who thought internet was only useful to send emails proved to be wrong.
AI is going to be a bigger revolution than internet because it will also power robotics and autonomous driving even further. Check out Chinese BYD plants, they already have more robots than people. AI infrastructure will power it further.
I do not disagree that the ML models can work very well in specific fields with a good training set. What I object to is the quest for Artificial General Intelligence (AGI). I think that is a pipe dream, but that is what Sam Altman is selling. Remember AI is more than just LLMs. Also remember it was Jon McCarthy who coined the term AI. He originally started with "Automata Studied", but that did not sell very well. So even the term AI is just a marketing term. Altman is apparently an excellent salesperson, but what he is selling is unrealistic and unobtainable.
But would you pay for Artificial Artificial Intelligence? For example, we in the US do a lot of bullshit for legal compliance without any real intent of solving the practical problem, just the legal one. Maybe deploying an artificial intelligence to satisfy the legal requirement without actually doing much to solve the practical problem is just what the Lawyer ordered! It is automated, demonstrable, private, safe, and doesn't go on vacation. Problem "solved"!
I am retired now, so I can joke about AI driven misogyny-aware shock collars, just as long as you young whooper-snappers keep working to deliver my dividend checks. Work harder!
Certainly in the markets, there will be a AI crash after the AI boom. Not every good idea is a profitable one, and regardless of the quality of the tech, the companies will need to navigate the landscape of market reality where in some cases where there is money on the table to be captured by AI, and other areas where there just isn't. Time will sort it out.
I’m not so sure. The speed of information delivery sped up market agility as well along with scenario planning. I think the adoption curve will be smoother and winter won’t be that bad, unless it’s triggered by a major security incident and we step into some sort of Matrix/Terminator scenario
There are a lot of areas where it might do a reasonable job. As a D&D Dungeon Master it is simply brilliant, because you are basically asking it to bullshit about a fantasy realm. It draws pictures better than I do, can spin yarns in most any style and any dialect, and occasionally is quite funny.
Prompt> The party, chased by ghouls, is racing a cart through the forest and is forced to make a rapid choice between track leading to a bridge with a sign "Bridge Out!" and a tunnel which leads under the earth into the dark. If they go under the earth, a trap door will drop behind them and a large net will fall on the cart. Give me a humorous title for the section.
AI: Net Gains and Ghastly Losses
I was quite amused. I just didn't expect a sense of humor out of a pile of racist linear algebra. Starting to think the campaign should be a series of Rocky and Bullwinkle titled scenes.
Also, there is politics, investment prospectus and toilet scrubbing where bullshit is the order of the day. Some areas will be completely transformed, because we really just don't need or at least expect quality / truthiness.
Again as a librarian, your last sentence reminds me of the onset of widespread internet use in business workplaces early 2000s and the dismissal or undermining of professionals capable of discerning authoritative information from chaff. Lots of really really bad decisions resulted. IMHO led directly to the 2008-9 crash.
AI will get better. Trillions of dollars have already been spent on it. I don’t think that in a long run AI will be replacing junior engineers. It’s just junior engineers jobs are getting revamped now. But AI will entirely kill the middle level of engineering, those who are now comfortable in their careers and are 40-65 yo. IT Managers and IT Generalists are already struggling to find new jobs. Project management will be completely revamped soon, and old school PMs will also be out.
I think you are wrong. A lot of the money spent on AI is in the hyperscalar server datacenters needed to train and run the LLMs. They need the capacity because it literally takes a lot of compute to train these monsters that still hallucinate. And the researchers are discovering that just making the models larger does not improve their accuracy. I suggest you read Karen Hao's book - "Empire of AI" about OpenAI and all the harm their quest for AGI is causing worldwide. Ironically, the Chinese AI community may have got the tech right which resulted in smaller models which consume a lot less resources.
Remember these models basically get their information by scanning the Internet which as we know contains a lot of disinformation. Look at what happened with Musk's LLM which ended up spewing a lot hateful fascist nonsense and had to be shutdown. It apparently even called itself MechaHitler.
What many folks are starting the realize is these huge models still do not reason which is supposedly a characteristic of AGI. They simply regurgitate the information they scoop up in the training. The old IT saying of GIGO (Garbage In Garbage Out) still applies.
If we remove AI from the market we’re in a deep recession, it’s the only economic driver now.
I know that many LLMs are garbage and tons of money and energy are spent to improve them, but for example Google’s Gemini is a solid model, Chinese DeepSeek, French Mistral and etc. Grok is not great because they are doing a lot of stupid things trying to catch up with leaders.
I think OpenAI will end up like Netscape, they will be buried by competition.
Also, current LLM algorithms will improve to be more energy efficient. DeepSeek did just that.
And I think AGI might only be possible after the revolution of quantum computing, which will most likely start around 2030
I believe that the major impacts will be on the junior engineers. The middle level people used to be junior engineers and will revert to their old jobs (with a cut in pay). That is, at least, what happened as my old employer (Bellcore/Telcordia) died.
I was at the optometrist getting a refraction, and the doctor mentioned her disagreement with the idea that AI could do a quality refraction. I agreed -- aside from the back-and-forth discussion (whether one or two is better, and if I can see one again?), she discussed my day-to-day activities. She asked if I'm a reader, how often I drive, and what my hobbies are (I mentioned sewing, painting, and embroidering). She used that information to plan my refractions (I have progressive lenses) to suit me and me alone, and explained why. AI lacks the ability to deal with singularities and nuance.
In the medical field, AI is not looking to replace your doctor, but rather to make you doctor more efficient, more accurate, and more productive--not computer diagnosis, but computer AIDED diagnosis. And frankly it's desperately needed. We don't have enough medical professionals in the US, much less in rural, remote, and underserved areas.
And yes, AI can manage nuance.
The largest challenge in medical progress for AI is the lack of good data sets. Superficially, there are many, but once you scratch the surface... nada. None. It's just not there.
Depends on your definition of worse. It made revolution in media and communication, and made a lot of money to investors. We’re on social media platform now.
If anything social media wide-spread toxicity proves my point of a widespread AI adoption
Anybody here but me concerned about un regulated crypto bubble and it's overt use to fund terrorism and other crimes? That feels a lot more in my face and immediate in the grand scheme of things.
Oh that train has passed the point of concern. I think of crypto as a new sort of religion. You could laugh at Christians all you wanted when they were a small ostracized group, but you can’t laugh at Catholics or Mormons, they will bury you. And they will keep nurturing their faith.
Crypto is already owned by about $60M Americans. Many of them voted for Trump to keep their crypto assets, cause they put real cash in it.
As a research librarian, AI's ability to demagogue & misinform frightens me as much as the Trump Republicans & those behind them. The thought of a combination of both, and cryptocurrencies layered on top, has me in a state of psychic panic.
I've been reading the NYT articles on Trump's erratic tariff threats and there still seems to be a determination to sanewash him. Somehow the absurd letters he was randomly posting on social media are all part of some unorthodox negotiating strategy which may or may not yield results. The emperor has no clothes, but they don't want to admit it.
The seven members of the Board of Governors of the Federal Reserve System are nominated by the President and confirmed by the Senate. A full term is fourteen years. One term begins every two years. So in theory Trump cant pack the board with puppets in this term. Hans makes my point more eloquently below
Russell Vought has no credentials other than as a hired Heritage Foundation hitman. Trump wants Powell out because he won't bend the knee, just like he wanted Comey out for the same reason. Inflation will go up, the economy will go down, chaos with stagflation is not a good place to be. But that's all that Trump can deliver. Americans have to find out for themselves that electing a lunatic and criminal as president was not a good idea.
Political theorists like Schumpeter, Mosca, and Michels would not have been a bit surprised by Trump’s reign of terror. They predicted that democracies would always fail, that in a democracy, the state would inevitably be captured by a cynical cabal of organized elites. The disorganized, marginally engaged and informed masses are simply no match for a determined pirate ship of ruthless, well-funded elites.
Answering these critics of democracy is no easy task, particularly now that the world’s oldest democracy is sinking fast. But we can answer them if we remember that government actually does something, that we actually need government. The key is the idea of legitimacy. Government, except in its most extreme police state form, requires legitimacy. And this legitimacy derives from its performing basic functions.
When the state is captured by a cabal of parasitical but organized and well-funded elites, it no longer performs the basic functions of a government. It is like a cell invade by a virus whose basic functions are subverted to serve the interests of the parasitical virus and not the body.
This inevitable failure to perform basic functions in favor of serving the interests of the cabal regime comes at the cost of legitimacy. The state loses legitimacy and becomes more and more unstable until eventually the body politic throws out the parasitical cabal and reconstitutes a functional democratic government that actually does the things we need a government to do.
So when we read with fresh horror each new day’s outrages, we at least can also see the seeds of MAGA’s eventual expulsion being planted. But even knowing that they are destroying themselves as they destroy the country does little to mitigate the agony of being forced to watch it happen…
Read any Marx & Engels lately? Or that former Greek finance minister ('Yxxx"-something - name escapes me for the moment). Problem is not democracy, but capitalism. Experiments in economic democracy failed so far, but let's devote ourselves to figuring it out for the future. Nica & Cuba appear to be trying, but falling unevenly short on the democracy side, primarily due to external econ, political, propaganda & military pressures.
After reading Mr T's insolent letter to Brazil, one is staggered that a semi-literate twelve year old classroom bully could be President. It is insane.
The shortage of musical accompaniment on federal fund rates is not a problem if you don't speak Portuguese. I can pretend these beautiful girls with enchanting voices are mulling the merits of Fisher's Curve and Goodhart's Law.
PK's musical coda's are remarkable!!! Love 'em. Introducing me to so many artists. question is: where does he find the time to gift us so consistently.
Trump has lived, existed and relied on borrowed money. That was when he could find any one who was foolish enough to lend it to him. Most of his ventures and projects have shown that he does not and has not understood any basic rules of business and finance. I remember when he drove out an analyst who pointed out that his debt offering for one his casino projects would not survive at the interest rates and leverage he had put on the casino. By the way eventually the bond holders were the ones that lost out. His business record has been abysmal and his understanding of finance and the economy lacking. Once he gets his hands on the Fed we can expect to see not only more financial chaos but an economic contraction. He has no strategy or understanding this is a government being run on the day to day on his instincts and his needs to be the head line.
He loves taking huge risks with other people’s money and leave them holding the bag when things go south.
I have seen some of the damage first hand and had clients that lost large amounts of money. In fact, I was able to discourage one investment and found out that the value of the assets had been inflated several hundred percent, his rejoinder was 'it has my name on it".
It’s self generated hype.
Actually, he does have a strategy: destroy the government and pilfer the remains.
“An evil man will burn down his own nation to the ground to rule over the ashes.” —Sun Tzu
No, just remake the government into an image like Putin's Russia, where it's basically a protection racket.
Same thing.
And it's people
I think he does understand basic rules of business and finance, just in a similar way to how a leech would understand hematology. It goes something like this:
“If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem.” - J. Paul Getty
It's the same pattern over and over, whether it is Credit Suisse, Rudy Giuliani or a tradesman redoing the tile in his bathroom.
1. Borrow capital (or labor)
2. (If necessary transfer the asset to another holding)
3. Refuse to pay / go bankrupt
It's like he's religiously transactional except always welches on his end of the deal. You are useful to him as long as you keep giving him stuff. After that, you're gone.
Sometimes, like in the tariffs, it might not even be about the apparent target. Maybe he's just looking to extort the little guy (e.g. Apple or Walmart) into bribery when he goes after China. Bribes are definitely aligned with the sort of 1-way deal he strikes. Expectations of reciprocity are the other guy's foolish mistake. Just ask Musk.
I was a member of the creditor committee during Trump's Atlantic City BK's 2&3. I can say that he always wants lower rates and no covenants. He's a condo guy!
I must commend Paul for his mention of the My Pillow guy as a possible Fed Chair! Brilliant! Now what about America's Mayor?
As a country, we've seen this before. Tricky Dickie convinced the Fed to leave interest rates low in an inflationary economy and set up protective tariffs (though much lower than DonnyJon's). The result was the "stagflation" that proved incurable without triggering a serious recession.
Watching from the outside, it’s just CRAZY that your Presidents get to choose all the people who run things - including the justices on the Supreme Court. I can’t see how that’s meant to fit with separation of the powers, let alone contribute to stability…
…and evidently it doesn’t. It’s like watching a race to the bottom, and it’s infecting countries like the UK. Funded of course by the rich individuals and corporations who never pay their taxes, but instead spend on political influence, to stitch things up to suit themselves.
And that’s not to mention the poor mid-ranking civil servants who have dedicated their lives to trying to do the right thing, often with very little recompense (and a huge weight of responsibility). They are thrown on the scrapheap while the pirates fleece the nation…
It used to work, not perfectly but just enough to keep us from rebelling. The Constitution is a deeply flawed document, hence our laws, based on it, are deeply flawed. The worst flaw is that the whole thing depended on an "honor" system. It never occurred to the framers that someone with no honor and no shame would ascend to the throne.
And for nearly two and a half centuries, we bought into it without much pushback. Our politicians were already beholden to their biggest donors, and then came Citizens United. That sham of a "decision" opened the floodgates to absolute graft.
If and when we retake our country, we'll obviously have to fix the Constitution to ensure this never happens again, as well as to bring to justice the culprits who got us here.
Yeah, I don't think people appreciate how rickety the Constitution's always been. The entire thing was based on a compromise with slavers that started coming apart before the ink was dry, and the country spent the next eighty years spiraling towards civil war. It was able to pull itself together because the good guys won that war, because the bad guys were reduced to a rump state in the Southeast that couldn't dominate the nation's politics anymore, and because for the next hundred and thirty years or so, the more liberal party (first Republicans, then Democrats) was largely the one in charge (even after people like Nixon and Reagan started winning big, it wasn't until the nineties that Congress went Republican).
People look at this series of fortunate events and think it all happened because the founding fathers designed a perfect system, rather than dumb luck that inevitably runs out eventually.
After Professor Krugman posted his talk with Ada Palmer, I ordered her book on the Renaissance. She has a section that agrees emphatically with your last sentence. She says people are always asking "What caused the fall of ancient Rome?" What they should be asking is "How the Heck did it last so long?" Our system is relatively young, but many democracies have disintegrated in much shorter times. While it was a separate State, Venice held the record at roughly 1,100 years.
I read that too, George, initially out of an interest in art & a recent visit to Florence. But I got so much more out of the analyses in the conversation. Highly recommended.....
It doesn’t help that most schools (at least the ones in the South) no longer teach Civics as a stand alone subject. I’d bet 70% of those under 40 to 45 have no real understanding of how government is supposed to work let alone how it really works.
Completely agree that there needs to be a Nuremberg moment for them!
Our Congress has "advise and consent" powers, which theoretically allows them to torpedo bad nominees. But the Republican majority just rolls over and shows its belly to Trump, rubber stamping anything he wants.
Actually, they didn't just roll over. Recall that Bitch McConnell very actively pursued this. It was all by design.
Congress has lots more power than it uses. The US Constitution's language on appointments reads in Article II, Section 2:
"He [the President] ... shall nominate, and by and with the Advice and Consent of the Senate, shall appoint [various officials], whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments."
We tend to overlook the parts that say "established by law" and "but the Congress may by Law vest the Appointment." If the US wanted to have the rule of law rather than of one person, Congress could do a lot with this.
PS: The US Constitution doesn't have the word "unitary" with respect to the President or anything else. Art. II.2 sounds like "the executive Power" may be exercised by more people than just those nominated by the President.
And that's just personnel appointments. As regards policy, by the time we get to Article II, Article I has already given that to Congress in Article I, Section 8: "The Congress shall have Power ... To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof." NB: all powers vested by the Constitution in the US Government may be controlled by the law of Congress.
All Article II's references to "executive" need to be read in the context already laid out in Article I. That is, the executive carries the law into execution. Doesn't make law.
That's interesting: thank you so much, Joe.
This indeed gives you leeway in the future (I fervently hope it's sooner rather than later, but it WILL come) to push things back in the right direction, and perhaps nail them down there rather harder!
One of the things I like about the American system is that it has committees WITH POWER who come from both parties (and independents?). I'm not sure about how that's constructed, but it seems to me to be a fundamentally good idea.
One thing that's better in (most of) the Westminster systems is how the role of the Speaker is framed:
"...when the Speaker becomes the Speaker they give up their party allegiance. This means that they effectively sit as an Independent MP in the House of Commons. Importantly, by convention, the major parties do not put up a candidate against the Speaker at the next General Election. This is to avoid putting the Speaker in a position whereby they have to compromise their neutrality by being forced to campaign in a General Election." Which in practice means the Speaker is often originally from the party that is sitting in opposition. Does help to keep that neutrality...
https://politicsteaching.com/2024/01/19/what-is-the-role-of-the-speaker-of-the-house-of-commons-and-what-is-the-denison-convention-2/
As a bit more background, during my lifetime we’ve had ‘liberal’ Republicans and ‘conservative’ Democrats, rather than the party/ideology we have now. That’s what allowed for “working across the aisle “ that no longer exists. Another oversight on the part of the Founders (according to historian Heather Cox Richardson) is they didn’t envision the future political parties, which seems to us unbelievable!
I don't have any problem with the president choosing his cabinet. How many managers in business don't get to hire their employees. The problem is it is all predicated on an president interested in doing a good faith job. Ultimately, it was up to the voters to stop this kind of stuff. They just didn't (again).
Unfortunately it’s a lot more complicated than just “it was up to the voters” between gerrymandering, the electoral college system, and even evidence that has been found after the fact that points to a strong possibility that the election was outright rigged by the very people constantly making accusations of election rigging (as usual every accusation is an admission with MAGA…..)
Every evil President wants their own Arthur Burns, unfortunately.
I've been thinking more and more about these passages from members of W Bush's admin as related by Ron Suskind.
"This is why he dispenses with people who confront him with inconvenient facts," Bartlett went on to say. "He truly believes he's on a mission from God. Absolute faith like that overwhelms a need for analysis. The whole thing about faith is to believe things for which there is no empirical evidence." Bartlett paused, then said, "But you can't run the world on faith."
....
The aide said that guys like me were "in what we call the reality-based community," which he defined as people who "believe that solutions emerge from your judicious study of discernible reality." I nodded and murmured something about enlightenment principles and empiricism. He cut me off. "That's not the way the world really works anymore," he continued. "We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do."
https://www.nytimes.com/2004/10/17/magazine/faith-certainty-and-the-presidency-of-george-w-bush.html?unlocked_article_code=1.4k0.pzPh.WU1Quy6_O_ms&smid=url-share
Reality will bite, as it did to W's team in Iraq.
Hard.
Reality doesn't care what anyone "believes."
*sigh*
They did not, in the end, create their own reality, they created a delusion.
I remember the good old days, when America was great, and I was sure that GW Bush would be the worst president the US would ever have. Boy, was I naive.
What’s striking is Republicans regaining office only eight years after tanking the economy and bogging us down militarily in Iraq and Afghanistan. It took many decades for Republicans to recover from the Hoover administration.
That’s the power of 1.) all the money pooled into the 1% over the last 25 years 2.) propaganda 3.) steadily undermining both democracy and education.
Even the internet became horribly warped from its original form of freely available information on everything you could think of and an unprecedented technological development that educates the masses more than anything ever has just to become weaponized as the most terrifying propaganda tool the world has ever seen. The scariest part of any propaganda is that most people don’t realize it’s propaganda but in this case people don’t even realize anything changed they still think of the internet the same way that they always have.
what was the purpose of 8 years of "war on woke" ....
Sorry, just spit my lunch all over my monitor.
I only tolerate W now having experienced T. Never thought he would ever appear sane by any comparison!
Nixon is looking like a real shining example of public service and statesmanship at this point.
The fact that Trump is clearly insane does not mean that W wasn't.
"appears" key here
A note of cautious optimism in the gloom: The Fed chair is the public face of the Federal Reserve, leads its work, and chairs the Federal Open Market Committee (FOMC). But he or she cannot just dictate interest interest policy because the chair has only one vote out of twelve on the FOMC. So the Fed chair's power over interest rates exactly equals their ability to persuade the other FOMC members they should follow the chair's lead. I don't know that a toady or a crank would be all that persuasive.
It also doesn't look like the Supreme Court will let Trump fire Fed governors at will, and he doesn't even have theoretical ability to fire the five members of the FOMC that are supplied by the regional Feds. So Trump's ability to bend the Federal Reserve to his will rests on the appointment of a single governor whose term ends in January of next year. (That's January by the way, not May, since the Fed chair is appointed from the sitting governors.) Also, just because Jay Powell's term as chair ends next year doesn't mean Trump will be rid of him, because Powell's term as governor is not up until January of 2028, so if he wants he can stay on as an eminence grise to potentially lead the internal opposition against whichever Fox News host Trump will appoint as his successor.
Of course, nobody can say this is what will actually happen, but it doesn't seem totally unlikely.
Powell is highly principled. We won’t see that again for a while. Low interest rates are a sugar boost to the economy but a diet of pure sugar isn’t sustainable.
True, I was not a fan at first but how he slipped in past the sychophantic needs to the despot.
At least he took the job seriously and drew the line firmly at the Fed not being political. The next person will make no such distinction.
That is exactly my fear. Hopefully the rest of the FOMC can act as guardrail
Call. Write. Email. Protest. Unrelentingly. About everything ❤️🩹🤍💙
Use/share this spreadsheet as a resource to call/email/write members of Congress, the Cabinet and news organizations. Reach out to those in your own state, and those in a committee that fits your topic.
https://docs.google.com/spreadsheets/d/13lYafj0P-6owAJcH-5_xcpcRvMUZI7rkBPW-Ma9e7hw/edit?usp=drivesdk
Thank you Megan!
You’re welcome! Thanks for speaking up right now!
We’re in the year 2 of AI bull market. AI revolution is slow for now as all that CAPEX spending is only building an infrastructure. But just like Trump had to face COVID, he’ll likely have to face accelerating revamping of job market that can leave millions out of jobs instantly. In addition, current AI bubble can go through a massive correction phase under Trump as well.
I'm actually an AI Engineer and I'm getting a Masters in AI/ML stuff. Don't fall for the CEO hype.
Yes, AI capabilities are expanding in leaps and bounds and very stupid companies WILL be persuaded to replace a lot of junior engineers (a very bad idea), and mid-level and senior people will become MUCH more productive. But when you get into higher level stuff. For example, I used AI as a tutor for Deterministic Optimization and it was hallucinating right and left even on relatively simple (graduate level) tasks. It simply could not do it and even I, as a student learning, could catch its errors. IN NO WAY could it do the work professionally.
But what we are heading for is CEOs doing a lot of stupid things, then a crash when those stupid decisions have stupid results--as you say, a correction--and then a large reorientation and probably an AI Winter.
Thanks for the post. I am a retired IT professional. My field of expertise was system and network administration plus network security. LLMs are an interesting tech, but I agree with you that the hype goes well beyond the reality of what the tech is capable of. This is similar to the Internet bubble. You are correct that right now we are building a lot of very powerful computing infrastructure which is similar t all the fiber optic cable laid down in the 90s. That infrastructure can at least be repurposed for more productive uses. LLMs are expensive to train and expensive to run. There is no viable business model for their use at this time. So far the only way companies like Open AI stay in business is to continue to extract money from gullible investors.
Main market for AI is enterprise not direct consumers. I know for a fact that most software development firms have already replaced first lines of QC and first lines of tech support by AI. I have friends who are doing this kind of automation - building AI agents for mundane coding tasks, and they are overwhelmed with demand.
We’re not only building computing infrastructure, we’re building energy infrastructure as well, nuclear plants are making a comeback.
Everyone who thought internet was only useful to send emails proved to be wrong.
AI is going to be a bigger revolution than internet because it will also power robotics and autonomous driving even further. Check out Chinese BYD plants, they already have more robots than people. AI infrastructure will power it further.
I do not disagree that the ML models can work very well in specific fields with a good training set. What I object to is the quest for Artificial General Intelligence (AGI). I think that is a pipe dream, but that is what Sam Altman is selling. Remember AI is more than just LLMs. Also remember it was Jon McCarthy who coined the term AI. He originally started with "Automata Studied", but that did not sell very well. So even the term AI is just a marketing term. Altman is apparently an excellent salesperson, but what he is selling is unrealistic and unobtainable.
But would you pay for Artificial Artificial Intelligence? For example, we in the US do a lot of bullshit for legal compliance without any real intent of solving the practical problem, just the legal one. Maybe deploying an artificial intelligence to satisfy the legal requirement without actually doing much to solve the practical problem is just what the Lawyer ordered! It is automated, demonstrable, private, safe, and doesn't go on vacation. Problem "solved"!
I am retired now, so I can joke about AI driven misogyny-aware shock collars, just as long as you young whooper-snappers keep working to deliver my dividend checks. Work harder!
I agree with you, but I think there will be a winter before there is a summer.
Certainly in the markets, there will be a AI crash after the AI boom. Not every good idea is a profitable one, and regardless of the quality of the tech, the companies will need to navigate the landscape of market reality where in some cases where there is money on the table to be captured by AI, and other areas where there just isn't. Time will sort it out.
I’m not so sure. The speed of information delivery sped up market agility as well along with scenario planning. I think the adoption curve will be smoother and winter won’t be that bad, unless it’s triggered by a major security incident and we step into some sort of Matrix/Terminator scenario
Yep, given the complete softballs most engineers write for QC, I am not surprised AI is viewed as a substitute.
exit the human - in execution and consideration of results.....
There are a lot of areas where it might do a reasonable job. As a D&D Dungeon Master it is simply brilliant, because you are basically asking it to bullshit about a fantasy realm. It draws pictures better than I do, can spin yarns in most any style and any dialect, and occasionally is quite funny.
Prompt> The party, chased by ghouls, is racing a cart through the forest and is forced to make a rapid choice between track leading to a bridge with a sign "Bridge Out!" and a tunnel which leads under the earth into the dark. If they go under the earth, a trap door will drop behind them and a large net will fall on the cart. Give me a humorous title for the section.
AI: Net Gains and Ghastly Losses
I was quite amused. I just didn't expect a sense of humor out of a pile of racist linear algebra. Starting to think the campaign should be a series of Rocky and Bullwinkle titled scenes.
Also, there is politics, investment prospectus and toilet scrubbing where bullshit is the order of the day. Some areas will be completely transformed, because we really just don't need or at least expect quality / truthiness.
Again as a librarian, your last sentence reminds me of the onset of widespread internet use in business workplaces early 2000s and the dismissal or undermining of professionals capable of discerning authoritative information from chaff. Lots of really really bad decisions resulted. IMHO led directly to the 2008-9 crash.
AI will get better. Trillions of dollars have already been spent on it. I don’t think that in a long run AI will be replacing junior engineers. It’s just junior engineers jobs are getting revamped now. But AI will entirely kill the middle level of engineering, those who are now comfortable in their careers and are 40-65 yo. IT Managers and IT Generalists are already struggling to find new jobs. Project management will be completely revamped soon, and old school PMs will also be out.
I think you are wrong. A lot of the money spent on AI is in the hyperscalar server datacenters needed to train and run the LLMs. They need the capacity because it literally takes a lot of compute to train these monsters that still hallucinate. And the researchers are discovering that just making the models larger does not improve their accuracy. I suggest you read Karen Hao's book - "Empire of AI" about OpenAI and all the harm their quest for AGI is causing worldwide. Ironically, the Chinese AI community may have got the tech right which resulted in smaller models which consume a lot less resources.
Remember these models basically get their information by scanning the Internet which as we know contains a lot of disinformation. Look at what happened with Musk's LLM which ended up spewing a lot hateful fascist nonsense and had to be shutdown. It apparently even called itself MechaHitler.
What many folks are starting the realize is these huge models still do not reason which is supposedly a characteristic of AGI. They simply regurgitate the information they scoop up in the training. The old IT saying of GIGO (Garbage In Garbage Out) still applies.
If we remove AI from the market we’re in a deep recession, it’s the only economic driver now.
I know that many LLMs are garbage and tons of money and energy are spent to improve them, but for example Google’s Gemini is a solid model, Chinese DeepSeek, French Mistral and etc. Grok is not great because they are doing a lot of stupid things trying to catch up with leaders.
I think OpenAI will end up like Netscape, they will be buried by competition.
Also, current LLM algorithms will improve to be more energy efficient. DeepSeek did just that.
And I think AGI might only be possible after the revolution of quantum computing, which will most likely start around 2030
I believe that the major impacts will be on the junior engineers. The middle level people used to be junior engineers and will revert to their old jobs (with a cut in pay). That is, at least, what happened as my old employer (Bellcore/Telcordia) died.
I was at the optometrist getting a refraction, and the doctor mentioned her disagreement with the idea that AI could do a quality refraction. I agreed -- aside from the back-and-forth discussion (whether one or two is better, and if I can see one again?), she discussed my day-to-day activities. She asked if I'm a reader, how often I drive, and what my hobbies are (I mentioned sewing, painting, and embroidering). She used that information to plan my refractions (I have progressive lenses) to suit me and me alone, and explained why. AI lacks the ability to deal with singularities and nuance.
In the medical field, AI is not looking to replace your doctor, but rather to make you doctor more efficient, more accurate, and more productive--not computer diagnosis, but computer AIDED diagnosis. And frankly it's desperately needed. We don't have enough medical professionals in the US, much less in rural, remote, and underserved areas.
And yes, AI can manage nuance.
The largest challenge in medical progress for AI is the lack of good data sets. Superficially, there are many, but once you scratch the surface... nada. None. It's just not there.
AI will get better. It’s getting better by leaps and bounds already. And billions are being spent on helping it get better.
Billions were spent on social media as well and it just got progressively worse.
This is because of the inherent contradiction: The realized version of social media was antisocial.
Depends on your definition of worse. It made revolution in media and communication, and made a lot of money to investors. We’re on social media platform now.
If anything social media wide-spread toxicity proves my point of a widespread AI adoption
Anybody here but me concerned about un regulated crypto bubble and it's overt use to fund terrorism and other crimes? That feels a lot more in my face and immediate in the grand scheme of things.
Oh that train has passed the point of concern. I think of crypto as a new sort of religion. You could laugh at Christians all you wanted when they were a small ostracized group, but you can’t laugh at Catholics or Mormons, they will bury you. And they will keep nurturing their faith.
Crypto is already owned by about $60M Americans. Many of them voted for Trump to keep their crypto assets, cause they put real cash in it.
As a research librarian, AI's ability to demagogue & misinform frightens me as much as the Trump Republicans & those behind them. The thought of a combination of both, and cryptocurrencies layered on top, has me in a state of psychic panic.
It still amazes me Trump was able to politically bounce back from the capital insurrection. It was his Munich putsch.
He can keep doing what he's doing because he is not prosecuted.
Hope y'all are ready for the republican Depression 2.0. Will make the 1930s look like a picnic.
I've been reading the NYT articles on Trump's erratic tariff threats and there still seems to be a determination to sanewash him. Somehow the absurd letters he was randomly posting on social media are all part of some unorthodox negotiating strategy which may or may not yield results. The emperor has no clothes, but they don't want to admit it.
They don't want to get sued and they don't want to get shut down.
The Fed chair is but one vote of the Board, so maybe we're okay for a while.
I think this is an underappreciated point. The rest of the board doesnt automatically fall in line behind a puppet chair
but how immune are the rest of the Board members from presidential appointment and control?
The seven members of the Board of Governors of the Federal Reserve System are nominated by the President and confirmed by the Senate. A full term is fourteen years. One term begins every two years. So in theory Trump cant pack the board with puppets in this term. Hans makes my point more eloquently below
Russell Vought has no credentials other than as a hired Heritage Foundation hitman. Trump wants Powell out because he won't bend the knee, just like he wanted Comey out for the same reason. Inflation will go up, the economy will go down, chaos with stagflation is not a good place to be. But that's all that Trump can deliver. Americans have to find out for themselves that electing a lunatic and criminal as president was not a good idea.
Political theorists like Schumpeter, Mosca, and Michels would not have been a bit surprised by Trump’s reign of terror. They predicted that democracies would always fail, that in a democracy, the state would inevitably be captured by a cynical cabal of organized elites. The disorganized, marginally engaged and informed masses are simply no match for a determined pirate ship of ruthless, well-funded elites.
Answering these critics of democracy is no easy task, particularly now that the world’s oldest democracy is sinking fast. But we can answer them if we remember that government actually does something, that we actually need government. The key is the idea of legitimacy. Government, except in its most extreme police state form, requires legitimacy. And this legitimacy derives from its performing basic functions.
When the state is captured by a cabal of parasitical but organized and well-funded elites, it no longer performs the basic functions of a government. It is like a cell invade by a virus whose basic functions are subverted to serve the interests of the parasitical virus and not the body.
This inevitable failure to perform basic functions in favor of serving the interests of the cabal regime comes at the cost of legitimacy. The state loses legitimacy and becomes more and more unstable until eventually the body politic throws out the parasitical cabal and reconstitutes a functional democratic government that actually does the things we need a government to do.
So when we read with fresh horror each new day’s outrages, we at least can also see the seeds of MAGA’s eventual expulsion being planted. But even knowing that they are destroying themselves as they destroy the country does little to mitigate the agony of being forced to watch it happen…
Read any Marx & Engels lately? Or that former Greek finance minister ('Yxxx"-something - name escapes me for the moment). Problem is not democracy, but capitalism. Experiments in economic democracy failed so far, but let's devote ourselves to figuring it out for the future. Nica & Cuba appear to be trying, but falling unevenly short on the democracy side, primarily due to external econ, political, propaganda & military pressures.
Thank you Paul! One of your best. I learned a lot at 6:40 am. :) 😀
PK is so uniformly excellent that I've never been able to discern a 'best'
After reading Mr T's insolent letter to Brazil, one is staggered that a semi-literate twelve year old classroom bully could be President. It is insane.
Lololol .
Just thought of a title for a new Hollywood dystopian film ..
Insolent Orange!
Now beaten by a ridiculous letter to Canada, imposing 35% tariffs based on lies about fentanyl- beyond ridiculous
The shortage of musical accompaniment on federal fund rates is not a problem if you don't speak Portuguese. I can pretend these beautiful girls with enchanting voices are mulling the merits of Fisher's Curve and Goodhart's Law.
PK's musical coda's are remarkable!!! Love 'em. Introducing me to so many artists. question is: where does he find the time to gift us so consistently.