Do you really want to know about how SkyNet controls your investments and pension via the various financial markets? I ask with all sincerity because the subject is not pleasant and may even be frightening to those who have followed a strict diet of financial ignorance.
Once you know, it is nearly impossible to un-know. And just as there is never only one weed in the garden, knowing this inevitably leads to a critical juncture where one must then decide if they wish to know more or simply curl up in the fetal position on the bathroom floor.
You see, when “We the Mindless Minions” (desperately) wish to avoid responsibility for knowing, while the specific tactics used may vary greatly, the theme remains pretty consistent. I call it the Sgt. Schultz defense.
“I know nothing, I see nothing and I was never here.”
A variation of the theme, usually employed when among others, thus we cannot claim total ignorance about the uncomfortable subject presently being discussed, is brilliant in its ability to disavow responsibility while passing the buck to someone (anyone) at a higher pay grade.
“They would never let that happen/do that,” or the always reassuring “I’m sure someone’s looking into that as we speak.” Now how about those (fill in this blank with any sport, celebrity, politician, TV show or viral cat video).
Disavowing knowledge or responsibility, passing the buck and then changing the subject is the time tested way to live in blissful ignorance. Or as I have grown fond of saying, unconscious incompetence with a heaping side order of willful ignorance.
By the way, if you have never come across that phrase, let me give you the crib notes with a little Donald Rumsfeld thrown in for good measure. There is unconscious incompetence. I do not know that I do not know. There is conscious incompetence. I know I do not know and I’m trying like hell to get up to speed and improve.
Then there is conscious competence, where I have fully embodied my incompetence and have turned it around by mindfulness and constant personal work. Finally there is unconscious competence, where I have reached a point where it all just comes naturally, with little thought given to actually doing what by now is simply a natural part of my self.
It should be noted with great emphasis these four steps are speaking to spiritual growth and evolution, not scientific, political or mathematical knowledge. Though it should also be noted those of us firmly enmeshed within the Imperial culture dwell strictly at the first level of unconscious incompetence. Any accidental glimpse of our actual ‘self’ is quickly suppressed and forgotten. Beware, for there be dragons.
Viral cat videos, conversing with your lover next to you in bed via text and narcissistic selfies are just a few examples of unconscious incompetence. Let your imagination be your guide while compiling your own personal list.
So, with this information firmly in hand, do you really wish to know how SkyNet is controlling your investments and pension?
Below this piece are links to two articles written by Doug Kass, a financial professional MANY pay grades above me. He explains in reasonably plain English what this potential problem is about.
Just in case your ADHD has suddenly flared up, or your hands are shaking at the thought of reading his (shorter than mine) missives, let me give you the down and dirty. While the financial mainstream media likes to promote the illusion actual humans are in charge as they control the financial markets, helped along with images of human traders shouting into phones or scribbling on a pad of paper, reality is quite different.
These days over 60% of actual ‘trading’, meaning buying and selling of stocks, bonds and derivatives, is executed by (thinking) machines aka computers. And no, I’m not talking about that sleek looking desktop box or fancy laptop you bought from Dell last year.
This means less than 40% of all trading is actually done by thinking humans using real world judgment and expertise. And that percentage is rapidly diminishing on a daily basis. I suspect in a few years it will be down to less than 20%.
The thing about computers is they are fast and efficient. And the ultimate in unconscious incompetence, since they have (at least for now) no spiritual presence, let alone common sense or fear of high places from which they could fall. Such as an extremely overbought stock and bond market at all time highs; markets which have completely divorced themselves from fundamental financial logic and reason.
Greed runs riot in the towers of Wall Street. Or to be more accurate, in mainframe computers tucked away in nondescript industrial parks in New Jersey, Chicago, Texas or wherever.
But the computers are not the problem here, or at least not the primary problem. That’s because computers are essentially expensive boat anchors unless instructed on what and how to do something. This requires an operating system and software, similar to the operating system and programs on your Windows, Linux or Apple computer.
Ok, somewhat similar. Maybe! Well, actually not. But we’re getting to that.
Software is (usually) dumb as a rock and entirely dependent upon the genius of the creator(s) of that software. While a computer may be millions of times faster than a human, it is only as smart as the human who programs it.
Popular media introduced us to the concept of Artificial Intelligence (AI) decades ago via science fiction in book and movie form. Everyone over a certain age remembers HAL from 2001: A Space Odyssey, where HAL the AI computer begins making ‘mistakes’ and decisions that are at times contrary to the wellbeing of the humans on board the spaceship. The Terminator series of movies is another example of AI run riot; in this case the AI was a group of networked computers called SkyNet.
While the concept was/is always quickly dismissed as highly improbable, if not outright impossible, it no longer is impossible, at least when it comes to trading the financial markets.
In an effort to increase the efficiency of trading computers (read that as make them more PROFITABLE) computer scientists and programmers have infused the computers with increasingly sophisticated AI software. Meaning these computers can now learn very quickly on their own.
Most people are not aware that professional human traders using extremely sophisticated trading strategies and tools (aka financial derivatives) can make a boat load of money regardless of whether the market is going up or down. While you are encouraged to stay in the market regardless of what’s happening, the professionals are leveraging your passive position into money in their bank. So be it. That is the confidence game the markets have always been.
Now here’s the kicker.
The individuals and institutions with financial dogs in this fight, along with a (very LARGE) paycheck to maintain, will assure all who ask if these trading programs are safe. “Yup, no problem, we can turn HAL off anytime we want. See, here is the panic button right here. And if all else fails, here are some grenades and a flame thrower.”
However, frank discussions with actual computer scientists who create AI software for a living reveal a slightly (ok, very) different assurance.
Popular myth informs us ALL computers are simply fast humans. Whatever a human can do, a computer can do much faster. And that may be the case for 99.9999% of the computers out there. But this is NOT the case with AI computers.
Once the AI computer is turned on and the software begins to ‘learn’, no one knows exactly what it is doing or why. And the longer it learns, the more it can and will deviate from its own original programming.
Anyone who says otherwise is either lying directly to your face or demonstrating their glaringly obvious unconscious incompetent.
The AI trading software has one prime directive. Make money, lots of money. Or as my lovely bride likes to say, a crap ton of money. It does this mostly by making tiny (profitable) trades tens of thousands of times per second.
That is not a typo. I said per ‘second’.
All the financial markets are currently awash in oceans of liquidity. Meaning nearly free money is handed by the Federal Reserve (and other central banks) to all those warm and cuddly too-big-to-fail banks and their partner institutions and companies to do with as they please. They in turn got their friends in Congress to OK rigging the market with their AI computers so they can’t lose.
There are banks and trading institutions out there that have not had a single losing day trading the market in years.
Y E A R S!
If you never lose money when trading the markets, obviously the markets are rigged in your favor. But it’s all ‘legal’ so what’s the problem. Heads they win, tails you lose. It just doesn’t get any better than this.
The easiest way for the machines to make money is to push the market up. But when the tide turns, and it always eventually turns, the machines will shift to making money on the way down with the same speed and zeal they apply to the ‘up’ market.
Only ‘down’ markets tend to breed panic in the humans. When selling really ramps up, market conditions move very rapidly and markets can drop many percentage points in seconds, especially when you have machines making tens of thousands of trades a second and you have thousands of machines all doing this at the same time.
Can you say “Express elevator to the basement?”
The somewhat uncomfortable euphemism coined for this phenomenon by market participants down in the pits and up in the peanut gallery is “Flash Crash”. You may even remember the 2010 Flash Crash, where markets dropped like a rock (“collapsed” is the technical term) then quickly rebounded to regain most (but not all) of the loss, all in under 40 minutes.
While this hiccup was eventually blamed on one individual, a so-called rogue trader, we must fully understand the markets are a con game, a Ponzi scheme. And the only way they can continue to bleed the suckers dry is to maintain confidence in the game. Thus those who ‘regulate’ the game will not destroy confidence in the game by telling the truth.
It simply won’t happen!
Supposedly this ‘problem’ was fixed shortly after the crash and all was right in the world again. But over the ensuing years mini flash crashes have been showing up first in small illiquid stocks, then larger blue chip stocks and recently in the US Treasury market, the largest, most liquid and stable market in the world.
And while the people who own these (rip off) machines claim all is well, those who appear to being channeling a bit of their conscious incompetence (meaning they are breaking from their Imperial conditioning) are sounding the alarm bells.
Loudly, as in air horns at 2 paces.
My mother imbued in me some wisdom, life lessons I eventually embraced after resisting them for as long as I could. The really good ones were always short and sweet. Just because everyone else is doing something doesn’t mean you should. And if something is good, more is not always gooder…or better as the case may be. In fact it rarely is.
These were tough pills to swallow for an impatient young boy with a severely underdeveloped impulse control. But it’s one thing for a seven year old to become violently sick from excessive indulgence in candy bars (10 to be exact) and another for a relatively few men and women to set loose ‘thinking machines’ they do not actually control upon markets that are already long overdue for a correction and therefore extremely fragile.
But alas, we are dutifully assured by various financial high priests and powerful fiat wizards that capital markets are efficient and highly regulated. Worst case scenario, we can mosey on over to Mabel the thinking machine and pull her plug. Problem solved.
Lies. Damn lies in fact.
Unfortunately...... No, let me try that again. UNFORTUNATELY the problem is even worse than outlined, if that’s even possible. IF the world’s governments weren’t spending money like drunken sailors and IF the world’s central banks weren’t printing money out of thin air like mad hatters and IF personal, corporate and governmental debt wasn’t well past the point of ever being paid back and IF public and private pensions weren’t severely underfunded despite an all time high bond and stock market and IF student loan debt default rates weren’t at 30% and rising and IF the US wasn’t going full police state and IF….well, you get the picture.
IF all these (and more) detrimental socioeconomic conditions weren’t present, then MAYBE SkyNet becoming sentient MIGHT be a recoverable event.
That which is unsustainable cannot and will not be sustained. Something has to give. The longer the unsustainable is forced to sustain, the greater the damage when it all comes crashing back down to terra firma.
If you are a student of history, eventually you come to realize events large and small tend to cycle in and out on a reasonably predictable time frame. Huge financial catastrophes appear to occur in 80 to 90 year cycles, though this timing isn’t hard and fast. And it is often regional rather than global, such as northern or southern hemisphere, eastern or western cultures etc.
What is evident to me is these huge socioeconomic disasters follow the life cycle of humans, meaning the insanity ramps up precisely when the generation affected by the last collapse has just about died off from the face of the Earth.
The last socioeconomic implosion, the Great Depression followed closely by World War Two, has now essentially completely disappeared from living human and institutional memory. All that remains are chapters in history books and the following generation (that’s me) who vaguely remembers grandma and pa talking about those terrible times.
In the minds of we mere mortals, distance and time tend to greatly diminish the concept of risk. When those parameters extend beyond our living memory, we can easily convince ourselves and others we have progressed mightily since those ancient times and the warnings from the grave are meaningless and not applicable.
This is precisely what the high priests, financial wizards and every conflicted soul who benefits from the financial insanity are telling us today. Ignore that man behind the curtain (or in the grave) for I am the mighty and powerful Wizard of Oz.
One final thought. The financial crash in 2000-2001 was a loss of confidence in individual companies and/or a sector of companies. That market crash is most remembered as the tech wreck, where technology companies got way over their skies and needed to be rescued or allowed to fail. The banks did the heavy work in bringing the confidence game back from the grave.
But in 2008-2009, the banks themselves got in way over their heads. And this time the Federal Reserve and the US Government, along with every other major global central bank and government, came to the rescue, bailing OUT the too-big-to-fail banks at the expense of the taxpayer. This abomination was later extended to savage the savers with interest rates pegged at near zero in order to guarantee the banks a solid profit.
After all, the bank executives, traders and upper level management must be fairly compensated for all the financial death and destruction they have wrought. It’s hard work destroying hearth and home for crying out loud. To expect anything different would be un American.
When the next financial crisis hits, it will be the central banks and governments who will suffer a crisis of confidence. Because this time it will be a currency crisis once everyone realizes the money is backed by nothing more than thin air. And they’ve been printing a LOT of thin air over the last ten years.
So exactly who will come to the rescue of the various global governments? Yup, you and me, that’s who. And we won’t be given any choice in the matter. Suddenly the rapid expansion of the police state makes more sense when seen from this perspective.
We will witness our (large) bank deposits, along with stocks, bonds and other ‘securities’ vaporize as “We the Morons” are bailed IN, not out. Our money will be confiscated and swapped for bank equity, government bonds or some new type of fake fiat in order to protect us from the disaster they created. Sounds like the perfect mafia protection scam to me.
The rules, regulations and laws enabling all of this to happen have already been passed in all the first and second world countries, including the USA.
What’s that? You never read about this in the newspaper or saw anything about this on the boob tube ‘news’ shows?
I wonder why that is?
So when do the fireworks start? To be perfectly frank I haven’t the foggiest idea. There’s an old saying on Wall Street. The markets can remain irrational far longer than you can remain solvent. This farce could continue for the next six weeks, six months or six years. And it might even last longer.
But remember this. All confidence games are pretty solid right up until confidence is lost. When that happens, the rush of escaping air reaches hurricane force in an instant and all exit doors suddenly slam shut. We peons will be the last to know when the jig is up; therefore there will be no exit for us.
The markets will be shut, the banks closed and all trading ceased before the public is told there is a serious problem. Usually this occurs over the weekend and these institutions simply don’t reopen on Monday. Your money will be frozen in place and completely inaccessible. Sure, the relative small dollar amounts in checking and savings accounts might remain available. But the big chunks will be locked away under ‘capital control’ decrees.
Suddenly it will be a brave new world, one completely alien to us. Righteous indignation will quickly follow shock and awe. Then the panic begins. It’s happened before and it will happen again. Most people don’t know the USA has defaulted on its financial obligations several times in its past. So has every other old world country. It’s not a matter of if, but when.
All fiat currencies fail simply because there is nothing backing a fiat currency but pure faith and belief, since anything of substance was long ago looted. It eventually becomes a pure confidence game once the collusion between the elites, the financial interests and the government escalates to the point where there’s no turning back.
We are well past that point at this time.
The choice is simple. Either be a victim (whocouldanode) or break from the herd and prepare for the inevitable.
The articles linked below explain the AI issue much better than I can, though I have added a great deal of background and opinion in this piece for clarity. Or hilarity if you so wish. I urge you to read both of them.
Go ahead. What do you have to lose, except possibly your investments and pension?
Like Something Out of 'The Twilight Zone,' This Market Is About the Machines
Doug Kass: Not Even The Algo Creators Know What Is Going On