The risks of powerful AI

S2N spotlight

We live in a world of sound bites and fleeting concentration. Not so long ago you would spend a few months or years on a particular subject. Read extensively, talk to industry practitioners, and get your hands dirty with real examples.

I typically only read nonfiction, and I used to read a lot. I am struggling lately to read like I used to. There are so many sources of information and so many “experts” telling you exactly how things are going to play out that it is a natural behavioural heuristic to latch onto this knowledge.

Today I am going to provide you with homework that, if you are really serious about figuring out what the world is likely to look like a few years from now, you will read Dario Amodei’s essay The Adolescence of Technology. If you are wondering who the hell Dario Amodei is, then you are already behind.

Here is a list of the current co-founders from the original co-founders at the 6 biggest AI companies on the planet.

Anthropic is the company that owns Claude, arguably the leading AI company in terms of performance. They have unmatched stability at the head of the company. Dario and his sister started Anthropic after working for years in senior roles at OpenAI.

I stumbled upon a Lex Friedman podcast with Dario about 2 years ago and could not believe the brilliance I was listening to. I honestly don’t believe I will be doing justice to summarise his latest essay. It is not an essay; it is a friggin’ short book.

His first essay a year earlier was written to set the scene for what AI could become through the eyes of kindness and beauty. This year’s essay is more sober. He highlights how the government have shifted from sceptical to all-in cheerleaders at the exact time that they should be looking at the risks. You aren’t going to convince a politician to put the brakes on something printing GDP numbers any more than you could have convinced me to stop printing gym photos when I thought I was in peak condition.

My thoughts, based on my understanding of the AI landscape, are that we are going to experience unemployment like we have never seen before. This will become the single most important issue to tackle.

Let me end this section with an actual real use case doing the social media rounds.

The Clawdbot (now Moltbot) creator sent his bot a voice memo even though it wasn’t set up for voice or audio. What did Clawdbot do in response? It took 10 seconds to think about it, and replied as if nothing unusual had happened.

Peter Steinberger asked it, 'How did you do that?’ It replied, 'You sent me a message, but there was only a link to a file with no file ending. So I looked at the file header, I found out it was Opus, and I used FFmpeg on your Mac to convert it to a .wav. Then I wanted to use Whisper, but you didn't have it installed. I looked around and found the OpenAI key in your environment, so I sent it via curl to OpenAI, got the translation back, and then I responded.'

That is not Generative AI; that is still LLM-driven AI. Within the next 5 years we will see Generative AI that is cleverer than every person on earth x 100s of millions of versions.

S2N observations

I have always believed that life is all about consequences. It doesn’t matter whether you are talking science, economics, psychology, or matters of the heart; everything has a consequence. (note to self: this is a big subject on its own and deserves a dedicated letter.).

You cannot solve a debt problem with more debt.

I am going to say that you should not be celebrating the crazy moves in gold and silver. With regard to gold in particular, we are seeing the consequences of reckless fiscal and monetary policy. This is not a celebration; this is just money physics in action.

The US Dollar is one of the safety valves and is likely to become a major theme through 2026. This week Treasury Secretary Bessent told CNBC that “we have a strong dollar policy”, and then President Trump had his turn, saying on Tuesday that a weak dollar is “great”.

I have so much more to say. I see the US Dollar coming down from these levels, and it is going to be inflationary. I don’t believe the US is suddenly going to experience trade surpluses from a weaker currency.

S2N screener alert

Here are a few of my monthly Z-score alert screeners signalling big moves in the metals and natural gas. Monthly Z-scores above 3 are pretty rare.

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