"If they actually believed the buildout would arrive at the scale their own decks describe, they’d be loading up on the stuff you can’t generate from a GPU.
They are not."
That's the tell, innit?
I'm sure there are plenty of Elon/spacex believers who'll hit back with "we'll just go mine some asteroids."
Reminds me of the mortgage backed securities scam. Same bag holders too. It used to take a generation for people to forget something like that. Now it's less than 10 years.
So what's after AI? The Android replica bubble? Moon water? Real estate on Mars?
Tokens, in this context, are units of AI processing power. Ask a simple question, AI will answer, a number of "tokens" will be used up. Ask for a complex report, more tokens will be consumed. Your employer (or yourself, if you ask AI privately) has bought a number of tokens from the AI provider for employees to use. This is much like software licenses---a company subscribes to, say, 5 simultaneous licenses to use AutoCAD---except that tokens are more fine-grained.
But, in order to promote and encourage AI usage, the same companies reward the employees that use up the most tokens, on the dubious assumption of more productivity. So an employee is encouraged to ask AI a lot of trivial questions, so that his token usage goes up. This is tokenmaxing. Now, it is easy to ask AI a lot of seemingly relevant questions, so token usage skyrockets company-wide as employees compete for rewards; and the company discovers that the tokens---the licenses, as it were---that they bought/subscribed run out prematurely, and a new batch must be purchased, expensively.
The idiotic thing here is rewarding AI usage as such, rather than results. But this has become widespread for some reason; a fashion not unlike the Tidepod challenge, IMHO.
10-4 - so the "tokens" are just the bitcoins and the like so to speak - and "token trade" happens in them I reckon?
I mean why is there so much mystery bout the fella who "created" bitcoin and you heard the story about the fella had is laptop end up at the landfill with so many token upon it - ha, ha. That is funny.
I'd just assume have real currency thank-you rather than a mathematical construct that is hardly real.
It is kinda tragi-comedic yes. But if someone is willing to pay good money for those tokens? Why not.
Story from my early days: I was investing in physical miners (gpu and such), and kept a few btc till recently. Sold most of them (Sam disagrees as she says they'll go to a million).
I'm very enthused about the blockchain as technology, which is genuinely good. But less about the "tokens" that are being used (read: traded) as if they are money.
Well fine and good but you know tis WAR. War upon imaginary ideas harmful.
Maybe you ought do an article on "blockchain" but if conceptually all that is is a way to do business without records - then I ain't sure that is of merit.
Gold and silver let there be no doubt - both have merit.
Tokens are tokens - and let me share this link in that regard:
So literally - the ONLY thing bitcoin has going for it is that it is a "limited" mathematical construct - but that hardly gives it inherent value - in contrast to gold and silver both.
Please let me know if what you mean by "tokens" has been misinterpreted, but seriously "token trade" is the outcome of any fiat currency no doubt.
Thanks for bringing things back down to the material leverl: copper, silver, rare earths etc. I am curious about pension funds. Don't they have people at least as capable as me, able to see the great bamboozlery that's unfolding? Are my pension's funds in some kind of locked accounts that are going to automatically chase after the rising stock values? Do pension managers not see bubbles when they exist?
Fwiw, some pension funds got in early. So if you are an Ontario Canada teacher, for instance, your pension fund will gain more than a trillion in profit on a few billions in original investment. Sorry I don't remember the actual numbers, but they're out there, and the profit is huge. Ontario Teachers' is said to be a very well run fund.
The first thing that comes to mind when reading these valuations is to short an AI index if it exists. But there's a "too big to fail" air about AI infrastructure becoming entwined with state policy.
No 1, do you believe in the existence of the plunge protection team?
If so, are some sectors or companies so conjoined with the state as to be unshortable?
I am reminded of the quote about betting against the fiat money system. The system has a lot more resources available to sustain itself than you have to bet against it.
Sam compares it to the Space Race, and I have to admit, she's not wrong on this one. For many in power, it feels like existential.
But China already won because it has the infrastructure and the energy. The US does not. The latter still has the brains (but notice that those data teams are mostly made up by Asian-looking people?). But when I compare this to this chip: https://no01.substack.com/p/the-chip-that-pops-the-ai-bubble and then you read that DS & MM cut their token price down enormously... We've already lost.
All that's left are shenanigans and stock market grift (headline grabbing movements pre-initiated by the people in power)...
Take down on "gold" today - the markets are disconnected from reality. I ain't saying "gold" is worth this or that - but oil sure as hell is - and so if I was a younger man - tis oil futures I'd be betting upon.
As for gold and silver - they will find their value - just now they are collateral seems evident.
Given your excellent and excellently scary analysis I can only think that all these investors rushing to buy Anthropic shares and hoping for a lovely return are now firmly given over to magical thinking, especially since, as you mentioned in an aside, they don't seem to be able to recall their 'Pure primary-school math.'
Of courser the poor old taxpayer will finally hold the bag: that's what taxpayers are there for!
I think it's time to re-institute the Victorian 'debtors' prisons', ghastly and nowadays deemed 'inhume' conditions included. After all, the living conditions of the tax payers outside those prisons won't be that much different. Unless one is Chinese, that is ...
I'm pretty sure I will buy Anthropic. But not yet. It hasn't a good proposition. I think it's the one company that is mostly (not yet, but closest) to self-sufficiency.
Think Microsoft post-2000.
I like dirt cheap stuff... Like silver right now 😉.
hear hear on the debtor prisons, but I'm not going to hold my breath...
Liking dirt cheap stuff: yes, I can totally relate to that (in my teutonic housewifey way). No, holding one's breath in the current political circumstances is definitely ill-advised. Taking one's toys and walking away, turning one's back, might be a better strategy.
Yeah, I'm long the technology, short the bubble-mania... It has a LOT of future. I mean, you're here already a while so you've probably seen me compare it to fire, the wheel and electricity. THAT foundational.
"If they actually believed the buildout would arrive at the scale their own decks describe, they’d be loading up on the stuff you can’t generate from a GPU.
They are not."
That's the tell, innit?
I'm sure there are plenty of Elon/spacex believers who'll hit back with "we'll just go mine some asteroids."
That'll fix it for sure.
/sarc...
I know it's wobbly, but spin that thing faster, because if it slows down the bomb goes off and we all die... ;-/
No1
Great post with the receipts, thank you.
Will circulate to the normies in my circle once it opens up to the public.
Cheers
Reminds me of the mortgage backed securities scam. Same bag holders too. It used to take a generation for people to forget something like that. Now it's less than 10 years.
So what's after AI? The Android replica bubble? Moon water? Real estate on Mars?
Well, those pictures of Apes won't sell themselves now will they?
Humanoid robots? https://www.thewisewolf.club/p/elon-musk-tesla-robot-army-rorshach-watchmen
Can somebody please explain to the "old fart" that I am - what the hell a "token" is.
Thank-you in advance.
BK
Tokens, in this context, are units of AI processing power. Ask a simple question, AI will answer, a number of "tokens" will be used up. Ask for a complex report, more tokens will be consumed. Your employer (or yourself, if you ask AI privately) has bought a number of tokens from the AI provider for employees to use. This is much like software licenses---a company subscribes to, say, 5 simultaneous licenses to use AutoCAD---except that tokens are more fine-grained.
But, in order to promote and encourage AI usage, the same companies reward the employees that use up the most tokens, on the dubious assumption of more productivity. So an employee is encouraged to ask AI a lot of trivial questions, so that his token usage goes up. This is tokenmaxing. Now, it is easy to ask AI a lot of seemingly relevant questions, so token usage skyrockets company-wide as employees compete for rewards; and the company discovers that the tokens---the licenses, as it were---that they bought/subscribed run out prematurely, and a new batch must be purchased, expensively.
The idiotic thing here is rewarding AI usage as such, rather than results. But this has become widespread for some reason; a fashion not unlike the Tidepod challenge, IMHO.
Thank you for the excellent explanation.
RalfB - I kept hearing the term and obviously I was confused about it.
Thank you very much for this explanation.
Regards,
BK
FYI: https://no01.substack.com/p/crypto-explained-simply
10-4 - so the "tokens" are just the bitcoins and the like so to speak - and "token trade" happens in them I reckon?
I mean why is there so much mystery bout the fella who "created" bitcoin and you heard the story about the fella had is laptop end up at the landfill with so many token upon it - ha, ha. That is funny.
I'd just assume have real currency thank-you rather than a mathematical construct that is hardly real.
It is kinda tragi-comedic yes. But if someone is willing to pay good money for those tokens? Why not.
Story from my early days: I was investing in physical miners (gpu and such), and kept a few btc till recently. Sold most of them (Sam disagrees as she says they'll go to a million).
I'm very enthused about the blockchain as technology, which is genuinely good. But less about the "tokens" that are being used (read: traded) as if they are money.
Well fine and good but you know tis WAR. War upon imaginary ideas harmful.
Maybe you ought do an article on "blockchain" but if conceptually all that is is a way to do business without records - then I ain't sure that is of merit.
Gold and silver let there be no doubt - both have merit.
Tokens are tokens - and let me share this link in that regard:
https://www.youtube.com/watch?v=HtX3TZpgFwM - Gandalf and Frodo
Héhé, from 1 year ago: https://no01.substack.com/p/the-emperors-new-blockchain -- "Blockchain's real value isn't bitcoin"
I'll read that when I have time - but you realize this is NOT a game don't ya?
I mean many things are in the "balance" and 20th century ideology is going out of favor - being it is WAR. Like literally - it is WAR.
So make a choice - what side are you on?
So literally - the ONLY thing bitcoin has going for it is that it is a "limited" mathematical construct - but that hardly gives it inherent value - in contrast to gold and silver both.
Please let me know if what you mean by "tokens" has been misinterpreted, but seriously "token trade" is the outcome of any fiat currency no doubt.
Thanks for bringing things back down to the material leverl: copper, silver, rare earths etc. I am curious about pension funds. Don't they have people at least as capable as me, able to see the great bamboozlery that's unfolding? Are my pension's funds in some kind of locked accounts that are going to automatically chase after the rising stock values? Do pension managers not see bubbles when they exist?
I think there are, but they have to post a certain return. And like Sam says: keep dancing while the music's playing.
I've been at this for the better part of 2 decades now. And I feel it's ridiculous every.. single.. time...
Fwiw, some pension funds got in early. So if you are an Ontario Canada teacher, for instance, your pension fund will gain more than a trillion in profit on a few billions in original investment. Sorry I don't remember the actual numbers, but they're out there, and the profit is huge. Ontario Teachers' is said to be a very well run fund.
The first thing that comes to mind when reading these valuations is to short an AI index if it exists. But there's a "too big to fail" air about AI infrastructure becoming entwined with state policy.
No 1, do you believe in the existence of the plunge protection team?
If so, are some sectors or companies so conjoined with the state as to be unshortable?
I am reminded of the quote about betting against the fiat money system. The system has a lot more resources available to sustain itself than you have to bet against it.
Sam compares it to the Space Race, and I have to admit, she's not wrong on this one. For many in power, it feels like existential.
But China already won because it has the infrastructure and the energy. The US does not. The latter still has the brains (but notice that those data teams are mostly made up by Asian-looking people?). But when I compare this to this chip: https://no01.substack.com/p/the-chip-that-pops-the-ai-bubble and then you read that DS & MM cut their token price down enormously... We've already lost.
All that's left are shenanigans and stock market grift (headline grabbing movements pre-initiated by the people in power)...
Serious investors buy Rosneft, Rosatom and United Aircraft.
Some serious investors can't buy/trade in those... Blocked by the gazillion'd sanction package here in the EU 😣
That figures. Have you looked at brokers in Turkey, Georgia or Kazakhstan? Might be a work-around.
Strange, for some reason I thought you lived in Hawaii.
ebear, I thought he was a Brit. But where are you? Your substack name is in the cyrillic alphabet I think?
"Funny how modern finance works"
I guess the real question is who's the joke actually on?
Probably on me. But I don't find it funny... Not one bit. 😉
Enter Smokey Robinson and The Miracles (with an emphasis on the last half of their name)
<< The technical term for this in modern finance is “synergy”. >>
Ring-a-round the Rosie,
A pocket full of posies.
Ashes! Ashes!
We all fall down!
Maybe you'll enjoy some Ed Zitron
https://www.wheresyoured.at/
Brilliant article👍
How about “too big to bail”? At some point reality will prevail? Right?
Printer goes Brrrrrrr [kinda like: https://no01.substack.com/p/strait-to-brrrrrrr ?]
This one's a special gem in your collection.
Take down on "gold" today - the markets are disconnected from reality. I ain't saying "gold" is worth this or that - but oil sure as hell is - and so if I was a younger man - tis oil futures I'd be betting upon.
As for gold and silver - they will find their value - just now they are collateral seems evident.
🎯
Given your excellent and excellently scary analysis I can only think that all these investors rushing to buy Anthropic shares and hoping for a lovely return are now firmly given over to magical thinking, especially since, as you mentioned in an aside, they don't seem to be able to recall their 'Pure primary-school math.'
Of courser the poor old taxpayer will finally hold the bag: that's what taxpayers are there for!
I think it's time to re-institute the Victorian 'debtors' prisons', ghastly and nowadays deemed 'inhume' conditions included. After all, the living conditions of the tax payers outside those prisons won't be that much different. Unless one is Chinese, that is ...
I'm pretty sure I will buy Anthropic. But not yet. It hasn't a good proposition. I think it's the one company that is mostly (not yet, but closest) to self-sufficiency.
Think Microsoft post-2000.
I like dirt cheap stuff... Like silver right now 😉.
hear hear on the debtor prisons, but I'm not going to hold my breath...
So - it is a "game" to you after all and you are seeking profit.
Correct?
I mean you want to get in the "game" when you maximize your return.
Correct?
If so, realize things are fixing to change for the better and better ideas beckon pal.
This has "too big to fail" written all over it.
Sure stuff will go on sale after reality hits and burn a ton of retail investors, the question is how much if the US taxpayer subsidizes the thing.
Liking dirt cheap stuff: yes, I can totally relate to that (in my teutonic housewifey way). No, holding one's breath in the current political circumstances is definitely ill-advised. Taking one's toys and walking away, turning one's back, might be a better strategy.
Ed Zitron approves this post. The AI bubble seems to attract grifters like flame attracts moths. What is your take on CRWV btw?
Yeah, I'm long the technology, short the bubble-mania... It has a LOT of future. I mean, you're here already a while so you've probably seen me compare it to fire, the wheel and electricity. THAT foundational.
CRWV: Still short 😉
FYI:
- https://no01.substack.com/p/trumps-pump-and-dump-scheme-analysed: ""CoreWeave spends its capital expenditures buying Nvidia chips, then Nvidia invests in CoreWeave, then Nvidia guarantees to buy CoreWeave’s excess capacity.""
- https://no01.substack.com/p/the-trillion-dollar-oops: ""CoreWeave rents GPU capacity to OpenAI in exchange for OpenAI stock. Nvidia guarantees it will absorb any unused CoreWeave capacity through 2032.""