Artificial Intelligence and Fiat Money
August 13, 2012Posted by on
Is it bird? Is it a plane? No it’s a bid! introduces algorithmic artificial intelligence (AI) with examples that include some fictional AI robot scenarios and some recent real life occurrences. In researching material for the post, two things stand out. The first is the fictional human to AI-robot interactions, scenarios where humans interact with artificially created intelligence endowed with human attributes. The second is the ‘real life’ AI-robot to AI-robot stock market occurrences, where multiple artificial intelligences autonomously manipulate stock values, endowed with the single human attribute of seeking financial gain.
The fictional examples are extracts from 2001-A space Odyssey and Dark Star, in which humans interact with an artificial intelligence that is robotic but is not in human form. Every article I found relating to these extracts attributed human qualities to these artificial intelligences when discussing them, even writing about them as such. Something that should be thought of as strange considering that these were machine form AI and not human form AI. These are not one of the many fictional robots given human form and character as androids, often endowed with humanity and sometimes displaying human emotion, a concept taken to its ultimate conclusion in Bicentennial Man and Blade Runner.
The real life example, is where high frequency trading (HFT) uses multiple artificial intelligences that are programmed to maximise financial gain though the autonomous buying and selling of stock. Humans do not make any intimate personal connection to these AI-robots and they are only considered and discussed in terms of their algorithmic capabilities. Human awareness only being the measure of their ability to achieve financial gains. A dull awareness, only made acute by what is now known as the flash crash. The use of these multiple AI over the last five years by Wall Street, can be directly attributed to fiat money and fractional reserve banking in a shadow banking environment. These are not androids or humanoids, but invisible autonomous algorithmic artificial intelligences, the creators and maintainers of a ‘virtual reality for financial markets‘.
These virtual reality financial markets are the subject of Robert Harris’s book The Fear Index, written around high frequency trading (HFT) trading and hedge fund management. A review by Reuters financial blogger Felix Salmon claims that everything from the way that hedge fund managers sell their funds, to algo (automated algorithmic artificial intelligences) shops, to the income-tax rates on Switzerland-based hedge funds, to the mechanics of the National Best Bid and Offer ( NBBO) system and algorithmic e-mini orders during the flash crash are specific and correct.
An IPA article – Space Ships and Sound Money – discusses the Prometheus Awards , which are made annually by the Libertarian Futurist Society. Here at least, the fictional value of fiat money transmutes fiction into gold. The Prometheus Award prize is a gold coin-currently an ounce for the Best Novel Award and an eighth of an ounce for the Hall of Fame.
In 1983, the Libertarian Futurists gave Hall of Fame Awards to Ayn Rand for Atlas Shrugged and Robert Heinlein for The Moon is a Harsh Mistress. Each of these had issues with fiat money. One of Atlas Shrugged’s heroes, makes money an existential issue, saying:
Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards.
Inflationary money – ‘let it be done’ (fiat) notes that in 1971 most of the major trading currencies became fiat money, which ‘floated’ in a market environment, this being in a world with a history of paper money defaults. Historically, no government has had the discipline to maintain its currency, fiat or commodity based, without resorting to the printing of money for political gain and financial loss.
The use of autonomous artificial intelligence to exploit the financial markets, coupled with the issuance of fiat money for political gain, brings its own Nemesis.