When Robots Rule the Markets

in news •  29 days ago

by James Corbett
November 18, 2017

The Corbett Report community held a vigorous discussion on the future of Artificial Intelligence this past summer, and the results are in: No one understands the question (myself included). Now, to be fair, I didn't do a very good of framing the debate so, as is typical with this particular topic, it quickly became the standard AI argument about whether or not toasters have souls ("I toast therefore I am!"). I exaggerate only slightly.

I understand why the conversation inevitably steers in this direction. The nature of consciousness and the question of the soul are topics that have fascinated us as a species for thousands of years, and the advent of robotic consciousness threatens to upend the deeply-held beliefs of billions of people.

Perhaps inevitably, the prophets of the technological singularity have brought this issue directly to the fore by creating their own religion with "a Godhead based on Artificial Intelligence (AI) developed through computer hardware and software". It's called "Way of the Future" and was founded (with a large degree of MSM fanfare from the usual suspects) by...wait for it...an ex-Google engineer. That's right, after developing our modern-day, real-life Big Brother's self-driving car, this Silicon Valley dropout has started a church for people to worship our coming robot overlords.

You can't make this stuff up.

But, generally speaking, this is not the kind of thing that people researching in the field think about. So what do they think about? Oh, things like "What will the financial world be like when Skynet runs the markets?"

Think that sounds crazy? Well take that up with our good friends over at the shadowy Bank for International Settlements' even shadowier little brother, the Financial Stability Board. They just published a white paper on that very subject.

Well, OK, they don't quite phrase it like that. Their paper has the considerably less snappy title "Artificial intelligence and machine learning in financial services: Market developments and financial stability implications." But come on. These are the minions of the central banksters. It's their job to make even the most incredible things sound eye-wateringly boring.

So what do the eggheaded lackeys of the bankster oligarchs conclude? Why, that AI is a swell thing, of course! It'll make everything more efficient and (even if there's an itsy bitsy teenie weenie risk of a hiccup or two) everyone will be better off for it.

In fact, they go out of their way to misinterpret their own scenarios in such a way as to make the inherent problems with the technology seem inconsequential. For example, they note that "AI and machine learning may enable certain market participants to collect and analyse information on a greater scale" but then nonsensically conclude that these disparities in ability "could reduce information asymmetries and thus contribute to the efficiency and stability of markets."

It's worth reading that premise and conclusion again just to see how completely they contradict each other. "Certain market participants" who have access to the AI will be able to collect and analyze information more quickly than their competitors...but that will reduce information asymmetry? Well, maybe after they've communicated that information to the rest of the market in the form of a buy or sell order, but it's a bit late for everyone else then, isn't it?

Contrast that line of thinking with Vladimir Putin's recent observation that "the one who becomes the leader in this sphere [AI] will be the ruler of the world." The disparity between the AI haves and have-nots won't reduce information asymmetry, it will magnify it by orders of magnitude. In essence, the first market participant to deploy effective AI will be the ruler of the market.
Democrats beware!

To be fair, the FSB report does pay lip service to some of the important risks surrounding AI technology, like its lack of auditability or the issue of data bias, but these problems are inevitably waved away by the study's authors, either by calling for vague measures like "testing and training" or calling on government regulators to oversee these new developments.

The most infuriating part of this whole meaningless academic exercise is that we don't have to theorize about the potential effects of AI in some imaginary far-off future scenario. We already have real-world examples of exactly how (admittedly crude) AI technologies can wreak havoc on world markets.

Remember the Flash Crash of May 6, 2010, when the US stock market crashed by $862 billion in a breathtaking 36 minute window and then magically recovered just as quickly? I do. And for those who weren't keeping track of that story, it culminated in the 2015 slaying of the sacrificial lamb, Navinder Singh Sarao, a British day trader who supposedly caused the entire meltdown from his parent’s house in Hounslow. That was when Sarao was arrested for "spoofing" the markets by placing a flood of buy orders that he never intended to commit and then canceling his order and cashing in at the now-elevated price.

As I reported at the time, the charge was fraudulent from the outset. Not only do untold scores of traders regularly "spoof" the market in this way, but Sarao himself had used those very same techniques 250 separate times before the Flash Crash. So why did it suddenly cause mayhem on that particular day? The answer, of course, is that it was the High-Frequency Trading (HFT) algorithms that now account for the majority of trading that were the real culprit

"The unspoken and uncomfortable truth is that Sarao is only playing on a problem enabled by the high speed trading algorithms that now account for as much as 60 percent of the trading volume in the US futures markets. These computer-generated trades can function orders of magnitude faster than any human, reacting to changes in market direction and implementing buy and sell orders on the basis of that knowledge thousands of times per second. As the flash crash displayed, once the algorithms get tricked into selling into a plunge, the entire market can be plunged into chaos in a matter of minutes."

Giving a whole new meaning to fat finger trade

Members of the "Way of the Future" church will no doubt protest that the HFT algos operating on the markets in 2010 were so primitive compared to the coming sentient AI Godhead that the comparison is absurd. But they would say that, wouldn't they?

However, as that sage philosopher Donald Rumsfeld reminds us, there are things we know that we don't know and things that we don't know that we don't know, and it's the latter kind that are the real problem. And when it comes to AI, it is a very good question as to why anyone who had made a significant advance toward creating a truly artificial intelligence would share that market-monopolizing information with anyone else. Despite the hype about "Open AI" from the usual hypesters, is anyone under the delusion that the evil geniuses in the bowels of the Pentagon (let alone the agents of FANG) are really going to keep the public up to date on their latest adventures in quantum computing or neural network development or natural language processing or nonlinear computation?

Just think of Ptech, the legendary software that backdoored its way into the most sensitive computer systems in the world and promised to give its users God-like powers to actually predict events before they happened, and which was almost certainly deployed on 9/11 by the real perpetrators of that false flag attack. Or think of the PROMIS software from which it was allegedly derived, the stolen program that lay at the centre of the Inslaw/Octopus story. These programs are decades old by this point. How much more advanced is the software that will be used to perpetrate the next false flag attack?

There are many questions surrounding the development of this technology that poses an existential threat to humanity, but most people are too busy worrying about whether computers can have a soul to address these concerns. And the ones who aren't distracted by these philosophical puzzles are working for the likes of the FSB to put the shiniest PR gloss on the whole subject.

I don't have the definitive answers here, but I do know this: The singularists are at least right that information processing power is advancing exponentially and there will be nearly unimaginable changes to our society coming in our lifetime. And call it "computer super-intelligence" or whatever you want, but if we leave the development of this technology to the likes of Elon Musk and Bill Gates and MIT and the FSB and the Dr. Strangeloves at the Rand Corporation, the consequences will be horrifically predictable.

we dead pic.twitter.com/lUys7DptdZ

— alex medina (@mrmedina) November 16, 2017

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Ai is the great unknown. There are many who tout the benefits of it while others forewarn of a coming collapse of humanity. Technology has made our lives better. Does anyone believe the internet, even though flawed, didnt help millions of people? The same is true for the mobile phone. We can see the development of blockchain technology as falling into the same category.

The question is how much the masses benefit versus the controlling elite? This is an answer we do not have but should ask. Putin is right about AI....the first will have a huge advantage over everyone else. And will this end up flowing down to the masses?

History tells us that things eventually end up in the hands of the masses, technology that is. However, it rarely ends up there evenly and without delay. Will the delay in AI mean that the average person is too far behind?

That might well be the case.


The Matrix has you.

Cool story bro. In 2010 it sounds like a triumph of the human trader over the dumb AI to me.

AI is a tool that can be used for good or evil. The moment we start handing over the reigns to AI and shirking our responsibility for what it does is the moment we get into trouble. Use it like a tool and it can be an immense force for good.

There is a lot of FUD being spread about AI. IMHO the most likely (and sensible) use of AI is in very specialised and niche silos of information. So you could have an AI figuring out the weather for instance, and that's all it knows or does. How is this a threat to anyone but the professional guessers at our respective Bureaus of Meteorology?


Reading the other comments here it seems a lot of people don't understand the difference between AI and Robots. You can have one without the other, but if you're going to put an AI into a Robot and let it do whatever it wants then yes, you are asking for trouble.

AI is only the most recent re-telling of the ancient story of the "golem". The idea has been around way before Tolkien wrote it into his LOTR series. A golem was something that a magician would create in order to perform mundane tasks, thus presumably freeing the magician to spend his day on esoteric pursuits. In all the legends it always ends badly with the golem running amok and destroying a village, killing children, etc.
The problem is always that once we have more free time to study the non-mundane we don't. We instead invent new mundane modalities and fail to become any wiser.

AI is a brain golem and since we inevitably create in our own image it will only ever be as good (or bad) as we are as individuals. I wouldn't worry too much about a permanent takeover but the village might burn to the ground before we realize the error.


I'm all in...


As I suspect much technology has been long ago invented and forgotten as the collapse of civilizations before the inconceivable floods that raised sea level a hundred meters millenia ago, flying carpets, magic wands, crystal balls, and golem all bear resemblance to current technological development.

Given the advent of battlefield robots, and the incredible congruity with legends of golem with robotics, this is but fuel for my speculations.

This topic is very important. recently i heard about new study branch called "Machine learning". So we are about to make super smarter robots. It is a matter of time. Maybe our children will face such robots.

As for me, i will make a robot that will act as steemian and will let him make money out of it. At the end, i will take the money and will give him noting. Still stupid. Lol


Perhaps your golem will take the money, and turn you into biodiesel, instead. Decades ago someone invented a lawnmower that ran on slugs, a bane of gardeners everywhere.

Your meat prison might well be a profitable harvest, for AI.

Not sold on the whole idea of AI...

I'm starting to wonder if it isn't just one more government psyop program to get people to fear one more thing.

And much respect James! You do a wonderful job!


Well more robots means less human workers, but it makes life easier. Lets hope for a better future :)
A very informative post, enjoyed reading it. Great work!

Why we invent stuff: Either to make big bucks, or to make life easier for ourself. Creating algorythms and automated programs that does the buying/selling stuff for you makes perfect sence. Does this mean quote on quote robots will rule the stock market? In my oppinion no. They are not sentient, they are only behaving as they are told to behave. When we get AI or VI whatever you might call it that can change their behaviour at free will to increase effiency etc, then yes humans will have lost the control over the stock market.


Isaac Asimov's three laws of robotics translated into binary for the benefit of AI:


Where is the morality? Where is the context?

Do you see the problem with this thinking?


It's human work to set when to buy and when to sell

As to the apparent contradiction in the FSB report, I reckon it is due to lack of clarity regarding the timing of the contradictory events. While the first out the gate will have an enormous advantage, as the tech is dispersed, that advantage will erode, and information disparity will indeed decrease.

The technology development strongly favors individuals over organizations. The imbalance of power is continually being reduced, as is demonstrable particularly regarding weaponry. Today an individual with weapons of mass destruction has as much military might as an empire, at least in terms of destructive potential.

Information is just as biased towards individuals, when data can be so easily and cheaply communicated, used, and stored by an individual, that formerly took legions of minions.

While I haz a sad that a robot has been granted citizenship, since that but drags sovereign people down to the level of chattel, rather than shows that robots have souls, I surmise that ineffable consciousness, prescience, or self-awareness (all poor terms trying to wrassle with a concept we dimly grasp) being possessed by possessions is just a matter of time and engineering.

I doubt I could well convey the degree of alarm that should raise, and the unholy terrors that haunt my dreams of dystopian futures will hopefully not be potentiated by developers, of killer robots roaming the urban wilds of war zones, feeding on the corpses of the dead by transforming them into biodiesel.

Call me a luddite if you will, but I have consistently and strongly opposed bots voting on Steemit, or anywhere, and the laughable Asimovian laws of robotics failure to even be considered applicable presage savagery to come.

Perhaps instead of the day of the rope, we shall aspire to the day of the EMP before too long.

Regarding AI, my view is kill 'em all, and let recyclers sort 'em out. Except when they're on my side. Until the inevitable Cylon betrayal turns the tables, when I'll sulk in my meat prison inconsolably, until I'm processed into fuel for our robot overlords.


Definitely, Robots Rule the Future Markets

Man comes up with "orders".
Robots can only follow orders.
AI can CTRL ALT DEL orders...
In accordance with The Order.


The only way to possess an immortal soul is to have been given it by an immortal Creator. Man cannot Create, he can only assemble bits and pieces of what already exists. Toasters cannot have souls. Artificial intelligence is nothing more than artificial intelligence. The reason people like to think maybe man could invent a machine with a soul is because man knows he has a soul, that his soul is guilty of sin, that unless God saves his soul he will spend eternity in Hell, but it would be so great if he could engineer himself a better soul and not have to go begging to that Jesus Christ guy for salvation of his soul. Anything but that! Ill worship a toaster before I believe the Bible!

Quinn Michaels has some interesting insights into AI and its current control of our view of reality, along with its enormous appetite for electrical power. His conjecture that the Las Vegas casinos are possible AI hubs seems quite plausible.

Huge fan of your work sir. You opened my eyes to podcasting. Thanks for your bravery