The "smart" people who invested or promoted Elizabeth Holmes' Theranos (Rupert Murdoch, Carlos Slim, Henry Kissinger) or those who invested in SBF's FTX ( Larry David, Paul Tudor ,Dan Loeb, Dan Och) come to mind after reading this.
The problem here was most likely unethical people, but even earnest people using AI like this could have ended up with problems, given the problem of AI hallucinations.
AI could literally be making up the data in the summary reports you're using to check that everything's going OK. I know it makes up stuff when I use it.
It can't even add more than a few numbers together. Literally, it gets sums wrong.
LLMs are exceptionally bad at math, which makes sense when you understand how they work. Here's the vastly oversimplified version.
1. Feed the LLM a whole crapload of text.
2. Use various algorithms to compress it and turn it into something you can query.
3. The user types text into it.
4. Here's the dirty trick. In order to respond to that question, the LLMs queries it's dataset and tries to predict what the next word in the sequence should be based on frequency analysis and a sprinkle of randomness.
That's it. Even though there's been massive progress in the finer details, the principle is actually quite simple. What's really evolved is the hardware and programming interfaces.
LLMs are bad at math because they're not actually doing math. It's just autocomplete, but on gorilla steroids. This is also why they "hallucinate". Everything an LLM does is a hallucination. Some of them are more likely to be true than others depending on the data it's been fed. Some are not.
I think it hallucinates because the imaginary number in the statistical models aren’t handled correctly. I’m not sure what “handled correctly” looks like but even in Calc 1 we had to know when a result wasn’t a real result.
Seems like if you spend tens of millions of dollars training such an LLM, throwing in math subroutines would be a tiny fraction of that cost and add a lot of value - it would have to correctly suss out when to call them, but seems very doable.
I think the difficulty there is that once you get into math formulas, you're no longer doing natural language processing. You have to have certain syntax and such.
What will the computer do if the user puts it in wrong? Try to fudge it? You risk catastrophic error. Force them to correct it? At that point you might as well bust out MATLAB or whatever.
I understand the sentiment but I think this is more complicated than most people realize.
BTW to clarify the request, my case was “give me the average of the ten numbers in this table”. Not inputting math syntax but asking for math in natural language. i got three different wrong answers before doing it myself.
At least MATLAB produces results that mimic the human solution process, are accurate, are repeatable and replicable with paper, pencil and brain cells.
Yes, I get confused that "natural language processing" is actual natural language processing, i.e. abstracting the words into ideas and then going from there. If you're doing that, realizing the user is asking for math to be done is on the menu. But if you're just appending words using an algo as you described, not so much.
You'd need to add a module for every area of human expertise if LLMs are to actually aggregate and use expert knowledge instead of a next word prediction model.
I mean when I tell it "make me a PDF worksheet of multiplication problems of two numbers one to ten" and then "now have there be more instances of the numbers 6-9 in the problems" there's something other than next word prediction going on, for sure.
Maybe that was the plan from the start. Stenn gives the AI the criteria, and it produces a perfect dream to present to investors. However, I find it hard to believe that an obvious fraud like Stenn happened in the darkness. I would guess that many, if not most, of those big investors knew exactly what they were investing in - a billion dollar money laundering scheme.
EDIT: From Matt's 2021 story regarding Greensill- "Greensill had bought credit insurance with Insurance Australia Group, which transferred to Tokio Marine when the latter company bought out the former."
I would guess that Insurance Australia Group was either in on the con from the beginning, or discovered it along the way, and unloaded itself onto Tokio Marine to muddy the books, and at least walk away with something.
These are the people, on both sides of the transactions, who think they are smarter than us, more moral than us, better than us in every way, and have the right to rule us. Don't forget that.
In the late 1990s it was a thing to slap "Internet" or ".com" on the name of a company or all over its prospectus, said company having no revenue or even business plan, and do an IPO to raise 9 or 10 figures. Fast forward 25 years and it's the same story, with "AI."
I have long maintained that any business you could not convincingly explain to Walter Bagehot or John Pierpont Morgan in a brief paragraph is not investable. Innovation can be great, but as the lyrics say, "the fundamental things apply, As time goes by."
They don’t think they’re more moral. Being moral or being a fiduciary is shit they pump to the middle and working class. They are ‘above morality or plagiarism.’
Einstein maintained that any physics that can't be explained to a 12 year old probably isn't true. I'm not so sure about that. Probably such an explanation omits vast quantities of detail essential to proof. In finance, when everyone is making money, nobody wants to look at the details.
Their initial considerations of opportunities begins with a one sheeter, usually faxed. If your deal doesn't clear that hurdle, it doesn't mean it's bad, just not for BH. They dodged a lot of bullets that way. They were in for part of Theranos though, if memory serves.
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
"I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." --Thomas Jefferson to John Taylor, 1816. ME 15:23
I have been working my way through the Federalist Papers and it is obvious that our Republic's founders possessed a sound understanding of history, politics, trade, economics and war. And most importantly, after their narrow escape from monarchy and the general slaughter of common people by the machinations of European criminal finance, human nature.
I see no engine of survival for our Republic beyond the Constitution and the free citizen.
Not snark and no joy in typing this, but having gone round about this with others must point out that the first paragraph ("If the American people ever allow...") is not in the document you reference. TJ had the sentiment IMO but didn't actually write it that way.
Once upon a time the quantity of money was derived from the quantity of gold and silver. As economies grew and more money was needed to support commerce, coincidentally the continued mining of gold provided the underlying collateral for the paper notes. We ditched that and it's been iffy ever since.
There is a serious amount of Capital flowing around the world. Investment Institutions feel panicked to get their money into markets and not miss some esoteric opportunity. Like the Dot Com era many proposals have no fundamental foundations. They present smoke and mirrors with impressive processes that can’t be understood nor dissected. Many investors are too embarrassed to admit they don’t get it but throw money at these scams to get their money into markets. If you don’t understand any proposal or business model run. 🏃
when you see something like that, you have to believe that individuals at the creditors are in on it. Notice always it is large institutions who get burned. anybody who was actually risking their hard earned money would be doing the due diligence. some data is just too good to check.
when you see something like that, you have to believe that individuals at the creditors are in on it. Notice always it is large institutions who get burned. anybody who was actually risking their hard earned money would be doing the due diligence. some data is just too good to check.
This has been going on at least since 1980. That year I was contracted to perform data forensics on a company which had fallen victim to a similar scheme, selling their accounts receivable. I found a quite bewildering series of shell companies centred around San Salvador. I got paid but I’m betting no one else did.
Glad to see, Matt, that you're mentoring Eric with your aplomb for crisp prose while adding in just enough snark. Not too much, as that's bad form. But just enough. I still remember and laugh over the vampire squid.
America wake up! Article makes me think: CBDC is all about surveillance and control!!! I don’t care if it is pitched during Trump’s term. It is a wolf in sheep’s clothing. Never let it happen! It’s a digital prison!
For an exact picture of the mal pathology attempting to subsume our Republic I suggest Cormac McCarthy's last novels THE PASSENGER/STELLA MARIS. --Remember reading? :)-- It is mostly a series of conversations about the nature of human existence in modern America. ("...you are already under arrest...")
I've always been a little skeptical of this. What TECHNICAL capability does CBDC provide to an authoritarian government that they don't already have through banks and credit card companies?
Laws and social norms are what keep the government from raiding your bank account, not technological limitations. The technology is already there.
"I know this saying, it was invented in Russia" and "Some of Stenn’s biggest suppliers were tiny companies in Thailand and Hong Kong with little in common yet corporate filings for all of them list the same Russian name as a backer."
This couldn't have been scripted better.
Here's the explanation, somewhere along the roundtrip transactions there are detours of part of the money going to facilitators, NGOs, government regulators, bank insiders (or all of them).
Could someone do a story about one of those investors who lost in this debacle? I want to hear about how they became homeless because of their losses (like how a working class person becomes homeless when they can't work anymore). Does that even happen to these investors? Don't they just bury their losses in their corporate report and go on their merry way?
The "smart" people who invested or promoted Elizabeth Holmes' Theranos (Rupert Murdoch, Carlos Slim, Henry Kissinger) or those who invested in SBF's FTX ( Larry David, Paul Tudor ,Dan Loeb, Dan Och) come to mind after reading this.
The problem here was most likely unethical people, but even earnest people using AI like this could have ended up with problems, given the problem of AI hallucinations.
AI could literally be making up the data in the summary reports you're using to check that everything's going OK. I know it makes up stuff when I use it.
It can't even add more than a few numbers together. Literally, it gets sums wrong.
LLMs are exceptionally bad at math, which makes sense when you understand how they work. Here's the vastly oversimplified version.
1. Feed the LLM a whole crapload of text.
2. Use various algorithms to compress it and turn it into something you can query.
3. The user types text into it.
4. Here's the dirty trick. In order to respond to that question, the LLMs queries it's dataset and tries to predict what the next word in the sequence should be based on frequency analysis and a sprinkle of randomness.
That's it. Even though there's been massive progress in the finer details, the principle is actually quite simple. What's really evolved is the hardware and programming interfaces.
LLMs are bad at math because they're not actually doing math. It's just autocomplete, but on gorilla steroids. This is also why they "hallucinate". Everything an LLM does is a hallucination. Some of them are more likely to be true than others depending on the data it's been fed. Some are not.
I think it hallucinates because the imaginary number in the statistical models aren’t handled correctly. I’m not sure what “handled correctly” looks like but even in Calc 1 we had to know when a result wasn’t a real result.
Seems like if you spend tens of millions of dollars training such an LLM, throwing in math subroutines would be a tiny fraction of that cost and add a lot of value - it would have to correctly suss out when to call them, but seems very doable.
I think the difficulty there is that once you get into math formulas, you're no longer doing natural language processing. You have to have certain syntax and such.
What will the computer do if the user puts it in wrong? Try to fudge it? You risk catastrophic error. Force them to correct it? At that point you might as well bust out MATLAB or whatever.
I understand the sentiment but I think this is more complicated than most people realize.
BTW to clarify the request, my case was “give me the average of the ten numbers in this table”. Not inputting math syntax but asking for math in natural language. i got three different wrong answers before doing it myself.
At least MATLAB produces results that mimic the human solution process, are accurate, are repeatable and replicable with paper, pencil and brain cells.
Yes, I get confused that "natural language processing" is actual natural language processing, i.e. abstracting the words into ideas and then going from there. If you're doing that, realizing the user is asking for math to be done is on the menu. But if you're just appending words using an algo as you described, not so much.
You'd need to add a module for every area of human expertise if LLMs are to actually aggregate and use expert knowledge instead of a next word prediction model.
I mean when I tell it "make me a PDF worksheet of multiplication problems of two numbers one to ten" and then "now have there be more instances of the numbers 6-9 in the problems" there's something other than next word prediction going on, for sure.
"AI could literally be making up the data..."
Maybe that was the plan from the start. Stenn gives the AI the criteria, and it produces a perfect dream to present to investors. However, I find it hard to believe that an obvious fraud like Stenn happened in the darkness. I would guess that many, if not most, of those big investors knew exactly what they were investing in - a billion dollar money laundering scheme.
EDIT: From Matt's 2021 story regarding Greensill- "Greensill had bought credit insurance with Insurance Australia Group, which transferred to Tokio Marine when the latter company bought out the former."
I would guess that Insurance Australia Group was either in on the con from the beginning, or discovered it along the way, and unloaded itself onto Tokio Marine to muddy the books, and at least walk away with something.
Ya forgot Kushner.
O, yes--there were so many plus some of the hedge funds.
Steve Jurvetson stands by the whole concept and by Holmes even today.
"--my baby is tough--she's double tough..and that's tough enough---"
Don't quit!!
These are the people, on both sides of the transactions, who think they are smarter than us, more moral than us, better than us in every way, and have the right to rule us. Don't forget that.
In the late 1990s it was a thing to slap "Internet" or ".com" on the name of a company or all over its prospectus, said company having no revenue or even business plan, and do an IPO to raise 9 or 10 figures. Fast forward 25 years and it's the same story, with "AI."
I have long maintained that any business you could not convincingly explain to Walter Bagehot or John Pierpont Morgan in a brief paragraph is not investable. Innovation can be great, but as the lyrics say, "the fundamental things apply, As time goes by."
They don’t think they’re more moral. Being moral or being a fiduciary is shit they pump to the middle and working class. They are ‘above morality or plagiarism.’
Time to reciprocate.
This statement couldn't be more true.
Einstein maintained that any physics that can't be explained to a 12 year old probably isn't true. I'm not so sure about that. Probably such an explanation omits vast quantities of detail essential to proof. In finance, when everyone is making money, nobody wants to look at the details.
Charlie Munger is having the last laugh from above, again.
Their initial considerations of opportunities begins with a one sheeter, usually faxed. If your deal doesn't clear that hurdle, it doesn't mean it's bad, just not for BH. They dodged a lot of bullets that way. They were in for part of Theranos though, if memory serves.
Who knew? Thomas Jefferson, who warned us:
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
"I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." --Thomas Jefferson to John Taylor, 1816. ME 15:23
You Madam are my hero of the day.
I have been working my way through the Federalist Papers and it is obvious that our Republic's founders possessed a sound understanding of history, politics, trade, economics and war. And most importantly, after their narrow escape from monarchy and the general slaughter of common people by the machinations of European criminal finance, human nature.
I see no engine of survival for our Republic beyond the Constitution and the free citizen.
(What is ME 15:23 please?)
Apparently, it was TJ’s own unique reference in his writings. AI says ME 15:13 references TJ’s personal copy of the bible. But, it’s in that letter and here’s the full letter: https://founders.archives.gov/documents/Jefferson/03-10-02-0053
Wait until you get to Federalist #84. Hamilton talks about how a bill of rights is not only unnecessary…but dangerous! For real. He actually said that: https://lizlasorte.substack.com/p/get-in-the-ring-thomas-jefferson?r=76q58
And, then there are the “Anti-Federalist” Papers – Brutus predicted all the corruption we know today: https://lizlasorte.substack.com/p/captain-hindsight-to-the-rescue-brutus?r=76q58
Not snark and no joy in typing this, but having gone round about this with others must point out that the first paragraph ("If the American people ever allow...") is not in the document you reference. TJ had the sentiment IMO but didn't actually write it that way.
ok, thanks for that.
yes, fractional reserve banking is license to counterfeit. instead of government cracking down, it made the federal reserve and joined in.
Wise words from a slaver and hypocrit of the highest order. A Jackson was the last POTUS to take on the banksters and win and that's a long time ago.
And that is why free education to the masses is so dangerous. They might catch us!
Once upon a time the quantity of money was derived from the quantity of gold and silver. As economies grew and more money was needed to support commerce, coincidentally the continued mining of gold provided the underlying collateral for the paper notes. We ditched that and it's been iffy ever since.
This is a prime example of people who play with other people's money, moving it around, betting on short-term gains. Just like at a casino.
They produce nothing useful, make no product, just use tech and now AI, to make a profit, ethics and morality be damned.
It's hard to have sympathy with the losers because they're just looking for an easy buck.
Trading Places "It sounds like you guys is a couple of bookies"
https://www.youtube.com/watch?v=04KKWEOwgnM
Lewis and Mortimer are eternal.
BINGO! PARASITES ALL, Produce nothing, extract everything. This is the New amerika!
tell their yacht salesmen that they do not make anything useful lol
LMAO!
There is a serious amount of Capital flowing around the world. Investment Institutions feel panicked to get their money into markets and not miss some esoteric opportunity. Like the Dot Com era many proposals have no fundamental foundations. They present smoke and mirrors with impressive processes that can’t be understood nor dissected. Many investors are too embarrassed to admit they don’t get it but throw money at these scams to get their money into markets. If you don’t understand any proposal or business model run. 🏃
They also feel comfortable in a crowd of their peers.
Vaporware.
FOMO has ruined many investors.
“…won’t get fooled again.”
when you see something like that, you have to believe that individuals at the creditors are in on it. Notice always it is large institutions who get burned. anybody who was actually risking their hard earned money would be doing the due diligence. some data is just too good to check.
when you see something like that, you have to believe that individuals at the creditors are in on it. Notice always it is large institutions who get burned. anybody who was actually risking their hard earned money would be doing the due diligence. some data is just too good to check.
"Supply chain financing is nothing new. It was probably around when Marco Polo set out for the Orient"
I think it literally goes back to ancient Phoenicia.
Anyway, this sounds like a classic Ponzi.
It does.
This has been going on at least since 1980. That year I was contracted to perform data forensics on a company which had fallen victim to a similar scheme, selling their accounts receivable. I found a quite bewildering series of shell companies centred around San Salvador. I got paid but I’m betting no one else did.
If HSBC says you’re crooked, you must REALLY be crooked cuz nobody knows more about being crooked than HSBC.
Wells Fargo runs a close second
Glad to see, Matt, that you're mentoring Eric with your aplomb for crisp prose while adding in just enough snark. Not too much, as that's bad form. But just enough. I still remember and laugh over the vampire squid.
America wake up! Article makes me think: CBDC is all about surveillance and control!!! I don’t care if it is pitched during Trump’s term. It is a wolf in sheep’s clothing. Never let it happen! It’s a digital prison!
For an exact picture of the mal pathology attempting to subsume our Republic I suggest Cormac McCarthy's last novels THE PASSENGER/STELLA MARIS. --Remember reading? :)-- It is mostly a series of conversations about the nature of human existence in modern America. ("...you are already under arrest...")
Don’t forget to take CBD oil as a precautionary antidote to CBDC… the pain will lessen the symptoms. Who cares when they’re “High”?
I've always been a little skeptical of this. What TECHNICAL capability does CBDC provide to an authoritarian government that they don't already have through banks and credit card companies?
Laws and social norms are what keep the government from raiding your bank account, not technological limitations. The technology is already there.
Trump swore he'd never allow digital IDs or CBDCs. Hmmm, guess he lied.
> CBDC is all about surveillance and control!!!
Ya think?
And yeah I don't care who's pitching this bad idea, it's still a bad idea.
"I know this saying, it was invented in Russia" and "Some of Stenn’s biggest suppliers were tiny companies in Thailand and Hong Kong with little in common yet corporate filings for all of them list the same Russian name as a backer."
This couldn't have been scripted better.
Here's the explanation, somewhere along the roundtrip transactions there are detours of part of the money going to facilitators, NGOs, government regulators, bank insiders (or all of them).
The blind pursuit of obscene profits defeats logic every time!
Always glad to read happy news. Well done, our corporate overlords.
Same.
Stupid is as stupid does.
Could someone do a story about one of those investors who lost in this debacle? I want to hear about how they became homeless because of their losses (like how a working class person becomes homeless when they can't work anymore). Does that even happen to these investors? Don't they just bury their losses in their corporate report and go on their merry way?