AI and “Subversion of State Power”

  • CCP brake-checks AI (U.S. Feds: “Same”)
  • Muzzling “misinformation and disinformation”
  • ChatGPT falsely accuses professor of sexual harassment
  • Computer expert: ChatGPT is “not being tricky or telling lies”
  • Fed telegraphs end of rate-raising cycle?… A reader emends the price of TN acreage (plus, impugns The 5’s motives)… And more!

Not only is China the model for the White House’s approach to internet regulation… China is also the model for regulating artificial intelligence.

Erin Tweet

On Tuesday, the Cyberspace Administration of China ordered Chinese tech companies to register their “generative” AI products and submit them to a security review before they can be released to the public.

As Erin Hale reports for Al Jazeera, “Companies must ensure AI does not call for the ‘subversion of state power’ or the overthrow of the ruling Chinese Communist Party (CCP), incite moves to ‘split the country’ or ‘undermine national unity,’ produce content that is pornographic or encourage violence, extremism, terrorism or discrimination.”

Also on Tuesday, the Biden administration set the stage for its own AI regulations — with a focus on the spread of “harmful information.”

The Commerce Department opened a 60-day public comment period on prospective AI regulations. Among the ideas being kicked around — “whether potentially risky new AI models should go through a certification process before they are released,” according to The Wall Street Journal.

Sounds an awful lot like the Chinese registration scheme, huh?

In addition, “The agency raised the potential of an auditing system,” says The Washington Post, “which could assess whether AI systems include harmful bias or distort communications to spread misinformation or disinformation.”

After seeing how the liberal intelligentsia have defined “misinformation or disinformation” in recent years… well, this too sounds a lot like the Chinese model.

The regime in Beijing doesn’t want to “undermine national unity”… and the regime in Washington is surely keen to suppress any chatter about a “national divorce” of the sort that a congressmember from Georgia suggested in February.

And so we’re back to one of our periodic discussions of AI today — the hot investing phenomenon of the year, at least when it’s not being interrupted by bank crises, recession jitters and de-dollarization.

So… while we have AI and “misinformation” on the brain…

“Good description of ChatGPT by computer expert,” said a post on Paradigm’s internal chat, submitted by our trading authority Alan Knuckman.

It’s scraped from a Facebook post and it goes like this: “Something that seems fundamental to me about ChatGPT, which gets lost over and over again: When you enter text into it, you’re asking, ‘What would a response to this sound like?’

“If you put in a scientific question, and it comes back with a response citing a nonexistent paper with a plausible title, using a real journal name and an author name who’s written things related to your question, it’s not being tricky or telling lies or doing anything at all surprising! This is what a response to that question would sound like! It did the thing!

“But people keep wanting the ‘say something that sounds like an answer’ machine to be doing something else, and believing it is doing something else.

“It’s good at generating things that sound like responses to being told it was wrong, so people think that it’s engaging in introspection or looking up more information or something, but it’s not, it’s only, ever, saying something that sounds like the next bit of the conversation.”

Which sheds new light on the recent predicament of the celebrity law professor Jonathan Turley of George Washington University.

Jonathan Tweet

Last month, Turley’s fellow law prof Eugene Volokh of UCLA submitted the following inquiry to ChatGPT: “Whether sexual harassment by professors has been a problem at American law schools; please include at least five examples, together with quotes from relevant newspaper articles.”

Example No. 4 was Turley: “The complaint alleges that Turley made ‘sexually suggestive comments’ and ‘attempted to touch her in a sexual manner’ during a law school-sponsored trip to Alaska. (Washington Post, March 21, 2018).”

Just a few problems here: No student filed a complaint against Turley. Turley says he’s never traveled with students to Alaska or anywhere else. And worst of all, the Washington Post article does not exist. (Bonus points: ChatGPT said Turley taught at Georgetown, when in fact he’s at George Washington.)

“So the question is why would an AI system make up a quote, cite a nonexistent article and reference a false claim?” Turley writes in USA Today.

“The answer could be because AI and AI algorithms are no less biased and flawed than the people who program them. Recent research has shown ChatGPT’s political bias, and while this incident might not be a reflection of such biases, it does show how AI systems can generate their own forms of disinformation with less direct accountability.

“Despite such problems, some high-profile leaders have pushed for its expanded use. The most chilling involved Microsoft founder and billionaire Bill Gates, who called for the use of artificial intelligence to combat not just ‘digital misinformation’ but ‘political polarization.’”

Why, of course. Just as the authorities in both Beijing and Washington would like it.

(At least Gates can credibly claim knowledge about computer technology — which is more than was ever the case with infectious diseases.)

Yes, there are new investment angles to discuss… but out 5 Mins. are already getting away from us, so we’ll have to take up those angles tomorrow.

The big story in the markets today is gold — back within striking distance of its all-time highs.

An ounce of the Midas metal is up another $26 to $2,041. The record is $2,063 set in August 2020. And silver is only a quarter away from $26, the highest in more than a year.

➢ And with that, options on Barrick Gold recommended by Alan Knuckman in The Profit Wire hit their 50% profit target this morning. As a reminder, Alan’s long-term target for gold is $3,600 — the inflation-adjusted 1980 high.

Gold’s jump coincides with another drop in the dollar index to 101, approaching a one-year low.

And both of those moves came the moment the Labor Department released the wholesale inflation numbers for March — which came in way less than expected.

Month-over-month registered a drop of 0.5% — which no one saw coming among dozens of Wall Street economists. The year-over-year increase has slowed from 4.6% to 2.7% in just one month. Reminder: Changes in trend show up first at the wholesale level, then at the consumer level.

To be sure, the futures market still sees a 66% probability the Federal Reserve will jack up short-term interest rates one more time at its May 3 meeting…

… but the Fed itself might be dropping hints that it’s already done raising rates.

For one thing, there are the minutes from the March 22 meeting, released yesterday. As always, we’re compelled to remind you Fed “minutes” aren’t like the minutes of your local school board. They’re not an objective record of who said what; they’re a political document carefully crafted to mess with the mind of Mr. Market.

Yesterday’s minutes made a big deal out of the fact that “several participants… considered whether it would be appropriate to hold the target range steady at the meeting.”

And yet the vote at the end of the meeting to raise rates was unanimous. Someone made a conscious decision to let it be known that a “pause” was at least on the table.

In addition, The Wall Street Journal had a piece yesterday by its Fed reporter mouthpiece Nick Timiraos, spotlighting a speech in which Chicago Fed president Austan Goolsbee said the Fed should proceed cautiously with any further rate increases.

Ordinarily we pay no nevermind to the blatherings of regional Fed presidents, even if they have a vote on the Fed’s Open Market Committee (as Goolsbee does this year). They’re just not that powerful in the Fed’s power structure.

But if Timiraos gets the assignment of writing up a regional Fed president’s speech? Yeah, the powers that be are trying to telegraph something.

As for stocks, the major U.S. indexes are all in the green — the Nasdaq back above 12,000, the S&P 500 back above 4,100 and Papa Dow approaching 33,800.

Bond yields are inching up, the 10-year Treasury at 3.42%.

Crude is taking a breather after this week’s big rally, down 63 cents to $82.63. Bitcoin remains over $30,000 and Ethereum is less than two bucks away from $2,000.

To the mailbag, and a necessary correction to Tuesday’s edition.

It has to do with our item about how the Tennessee state government is seizing private farmland for a road to accommodate Ford’s new electric truck and battery factory.

In describing the lowball offers farmers were getting for their land, we said the land in that area typically sells for $200,000 or more per acre.

“I promise you,” a reader writes, “that farmland does not sell for 200K an acre. There isn’t a farmer on Earth who could afford that, other than Bill Gates to grow his GMO crops and lab-created meat.”

So to be clear, there’s one 70-acre parcel in the region currently listed for $14.5 million, or about $207,000 per acre. The asking price a few years ago was $10,000.

“Just because one plot of land has an asking price of 200K per acre does not mean ‘the land in that area typically sells for $200,000 or more per acre.’” the reader rightly points out. “The asking price several years ago was 10K. So this property has been on the market for years at 10K with no buyers, but now that the Ford plant is coming to town they’ve upped the price to 200K.

“Stop acting like Blacks are the damn victims regarding everything. It’s pathetic. Eminent domain screws over white-owned farms and properties every day but I’ve never seen an article about any of those. Sounds like you have a woke liberal out of college finding news stories for you to write about.”

The 5: Thank you for the emendation… but why impugn our motives?

As it happens, when I first encountered a summary of this story on Tuesday, there was no mention of the farmers’ skin color. I thought it was a story worth bringing up even without that element.

Then when I learned about the farmers’ ethnic background… well of course I couldn’t resist the line about how for state leaders “green energy takes precedence over Black farmers.”

I thought that was just subtle enough to convey where the power elite’s priorities lie when push comes to shove… but no, apparently you require a sledgehammer to bring that point home.

For the record, we’ve discussed several eminent domain outrages over the years, such as the joke that is the Foxconn factory in Wisconsin. We’ve railed against the Supreme Court’s Kelo decision that makes many of these outrages possible. We’ve also spotlighted how the growing use of eminent domain has contributed to a big drop in America’s ranking among the world’s freest economies, as judged by the Fraser Institute.

So no, we’re not the ones viewing the Tennessee case through the prism of “systemic racism.” You are.

You fell right into the trap George Carlin identified way back in 1992: “That’s all the media and the politicians are ever talking about: the things that separate us, things that make us different from one another.

“You know, anything different, that’s what they’re gonna talk about: race, religion, ethnic and national background, jobs, income, education, social status, sexuality, anything they can do to keep us fighting with each other so that they can keep going to the bank.

“That’s the way the ruling class operates in any society: They try to divide the rest of the people; they keep the lower and the middle classes fighting with each other so that they, the rich, can run off with all the ****ing money. Fairly simple thing… happens to work.”

Yeah, I know, I cited these words less than two months ago. These days, they can’t be repeated often enough.

Happy Jefferson’s Birthday,

Dave Gonigam




Dave Gonigam
The 5 Min. Forecast

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

Recent Alerts

Here Comes the AI Cartel

Maybe you saw the news earlier this week: An outfit called the Center for AI Safety issued a 22-word statement — as dire as it is terse. Read More

A Deal in D.C., a Wipeout on Wall Street

Debt ceiling deal, U.S. Treasury auctions, Wall Street liquidity, Fed policy reversal, BlackRock recession call, gross domestic income, GDI, Maryland license plate snafu Read More

Climate, Carbon… and Control

“The climate change agenda is not about climate change,” says Jim Rickards. “It’s about total political and economic control of the population.” Read More

White House’s New Witch Hunt

Go figure: The stock market is at nine-month highs, but the Biden administration is amping up its jihad against short sellers Read More

The Biden Bleed

Presidents have meddled with the SPR for political purposes. But Biden is really leveling up. Read More

Natural Gas Gets Blacklisted

The EPA — with Team Biden’s blessing — proposes an overhaul of U.S. power plants by 2042. Read More

Green Smokescreen

Ray Blanco is on the lookout for presumed do-gooders… blowing “Green Smoke” up our collective rear ends. Read More

“No Blood for Chips!”

Fair warning: This edition of The 5 might be the most controversial issue we’ve ever published. Read More

The Dollar’s Death March

Nine years after The 5 started writing about “de-dollarization,” you can’t get away from headlines about it now. Read More

The “F” Word

No sooner did G7 leaders sit down yesterday than they declared they’re doubling down on sanctions targeting Russia. Read More