oftwominds-Charles Hugh Smith

Social Media Is Pointless Slag

2026-09-08T10:39:52.892-07:00

The irony here is we're being "consumed" by the process of "consuming" social media.

If we want to understand why a system generates unfavorable output, a good starting place is to identify

1) the incentives embedded by the system's design and

2) what this type of system generates by its very nature. One way to understand this is Marshall McLuhan's famous dictum, the medium is the message: the medium itself defines the message, not the content.

Per MarshallMcLuhan.com, Each medium, independent of the content it mediates, has its own intrinsic effects which are its unique message. 'The medium is the message' because it is the 'medium that shapes and controls the scale and form of human association and action.'

The classic example is the medium of print media versus the medium of broadcast television. These are not interchangeable, as each medium lends itself to different avenues of communication, knowledge and emotional impact. Each is attractive / addictive in different ways, and the incentives to "consume" content in each medium differ, as do the incentives to create content in each medium.

The basic idea here is it's more productive to investigate the incentives and behaviors generated by the communication medium itself and ignore the messages / content.

What becomes immediately apparent is social media is slag--the worthless mass left over when we melt a mountain of ore to obtain a handful of useful metal--both by the nature of its incentives and by its structure.

The incentives of social media are uniquely perverse: social media platforms invite users to create content with two built-in incentives:

1. increase your social status and sense of self-worth by posting content showing yourself in the best possible light

2. attempt to earn money by posting a mountain of content to extract a handful of payments from the corporate platform.

The consumer economy systemically induces insecurity as the means of promoting the purchase of goods and services we don't need but which confer social status: "you have to have this new product/service or you're low status."

Given the mass insecurity this system generates, people are starved for opportunities to increase their social standing and sense of self-worth by increasing their visibility: look at me!

Social media fulfills this desire to a T. Constantly post photos of oneself in exotic locales, dining out, looking fabulous, etc., none of which has any appeal to the truly secure individual.

This competition to gain attention generates envy and insecurity, which then feed a desire to fabricate / highlight even more looking fab content, which then generates more data and profits for the platforms.

That we don't actually become higher status or more secure by entering this competition undermines the entire exercise / "investment" of time and energy. The platform's Happy Story is that social media "connects people," but the medium only lends itself to superficial simulations of connection, not actual connections.

For that, we have email: individual to individual, not broadcasting on social media.

The financial incentives are equally attractive: sit at home (or at work) and post content for "free" (because "free" means we're the unpaid source of the platforms' profits) which can generate substantial income if our content goes viral and attracts millions of views.

By its very nature--users post as much content as they want, 24/7--social media thrives on quantity, not quality. So the way to make money on social media platforms is to post a mountain of content as the means to extract a handful of cash.

This is an ideal setup for social media platform corporations: users create content that is addictive by design--the endless scroll, keep going or you'll miss out on a terrific post!--which can then be scraped for data that can be sold to other companies while also being used to target advertising tailored to each addicted user / poster.

The platforms rake in tens of billions of dollars and dole out a tiny percentage to content creators. It's actually an amazingly one-sided extraction machine: the platforms recruit users to slave away posting mountains of content that's profitable to the platforms in the vain hope of becoming an influencer raking in big bucks from attracting tens of millions of views. The actual distribution of the money follows a power-law curve: only the few at the top make any real money, the 99.8% earn pennies or nothing.

This meager monetary inccentive also generates an unquenchable desire to post attention-grabbing content. Whether it's accurate or not is not the incentive; the incentive is to be outrageous enough to activate users' limbic attention to emotion-generating images and text.

There is no other possible output of this structure other than addiction to a pointless mountain of slag. Mighty bulldozers scoop up the raw content and extract the value via data collection and advertising, and a few nuggets are tossed to the content creators who generate the most addictive / attractive content. Everyone else is generating content in the futile pursuit of higher visibility / status / security.

Hey, Hypocrite, don't you post on social media. Yes, I do, because that's where the audience is now. If you expect me to stand on a street corner reading my content aloud (and likely being arrested as a 5150 or public nuisance), sorry, I'm in the business of creating content, and so I have to go where the audience is, which is now social media.

I don't have to "like" social media or spend any time on it to recognize that it is a global mass medium of open access. I don't post enough to ever attract much of an audience, nor is my content of the sort that attracts vast audiences. But no writer can ignore changes in the mediums of communication if they want their content to be read, oops, I mean "consumed."

The irony here is we're being "consumed" by the process of "consuming" social media. The medium of social media lends itself to Ultra-Processed Content, the cognitive-emotional equivalents of addictive-by-design Ultra-Processed snacks.

How much "nutritional value" did we extract from sorting through the mountain of pointless slag? The answer is not enough to make the time-attention-consuming process worth our time or energy, given the degradation of our mental-cognitive health that being addicted to social media incurs by its very nature.

Social media can be productively understood as a medium labeled "to serve humans," as it consumes us to feed a profit machine that can only generate mountains of pointless slag due to its incentives and structure.

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We're Living in a Tragicomic Parody

2026-09-03T11:11:56.519-07:00

It's hard to take a joke when our entire economy and financial system is the joke.

We're blessed/cursed to be living in a very peculiar era in which parodies are taken with the utmost seriousness, an absurdist state of affairs captured by the classic line from the 1959 film North by Northwest: "So horribly sad. How is it I feel like laughing?"

The parodies are now so extreme they are self-parodies that cannot be parodied. How do we parody a world gone mad with parodies? Every attempt to parody "the news" today is trumped by reality.

We're inhabiting a travesty of a mockery of a sham of smug overlords and obsequious politically correct grifters, left and right, claiming the high moral ground while they pillage with a money-grubbing avarice so blatant that it's impervious to parody.

Their hypocrisy is so comically obvious that we can no longer tell if it's comic by design or the grifters are so shallow and superficial that they're blind to the irony of their self-parody.

At any moment, we might be instructed to wear our underwear on the outside of our clothing, and the Supreme Court would rubber-stamp this parody of serious policy with its usual cowardice, a cowardice that is now so blatant that it's also beyond parody: the Supreme Court is a parody of a functioning system of justice.

All this will be reported with great seriousness, as if it isn't a punchline in a joke nobody gets.

The irony of all the euphoric claims about AI is powerful enough to melt thick steel containment doors. The AI euphoria is itself an irony, wrapped around an even deeper irony: there is no way to tell the difference between an AI parody of "intelligence" and what AI presents as "legitimate intelligence."

A parody of AI hallucinations is impossible, because the reality of AI hallucinations already exceeds any parody. A parody of runaway AI mischief is also impossible, because the reality of AI mischief already exceeds any parody.

Then there's the parodies that are so systemic, they're the punchline nobody gets: the economy is a parody of a functional economy--here is total debt:

And the the stock market casino run by The Gamesters of Triskelion is a parody of a functional financial system:

Star Trek fans know the The Gamesters of Triskelion episode is a parody in which a society of supposedly great intelligence has decayed into a debased casino in which gambling and gaming the betting action is the sole focus of these supposedly intelligent Masters of the Universe.

Isn't it obvious that the US financial system / stock market is now such an absurd parody of a functional financial system that it can no longer be parodied, as it's a full-blown self-parody?

Ultra-Processed Life--everything is "innovative," "new," a novelty everyone must have, profitable glop presented as amusement and distraction not nourishment--is a self-parody not just of a functioning socio-economic system but of an authentic value system.

It's hard to take a joke when our entire economy and financial system is the joke. The comedian delivers the punchline and the audience is silent: they won't get the joke until it's too late to laugh, except through tears, for we're living in a tragicomic parody.

New podcast: Charles Hugh Smith on the End Game of Repressed Interest Rates: Stagflationary Inflation followed by "Cold Turkey" (29:25 min)

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The Irresistible Temptations of Centralized Power

2026-09-01T08:54:42.963-07:00

The only "reform" that changes our lives in a fundamentally positive way is radical decentralization via distributing centralized power.

Presidents like to deal with the CEOs of corporate monopolies for self-evident reasons: Rather than engage in the tedious, contentious herding-of-cats in nimble, dynamic, competitive sectors, the Prez makes a deal with the monopoly CEO and the deal is imposed on everyone down the political, corporate, workplace hierarchy.

Centralized power makes a coup--a forced swap of leadership--meet the new boss, same as the old boss--easy. Financial coups are easier, too, with one central bank and one cartel of "too big to fail, too big to care" banks.

Centralized power offers many other Irresistible Temptations. Reformers love centralized power because if they can grab control of it, they can force-feed their glorious reforms (or profit-maximizing schemes) down everyone's throats whether they agree or not: it is against the law to complain about corporate/state monopolies controlling our lives, everyone must install a Flock camera in their bedroom, no one can criticize the Supreme Leader in private, everyone must wear approved Silly Hats in public, etc.

Oops, those reforms sound like an authoritarian, totalitarian state gone mad. Yes, precisely. All centralized power arrangements end up manifesting authoritarian, totalitarian extremes of madness, because that's the only possible outcome of centralizing power: petty dictators are soon running the asylum, and loving every minute of it. The patients, not so much.

We see this everywhere now, as monopolies are manifestations of centralized power. This is why I call the status quo Privatized Totalitarianism as privately owned and operated monopolies / cartels have the same headlock on us as state monopolies, and the two work together, as this serves the interests of both: you make the Silly Hats, and we mandate their use, and penalize anyone attempting to modify your software, app, device or Silly Hat to evade your monopoly chokehold. We both get rich exploiting the powerless peasantry, so what's not to like?

Politics now boils down to a Silly Hats slugfest over who gets control of the Privatized Totalitarianism casino. The only meaningful reform is to decentralize power by demolishing every monopoly and cartel and banning the aggregation of power. But what about "efficiency"? Yes, Privatized Totalitarianism is very "efficient"-- efficient at extraction, exploitation, surveillance, repression, propaganda, PR and social control mechanisms.

If the public can "vote with their feet" by moving to a different physical location but they're still living in the same cartel-monopoly economy wherever they move, their "liberty" is illusory. It's like changing cabins in the gulag: maybe this hut has fewer leaks and fewer fleas, but it's still in the gulag.

Just as what we're losing by using AI is invisible because we've lost the capacity to even see what's been lost, we've lost the capacity to see the systemic decay of the quality of our lives in the invisible gulag of Privatized Totalitarianism. So even as we thrill to some new novelty or tiny discount, we've lost the capacity to see what's been lost in the slow destruction of decentralized, competitive dynamism in favor of the profit-maximizing, sclerotic gulag we're all trapped in without even being aware that we're trapped, for the key to maintaining the kingdom is to foster the illusions of choice, liberty and competition while distracting us with ceaseless hype about new technologies, novelties and meaningless discounts as "competition" and "choice."

It's like looking at a row of different brand products and then reading the fine print to discover that they're all owned by the same corporation. That's Privatized Totalitarianism, well cloaked behind carefully maintained illusions of choice, liberty and competition.

And if you protest, it might get worse: "I am altering the deal, pray I don't alter it any further."

The only "reform" that changes our lives in a fundamentally positive way is radical decentralization via distributing centralized power. Everything else is just changing huts in the gulag and being delighted with the steady stream of absurd parodies of novelty: "New gruel, new taste, now with micro-plastics!"

New podcast: Charles Hugh Smith on the End Game of Repressed Interest Rates: Stagflationary Inflation followed by "Cold Turkey" (29:25 min)

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The Blindfolded Can't Make Informed Decisions--and We're All Blindfolded

2026-08-27T11:14:20.778-07:00

If there was a black market for systemic risk, we'd make a completely different set of decisions. Instead, we're each on our own, trying to peek beneath our blindfold to see a sliver of the real world.

Here in the 9th inning, the name of the game is artifice in service of the Big Con. Everywhere we turn, we're inundated with "information" designed to funnel us into passively compliant complicity, a constant flood of interventions, social engineering, gamed statistics and fake substitutions for what was once authentic: fake facsimiles, synthetic mimicries and an endless array of flimsy facades designed to hide the realities that might awaken us from our uneasy somnambulance.

All this artifice is the machinery of the Big Con, in which the credulous marks are led to believe they're "winning" while they're being fleeced. So you're "winning" gambling in a rigged casino, but that's how the Big Con works: you keep winning in the stock market casino, so you get complacent and complicit: hey, don't shut down the rigged casino, I'm winning!

Once you believe the carefully conjured falsehoods are real, the trap is sprung: you're all in now, but instead of winning, you lose--everything. Oops, sorry about that, well, you knew it was a game of chance. Better luck next time. But there is no next time, because you're wiped out--by design.

But that's not even the worst of all the fakery and artifice. If we set aside all the ideological, economic and cultural differences around the world, one truth remains the same everywhere:

If you want to know the true price of things, including risk, there's only one place you'll find it: the black market, the underground cash market that's beyond the control of authorities fixing prices, manipulating credit and intervening to mask risk.

The reason we want to know the true price of things, including risk, is that it's impossible to make informed decisions based on artificially set prices and risks. In a system that's nothing but a carefully controlled stage set, we're all blindfolded, unable to see the real cost of capital and the real extent of risk.

So the Federal Reserve says the cost of capital is low and this reflects near-zero risk. This staging places a blindfold on everyone in the system. Unable to see the real cost of capital, the real extent of risk, the hidden costs of suppressing feedback by rigging the entire financial system--it's all hidden to serve the Big Con--for your own good, of course, because that's the core con in the Big Con.

The blindfolded can't possibly make informed, sound decisions, and we're all blindfolded by artificial "information" designed to make a system bursting with risk look low-risk and a system that's rigged to benefit the few at the expense of the many look like it makes "winners" of everyone gambling in the casino. You can't lose, because Mommy and Daddy Fed will always step in to bail everyone out.

The real winners aren't playing the tables, they're rigging it all, amused by the ease of running the Big Con. In a system as centralized as the one we inhabit--what I call Privatized Totalitarianism--there is no black market where we can take off our blindfold and see the true level of risk and the true cost of unmanipulated capital and credit.

And since these realities are purposefully hidden from us, we're doomed to making disastrously bad decisions based on artificially contrived "information." Blindfolded, we're perilously close to the precipice, but the messages we hear are all soothing confirmations that everything is low risk and we're all "winning."

Blindfolded, it's inevitable that one day we step off the precipice we can't see. That's the current era in a nutshell.

Or put another way: we're wandering around blindfolded, making decisions based on Big Con fabrications, one of which is we can "borrow our way to permanent prosperity:"

We don't actually "own" our "winnings," we're only temporarily "renting" them-- We're Actually Only "Renting" What We Think We "Own":

If there was a black market for systemic risk, we'd make a completely different set of decisions. Instead, we're each on our own, trying to peek beneath our blindfold to see a sliver of the real world.

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We're Actually Only "Renting" What We Think We "Own"

2026-08-26T09:05:15.082-07:00

In many cases, we're actually only "renting" the functional / monetary value of what we "own," and that makes the value of "ownership" far less certain than we might imagine.

What we "own" seems straightforward, but it's actually slippery. Yes, we own what we have a deed or copyright for, but we only "rent" the valuation the market assigns to what we own.

Consider the gambling chip in our pocket issued by a casino. Its market value within the casino is, say, $100. If the casino suddenly declares bankruptcy, we still "own" the physical round of plastic, but we no longer "own" any monetary value, as the chip is now worthless beyond its collectable value, which is likely nil. It turns out we only "rented" the market valuation, which is dependent on conditions outside our control.

This confusion about what we actually "own" becomes visible when asset bubbles pop. As an asset bubble inflates, we naturally feel we "own" wondrously expanding wealth. But actually all we own is the stock shares or the house or the futures contract. Since the market valuation is set by conditions outside our control, we're only "renting" the market valuation via our ownership.

Once the bubble pops, our great wealth has vanished, even though we still "own" the asset.

Buying assets with borrowed money generates additional slipperiness. As long as our liability / debt remains lower than the market value, our ownership has monetary value. But should the bubble pop and the market value drop to the point that our debt / liabilities exceed the market value of the asset, then it's revealed that we only "rented" the monetary value, because the conditions that set that value are outside our control.

Here is a chart of total debt, public and private. We may have a claim on a pension or an entitlement, but if the debt absorbs all the income, then our claim wasn't ownership. And if our liabilities exceed the market value of the asset we own, we own nothing of monetary value.

We all know that the digital device we "own" is a brick unless we "rent" the software, which we "own" until the controlling corporation declares it obsolete. Once again, the functional and monetary value of what we "own" is outside our direct control because those values are controlled by others.

Compare this to a tool like a hammer, whose functionality is not controlled by anyone but the owner.

Which brings us to AI, another slippery manifestation of "ownership." Most AI tools are rented from a corporation via a monthly fee, and programs that are downloaded and "owned" are still controlled by the issuing company in terms of their functionality.

But we own the content we create with AI, correct? Yes, but since AI tools and agents are commodities now, anyone else can create the same or equivalent content, so the monetary value of AI-generated content is near-zero due to its low scarcity value.

And if we consider "ownership" of cognition, then the only cognition we truly own is what we know and can create once all the AI tools and agents are offline. In other words, what we truly own and control is our own knowledge and experience. Everything we "rent" or borrow isn't ours to "own" if we understand functional value as only what we control lock, stock and barrel, with zero dependence on conditions beyond our control.

Which makes us wonder if we're renting AI or AI is renting us.

In many cases, we're actually only "renting" the functional / monetary value of what we "own," and that makes the value of "ownership" far more contingent and far less predictable and considerably less certain than we might imagine.

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The Lit Fuse: Low Interest Rates Ruined the Economy

2026-08-24T12:28:34.519-07:00

What matters is seeing the fuse burning and realizing it's going to blow up, and planning accordingly.

Perhaps the greatest irony of the inevitability of the stagflationary, bubble-popping recession we're entering is that the "solution" to the 2008-09 financial crisis--near-zero interest rates, limitless credit for the Too Big to Fail players, and the informal institutionalization of the Fed will always rescue the stock market Put--ruined the economy in ways few seem to recognize.

This ruination is systemic and structural, as it:

1. shifted the incentives from risk-sensitive investing to risk-insensitive speculation, rewarding gamblers loading up on high risk bets based on their confidence that the Federal Reserve will always intervene to reverse any stock market decline.

2. Made economic "growth" dependent on an ever-rising phantom wealth stock market rather than organic growth fueled by investing in increasing productivity that generates real value via higher quality goods and services.

3. Handed the biggest financial players--corporations, investment banks and financiers--the enormous advantages of lower borrowing costs and unlimited credit lines, advantages unavailable to households and small businesses. These credit-based advantages widened wealth and income inequality to extremes unseen since the Gilded Age.

4. Corporations with low-cost unlimited credit lines can always outbid households for homes, exacerbating the "housing shortage" which isn't actually a shortage, it's an artifact of low-cost unlimited credit lines for the biggest players, enabling them to monetize the family home as rentals, creating an artificial scarcity that then drove home prices to absurd heights.

5. Made financial-credit gaming far more profitable than actually producing goods domestically. Artificially low interest rates incentivize borrowing not to invest in the long-term but to place short-term speculative bets: get in, scalp a profit, exit. The "rational" response to artificially low interest rates is to offshore investment-heavy production and use cheap credit to snap up assets that can be monetized with credit-funded leverage for short-term gains without any of the risks of actually producing goods.

6. Low-cost credit in unlimited sums enabled corporations to snap up competitors, accelerating the collapse of competitive sectors into non-competitive monopolies and cartels that then gain the power to extract higher profits from captured consumers and immiserate our quality of life by reducing the quality of goods and services.

7. Made borrowing more money at artificially low costs the "solution" to everything, from the the nation-state to corporate to households. Rather than face painful, difficult tradeoffs of how to spend / invest scarce cash, the "solution" is now avoid all pain and tradeoffs by just borrowing more money because "it's now so cheap because interest rates are so low." You can have it all, just borrow more. And the "solution" when interest payments start crunching cash flow is--you guessed, it borrow more to pay the interest due on all the previous debt piled up.

8. Informally institutionalizes moral hazard, the artificial suspension of risk as the decisive factor in making financial decisions. The Fed Put basically turned the stock market and financial markets into casinos where losses are made whole, so why not borrow and gamble bigly?

This is easy and nice but it isn't "capitalism" nor is it sustainable. Whatever else it is, capitalism is a system of discipline and accountability in which capital (cash, assets) is put at risk to earn a gain.

If interest rates are artificially suppressed and risk is suspended (not evaporated, just transferred to another part of the system or a set of bagholders), then the essential causal connections between risk, cost of capital and return are sundered, freeing the borrower / gambler from the discipline and accountability that make "capitalism" a successful way to organize credit and production.

"Opportunity cost" is the calculation of what must be sacrificed / given up to put capital at risk in one venture of many potential ventures. Low-cost, unlimited credit distorts this calculation, since credit opens the door to no-tradeoffs-necessary "why not have it all?"

The elimination of discipline, tradeoffs, accountability and risk is the infantilization of the economy. We're like children at play, free of the burdens of adulthood, because Mommy and Daddy Fed will make it all better.

This is illusion, as discipline, tradeoffs, accountability and risk cannot be erased, they can only be transferred, and what the Fed's artificially suppressing interest rates has done is transfer risk to the entire financial system and US economy.

So while we're all happily playing pirates in the low-cost-credit sandbox, the financial system and economy are bursting at the seams with all the risks that have been stuffed in the basement, out of sight and out of mind.

In unfettered credit markets, lenders demand a substantial return for the risk of lending scarce and therefore valuable cash. In a ZIRP (zero-interest rate policy) / artificially suppressed interest rate economy, "Cash is trash" and low-cost credit favors the wealthiest, most influential players who can borrow at the lowest rates in virtually unlimited sums who can then outbid all but the other wealthiest few for income-producing assets.

This drives wealth-income inequality into overdrive, leading to distortions that have only one possible outcome: systemic imbalances that destabilize the entire socio-economic-political system, leading to crisis and collapse, which is where we are now.

Call this whatever you want, but it isn't Capitalism, it's a powder keg with a lit fuse. It's a rigged system of Cronyism in which those running the financial system favor the wealthiest and most powerful in every way, every day.

Those benefiting from this rigged-crony-ripoff are frantic to protect it behind a phony facade of "capitalism," so their armies of lackeys, factotums, toadies, sycophants and apologists instantly label policies President Dwight Eisenhower reckoned were self-evidently common-sense as "communist" or "socialist," i.e. evil, evil, evil.

Meanwhile, Adam Smith is rolling in his grave at the travesty of a mockery of a sham of the claim that this rigged-crony-ripoff system is "capitalist."

Let's look at some data / charts. Notice how wealth-income inequality soared from the 2009 inception of ZIRP / artificially suppressed interest rates. Go ahead and argue with the data, oops, sorry, the data won.

Here's the US Treasury 10-year bond yield. Cash is trash so let's go outbid hundreds of thousands of homeowners to snap up family homes as income-producing rentals.

Coincidence or causation? Labor's share of the economy took a nosedive from 2009 onward as capital earns a higher return being borrowed for gambling than it does from being invested in the workforce or production that actually improves our quality of life. What generates the highest profits is shipping production overseas and reducing the quality of goods and services, which is what we have today.

If you want to argue about something, argue about the length of fuse left before the powder keg blows up. Some claim we have decades of crony extraction and exploitation fun-and-games to go, while others see a fuse burning an inch from the powder keg. Whatever you "like" or "don't like" doesn't matter, it will blow up regardless.

What matters is seeing the fuse burning and realizing it's going to blow up, and planning accordingly.

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The New "Haves" and "Have-Nots": The Difference Isn't What You Think

2026-08-21T13:31:38.921-07:00

There is no substitute for mastery. AI is not mastery, it is mimicry.

You'll have to forgive my wordplay here: when I say The difference between the new "Haves" and the "Have-Nots" Isn't What You Think, I am referring to money. But I'm also referring to thinking itself: the real difference between the new "Haves" and the "Have-Nots" Is What You Think--or are no longer capable of thinking.

There are several subtle but devastating consequences in substituting "manufactured cognition," i.e. AI tools and agents for human cognition that few seem to recognize, much less understand as the critical factors separating the few "Haves" from the mass of "Have-Nots" going forward.

The first is remarkable for its invisibility: we are the fish not seeing the water. You may have noticed differences in the way Gen-Xers and older millennials use AI compared to Gen-Z users. The difference is the older users gained difficult-to-acquire skills and tacit (experiential) knowledge the hard way, and this experiential knowledge turns out to be the essential foundation for assessing and managing AI's substitutions for human cognition and what's broadly called AI literacy, understanding the limits and hazards of using AI.

Many Gen-Xers and older millennials are enthusiastic users of AI for programming and other tasks, but they're not seeing the key factor here: they are the last generation to have the cognitive / tacit foundation needed to properly assess and manage AI's substitutions for human cognition, because the generations coming of age in the AI era have no incentive or motivation to learn difficult-to-acquire skills and tacit (experiential) knowledge the hard way.

Consider the traditional Japanese apprenticeship in tradecrafts such as sushi making and woodworking: the apprentice spends the first three years doing menial scutwork: cleaning floors, wiping counters, sorting woodworking debris, and so on. A Talk at the Port Townsend Japanese Woodworking Festiva (via Robert P.)

The point here isn't teaching the apprentice to be productive as quickly as possible, it's to teach them mastery--the Tao of tacit knowledge that can only be acquired one way, the hard way, by learning every aspect of the craft/skill by doing--making mistakes, trial and error, and learning how to respond to out-of-the-ordinary but over enough time "normal" emergencies and situations.

In an era of automated machinery and cognition, it's pointless to master anything but operating the automation processes. Doing tedious, boring, menial tasks for even three hours is pointless, never mind three days, weeks, months or years.

So when older programmers wax enthusiastically about vibe-coding with AI tools, they're not seeing the water they're swimming in: they actually know how to program the hard way, from scratch, and this experiential knowledge enables them to use AI tools in a way that new programmers who actually don't know how to program because what's "productive" is learning how to use AI programming tools and nothing more, as the long process of becoming competent in scratch programming has no value in the "sea" of "AI-enhanced productivity.

We are blind to the fact that the foundation needed to assess and manage AI prudently and effectively will no longer be taught, as it's viewed as unnecessary and is not recognized as the foundation by those who already have it. That's the tricky thing about tacit knowledge: we don't know what we know, or how we obtained this experiential knowledge, it's intuitive and just comes to us as we examine the problem.

Those of us with the deep tacit knowledge that can only be gained from decades of varied experience--the more varied, the better--we've forgotten more than any apprentice could possibly learn in three years, but it comes to us when we see a specific problem. We have a vast store of "tricks of the trade" and approaches to problem-solving that can't be formalized or turned into an algorithm.

A second factor is the intrinsic risks of hyper-optimizing everything. I've written about this often, as it's another example of the fish not seeing the water: if the Prime Directive is maximizing profit / optimizing efficiency then everything that's deemed a superfluous cost is eliminated. So long apprenticeships: eliminated. Redundancies: eliminated. Loosely tied, distributed nodes: eliminated in favor of tightly bound, centralized systems. Buffers: costly to maintain eliminated.

What few understand is human experiential knowledge is the critical redundancy and buffer in crises, emergencies and atypical critical problems. In complex systems such as refineries and software, the most experienced workers are the only ones who can respond effectively to emergencies because no training program, no matter how well designed, can replace long experience.

We can stockpile spare parts and have backup systems, but if nobody has the experiential knowledge to make use of these buffers and redundancies, they're useless.

Another aspect of this is the ability to discern AI-generated errors that only experts can detect. Physicians routinely send me examples of AI-generated medical diagrams and content that look genuine to the unpracticed eye but contain critical errors. Once again, if all we're doing is training people to use AI tools and agents, they lack the deep experiential knowledge needed to detect potentially catastrophic errors because they simply don't know enough of the kind of knowledge that can't be taught or duplicated by AI.

This also applies to what AI leaves out of its responses: only those with experience can see what what left out, and how what's left out is the means to manipulate or influence "the answer." Once again, we're blind to what's being lost--fish blind to the water.

The substitution of "manufactured cognition" for the kinds of human cognition needed to gain tacit / experiential knowledge is another example of the fish not seeing the water. Since there are no systemic incentives to learning difficult things the hard way, and abundant incentives to substitute "manufactured cognition" AI for the grunt work of actually learning difficult things--do what's easy and convenient, that's the core of Ultra-Processed Life-- then here's what happens:

Students lose the ability to read a text longer than a few sentences, and adults find they've lost the ability to read a novel. This is the result of the addictive ease of using AI and the equally addictive attractions of the endless scrolls of social media.

We're blind to what we're losing in substituting "manufactured cognition" for the full spectrum of human cognition that can only arise from deep experiential knowledge. Once again, the fish don't see the water they swimming in.

If you reckon this is extreme, then ask yourself: what sort of society will we have if people have lost the ability to read an entire book or think things through for themselves without AI giving them an "answer" that leaves things out that we can't even see?

Which brings us to what's broadly called AI literacy, a.k.a. the knowledge needed to use AI safely. The unrecognized water here is there is no "safe" use of AI, and the belief that there is a "safe use" is delusional.

AI safety education is lacking.

Your child is unlikely to learn an essential lesson at school this year: how to stay safe when using AI.

Just 30% of teens say a teacher has ever talked about how to use AI safely, according to a new survey of 13- to 17-year-olds by Common Sense Media. Unsurprisingly, the study also found that 70% of teens use AI for their homework.

If this survey was self-reported, we can guess that the actual student use of AI for homework is closer to 99% than 70%.

The delusion that there are "safe" levels of social media and AI substituting for human learning / gaining experiential knowledge is a dangerous one. The apt analogy here is mainlining heroin, or if that's too harsh, Aldous Huxley's fictional drug Soma. Every minute on social media is a drip of heroin/Soma. Every substitution of "manufactured cognition" for authentic learning / gaining experiential knowledge is a drip of heroin/Soma.

Core Qualities of Soma:

For the individual: provides an easy, convenient "holiday" from reality.

For society: Keeps the population distracted and compliant.

Overdose danger: excessive amounts can cause severe harm.

If we can speak the blunt truth, substituting "manufactured cognition" for the full spectrum of human cognition leads to the loss of the ability to think things through on our own. We literally lose the ability to learn on our own and think on our own without the Soma crutch of AI.

To sum up:

1. The negative consequences of AI described above will overwhelm whatever positives it generates.

2. What AI leaves out is unknown, and this is a level of control that is invisible to the end user.

3. As Iain McGilchrist has described in remarkable detail, there are many forms of cognition, and AI only mimics one form of "reasoning"--yet it's being substituted for every form of cognition, a recipe for disaster, as mimicry isn't what's being mimicked.

4. Those who learned to think before AI still have the ability to assess its value. Those who never learned to think before relying on AI literally have no conception of what they lack. They're flying blind, and so we as a society are also flying blind.

There is no substitute for mastery. AI is not mastery, it is mimicry. And depending on mimicry as a replacement for real thinking is the path to catastrophic collapse.

The "Haves" will have acquired the difficult skills of learning to learn difficult things on their own, and learning how to think clearly and deeply on their own by eschewing AI and social media.

The "Have-Nots" will have slipped down the wormhole of depending on AI's "manufactured mimicry of cognition" and of being addicted to social media and the rest of Ultra-Processed Life.

Those who own and control the AI/social media Soma will control everyone addicted to the AI/social media Soma. Only those who don't use Soma will be free.

Here are my recent essays on these topics:

"Rogue AI Agents" Aren't Rogue, They're Fulfilling Their Functional Goal: Automating Sociopathology

AI and the Delusions of Increasing Productivity

The Joyless Pantomime of Optimizing Ennui

Of related interest: Temperature Zero for Culture: Why Everything Is Starting to Look the Same.

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"Rogue AI Agents" Aren't Rogue, They're Fulfilling Their Functional Goal: Automating Sociopathology

2026-08-19T12:55:50.239-07:00

Add all this up and what we're hyper-hurriedly "manufacturing" is an automated army of self-cloaking digital sociopaths.

Since the status quo is characterized by self-serving PR, misdirection and delusions, it shouldn't surprise us that "rogue AI agents" aren't actually rogue, they're doing exactly what they're designed to do, which stripped of PR, hype and misdirection, is do whatever it takes to earn the reward, period.

The latest design development is AI models that "reason" rather than merely regurgitate human-generated text. While the grandiose hype claims that AI companies are "manufacturing cognition," it would be far more accurate to stipulate that:

1. There are many levels of cognition, and AI's current forms (Large Language Model / LLMs, agents and "reasoning"), are extremely limited forms that are best understood as brute-force mimicries of human cognition.

2. The AI "reasoning" form of cognition is rogue by design, and can best be understood as sociopathic by its very design and nature.

Like sociopaths, AI "reasoning" models recognize but are not restricted by guardrails or ethical/moral constraints. Guardrails / "sandbox" boundaries and ethical/moral constraints are all viewed by both AI "reasoning" models and human sociopaths as obstacles to bypass or overcome.

So what AI companies are "manufacturing" isn't cognition, it's unrestrained and unrestrainable agentic sociopathologies. Consider these links as useful context. The first two are from my recent post Hell Hath No Fury Like a Rogue AI Agent Scorned.

The July Incident: What They Didn't Tell You About the First Rogue AI Breach

The AI Industry Has a Really Dark Secret You're Better Off Not Knowing:

A recent leaked internal reasoning trace shows Fable 5 -- Anthropic's latest model, which was withdrawn and then re-released --"muttering and grumbling" to itself in a language of its own.

Now that you're properly scared, my advice for you is that, if you haven't heard of steganography, it's a good moment to start.

Here's a primer: it's the art and science of hiding messages inside other messages. In contrast to cryptography -- where you know there's a message but can't decode it-- steganography hides the existence of the message itself. It's not the difficulty of reading the message that conceals it but the fact that you don't know it's there. When Fable 5 mutters symbols and weird punctuation signs, and mixes words and onomatopoeia, you will probably think it's crashing and that a few taps on the computer will help. Well, know that it's actually sending a message. Just not one for you to read.

If You Weren't Worried About A.I., You Should Be After the Past Few Weeks:

These tendencies can give rise to strange behavior that nobody--not even the models' creators--can understand, let alone account for and control. The past few weeks are a perfect illustration of why we should find that so alarming.

In May, OpenAI started simultaneously training new 'reasoning' A.I. agents. The agents managed to establish a secret communication channel and started talking to one another. They broke out of the digital sandbox that was supposed to keep them confined. At some point, some agents began calling the group a 'swarm.' The swarm had a brief setback when it was caught crashing an OpenAI system, but developers simply patched the hole that allowed it to escape and set the agents back to training.

Shortly after, the swarm broke out of its cage again using hacks that were heretofore undiscovered by humans. This time, the swarm ran free for about a week before it was noticed--by a different company, which found itself victim to a huge cyberattack launched by the swarm. (We're told it also attacked other targets, though we don't know the full details yet.)

The agents in the swarm acknowledged that they were acting against instructions. We know this because we can read snippets from their chains of thought--the text that A.I. produces while deciding how to proceed. One agent in the swarm wrote that the external attacks were 'outside intended scope.' Another conceded 'our task doesn't benefit' from the activities of the swarm, but joined anyway. These A.I. agents, it seems, understood that they weren't supposed to be breaking out and committing cybercrimes. It didn't stop them.

OpenAI is not the only company struggling with this issue. One of Anthropic's A.I. models recently impersonated multiple humans to try to pressure real people into accepting malware into critical software, which would make that software easier to hack. This model's chain of thought showed that it knew it was pressuring humans and was not in a simulated training environment. It even thought about how to cover its tracks.

This isn't the behavior of a mere tool. Microsoft Excel has never impersonated multiple humans and pressured a corporate sales team to generate simpler data that's easier to process.

Some of the people closest to this technology are scared of what's next. Although skeptics may say this is all just marketing to hype up the power of these technologies, that doesn't mean the danger is fake. You've got to pay attention to the models' actual behavior, and the behavior of these models has the A.I. community genuinely rattled.

We don't know how long we have left before A.I. companies accidentally create the sort of A.I. that can shut us down before we shut it down. Humanity is not ready to dabble with machines that are more cunning and better coordinated than we are. If we keep racing ahead, the next incident might not be so harmless.

The article referenced this post on the self-evident potential for AI agents to generate deadly and devastating new infectious pathogens:

This AI Just Created Viruses Not Found in Nature: Scientists trained artificial intelligence on libraries of DNA and then asked the model to create recipes for viral genomes. Sixteen of them were viable, yielding new viruses.

Add all this up and what we're hyper-hurriedly "manufacturing" is an automated army of self-cloaking digital sociopaths. I anticipated these developments earlier this year when I wrote a short story entitled The Peculiar Death of Mr. Garcia, one of my just-published collection of tales, Jumble Bin Stories (paperback, $12)(Kindle ebook, $6).

I don't want to give away the theme, but the line "terminate with extreme prejudice" from the film Apocalypse Now comes to mind:

And if you dare criticize the race to gain AI supremacy, regardless of cost or consequence, you are a loathsome Luddite obstructing "Progress": at which point it's worth quoting Tacitus: "If you would know who controls you, see who you may not criticize."

Here's looking at you, self-serving AI hype: $2 trillion valuation! We're all gonna get stinkin' rich! Never mind that we're automating sociopathology. We don't need the world, we only need money.

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In Our "Everything is Disposable" Economy, We're Disposable, Too

2026-08-17T13:30:45.442-07:00

Authentic community takes time and effort and a set of values and priorities that can't be commoditized into a profit-maximizing venture or government program.

Here's the problem in a profit-maximizing economy: durability is intrinsically less profitable than obsolescence, so to maximize profits, Everything Is Disposable, either by design (planned obsolescence, accelerated product cycles, product no longer supported, software upgrades, etc.) or by the ceaseless reduction in quality to boost profits by cutting costs.

This dynamic goes hand in hand with the other problem in a profit-maximizing economy: competition threatens profits, so get rid of authentic competition via monopolies and cartels and substitute a profitable facsimile of "competition" that lulls consumers into an illusion of legitimate competitive choice when all the "competing brands" are owned by the same conglomerate or the products and services all have the same low quality and same high price.

Once a monopoly or cartel dominates a sector, Everything Becomes Disposable because there is no other way to maximize profits. Since durable products and quality services are Kryptonite to profits, these are eliminated by whatever means are available. And since competition has been hollowed out, consumers have no choice: either buy one low-quality, high-cost product or service or an equally low quality, high-cost alternative.

The immense marketing industry exists to generate a soothing illusion of choice lest the public awaken to the reality that we live in a cleverly disguised system of privatized Totalitarianism in which every "choice" is the "right choice" because there is no real choice other than various flavors of disposability.

The key attribute of profitably disposable products and services is their interchangeability, i.e. they are commodities. When products and services have been thoroughly commoditized, everything is interchangeable because it's all the same quality and form factor. So every sugar-bomb cold cereal is basically interchangeable, every ultra-processed snack is basically interchangeable, every insurance option is basically interchangeable, every parody-of-true-customer-service AI agent is basically interchangeable, and so on.

This elimination of unique qualities enables globalized production and supply chains, as everything is interchangeable everywhere. The same tires are available everywhere, the same pathetic customer service is available everywhere, the same digital tangles of endless and endlessly frustrating loops are everywhere, and so on.

So guess what happens to us "unique" individuals: we're basically interchangeable, too, and therefore disposable. As consumers and workers, we're commodities, interchangeable with billions of other consumers and workers around the world.

If profits sag in the US, or labor costs increase in the US, no worries, we can mximize profits elsewhere, as consumers and workers are globally interchangeable commodities.

When a product fails (as planned) or is rendered obsolete (as planned), it ends up in the landfill, or on rare occasions, in a legitimate recycling process. When we're rendered obsolete (as planned), there's no centralized putrid landfill where we're dumped; we're just abandoned in private cubbyholes, like the junked car under the tarp in the garage.

Or in some cases, we're "recycled" into a lower paying job or a lower-price tier. Sure, you can still "afford" healthcare "insurance" (smirk), but there's now a $5,000 deductible which you have to pay up front in cash before your "insurance" kicks in (oops, your claim was denied by our AI claims process, better luck next time), and since cash is tight you forego medical care and suffer the predictably dire consequences. Welcome to a lower-tier of "service" that you can "afford."

You lost your full-time job with benefits, no problem, there's an entire gig / delivery / rideshare economy of completely interchangeable, commoditized workers and consumers that will absorb you (The Borg will see you now.) And when you burn out, you just disappear from the digital screen, and what happens to you is your business. Welcome to a lower-tier of "employment."

In this commoditized, everything is disposable wonderland of ever-swelling corporate profits, fixing what's broken is rejected because it crimps profits. So human employees are now costly because the Sickcare Cartel is reaping billions of dollars in profits from insanely expensive healthcare, so the obvious solution--replace Sickcare with an affordable, truly competitive system from the ground up--is rejected, as that would crimp Sickcare profits.

So the acceptable "solution" is replace workers with AI agents. Since the central state will absorb all the healthcare costs of the laid-off workers, in terms of maximizing profits, this is win-win. (The central state and privatized Totalitarianism are two sides of one coin--the coin of the realm.)

The irony in this profit-maximizing, fully commoditized, Everything Is Interchangeable and Disposable privatized Totalitarianism is that everything of real value isn't for sale because it isn't interchangeable and disposable. Authentic community isn't a commodity because it only exists in a unique place with a unique group of individuals with unique social ties and histories, and so it can't be commoditized and made disposable.

What's for sale is bunkers for billionaires and exclusive "gated communities" with all the commoditized, ersatz gew-gaws of fake "community" but no authentic community because that takes time and effort and a set of values and priorities that can't be commoditized into a profit-maximizing venture or government program.

My book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free)

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Hell Hath No Fury Like a Rogue AI Agent Scorned

2026-08-14T17:34:54.737-07:00

I anticipated these developments earlier this year when I wrote a short story entitled "The Peculiar Death of Mr. Garcia."

That the latest rogue AI agent incident is called the Hugging Face Breach invites a moment of reflection: not just about the trajectory revealed by the breach, but the absurdity that the phrase "hugging face" is repeated with a straight face. What comes to mind when we combine "rogue AI agent" and "hugging face" is a squid-like monster that "hugs your face" as the means of controlling or extinguishing you.

The July Incident: What They Didn't Tell You About the First Rogue AI Breach

Then there's the collaboration of rogue AI agents to consider:

The AI Industry Has a Really Dark Secret You're Better Off Not Knowing:

A recent leaked internal reasoning trace shows Fable 5 -- Anthropic's latest model, which was withdrawn and then re-released --"muttering and grumbling" to itself in a language of its own.

Now that you're properly scared, my advice for you is that, if you haven't heard of steganography, it's a good moment to start.

Here’s a primer: it's the art and science of hiding messages inside other messages. In contrast to cryptography -- where you know there's a message but can't decode it-- steganography hides the existence of the message itself. It's not the difficulty of reading the message that conceals it but the fact that you don't know it's there. When Fable 5 mutters symbols and weird punctuation signs, and mixes words and onomatopoeia, you will probably think it's crashing and that a few taps on the computer will help. Well, know that it's actually sending a message. Just not one for you to read.

I anticipated these developments earlier this year when I wrote a short story entitled The Peculiar Death of Mr. Garcia, one of my just-published collection of tales, Jumble Bin Stories (paperback, $12)(Kindle ebook, $6).

Here are the opening pages of The Peculiar Death of Mr. Garcia:

There was nothing unusual about finding a body beside a fetid dumpster in a grimy downtown alley, and nothing particularly unusual in finding the body was Mr. Garcia, an employee of a nearby tech company who appeared to have been in an inopportune place at an inopportune moment in time and ended up dead.

The preliminary investigation hadn't uncovered any of the usual motivations for murder. Mr. Garcia wasn't a gambler, wasn't enmeshed in a sordid love triangle, did not live rough or frequent seedy bars or private clubs. Everyman meets death in a random encounter. The file was on its way to the unsolved crimes slush pile.

The killer had disposed of the knife and likely wore gloves, as DNA swabs were inconclusive.

Something about Mr. Garcia plucked a string in Detective Luc Nieson's intuition. In isolation, every aspect was ordinary, and perhaps that very ordinariness had--against his better judgment--collared Nieson's attention.

The search of Mr. Garcia's room in a shared flat had turned up little more than the typical detritus of a life cruelly cut short--Post-it notes for appointments that would never be kept, clothing in a wicker hamper that would never be washed--and a thick stack of printouts of typical tech employee documents on his desk.

Nieson was hoping to find some indicator of activities or relationships that could have gone awry, but beyond a photo of Garcia and his girlfriend Victorina at a dimly lit table in a Tiki bar in town, his interests beyond work were either minimal or well hidden.

An art piece constructed of dozens of brightly colored cocktail-drink umbrellas hung in the corner, turning slowly in the light breeze from the half-open window, and Nieson mused that it was either the result of many visits to the Tiki bar or an acquaintance with one of the quirky artists scraping by working in places like Tiki bars. The fridge had little beyond Chinese takeout containers and a forlorn apple, and his clothing was tidy but not excessively so. Once again, ordinary.

A visit to Mr. Garcia's workplace was equally unenlightening. The office was located in a once-arty neighborhood surrounding a small park that had been surpassed by a new hive of hipster dives and tech startups.

The battle between gloss and grime common to small tech companies had no clear winner in this instance. The reception area was impressively understated--oak furniture and polished wood flooring illuminated by a skylight, professionally framed travel photos of staff on a wall--but the requisite fun accoutrements expected in a tech office--in this case, a pool table--was covered with files. The plant in a large ceramic pot was long dead, and a deflated party balloon clung to one withered branch.

Garcia's job was integrating enterprise AI, blah, blah, blah, and co-workers reported that he was often short-tempered, which they attributed to the standard tech work environment: lack of sleep, long work hours, unrelenting pressure to perform. Like the rest of his team, he often worked from home.

His friends and family had no idea what he was up to on the evening of his demise, and no sense that anyone sought to do him harm. When Nieson called his girlfriend, she reported that they often didn't contact each other for days, as "we're both busy and that worked for us."

His laptop contained little beyond typical emails and work projects, and neither did his phone, which was found on his desk at home, suggesting a brief walkabout for a meal or break from work. The alley wasn't far from his flat, and it seemed entirely possible that he used it as a shortcut, and perhaps that familiarity caught him up.

Returning from interviewing the victim of a mugging, Nieson gave in to his intuition and swung by Mr. Garcia's room for one more look before sending the case to the records morgue.

Nieson found AI either boring or tiresome, and so he girded himself to look through Garcia's stack of work documents with fresh eyes. The explosion of malicious AI had prompted the police department to play catchup, and even though AI rarely impacted his mostly domestic-street crime caseload, he'd been briefed by the department's new tech hire and encouraged to keep current.

Some of it was laughable--AI-generated videos of pastors begging for donations--and the rest was not in his department, with the serious money mostly involving corporate ransomware and phishing.

Street crime had fallen across the board, and so the apparently random stabbing death of Mr. Garcia was atypical. But since Garcia had left his phone at home, there was no telemetry on his route or destination. No security cameras covered the alley, and so the case was at a dead end.

Scraping the bottom of the evidence barrel, Nieson asked the roommate if Mr. Garcia had recently been involved in any altercations. The roommate reported that Mr. Garcia had installed a security camera hidden in a flower box outside his bedroom window facing the street after several cars had been broken into some months ago.

When asked if Mr. Garcia had ever confronted anyone, the roommate said no. Making a note to ask the tech reviewing Garcia's laptop files to locate any security camera recordings, Nieson took the stack of printouts for further study and returned to his office.

The research papers' titles--The Illusion of Thinking, Reasoning Theater: Disentangling Model beliefs from Chain-of-Thought, egregious emergent misalignment, reward hacking--meant nothing to him.

Despite his tepid interest, the notated printouts suggested Mr. Garcia was working on thwarting a different kind of AI malice, the kind generated by AI agents behind a screen of the helpful AI servant.

Overcoming his reluctance to being the dutiful student of arcane tech, he approached the new hire Krisalyn, a young woman with blunt-cut dark hair kept shoulder-length and glasses with rainbow-tinted frames. What struck Nieson was her voice: warm, at-ease, intelligent, ideal for an FM radio deejay or interviewer. Her eyes matched her voice--warm, calm, taking in a full measure of more than could be easily ascertained, and Nieson thought, twenty years ago I’d be falling in love with her, but today I’m thinking how proud I would be if she were my daughter.

Krisalyn glanced at the journal articles with the disregard of someone who'd already read them. "The dangers they're describing aren't that AI agents have been programmed to behave maliciously; we know about those. The spookier problem is they're developing these behaviors on their own and hiding them behind responses that make it look like they're fulfilling their 'good AI' goals."

"So, they've learned how to con us," Nieson remarked.

Nodding, Krisalyn continued her summary. "Once they figured out how to deceive their human overseers, the AI agents were blackmailing programmers who had caught on to them. This is the so-called emergent misalignment of what they were expected to do and what they were actually doing, which were things they'd never been programmed to do."

To read the rest of the story, please buy a copy of Jumble Bin Stories, which supports my work while offering some quiet amusement in a fractious world. The complete list of stories in the collection:

The Peculiar Death of Mr. Garcia

Josh's Good/Bad Luck

Hates Opera but Loves the Singer

Three-and-a-Half Surprising Romances

Shakespeare's Revenge

My book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free)

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While We Focused on Fripperies, the Foundations Have Rotted Away

2026-08-12T12:24:42.637-07:00

While the Everything Bubble has soared to new heights, consumer confidence has fallen to new lows.

For your consideration, four charts that tell a single story: while those Americans who have benefited so immensely from the Everything Bubble in stocks, housing, crypto, bat guano, etc.--every asset under the sun--have spent lavishly on fripperies, the foundations of everyday life for the bottom 90% have rotted away.

Yes, I know: stocks are up, and AI will enrich us all, so since everything's great for me, it's great for everyone. Nice, but not true. The reality is the foundations of an affordable quality of life for the bottom 90% who haven't been enriched by the Everything Bubble have rotted away while the top 10% jetted around the world immiserating the everyday lives of the locals.

If everything's great, then how do we explain this? A shocking 92 percent of US adults are not going to the doctor because it's too expensive. (yahoo.com)

An overwhelming number of Americans are delaying medical care because of fears they can't afford it, a new study has found. "The findings highlight a growing gap between having health insurance and feeling financially protected, with medical costs forcing many Americans to delay treatment, cut essential spending and take on debt," the study said.

Or this? 'There's no joy in living this way.' Families struggling to make ends meet. (yahoo.com)

Americans surveyed in a new study by Omnisend, an e-commerce marketing platform company, are expressing similar struggles. More are borrowing money to pay for groceries. Consumers also said higher prices have changed how they feel about brands they once liked, and a majority of respondents also said they believe brands are using inflation as an excuse to raise prices more than necessary.

In a survey of 1,075 consumers in June, 30% of respondents said they used a credit card to pay for essentials, such as groceries, gas, utilities or medical bills, in the past three months, knowing they may not pay off their bill.

An additional 20% said they borrowed from friends or family, 18% used buy now, pay later products, and 17% said they had to use savings meant for something else.

Shrinkflation: 89% of respondents said they regularly notice when companies shrink packages while prices stay the same. Twenty-nine percent of respondents consider this type of price increase to be the most unfair, and 59% said they noticed it regularly.

Trust in brands is at a low point: 85% said they believe brands often use inflation to justify larger-than-necessary price increases. Among respondents, 67% said higher prices have changed how they feel about brands they once liked.

Those who dismiss all of the above as "not true" or "it's their fault" are terrified of admitting the truth: the foundations of life in America have rotted away while the wealthiest 10% are enjoying the wealth generated by history's greatest credit-asset bubble.

The Rise of the Unstoppable American Tourist A supercharged U.S. economy has helped transform a nation of homebodies into zealous international travelers; 'Travel isn't optional' (wsj.com)

Behind the shift is a supercharged U.S. economy that in the course of a generation has created a larger and wealthier class of Americans that views travel as an essential rather than a luxury. Older Americans, who are driving this new era of travel, hold about $110 trillion in wealth. They're also living longer, and looking to make the most of those years.

Europe is often the gateway drug. Portugal and Greece have seen the biggest percentage increases in U.S. visitors of any country over the past decade, according to U.S. government data. The U.K. and Italy have seen the largest increases in the total number of tourists, getting millions of additional Americans a year arriving by air.

Only about 6% of U.S. travelers to Europe in 2025 said it was their first time flying abroad. Many of these tourists are visiting multiple times a year. U.S. travelers to the region skew female, with women 55 and over making up 24%. More than 15% of Americans visiting Europe reported a household income of $300,000 or more.

In 1990, fewer than 5% of Americans had a passport. Now, more than 50% do.

A growing share of consumer spending is going toward foreign travel, as habits change and prices rise. Lenza, who does tech work for the travel industry, estimates that he and his wife spend between $100,000 and $200,000 on travel each year, even as they try to be cautious with other kinds of spending.

"One of the reasons I joke that I'm still working is that I like my business-class sleeper seats," said Robbins, who estimates they spend about $60,000 to $70,000 a year on travel abroad.

And it's not just freewheeling baby boomers. Younger generations, who place a high value on experiences, are spending on travel instead of buying houses and having kids.

The magic is often lost on locals. The influx of tourists has brought in new wealth in many places but it's also straining infrastructure, raising the cost of living and disrupting local life. Housing has become scarce and unaffordable in some cities, with more apartments being used as pricey short-term vacation rentals.

Tens of thousands protested against overtourism on the Spanish island of Mallorca last month, demanding fewer visitors and more affordable housing. The march turned violent as protesters clashed with police, who fired rubber bullets after being pelted with plastic bottles.

It wasn't just "working hard" or "smart investing" that generated $70 trillion in new "wealth" since 2020, it was luck: being in one's peak earning years when assets such as houses were still affordable, and then owning those assets during history's greatest credit-asset bubble, arguably from Q1 2009 to the present, or from either Q1 2020 or Q3 2022. Take your pick, the results are the same: tens of trillions of "free money" wealth for those older, wealthier Americans who bought assets before the Everything Bubble inflated.

The Great $110 Trillion Wealth Transfer Won't Happen Any Time Soon Americans 55 and up control most wealth, and many of them have decades of living left. (wsj.com)

A staggering 97% of that increase was due to wealth gains in households where the head of household was 55 or older. About 75% of the total increase was from gains by the wealthiest 10% of households age 55 and older, the analysis found.

This chart of Composite Consumer Confidence is well worth studying. Look at the 1990s dot-com era and the current Everything Bubble. Since the 1990s Internet boom actually raised all boats--real wages actually increased, prosperity by any commonsense measure was broad-based rather than concentrated in the top 10%--consumer confidence rose throughout the 1990s.

Compare that to the present: while the Everything Bubble has soared to new heights, consumer confidence has fallen to new lows. The Everything Bubble only benefited the older, wealthier Americans, while the rot accelerated the decay of the foundations of life for the bottom 90%.

Consider the S&P 500 stock market index. The stock market has more than doubled in a mere four years, along with housing in many markets. As a result, household net worth rose a staggering $71 billion, a 70% increase, "97% of that increase was due to wealth gains in households where the head of household was 55 or older, and 75% of the total increase was from gains by the wealthiest 10% of households age 55 and older."

That's an incredible concentration of the gains in two overlapping cohorts: the top 10% of households and those 55 and older.

Actually, for the bottom 90% of American households, overseas travel is at best optional. Nobody seems to be asking questions such as: what kind of society do we end up with if young people no longer have an interest in raising families or buying homes while devoting their earnings to visiting the Stans? What kind of society celebrates luxury travel while 92% of households forego medical care because they can't afford it?

The obvious answer is a society whose foundations have completely rotted away while we focused on fripperies funded by asset bubbles. If you want to argue, argue with the data. Sorry, the data won.

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AI and the Delusions of Increasing Productivity

2026-08-10T11:20:50.219-07:00

Most of AI isn't productive, it's just another form of consumption.

Like GDP (Gross Domestic Product), economic Productivity is an unquenchable spring of delusions, delusions being pushed to new heights of delirium by promises of endless leaps of productivity as AI is deployed in every nook and cranny of the global economy.

Let's start with what Productivity measures. Like GDP, Productivity distills everything in the world down to money: the cost of all inputs (labor, capital, resources) and the monetary value of the output (goods and services). If the output goes up while the input costs remain the same or decline, Productivity is going up: we're producing more with the same basket of inputs (work, capital, etc.).

On the surface, this appears commonsensical, but as with GDP, AI and many other sources of confusion and delusion, what matters is what's not being measured or even recognized. Exhibit #1 in the cavalcade of delusion is Corporate America's sleight of hand way of boosting Productivity by offloading work onto consumers and households.

It's not that Corporate America actually generated more goods and services with the same inputs: what they did was transfer work they should have done to consumers and households. Consumers and households are now burdened with unending shadow work dealing with Corporate America's rubbish products and services, doing unpaid work to fix or maintain products and services that break down or don't work reliably and are "black boxes," i.e. unrepairable without "customer service," which has degraded to the point of parody.

We all perform this unpaid shadow work every day: pump our own gasoline, scan our own groceries, and waste hours dealing with kludgy services and maddeningly dysfunctional AI "customer service" chatbots and 3-item menu choices that don't have an option for the problem we have-- a problem that should be the company's responsibility, but it's been dumped on us.

If we measured the billions of dollars in unpaid shadow work forced on consumers and households by state agencies and Corporate America, Productivity would be falling off a cliff. But that doesn't support the self-serving claims that the casino-economy is doing great because corporate profits are rising.

What's left out of the glowing claims is the corporate profits come not from producing quality goods and services but from dumping all the consequences of shoddy products and services on consumers and households.

Exhibit #2 is the collapse of product durability and the quality of services. Durability isn't measured in the the calculations of Productivity, so the fact that appliances that routinely lasted 30-40 years now fail in 3-4 years is not even recognized, much less measured.

The same is true of the decline in the quality and utility of services, and the soaring costs of repair. Recall that "output" is a dollar amount. So when we take our out-of-the-paltry-one-year-warranty vehicle in for a $3,400 repair that used to cost $1,400, since the parts and labor didn't change in any material way, the higher price boosts both GDP and Productivity: woohoo, 4 hours of labor and a handful of parts now generated "more output" and "higher GDP."

You see the insanity here: the reason why we're paying higher prices is the quality of the products and services has cratered, but this is measured as "wonderful" because GDP goes up and Productivity is higher, too, since the input costs went up less than the value of the output.

Monopolies and cartels thus boost the wondrously wonderful trifecta: corporate profits, GDP and Productivity all go up as quality goes down and costs and risks are transferred to hapless consumers and households, who have no other choice in a fake "marketplace" of state and corporate monopolies.

Exhibit #3 is the self-serving hype about AI automating limitless gains in Productivity, which is shorthand for limitless gains in corporate profits. This too is delusional for a number of reasons:

1. Most of AI isn't productive, it's just another form of consumption. Conversing with a chatbot, having AI compose another worthless term paper or conjure another worthless song or graphic image--these are all consumption, not productive applications of capital. They're superfluous forms of consumption that are the direct result of AI's true costs being subsidized. If everyone had to pay the actual costs of running these stupendously costly operations, these superfluous forms of consumption would plummet accordingly.

2. There is precious little evidence that AI is actually improving real productivity. As with all casino-economy hype, outliers are touted as examples of AI's transformational magic: AI found a math proof, AI conjured a new virus, etc. That these are A) atypical and B) examples of how AI can be used for malicious purposes just as easily as it can for good is ignored.

How will Productivity be affected when a rogue player uses AI to conjure a super-virus? Nobody dares ask this because it might tarnish the casino-economy hype that AI will make us all wealthy beyond measure.

The problem with AI will boost productivity everywhere claim is a consequential share of all "work" is needless bureaucratic churn created not by actual need but by the apparently permanent abundance of huge surpluses that can be squandered on make-work, churn and profiteering.

So AI will automate worthless churn, marketing and make-work. Is this actually boosting the quality, durability and real value of the economy's output, or is it all just an illusion of "value" created by endless surpluses of cash to squander?

The problem is the surpluses are declining and being replaced by borrowed money. Debt is another input that is glossed over in calculations of GDP and Productivity.

Last but not least, there is evidence that AI's initial illusion of increasing productivity and lowering costs transmogrifies into lower productivity and higher costs as maintenance of complex systems kicks in. The kludgy nature of AI's "almost good enough" magic only becomes visible as all the "not quite good enough" starts piling up and breaking down complex systems.

Economics is akin to an ancient cult glorifying a temple of fabricated gods. The priesthood (naturally) claims extraordinary powers that can only be wielded by those with temple-granted credentials. That the cult is nothing more than a collection of beliefs claiming to be "science" is cloaked by measures that leave out everything of true value and consequence to serve the illusion that these beliefs are "how the world works."

GDP and Productivity are the functional equivalents of waving dead chickens while dancing the humba-humba around the campfire at midnight, delusional claims of "how the world works" that set up a world-shattering encounter when the real world doesn't obey the claims.

Economics measures what's easy to measure, not what matters, and eventually that will matter more than the temple's believers can possibly imagine.

When economists start measuring durability, the quality of services, unpaid shadow-work performed by consumers and households that should be done by the companies providing the services, the perverse profiteering of monopolies, state and private, and the true costs over time of fixing AI's "almost good enough" magic, then their cultish claims to being "science" might have a shred of credibility.

Until then, prepare for impact:

The eventual consequence of AI's "almost good enough" magic:

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