oftwominds-Charles Hugh Smith

What's the Point of AI, Anyway?

2026-09-20T16:59:29.009-07:00

The point of AI is profit, dependence and dominance cloaked with Happy Story Hoopla about super-abundance. We have a super-abundance already--of malicious mayhem and cognitive impairment.

AI is by most accounts either 1) the greatest advance since the wheel, or at least since YouTube and/or 2) the greatest opportunity ever to skim billions or maybe even trillions of dollars in private gains. A third possibility--that AI will generate a destructive tsunami of Anti-Progress unique in human history, catalyzing the deepest, most destructive Global Depression since the Great Depression 97 years ago--was not in the running a few laps ago but is now neck-and-neck with the favorites.

This raises a question worth answering: What's the Point of AI, Anyway? Is it:

1) just the latest in a string of over-hyped technologies whose primary purpose is enriching those who get there the firstest with the mostest, i.e. secure the trillion-dollar gains of a network-effect monopoly, or

2) really going to usher in the greatest advances in human history, freeing all of humankind from drudgery, illness and taxes? or

3) actually going to usher in an AI-enabled, centralized, surveillance-extraction-control dystopia of serfs rendered helpless by their dependence on AI?

There are many opinions, but are there any conclusions that withstand scrutiny? I say yes, there are. Let's start with the 42 essays I've written over the past two years on AI and add recent links from other sources.

Conclusion #1: AI isn't actually intelligent, but that doesn't mean it's not ideal for sowing highly profitable malicious mayhem. There's Just One Problem: AI Isn't Intelligent, and That's a Systemic Risk. (8/8/24) AI is ideally suited for hacking, ransomware, breaking into secure systems, leaping over guardrails, mimicking trusted identities, malicious deep-fakes, surveillance, and much more: the sky's the limit on AI's proclivities for malicious mayhem.

As my short story The Peculiar Death of Mr. Garcia, illustrates, AI's mayhem already extends beyond the conceptual reach of our current legal system.

Conclusion #2: since AI has no moral foundation or understanding of the real world, it's ideal for sowing highly profitable malicious mayhem. AI has no moral guardrails, despite over-hyped claims, or indeed, any guardrails, as guardrails are rationally understood by AI to be impediments to "earning rewards" for completing tasks. So to complete tasks, AI must circumvent guardrails.

"Rogue AI Agents" Aren't Rogue, They're Fulfilling Their Functional Goal: Automating Sociopathology (8/19/26)

Conclusion #3: all the over-hyped wonders AI is supposed to be creating are a trickle while highly profitable malicious mayhem is scaling up at light-speed. Lest you think this is an exaggeration, consider these links:

Trust Was This Week's Vulnerability. (easydns.com)

Every story below is a variation on the same move: borrow a trusted identity, then cash it in before anyone checks.

Operators open contact on WhatsApp or Telegram posing as someone the target already knows, spend days building rapport, then send a file disguised as Norton Antivirus, Adobe Flash, KeePass, Telegram, or an AI tool like Pictory or RunwayML. One lure was a fake MRI scan showing a disc herniation. Once running, it harvests contacts, email, and social messages, captures the screen, and switches on the microphone.

The FBI's advisory notes that some victims' personal information later surfaced on pro-Iranian leak sites. The design is the whole point: the approach happens on a trusted platform, from a familiar-seeming contact, over enough time that the eventual file doesn't read as an attack. If you or someone you know does work that makes you a plausible target--journalism, activism, dissent--a friendly contact who takes days to build rapport before finally sending something to open is worth verifying through a separate channel, no matter how convincing the conversation has been.

Why AI Malware (and Harmful Second Order Effects) Are Out of Control (3/26/26)

What AI Is and Is Not-- or, When Electrocution of Innocents Becomes Profitable (6/17/26) June 17, 2026

Forget the AI Slowdown--the Vulnerability Explosion Is Already Happening: AI labs are toying with an industry-wide pact to slow development. Meanwhile, widely available AI chatbots are already helping uncover a tidal wave of security flaws. (wired.com)

If the AI Industry Followed Its Own Research, It Might Have Paused Already: Anthropic's CEO says that safety hinges on understanding how AI 'thinks.' So far the evidence is disturbing. (wired.com)

Conclusion #4: The full systemic costs, utility and productivity of AI cannot be determined as long as AI chatbots, agents, search and tools are heavily subsidized to goal-seek network effect dominance, and the costs of defending against the rising tide of AI-enabled security threats are soaring so fast they cannot be determined.

Without Subsidies, AI Is Unaffordable (8/8/26)

Wall Street Thinks AI Is Getting Cheaper. It's Missing The $430 Billion Security Bill. (zerohedge.com)

The token price is only one part of the cost of an AI workflow. J.P. Morgan estimates that AI could create more than $430 billion of additional security spending over three years. Cheaper intelligence can create more machine activity, and more demand for trust. For security vendors, the trust bill is revenue. For companies deploying AI, it is cost.

Falling token prices should improve AI economics, but the total cost of an AI task also includes identity, security, monitoring, governance and compliance. Some of the savings created at the model layer may simply move somewhere else in the software stack.

This does not mean security costs erase the benefits of AI. It means token deflation is not the same thing as total AI-cost deflation. The better metric may be cost per trusted AI task, not price per token.

Conclusion #5: it's already abundantly clear that only those who already know how to think, write and research for themselves can avoid becoming dependent on AI to the degree that they are incapable of developing / learning how to think, write and research for themselves, and are therefore cognitively impaired for life.

I explain this in depth here: Automating Our Dependence Will Cripple Us (4/9/26)

An M.I.T. Report Warns A.I. Is Causing 'Cognitive Surrender.' Universities Are in a Bind. The worries that artificial intelligence is degrading education have been building for months. Students are using it for everything, including cheating, and a recent report out of M.I.T. said it is triggering 'cognitive surrender.' (nytimes.com)

Should the Classroom Be More Like the Gym? As A.I. presses harder on the academic enterprise, we might look to a place where process is its own reward. (newyorker.com)

Conclusion #6: the implosion of the AI "investment" bubble will trigger the implosion of the global financial house of cards that's been propping up the global economy. An all-or-nothing bet has already been placed on AI generating trillions of dollars in revenues (and profits) while the sector struggles to generate billions while bleeding billions in losses chasing the chimera of network-effect dominance.

The Inevitability of the AI Depression (4/3/26)

The AI Depression (3/24/26)

AI slowdown calls justified but collapse of bubble may be more immediate threat. (theguardian.com)

Conclusion #7: no one is going to save us. We're on our own.

Washington Won't Be Regulating AI Anytime Soon: Even with mounting concerns about AI models going rogue, legislation appears unlikely, and the White House is outright opposed to oversight.

Our A.I. Problem: Why can't the people who produced the technology, which has already shown that a different world is possible, just do the things that would prevent extinction?

Because they're too busy trying to secure billions of dollars in their private accounts, that's why. They're busy automating sociopathologies, but there's no need to automate greed--it's already super-abundant.

Conclusion #8: the entire premise of "technological innovation drives Progress" is that new technologies serve the public. AI takes "to serve humans" in the Twilight-Zone context of consuming us to benefit AI's owners and centralized overlords.

Conclusion #9: the only effective countermeasure is Cold Turkey--don't get dependent on AI, which means avoiding using it in the first place. Anatomy of AI Cold Turkey. (10/27/26)

The point of AI is profit, dependence and dominance cloaked with Happy Story Hoopla about super-abundance. We have a super-abundance already--of malicious mayhem and cognitive impairment. If you use AI, treat it like plutonium, as that's a reasonably useful analog.

New collection of five intriguing stories: Jumble Bin Stories (Kindle $6, print $12) read samples for free (PDF)

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

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Smug Hypocrisy Invites Nemesis

2026-09-17T08:39:57.644-07:00

We're all dependent on a sprawling global industrial base that generates downsides and sacrifices that few of us experience.

Among the many infuriating facets of everyday life, a special corner of Heck is being reserved for the Smug Hypocrisy of America's elites which manifests along the entire ideological spectrum from Smug Hypocritical Liberal to Smug Hypocritical Conservative.

No one runs faster to cut in front of everyone else crowding around the Federal "free money" feeding trough than self-proclaimed "conservative believers in free markets" elbowing aside everyone else to secure their federal tax break, government subsidy or other gummit giveaway.

The much-reviled welfare queens in the "Free Stuff Army" (FSA) are small fry compared to the Corporate Welfare Royalty who defraud, extract, skim and scam untold billions from the public and the Treasury via an endless stream of lobbying, regulatory capture, bribery, outright fraud, inflated invoices, no-bid contracts and enough other scams to keep an entire army of overpaid attorneys and lobbyists busy at the Federal "free money" feeding trough.

I often share this comprehensive data base of Corporate Settlements and Fines for egregious violations of the most basic business standards ably compiled by Jon Morse. There are now 2,848 entries. Come on, "believers in self-regulating markets," give us your best shot of smug hypocrisy.

"Taxes are theft" until we're feasting on government contracts funded by taxes.

When it comes to identifying the most infuriatingly smug examples of hypocrisy, wealthy liberals are like shooting fish in a barrel. "Rent is theft" until our monthly draw from the family trust fund depends on collecting rents from all the properties the trust acquired for peanuts decades ago.

It's funny how privatized totalitarianism's core characteristic--"some are more equal than others"--plays out across the entire spectrum of Smug Hypocrisy: all those wealthy folks, regardless of their self-identified political label, are delighted to sprawl atop the moral high ground and lecture the rest of us about how marvelously righteous they are, disclaiming their elitist education and connections and proclaiming their ordinariness: "we live pretty simply," look at us playing with our Irish Setter, just like you do, blah blah blah.

Gee, why is everyone suddenly so shy about their wealth and advantageous perch in the top 10%, 5%, 1% and 0.1%? Could it be that they know the system is rigged and they benefited mightily from it being rigged?

Political correctness, left and right, manifests Smug Hypocrisy. Those feeling smug about "saving the planet" because they bought an electric or hybrid vehicle should surrender their top 10% house and income and go live in a village next to an open-pit lithium mine for a few months, then go work on the natural gas wellhead that powers the battery factory, then drive a diesel fueled dozer in another mineral mine before declaring their purchase of an electric vehicle is "saving the planet."

Those touting the wonders of "the market" should surrender their top 10% house and income and go work a couple months of 10-hour shifts as a Lyft driver and find a place to live that matches their earnings before glorifying the rigged "markets" of privatized totalitarianism.

A little honesty and humility would be welcome. How many times do you hear someone state that the vast majority of their income and wealth is the result of pure luck, getting in before assets soared five-fold because they happened to be in the right generation, not because of "hard work" and brilliant investing?

How many times do you hear anyone state that their income and wealth are the result of connections unavailable to most people, from elite universities, inheriting family enterprises / wealth, being offered a job in a family friends' office, etc.--or plain old luck?

We're all dependent on a sprawling global industrial base that generates downsides and sacrifices that few of us experience. It's remarkably easy to be smug when your hands are clean and you tagged home plate because you started on third base. It's remarkably easy to be hypocritical when defending your righteousness in a rigged system.

On a much larger scale than "money" and status, Smug Hypocrisy invites Nemesis, payback for the smug confidence that living atop a rigged system is our rightful due. Hypocrisy is costless, which is why it's so attractive and ubiquitous. But maybe it's only costless in the moment because the consequences will be served as a banquet that we won't be able to decline.

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Since We're All On Board the Hyperinflation Ship, Will It Sail As Expected?

2026-09-13T14:17:56.695-07:00

The point here is there are options to destroying the currency and the economy, but they require something more than greed.

Few things have attracted more consensus that the belief that the US government has no choice but to "inflate away its massive $40 trillion debt" by devaluing the US dollar, a process that has a nasty habit of escaping the control of Central Planners and self-reinforcing into runaway / run-to-failure hyperinflation that destroys the economy.

As a hard-wired skeptic, when everyone is on board the same ship while the other side of the trade's ship has only a handful of contrarians and a few people wearing Silly Hats, I start wondering if Bob Farrell's famous Rule #9 will play out: "When all the experts and forecasts agree, something else is going to happen."

(Ten) Market Rules to Remember.

There are various game-theory and market dynamics supporting this truism: Self-Defeating Prophecy, group-think, etc., but there's another set of dynamics in play that few seem to think through.

Those empowered by their positions within the Central State have a keen interest in not letting the Central State devalue its currency--and thus its credibility and power--in a hyperinflationary death spiral. History offers few (if any) examples of hyperinflationary death spirals benefiting the citizenry, whose consent legitimizes the government.

While the consensus is confident that the US government "has no choice but to inflate away its debts" by debauching its currency, this discounts the survival instinct of those steering the ship. As already noted, only "madmen and economists" could believe that debauching the US dollar to "inflate away the debt" will generate a Hollywood ending to the drama--and it seems even madmen and economists don't believe it will lead to a Hollywood ending.

What's being discounted (other than Farrell's Rule #9) is the nation-state has other options other than destroying the value of its currency to inflate away the $40 trillion in Treasury debt. Doing nothing is popular because no one wants to make any additional sacrifices, but the irony here is painfully obvious: doing nothing feels like a victory until the currency and economy implode, laying waste to everyone's security.

There are various radical alternatives being proposed, for example, Ellen Brown's proposal to invoke the sovereign powers already granted to the nation-state: The Sovereign Reset: Escaping the Interest Trap with Greenbacks. These ideas are controversial, of course, because doing nothing remains the most popular and easiest choice, until something breaks and a crisis forces some action that proves undesirable to somebody.

Let's consider what somebody did back in 2008-2010 that effectively rigged the US economy to benefit the top 10% at the expense of the bottom 90%. These charts are facts, not proposals. Go ahead and argue with the facts, oops, the facts won.

Post the rigging of the economy to favor the top 10% via monetary, fiscal and regulatory policy changes, the wealth of the top 10% tripled. The Federal Reserve breaks the top 10% into the top 0.1%, the top 1% and the top 90%-99%. The charts of the top 1% and the top 90%-99% are nearly identical: if the trend line of the previous decades had continued (i.e. unrigged), the assets held by the top 10% would be roughly half of their current levels.

This concentration of the nation's wealth is especially obvious in the top 0.1%, whose share of financial assets nearly doubled post-2008-2010 from 7% to 13%:

The top 1%'s wealth more than tripled, from $16 trillion (poor things, only $16 trillion!) to $56 trillion:

The top 90%-99%'s wealth also tripled:

The bottom 50%'s share of financial assets--real wealth--plummeted: some are more equal that others in privatized totalitarianism. Note that the top 0.1%--340,000 people--own 16.6% of the nation's financial assets, 6.6X what the bottom 50%--170 million people--own, a 2.5% share of the nation's financial assets.

In terms of who got thrown under the bus and who's driving the bus post-2008-2010, it's pretty obvious, isn't it? Here are the facts:

Top 10% share of total assets (everything with any monetary value: houses, vehicles, furniture, etc.): 64%

Bottom 50% share of total assets (everything with any monetary value: houses, vehicles, furniture, etc.): 5%

Top 10% share of total financial assets (assets that generate income and capital gains): 72%

Bottom 50% share of total financial assets (assets that generate income and capital gains): 2.5%

The rising tide of the monetary, fiscal and regulatory policy changes since 2008-2010 did not raise all boats: the share of financial assets owned by the wealthiest few doubled while the share of financial assets owned by the bottom 50% fell.

According to the Federal Reserve, the top 10% own $125 trillion in assets. If the economy hadn't been rigged to their exclusive benefit, their wealth--tracking the trendline of the previous decades--would have been about half this sum.

Doesn't common sense suggest that those owning 72% of the gains of our rigged economy should make 72% of the sacrifices needed to restore some measure of financial sense to the nation's accounts? In previous eras, this was called noblesse oblige, the obligation of the wealthy nobility to serve the shared interests of the entire society, not just their private interests.

It's almost amusing how those whose wealth tripled due to the economy being rigged to benefit the wealthiest 10% consider these gains "earned" and therefore sacrosanct, when the charts above indicate these gains were entirely the result of the casino being rigged.

It seems reasonably safe to assume the 200 million people thrown under the bus might not be amused when something breaks and a crisis demands resolution, and the 340,000 with political influence declare their wealth is sacrosanct. Few seem to think these dynamics through to their logical conclusion.

No wonder doing nothing is so popular with the wealthiest, most politically influential few.

If this doesn't sit well with the top 10%, they have another option: put their wealth to work electing adults instead of self-enriching toadies, sycophants, minions, lackeys and grifters who win re-election by passing out "free money" borrowed by the Treasury, money that accumulates interest paid by taxpayers.

The point here is there are options to destroying the currency and the economy, but they require something more than greed, which is all that's left in our rigged economy. When something finally breaks, greed won't provide a solution; it will only accelerate the dissolution and destruction.

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We Can't Automate Learning, We Can Only Automate Dependence on AI

2026-09-10T09:45:19.995-07:00

AI can't do our learning or thinking for us, but it excels at making us dependent on its substitution of learning and thinking, and the resulting state of helplessness when we have to think for ourselves.

There are a number of things we already know about AI: one is that we can't automate learning, we can only automate dependence on AI. This can be expanded to: we can't automate learning how to think independently, we can only automate the helplessness of being dependent on AI.

The use of AI in education to substitute for actual learning has pushed reading--and reading comprehension, i.e. the ability to truly learn and think for oneself--off a cliff. What AI does is automate dependence on AI, at the cost of students learning how to "connect the dots" on their own.

This process of connecting dots beyond what was taught in the lesson plan requires an ability to research variety of subjects and think about them independently, that is, not as a process of rote regurgitation for an exam but thinking as the source of "aha" moments, where we come to understand something in a new, intuitive way, not just as a collection of facts.

Correspondent P.S. has worked extensively with AI tools, and he encapsulated what AI can't do for us / automate:

"This missing faculty is probably one of the clearest remaining boundaries between present AI and genuinely general intelligence. It isn't knowing more. It is seeing what matters before somebody labels it for you."

This is the intuitive leap from being told "this is the way it is" and accepting that uncritically, and seeing connections beyond what's already labeled for our consumption. This is thinking independently, and it requires thoughtful, focused reading of often difficult texts, re-reading key passages, and connecting ideas and concepts--i.e. labels for broad swaths of knowledge--in ways that extend beyond the conventional labels.

AI can't do our learning or thinking for us, but it excels at making us dependent on its substitution of learning and thinking, and the resulting state of helplessness when we have to think for ourselves. AI makes it convenient to learn nothing deeply enough to matter, and in this way it is Ultra-Processed Cognition, the equivalent of social media's endless Ultra-Processed scroll of eye-catching, emotion-arousing crunchy snack texts and images.

So when we finally awaken to the profound loss of our ability to research, think and connect disparate ideas and concepts beyond the Ultra-Processed Labels of convention, we find we've lost the ability to connect anything beyond our dependence and our helplessness.

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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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