Remy Blaire engages in a thought-provoking conversation with James Rickards, the editor of “Strategic Intelligence” and a New York Times bestselling author known for his works such as The New Great Depression and Currency Wars. The segment marks the one-year anniversary of Rickards’ book, MoneyGPT, which explores the implications of artificial intelligence (AI) in financial markets.
Remy opens the discussion by highlighting the rapid growth of AI technologies, particularly since the launch of OpenAI’s GPT-4, which reached 100 million users in just two months. She emphasizes the dual nature of AI’s impact, noting its potential to create significant market risks alongside its benefits.
Rickards shares his perspective on AI, asserting that while it is a powerful tool that has permeated various aspects of daily life—from smart appliances to trading algorithms—it also introduces substantial dangers, especially in the stock market. He explains that over 95% of trading is now fully automated, raising concerns about the potential for market crashes when AI-driven strategies are employed en masse.
Using the analogy of a baseball game, Rickards illustrates the “fallacy of composition,” where individual actions that seem beneficial can lead to collective failure. He warns that if all investors decide to sell during a market downturn, it could result in a rapid and irreversible market collapse, exacerbated by AI’s continuous sell signals.
The conversation shifts to the biases inherent in AI systems. Rickards points out that while developers strive to eliminate human biases, they often replace them with their own, leading to skewed outputs. He cautions that as AI increasingly learns from flawed outputs, the quality of information it processes may deteriorate, potentially resulting in chaotic market conditions.
Remy asks Rickards about specific safeguards that could be implemented in the financial sector and national security to prevent AI from amplifying crises. He suggests that rather than imposing rigid ethical frameworks, subject matter experts should apply their judgment to AI outputs, recognizing and addressing biases without enforcing a singular perspective.
Rickards proposes a more nuanced approach to market regulation, likening it to “pumping the brakes” instead of slamming them. He advocates for a system where, during significant market drops, only a portion of sell orders are executed, allowing time for reflection and decision-making rather than an immediate market shutdown.