October 15, 2008 at 12:35 pm #29355
note: This is why I am working hard to create a spiritual science that will empower people internally – so they don’t crave outer tech power that leads them astray. – Michael
THE RISE OF THE MACHINES
By RICHARD DOOLING
October 11, 2008
³Beware of geeks bearing formulas.² So saith Warren Buffett, the Wizard of
Omaha. Words to bear in mind as we bail out banks and buy up mortgages and
tweak interest rates and nothing, nothing seems to make any difference on
Wall Street or Main Street. Years ago, Mr. Buffett called derivatives
³weapons of financial mass destruction² — an apt metaphor considering that
the Manhattan Project¹s math and physics geeks bearing formulas brought us
the original weapon of mass destruction, at Trinity in New Mexico on July
In a 1981 documentary called ³The Day After Trinity,² Freeman Dyson, a
reigning gray eminence of math and theoretical physics, as well as an ardent
proponent of nuclear disarmament, described the seductive power that brought
us the ability to create atomic energy out of nothing.
³I have felt it myself,² he warned. ³The glitter of nuclear weapons. It is
irresistible if you come to them as a scientist. To feel it¹s there in your
hands, to release this energy that fuels the stars, to let it do your
bidding. To perform these miracles, to lift a million tons of rock into the
sky. It is something that gives people an illusion of illimitable power, and
it is, in some ways, responsible for all our troubles — this, what you
might call technical arrogance, that overcomes people when they see what
they can do with their minds.²
The Wall Street geeks, the quantitative analysts (³quants²) and masters of
³algo trading² probably felt the same irresistible lure of ³illimitable
power² when they discovered ³evolutionary algorithms² that allowed them to
create vast empires of wealth by deriving the dependence structures of
portfolio credit derivatives.
What does that mean? You¹ll never know. Over and over again, financial
experts and wonkish talking heads endeavor to explain these mysterious,
³toxic² financial instruments to us lay folk. Over and over, they ignobly
fail, because we all know that no one understands credit default obligations
and derivatives, except perhaps Mr. Buffett and the computers who created
Somehow the genius quants — the best and brightest geeks Wall Street firms
could buy — fed $1 trillion in subprime mortgage debt into their
supercomputers, added some derivatives, massaged the arrangements with
computer algorithms and — poof! — created $62 trillion in imaginary
wealth. It¹s not much of a stretch to imagine that all of that imaginary
wealth is locked up somewhere inside the computers, and that we humans, led
by the silverback males of the financial world, Ben Bernanke and Henry
Paulson, are frantically beseeching the monolith for answers. Or maybe we
are lost in space, with Dave the astronaut pleading, ³Open the bank vault
As the current financial crisis spreads (like a computer virus) on the
earth¹s nervous system (the Internet), it¹s worth asking if we have somehow
managed to colossally outsmart ourselves using computers. After all, the
Wall Street titans loved swaps and derivatives because they were totally
unregulated by humans. That left nobody but the machines in charge.
How fitting then, that almost 30 years after Freeman Dyson described the
almost unspeakable urges of the nuclear geeks creating illimitable energy
out of equations, his son, George Dyson, has written an essay (published at
Edge.org) warning about a different strain of technical arrogance that has
brought the entire planet to the brink of financial destruction. George
Dyson is an historian of technology and the author of ³Darwin Among the
Machines,² a book that warned us a decade ago that it was only a matter of
time before technology out-evolves us and takes over.
His new essay — ³Economic Dis-Equilibrium: Can You Have Your House and
Spend It Too?²
< http://edge.org/3rd_culture/dysong08.1/dysong08.1_index.html> — begins
with a history of ³stock,² originally a stick of hazel, willow or alder
wood, inscribed with notches indicating monetary amounts and dates. When
funds were transferred, the stick was split into identical halves — with
one side going to the depositor and the other to the party safeguarding the
money — and represented proof positive that gold had been deposited
somewhere to back it up. That was good enough for 600 years, until we
decided that we needed more speed and efficiency.
Making money, it seems, is all about the velocity of moving it around, so
that it can exist in Hong Kong one moment and Wall Street a split second
later. ³The unlimited replication of information is generally a public
good,² George Dyson writes. ³The problem starts, as the current crisis
demonstrates, when unregulated replication is applied to money itself.
Highly complex computer-generated financial instruments (known as
derivatives) are being produced, not from natural factors of production or
other goods, but purely from other financial instruments.²
It was easy enough for us humans to understand a stick or a dollar bill when
it was backed by something tangible somewhere, but only computers can
understand and derive a correlation structure from observed collateralized
debt obligation tranche spreads. Which leads us to the next question: Just
how much of the world¹s financial stability now lies in the ³hands² of
computerized trading algorithms?
Here¹s a frightening party trick that I learned from the futurist Ray
Kurzweil. Read this excerpt and then I¹ll tell you who wrote it:
“But we are suggesting neither that the human race would voluntarily turn
power over to the machines nor that the machines would willfully seize
power. What we do suggest is that the human race might easily permit itself
to drift into a position of such dependence on the machines that it would
have no practical choice but to accept all of the machines¹ decisions. …
Eventually a stage may be reached at which the decisions necessary to keep
the system running will be so complex that human beings will be incapable of
making them intelligently. At that stage the machines will be in effective
control. People won¹t be able to just turn the machines off, because they
will be so dependent on them that turning them off would amount to suicide.”
Brace yourself. It comes from the Unabomber¹s manifesto.
Yes, Theodore Kaczinski was a homicidal psychopath and a paranoid kook, but
he was also a bloodhound when it came to scenting all of the horrors
technology holds in store for us. Hence his mission to kill technologists
before machines commenced what he believed would be their inevitable reign
We are living, we have long been told, in the Information Age. Yet now we
are faced with the sickening suspicion that technology has run ahead of us.
Man is a fire-stealing animal, and we can¹t help building machines and
machine intelligences, even if, from time to time, we use them not only to
outsmart ourselves but to bring us right up to the doorstep of Doom.
We are still fearful, superstitious and all-too-human creatures. At times,
we forget the magnitude of the havoc we can wreak by off-loading our minds
onto super-intelligent machines, that is, until they run away from us, like
mad sorcerers¹ apprentices, and drag us up to the precipice for a look down
into the abyss.
As the financial experts all over the world use machines to unwind Gordian
knots of financial arrangements so complex that only machines can make —
³derive² — and trade them, we have to wonder: Are we living in a bad sci-fi
movie? Is the Matrix made of credit default swaps?
When Treasury Secretary Paulson (looking very much like a frightened
primate) came to Congress seeking an emergency loan, Senator Jon Tester of
Montana, a Democrat still living on his family homestead, asked him: ³I¹m a
dirt farmer. Why do we have one week to determine that $700 billion has to
be appropriated or this country¹s financial system goes down the pipes?²
³Well, sir,² Mr. Paulson could well have responded, ³the computers have
Richard Dooling is the author of ³Rapture for the Geeks: When A.I. Outsmarts
I.Q.²October 16, 2008 at 1:03 pm #29356
This goes I feel in line with your article as we start to look at institutions as tools that try to make up for the lack of inner tools.
October 21, 2008 at 7:40 am #29358
I found the article very interesting, thank you for posting. (note: it may be too technical for many).
However, there is only one brief reference to chemtrails in the last paragraphs – but certainly worthy of more attention. I am inspired to put up an energetic nano-shield over my property, to get the elemenals to pre-clean any chemtrails falling down.
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