The Latest Bubble, And Why It WILL Pop
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2024-06-17 07:00 by Karl Denninger
in Technology , 969 references Ignore this thread
The Latest Bubble, And Why It WILL Pop
[Comments enabled]

It's "AI" of course.

There is no such thing.  There never has been and I argue there likely never will be either.  Certainly, there is no evidence we're any closer to it in actuality than we have ever been in the age of computing, which runs back to roughly the 1960s.

Many will likely disagree with me on this, but you're arguing with someone who literally cut his programming teeth on both punch cards and reverse-engineering a Burroughs machine code print-out on green-bar paper without an instruction set manual by pure trial and error to map operators and operands so I could change a city tax rate in the bookkeeping software loaded originally from punch-tape, when Burroughs wanted an obscene amount of money to make a literal 10 second edit (since they had the source code, of course) and send over a new one.

If you want to know what that was yes, this is the machine series.  In fact it looked exactly like that, including the cabinet and attached upper paper handler (that was detachable and had a double-setup used for payroll and other things where both a ledger and check were required.)  Storage was core memory so it retained its program when turned off, but there was no persistent (e.g. disk) storage at all.

Yeah, that far back and that adventure was the first "revenue" producing computer-related thing I did.

Computer processing has never really changed.  Computers produce precise calculations at speeds which humans cannot match.  We produced a computer for the Apollo command module using the same sort of core memory that was in the Burroughs machine because due to physics it was not possible to carry enough propellant for the moon-going astronauts to be able to slow down enough to re-enter Earth orbit on their return.  The issue is simply that every pound you wish to carry into space you have to lift it off the surface of our planet first, and while we could engineer enough capacity to do that for the crew capsule and supporting machinery, then make the burn to get into a lunar transfer orbit, decelerate so you are "captured" by the moon's gravity and in orbit there, then accelerate sufficiently to head back to Earth adding the propellant necessary to slow back down so Earth would capture you on the return was not possible; there was simply not enough lifting capacity at the beginning to carry that much propellant.  No human could manage to hit the re-entry corridor on the return with the required precision even with precisely-aligned sights in the window -- the odds were too high that a human being attempting to do so would miss and, if you miss the corridor everyone on board dies either by burning up or skipping off the atmosphere into space.

Therefore being able to rapidly and accurately calculate the required trajectory, and execute it and corrections to thrust during the burns, was required.  This got tested, nastily-so, on Apollo 13 if you recall where the primary issue after the fuel cells were lost became both power for ship systems and oxygen for the crew.  In fact there was concern that their calculated corridor burn, which after the original incident on a correction basis was done by hand, was very slightly off -- perhaps by enough to kill them all.

As technology has advanced both the speed of processing along with storage and its speed have wildly increased.  But the fundamental character of how a computer works has not changed since the first calculating machines.  Yes, before transistors and even tubes there were calculating machines but they were all, even when mechanically-based, deterministic devices.  We have found evidence of such devices that, for example, calculated the precise date and time of solar eclipses.  Being deterministic, absolute facts a calculating machine can give you that answer, and it will be correct.

But "intelligence" isn't that.  It is not simply the manifest weight of how many times something is repeated, for example.  You do not need to see a child walk in front of a car and get smushed to know that said child will be killed by the car; the outcome is intuitively obvious to humans yet while we can describe the acceleration or impact that a living body can withstand without being damaged or destroyed we have to teach a machine that this is undesirable and thus to be avoided.

Worse, even after we do that its not enough because the machine cannot accurately infer from other cues in the environment that a child might be present where said kid cannot be seen (e.g. behind the bumper or hood of a vehicle) and might run out into the road.  Yet humans both can and do, every day, make exactly that sort of inference and we don't have to view millions of miles of driving video to do it either; we in fact draw that inference -- correctly -- before we have two digits years on this planet and have ever been anything more than a casual passenger in a vehicle.

I could go through a hundred examples from today and the so-called "AI revolution" that show this conclusively and that in fact no meaningful change has occurred.  Adding more variables and faster processing doesn't solve the problem because the problem is not deterministic and thus the computer is incapable of resolving it.

My cat is better at inferring where prey is hiding when he's hungry than the best of AIs and said cat consumes a tiny fraction of that AI's power budget in BTUs.

The hype around this so-called "AI" is ridiculous and what's even more ridiculous is the amount of power (and thus cooling) these systems require.  The idea that we'll all have one in our desktop machine (or phone) anytime in the near future is farcical nonsense, and that people will pay for their "share" of a large server farm which will amount to a couple bucks a day in power or more per user is also fanciful wish-casting.  Oh sure, sifting data at-scale is useful but the exponential amount of electrical power and RAM storage required for these "new models" is ridiculous and while yes, that will come down over time the existing hardware being built and sold for this purpose, when that happens, will be worth nothing as the power cost to run it compared against the newer stuff then available will cause that which was bought previously to have literal zero value.

When I ran MCSNet this was wildly in evidence and the cause for much consternation as buying any piece of technology equipment that could not be immediately used to generate revenue (not "on the come" a year or two later, but right now) was ridiculously dangerous.  You were paying today's price for a given level of performance but tomorrow's price was almost-certain to provide more capacity for less cost and thus the guy who bought to build something out that was going to take six months or a year to produce revenue from customers was very likely to get hammered by the guy who bought only when he had a revenue stream he could generate tomorrow with that acquisition.  The Pentium 90s, for example, were subsumed by Pentium Pro 200s that were more than twice as fast and consumed less power.  The 8 gigabyte SCSI-attached disk drives were soon subsumed with larger and faster ones.  I have tossed literal dozens of disks over the last 20 years (and a whole stack of DLT tapes along with its drive system) that were in perfectly good working order but there was no reason to keep them around as for a lower power budget what stored 320Gb and then 1Tb now stores 6, 8 or 12Tb and if you buy SSDs instead you can trade capacity for performance 10x or more greater!  The DLT15/30s were literally worthless within a few years as they couldn't cover even a single disk anymore.  As this occurs in technology the prior equipment becomes valueless as the physical space and energy it consumes costs more than the replacement on a per-unit-of-output basis.

Consider that said Burroughs machine up above would not be used by anyone in any business even if it was free because the electrical power to operate it now gets you less output than you get out of a literal solar-powered calculator and it has no storage so each operation must output a line to a ledger card that is then picked up by the operator the next time so it has the base data to compute from.  Thus the only place you'll ever see one today is in a museum.  This very same paradigm has been present in every form of computing for the last 70 years and its not going away.

The one computer in a rack in my basement has multiples of the processing power and storage than the entire data center at MCSNet and can deliver more than ten times the data flow of that entire data center yet it along with the cable modem and other required elements such as the network switch for the house consumes just 150 watts of electricity at moderate load and thus requires no forced cooling.

Today there are effectively no revenue models for so-called "AI".  None.  Everyone is falling over themselves to include the word in their corporate press releases and buy the hardware and power to operate it, never mind the programming and maintenance cost yet it makes said firms no money.  It is all a bet "on the come" that customers will appear and demand said tools, being willing to pay for them in the future.  That may or may not be true but what will be true is that the person who buys the gear only when the revenue is going to come in the door, and not six months or two years before that, is going to ruin the operating cost model of all of his or her competitors who bought earlier!

Research for the purpose of research is worth engaging in but never confuse the two.  The first has no defined purpose but might, with a very small probability, lead to some sort of breakthrough of tremendous value generally (although almost-never able to be confined to and thus profited from the entity that performs it.)  The latter is called business but all this speculative froth is not business as it has no revenue model today that reasonably pays the expenses and by the time that revenue stream develops the cost of providing it will almost-certainly be a small fraction of what it is today for a superior outcome.

These valuations are not just "elevated" they are nothing more than insane speculation on the next sucker to come along and buy as there has never been a circumstance in the evolution of technology in general and computing specifically where the above has not held sway.  In every case over 70 years has buying now with the expectation of developing a revenue model in the future has led to the other guy who buys only when he has revenue coming in the door tattooing his company name on your back.

Every CEO and CTO in the technology space knows this too.

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