Abundance

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Abundance

The best example of abundance I can find for you this week is this https://chat.minimax.io/, a new Chinese AI model that you haven’t heard of. Minimax is free and works slightly differently from other models, largely because US export restrictions on chips mean it has to. This one is sixteen small models behaving like one big one. It’s incredibly good and free.  I haven’t seen any information on it over here or in the US because it rather undercuts their entire AI industry.

This kind of on tap capability across all ranges of human knowledge would have cost you millions per year only 24 months ago. Now it’s free. Nobody seems to care. 

Within a year, the collective knowledge of every PhD student, medical practitioner, and engineer who ever lived will be free and at your fingertips. I believe it to be true that most people will simply ignore it. As Balaji Srinivassan pointed out this week, we are in an exponential moment and we have been for a while. 

The important super trend here is abundance. What happens if everything is abundant? Particularly access to knowledge, where is the value layer? They spent 10 years telling us all to learn to code, unfortunately that was not great advice because most of the AIs are now in the top 200 coders in the world. Coders are abundant now, if you wished you could have 100,000 of them working for you daily. Not to say the best humans aren’t still the best - they are. But surely not for much longer. 

The obvious retort here is that if everything is so abundant, why do people not feel it? Why can’t they heat their homes in winter and cool them in summer? Perhaps because the abundance is not equally spread. Many people will expect to be spoon fed their share of abundance and the government might very well try and oblige. 

The thing about the current rate of change is that it renders governments more and more obviously incompetent. Their speed of movement is so slow and the speed of change is so fast. The Australian government still talks about ‘regulating blockchain’. They talk about an “Australian approach to AI”. These ‘ideas’ are replicated across the world. They just simply cannot react quickly enough to the pace of change. 

I asked MiniMax if it had a copy of the Australian Hansard and all Federal Law. 

All the data regarding Australia or Australian life has been used to train the overseas models. We own nothing. Facebook, TikTok, Google the overseas models have been trained on everything we have, everything we do and everything we know. MiniMax wasn’t even embarrassed “sure, anything in the Hansard at your fingertips”, free. 

So knowledge. Access to digital data. Access to anything that ever touched the internet. Abundant. You could learn anything you wanted - you would of course need to be bothered to do so. 

Crucially then, what will be the value layer in the digital age? It cannot be government delivered. It cannot be their bonds or their “national conversations”, or their money. Everything is abundant now. That is exactly why digital scarcity was the most important problem in computer science for so long. The best computer scientists knew what was coming. 

I won’t say it. But it is obvious.

Gold

Some of you leapt to the defence of gold this week. I acknowledge, it has been on a very good run. 

The Germans and the Italians were seeking to bring their gold home from America. In the meantime, China has shipped over 5000 tons of it back home since 2023. Europe, as usual, is a bit late to the game. 

The last time this happened it precipitated the end of the Gold Standard. Everyone wanted their gold back and Nixon just defaulted on the gold standard. Now, there is no gold standard and everyone wants their gold back. My main concern then is I don’t hear so much about Donald Trump “heading to Fort Knox with Elon”. 

So again, the issues with gold come to the fore. Difficult to transport, difficult to assay. You have to rely on a custodian and in this case it's the United States. Do you trust them? I’m surprised there aren’t more conversations about what’s inside Fort Knox……..the nation-state bank run will surely reveal the answer. 

One other point to consider. In the robot age,mining for gold is going to be much more scalable. 24/7 digging and prospecting by a billion robots. 

Gonna be a lot of the yellow stuff soon.

5%

It must be said the recent NATO summit was embarrassing, culminating in General Secretary Mark Rutte calling Trump “Daddy”.

NATO Secretary-General Mark Rutte sought to clarify an eyebrow-raising comment he made during a bilateral news conference with President Trump on Wednesday: He doesn’t consider the U.S. leader “daddy” and was making a reference in jest.

“The daddy thing, I didn’t call him ‘daddy,'” Rutte told reporters later in the day.

He did.

Aside from that, the European participants of NATO have agreed to increase their defence spending to 5% of GDP by 2035. This addresses a long held (and totally valid) American concern, that Europe underspends on defence. They just let America do all the heavy lifting. 

The extent of the commitment is not trivial. In Britain the change in spending patterns has always been to cut defence in order to supplement health and social security. Overall spending is up by 4% of GDP since 1968. How can Britain get to 5% of defense without cutting something else?

It won’t happen. It won’t happen in Italy either, or Spain, or Portugal. Perhaps only Germany has the means and the industrial capacity to meet this commitment. So after 75 years of asking them not to, the Germans are now the only people who can. 

Expect government deficits to explode as they do their best to comply and fail. The Europeans aren’t stupid though. Trump is likely at the peak of his international power right now. Come the start of the US Mid-terms he is going to get a major haircut. 

Maybe massaging his ego was embarrassing but necessary. The Europeans just bought themselves the only thing Trump doesn’t have. Time. 

Euro-Trash

Shall I bang on about financial repression? Perhaps not. This paper makes the case that there is currently no such thing as a European savings product and it would be super-handy for everyone if there was. That way we can spend it on “EU Priorities”. I imagine a slew of tax-free Euro-Savings bonds in the near future. 

Chart 3 was helpful too. It points out that those people who have resided in overnight deposits and short term savings have lost about 80% of their relative value since 2015. Cash quite literally melts in your hands, even those lovely Euros. It’s a remarkable admission. 

The problem is that the reference is to the MSCI World index. Which includes the US, India, China and other variously more dynamic economies than the EU. The proposed savings tool would invest in EU companies and EU priorities. Like what? Where is the innovation in Europe? We have covered so many times why Europe is not able to generate value like other economies. The European and UK stock markets have hugely underperformed for a decade now. The demographic trends mean this doesn’t look like it will change either. 

For all those reasons, the proposed approach will likely fail. The accompanying video was telling. It’s incredibly creepy.

Further Information

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