How AI Could Reprice the Entire Economy - Dylan Patel

transcript

So we were talking about like you know before singularity interest rates rise 2% 3% etc. At some point I think it's very likely that the world economy will be doubling every single year.

Okay this is not happening in 5 years [laughter] but it'll happen eventually. it just like there will be there's this uh there's researcher David Binder who's done great work on this but basically if you look at like input output tables in a fully automated economy just like what would it take to like double the entire stock of things in the economy ever if economy grows at 3% a year then it's like you know rule of 70 it's like 20 something years right but then but he was like okay well right now we're bottlenecked by the fact that there's people and you can't like double people every single year but in a world where like you can also double labor force every single year how fast can the economy And I think it could double every single year.

At the very least, it would be like tens of percent every single year. Okay. The rate of interest should be pretty close to the growth rate. It it won't be exactly that because of consumption, but it should it should be pretty similar. So then we'll go into a world I think in the 2030s where the rate of interest is like tens of percent.

Um and like I I don't know, part of my brain is like it might be hundreds of percent, but like okay, let's say it's at least tens of percent.

I'm just like, okay, every country that is not involved in the production of AI defaults. um every stock that is not an AI stock is like worth basically zero because discounted cash flows are worth nothing if the federal government can't figure out a way to tax AI you know the the servicing the debt is more than the current uh tax revenue um all these other effects that I'm sure we're not even pricing in like you can't get a mortgage etc etc off because fundamentally what is happening in this sort like this is all nerd speak right but like let's step back what's happening just now it started the nerd speak [laughter] we'd be entering a regime we're just we're in a totally different growth regime basically and the economy is basically saying hey you like paying people p you b the government borrowing money to pay people pensions it the opportunity cost of that is extremely high now because that money could be spent building a robot factory that builds a robot factory that builds a robot factory and so the opportunity cost of capital is going to increase a ton and that just like that's fundamentally what the cause of all of these things we're talking about yeah so so as interest rates go up equity markets get pummeled Yeah.

Um, and even AI companies, right? People are like, you know, some people who really believe in AI are like, why does Micron or Highex or Kyxia trade at two or three times earnings? And it's like, well, if you're really AI pilled, everything in the economy should trade at like two or three times earnings. Um, and if you're not AI pilled, then sure, they're they're over earning.

Um, so it's sort of like a an argument for why like I I think memory is going to do great, but you know, memory memory stocks shouldn't, you know, 10x or whatever again because if they were if we're in the market where there's that much demand for memory, which means AI's caused this drastic change in the economy, then everything should trade at like two or 3x multiples and the stock market should [ __ ] crash. Right. Right.

And so in a sense, like Meta trading at I don't know, I think Meta Trades at like some they're like $ 1.5 trillion company. It's like what silly? Um they're worth way more than that.

At least in like a logical sense. you just look at their cash flows and and like all the infrastructure they're hoarding and all the compute that they're going to be able to sell for crazy amounts of uh dollars per watt either as tokens because their lab works or just anthropic and open AI um ultimately becomes a question of like you have to reallocate all the capital to the AGI and you do that by pricing everyone else out and and and so the limiter on AGI is not how fast can the research engineers like you know our roommate Shoto can crank the gear It's actually just like how much does the rest of the world let that happen, right?

Because they're going to regulate. They're going to obviously increase interest rates. They're going to say no data centers. They're going to say stop building fabs. They're going to say, oh [ __ ] every company's equity value is tanking. So, how can I pay for AI, you know, to increase my business? Well, then, you know, like, okay, then open, I have to start like building their own stuff.

And obviously they're going to eventually focus, you know, they're building their own chips already or at least designing their own chips and it'll expand out. They're, you know, they're contracting their own data centers and building their own uh infra in the next couple years. Um, you know, there there's sort of like how does this reallocation of the economy happen?

But there's a lot of downward pressure on it not being, you know, just straight takeoff. um even if the models were capable of it uh which which I think you and I believe we're in a world where models are capable of that but slow takeoff is is you know at least my hope possible because everything in the economy and and regulatory world like governments saying don't release your models government saying actually you can't even use your models internally that much because that's going to happen soon um they're already saying you can't release your models which is actually the thing I'm most worried about is you know a singularity which external deployment is is actually helping right so the fact that we're preventing external deployment well does that does that prevent singularity I mean right now it would lead to more revenue because models are incapable of bars high but I'm worried about a world where it's 2030 and the government's like we're going to wait 6 months before you can release your model to the public 6 months 100x let's go yeah in that six months they're just like they do like recursive selfment internally they just have all kinds of crazy [ __ ] happening in the company meanwhile the rest of us are stuck with models that are like at current pace years behind Yeah.

So, here's my thought. Okay. Suppose that the whole world gets in on this conspiracy to like try to slow down AI. I don't think it's a conspiracy. It's like it's outwardly written, you know, from like every politician. Suppose they basically prevent an entire they slow down AI by a year. If comput is increasing 2 to 3x every single year, they prevent a whole year of AI deployment such that you're a year behind where you would otherwise been.

During um RSI, you're getting three to six years of AI progress in a single year. But but they can't they don't just limit compute, right? They also limit the lab's ability to release the model internally, right? We saw that had to stop giving Mythos to foreign employees for a bit. I didn't I didn't know that was true. Like internally as well. I mean, that's what they claimed. And they claimed I thought that was just a different checkpoint that was not Mythos, but it was basically myth. Yeah. Yeah. Yeah.

But I mean, like stuff like that is not going to be allowed either, right? Like the government is dumb, but they're not that dumb, right? Like, you know, I I would hope at least. Um, you know, governments are going to not want companies, at least the US government has the cards here, are not going to want Anthropic to use methos for internally. They're going to be like, "Hold the [ __ ] on, right? Like, slow down, you know, because all of these regulatory reasons.

Everyone who's elected is going to hate AI." Even the people who are elected already hate AI. Um, all the constituents, you're going to literally have like I bet you at some point your parents are going to call you and be like, "Darkesha, you're doing a terrible job. [laughter] You're making every AI progress happen faster." I don't know. Like, it's my podcast. It's going to happen. It's going to happen. My podcast progress. [laughter] I mean, maybe you educate people, right? And and maybe if they're smarter, they're progressing AI faster.

Um, but anyways, like you you're going to have real world constraints on the progress and development and deployment of AI. Even though, you know, it will happen eventually, it's like we're we could tear ourselves apart before we get there. If you enjoyed this clip, you can watch the full episode here and subscribe for more clips. Thanks.