Central Banks Aren’t Ready to Feel the Impact of Years of Poor Decision Making

  The analogy between waist line and Central Banks is interesting although the consequences will be strikingly different. Inflating money away has always been the demise of Empires in History. Think Denarius, the Roman coin, but with no silver whatsoever inside! The Euro and Dollar won't escape this fate. It is technically impossible. But Central Banks will delay, burn more furniture in the castle until the rooms are bare. A look at Union Square in San Francisco these days, a city which used to be one of the most magnificent and nice to live in America is a snapshot of what is in store for the rest of us.

Central Banks Aren’t Ready to Feel the Impact of Years of Poor Decision Making

Since 1975 worldwide obesity has nearly tripled and it is now one of the leading causes of death. Despite this, rarely does someone have ‘obesity’ recorded as the cause of death on their death certificate. Instead, it might read ‘complications from Type 2 Diabetes’ or ‘cardiovascular disease’: conditions that obesity has led to. 

The rise in obesity is thanks to changing diets and the ready availability of ultra processed foods, as well as changing lifestyles. Despite knowing such diets and lifestyle changes can be deadly, people still consume such foodstuffs and choose not to exercise because the negative impact of doing so is not immediate. 

In fact, the immediate feedback one gets from living an unhealthy lifestyle is very often positive. Your taste buds signal to your brain that the Snickers bar is really good, or choosing to watch your favourite show rather than go for a run gives you pleasure faster than going for a run does.

 

To see the positive results of a healthy lifestyle is one that takes time. To see the negative results of an unhealthy lifestyle is also one that takes time. It’s not like you eat some deep fried chicken and wham! You’re struck down by a heart attack. No, that takes years of solid, poor choices. 

It’s only when you find yourself unable to run around with your grandkids or walking around with an oxygen canister do you wish you’d taken better, incremental decisions that would have led to a different outcome. It is only after years of poor decisions that you really feel the true impact. 

Central Banks and the Expanding Waistline

This is basically how it works for central banks. The economy starts to look a bit shaky, or governments make promises they can’t afford or ‘peacekeeping’ missions are declared and the likes of the FOMC decide that rather than save and budget within their means,  a big hit of ultra processed credit is what’s needed to help things along. 

Of course, they do this and everything starts to feel pretty good. Employment rates pick up, consumer spending rallies, startups are turning into unicorns, the S&P 500 is smashing through records and the housing market is booming. Everyone loves this approach to money that costs them very little and as a result they get addicted to it. 

The problem is the economy no longer knows how to function and stay energised without it. None of the economic policies that seemingly 'helped' the economy keep going have added to its overall long-term health. 

Central banks, recognizing that they have created an inflationary environment on purpose, willing the waistband of the economy to expand so that everyone ‘feels good’, then tries to tell everyone that these health issues are just ‘transitory’. But the truth is the expanding waistband is a fraud. Inflation is theft of wealth from the economy’s future. 

What’s the Excuse Now?

Pretty soon food prices become difficult to manage, people can’t afford to heat their homes, the cost of materials climb and people are struggling to make ends meet.

But, in the same way, we justify our weight to ourselves (it’s in my genes, I had a big meal last night), and the central bankers try to justify inflation to us. And they strip out the key components to measure inflation as if they can be easily ignored - we’re talking about food and energy prices here, i.e. two of the biggest costs to the household budget. 

Only in the last year have the likes of FOMC started to realise there is a big cost to all of this unhealthy economic policy of the last fifteen plus years. They tried to make amends for this by coming down hard on interest rates, and getting the economy to work harder to shift some of this inflation. 

But actually, how much has changed? ‘Core’ inflation is coming down ever so slightly- but that’s easy to do when food and energy prices aren’t included and costs for services continue to rise faster than anyone would like. As ZeroHedge pointed out, the US unemployment rate is exactly where it was when the FOMC started hiking rates, so is the S&P 500.

Very little has improved. All that seems to have been achieved is a near-collapse of the US banking system (more on that shortly) and unsustainable debt levels. 

 “...arguably the most significant consequence of this relentless creep higher in rates is that the annual payment on US Federal debt is about to hit $1 trillion, surpassing how much the US pays every year on defence!” ZeroHedge. 

The only tool left: words

Yesterday Jay Powell announced that the Federal Reserve was raising rates to a 22-year high of a target range of between 5.25 and 5.5 per cent. Markets are assuming that this is the final rate rise this cycle. Bless him, Powell did try in the press conference to wag his finger at the economy and declare that if it didn’t pipe down he’d be back in there to raise rates some more, but no one was really listening. 

“We have to be ready to follow the data…And given how far we’ve come, we can afford to be a little patient as well as resolute as we let this unfold.”

Well, that’s a relief that the FOMC are now looking at the data to guide the way. Interestingly enough Christine Lagarde used near-exact the same phrasing earlier today during the ECB press conference. 

We’re not convinced that they hope data will drive the way as so far it seems to us that most central bankers now try to influence inflation expectations rather than inflation itself. Jay Powell uses his press conferences and FOMC reports as an inflation-reduction tool more than they seem to use monetary policy tools. 

As a result, the market is mostly playing along, now pricing this to be the last FOMC hike in the current cycle of hikes with rates being cut as early as 2024.

A slow-down in hikes and ultimately a fall in official rates is good for gold, a non-interest bearing asset, as it reduces the opportunity cost of holding it. 

But, this isn’t mainstream financial media here. Nothing is ever as simple as “this metric went one way, so this commodity will go that way”. This also isn't’ the last 15 years where the world has become accustomed to low inflation rates and near-zero interest rates. 

As investors read the headlines that the Fed is likely to start cutting rates as early as 2024, there will be two expectations - one is that they will gradually cut back down to zero, the other is that inflation really was merely transitory. In other words, the Fed was right all along. 

Spoiler alert - neither of these things are correct. But what these assumptions do show is how addicted the market has come to low rates and the assumption that central banks really are the puppet master to the economy’s marionette. 

The truth of the matter is that inflation really isn’t going anywhere. Damage has been wreaked on the health of the economy. The drip, drip, drip of cheap credit and overheating has left us with a situation that sees negative real rates at best and financial turmoil at worst. 

Nothing, nothing repeat nothing that central banks around the world are doing should be giving anyone any confidence that they are on the right track to reducing our dependence on cheap credit. Therefore no one should have any expectations that real value will be returned to their currencies and savings in the mid to long-term future. 

Interest rates might be up again, but like an expensive diet plan, the promises are better than the results. 

Furthermore: high interest payments are clearly not just affecting US Fed’s annual payments. Remember that US banking crisis that arrived with a bang at the beginning of the year? Oddly enough it hasn’t gone away, although you wouldn’t think it looking at the news.

Earlier this week US regional banks PacWest and Bank of California agreed to a merger. More deals between the 4,000 banks are expected, as increasing numbers struggle under unsustainable deposit outflows. One has to ask why this wasn’t bigger news.

Granted the merger (unlike others this year) didn’t happen under regulator supervision, but it is clearly a sign that the embers of a banking crisis continue to burn.

The BRICS Won't Kill The Dollar, US Policy Will

  The fall of the dollar will not be an event but a protracted process. 

  It could be long as the Author outlines below, or much more sudden if there is a strategic incident with China or Russia.

  The real tragedy is that we are now at the mercy of events nobody controls...

Authored by Matthew Piepenburg via GoldSwitzerland.com,

Below we separate the hype from the sad reality of the USD in the face of a new “BRICS currency.”

Net conclusion: The real death of the USD will be domestic not foreign.

The Bell Has Been Tolling for Years

When it comes to the “bell tolling for fiat,” we can all hear its loud chimes, but that bell has been tolling since 1971 (or frankly 1968), when the US leadership decoupled the world reserve currency from its golden chaperone.

Like any teenager throwing a house party, the lack of a parental chaperone leads to lots of crazy events and lots of broken furniture.

The same is true of post-71 politicians and central bankers suddenly freed of a gold-backed chaperone and thus suddenly loaded with drunken power to mouse-click currencies and expand deficits.

And since then, all kinds of things have been breaking, from banks to bonds to currencies.

And now, with all the extreme hype (and, yes, some genuine reality) behind the headlines of a revolutionary gold-backed BRICS trade currency, many are making sensational claims that the World Reserve Currency (i.e., USD) is nearing its end and that fiat money from DC to Tokyo is effectively toast.

Hmmm…

Don’t Bury the Dollar Just Yet

Before we start tossing red roses over the shallow grave of an admittedly grotesque US Greenback in general, or fiat fantasy money in general, let’s all take a deep breath.

That is, let’s re-think through this inevitable funeral with a bit more, well, realism, mathematics and even geopolitical common sense before we turn our backs on the USD, and this is coming from an author who has never thought highly of that Dollar, be it fiat, politicized and now weaponized.

So, let’s take a deep breath and engage open, informed and critical minds when it comes to debating many of the still open, un-known and critical issues surrounding the so-called “game changer” event when the BRICS+ nations convene this August in S. Africa.

Needed Context for the “BRICS New Currency” Debate

As made clear literally from Day 1 of the Western sanctions against Putin, the West may have been aiming for Putin’s (or the Ruble’s) chest, but it then shot itself in the foot.

After decades of DC exporting USD inflation from Argentina to Moscow, a large swath of the developing countries of the world who owe greater than $14T in USD-denominated debt were already reeling under the pain of rate-hike gyrations which made their own debt and currency markets flip and flop like a dying fish on the dock.

Needless to say, a 500-basis-point spike in the cost of that debt under Powell didn’t help. In fact, it did little good (or goodwill) for USD friends and enemies alike, from the gilt markets in London to the fruit markets in Santiago.

Adding insult to injury, DC coupled this strong-Dollar policy with a now weaponized-Dollar policy in which a nuclear and economic power like Russia had its FX reserves frozen and access to SDRs and SWIFT transactions blocked.

Like Napoleon at Moscow, this was going a step too far…

The net result was an obvious and immediate distrust of that once neutral world reserve currency, an outcome which economists like Robert Triffin warned our congress against in 1960, and even John Maynard Keyes warned the world against long before.

Heck, even Obama warned against such weaponization of a reserve currency as recently as 2015.

Thus, and as I (and many others) warned from Day 1 of the sanctions, the distrust for the USD unleashed by the sanctions in early 2022 was “a genie that can never go back in the bottle.”

Or more simply stated, the trend toward de-dollarization was now going to come at greater speed and with greater force.

This force, of course, is now being seen, as well as debated, under the highly symbolic as well as substantive example of the BRICS+ nations seeking to usher in a gold-backed trade currency to move openly away from the USD, a move which some maintain will soon de-throne the USD as a world reserve currency and send its value immediately to the ocean floor.

The Trend Away from the USD Is Clear, But It’s Pace Is Not

For me, the trajectory of this de-dollarization trend is fairly obvious; but the speed and knowable magnitude of these changes are where I take a more realistic (i.e., less sensational) stance.

But before I argue why, let’s agree on what we do know.

The BRICS New Currency Is Very Real

We know, for example, that Russian finance experts like Sergei Glasyev have real motives and sound reasons for planning a new (anti-Dollar) financial system which not only seeks a Eurasian Economic Union for cross boarder trade settlements backed by local currencies and commodities, but to which gold will likely be added as a “backer” to the same.

Glasyev has also made headlines with plans regarding the Moscow World Standard as a far more fair-playing and fair-priced gold exchange alternative to the Western LBMA exchange.

If we take his gold backing plans seriously, we must also take seriously the plan to expand such gold-backed trade currency plans into the Shanghai Cooperation Organization which would make the final tally of BRICS+ nations “going gold” as high as 41 country codes.

This could ostensibly mean greater than 50% of the world’s population and GDP would be trading in a gold-backed settlement currency outside of the USD, and that, well, matters to both the demand and strength of that Dollar…

China’s Motives Are Also Anti-Dollar

China, moreover, has invested heavily in the Belt & Road Initiative (152 countries) as well as in massive infrastructure projects in Africa and South America, areas of the world that are all too familiar with America’s intentional (or at least cyclical) modus operandi of developing nations enjoying low US rates and cheaper Dollars to create local credit booms which later crash and burn into a local debt crisis whenever those US rates and Dollars rise.

China therefore has a vested interest in protecting its EM investments as well as EM export markets in a currency outside of a USD monopoly.

Meanwhile, as the US is making less and less friends with EM markets, Crown Princes, French Presidents and EU and UK bond markets, China has been busy brokering peace between Saudi Arabia and Iran, as well as building a literal bridge between the latter and Iraq while simultaneously making Yuan-trade deals with Argentina.

Other Reasons to Take the BRICS+ Currency Seriously

Tag on the fact that Brazil, China and Iran are trading outside the USD-denominated SWIFT payment system, and it seems fairly clear that much of the world is leaning toward what Zoltan Poszar described as a “commodity rather that debt-based trade settlement currency” for which Charles Gave (and the BRICS+ nations) see gold as an “essential element” to that global new trend.

Finally, with a strong Greenback making USD energy and other commodity prices painfully (if not fatally) too expensive for large swaths of the globe, it’s no secret to those same large swaths of the globe (including petrodollar nations…) that gold holds its value far better than a USD.

Given this fact, it’s easy to see why BRICS+ nations wish to settle trades in a gold-backed local currency in order to ease the pressure on commodity prices. This gives them the opportunity, as Luke Gromen reminds, to buy time to pay down their other USD-denominated debt obligations.

In addition to the foregoing arguments, the fact that the BRICS+ nations are cloning IMF and World Bank swing loan and “contingency reserve asset” infrastructure programs under their own Asian Monetary Fund and New Development Bank, it becomes more than clear that a new BRICS+ world, trade currency and institutionalized infrastructure is as real as the trend away from a monopolar hegemony of the USD.

In short, and to repeat: There are many, many reasons to both see and trust the obvious and current trend/trajectory away from the USD as warned over a year ago, all of which, no matter what the slope and degree, will be good, very good for gold (see below).

But here’s the rub: The speed, scope, efficiency and ramifications of this trend in general, and the “BRICS August Game Changer” in particular, are far too complex, fluid and unknown to make any immediate (or “sensational”) funeral plans for the USD today.

And here’s a few reasons as to why.

Why the BRICS New Currency Is No Immediate Threat to the USD

First, we have to ask the very preliminary question as to whether the August BRICS summit will even involve an actual announcement of a new, gold-backed trading currency.

So far, all we have to go on is a leak from a Russian embassy in Kenya, not an official communication from the Kremlin or CCP.

Meanwhile, India, a key BRICS member, has openly denied such a new trade currency as a fixed agenda item for this August.

But notwithstanding such media noise, we must also look a bit deeper into the mechanics, economics and politics of a sudden “game-changer” new currency.

The BRICS New Currency: Many Operational Questions Still Open

Mechanically speaking, for example, who will indeed be the issuing entity of this new currency?

The new BRICS Bank?

What will be the actual gold coverage ratio? 10% 15% 20%?

Will BRICS+ member nations/central banks need to deposit their physical gold in a central depository, or will they enjoy (most likely) the flexibility of pledging their domestically-held gold as an accounting-only-unit?

Cohesion Among the Distrusting?

As important, just how much trust and cohesion is there among the BRICS+ nations?

Sure, this collection of nations may trust gold more than they trust each other or the US (which is why such a gold-backed trade currency may work, as it can’t be “inflated away”), but if a BRICS member country wishes to redeem its gold from say, Russia, years down the road, can it realistically assume it will happen?

What if Russia (or any other trade partner) is in a nastier mood tomorrow than they are today?

Basic Math

In addition, there are certain economic/mathematical issues to consider.

We know, for example, that the collective BRICS+ gold reserve (as of Q1 2023) is just over 5452 tones, valued today at approximately $350B.

Enough, yes to stake a new currency.

But measured against a net global amount of $13T in total physical gold, are the BRICS+ gold reserves enough to make a sizable dent (even at a partial coverage ratio) to tilt the world away from the USD overnight, when the USA, at least officially, has much, much more gold than the BRICS+?

That said, we can’t deny that the actual gold stores in places like Russia and China are far, far higher than officially reported by the World Gold Council.

Additionally, the historically unprecedented rate of central bank gold stacking in 2022-23 seems to suggest that the enemies of the USD are indeed “loading their guns” for a reason.

Expecting, however, all of the BRICS+ members to maintain the discipline to continue to purchase and store more physical gold despite the political temptations to redeem the same for later or unexpected domestic spending needs may be a naive assumption in a real world of ever-shifting national behaviors.

Geopolitical Considerations & the BRICS New Currency

Speaking of such shifting behaviors, we also can’t ignore the various pro and con forces within a geopolitical backdrop wherein much of the world, whether it loves or hates the US, still needs its USDs and USTs.

China, for example, may be letting maturities run and even dumping the USTs it now owns at a fast pace (only years away from total UST liquidation), but for now, China needs to keep the USD from growing too weak to buy all the Chinese exports of those American products made, in well…China.

That said, if the trend is indeed a new world of currency wars, rather than currency cooperation, which is a more than fair assumption, then all such liberal economic cooperation/trade arguments fall to the floor.

Nevertheless, with over $30T worth of USDs held by non-US parties in the form of bonds, stocks, and checking accounts, the collective desire (common interest) to keep those USDs alive and at least relatively strong is a major counter-force to the notion that the world and USD are coming to a sudden change this August.

Furthermore, in such an uncertain world of competing currencies as well as national and individual self-interests, the trillions and trillions of off-shored USTs/USDs tangled up within the foreign as well as US banking and derivative markets is important.

Why?

Because any massive dislocation in risk asset (and even currency) markets emanating from South Africa or elsewhere, in August or much later, would more than likely (and ironically) cause a disruption in foreign markets so dramatic that we could easily see a flow into, rather than away from, USDs for the simple (and again ironic) reason that the mean and ugly Greenback is still the best/most-demanded horse in the global fiat slaughter house.

In other words, even if all the BRICS+ plans for a gold-backed trading currency go flawlessly, the time gap between the accepted rise of such a settlement currency and the open fall of the USD is likely to be long, wide and unknown enough to see the USD actually get stronger rather than weaker before we experience any final fall in the USD as a global reserve currency.

The USD: Supremacy (Still) vs. Hegemony (Gone)

So, no, I don’t think that the USD will fall entirely from grace or even supremacy in August of 2023, even if the trend away from its prior hegemony is becoming increasingly undeniable.

It will take more than sensational BRICS headlines to make such a rapid change, but yes, and as the Sam Cooke song says, “change is gonna come.”

My only point is that for now, and for all the reasons cited above, the trajectory and speed of those changes are likely not as sensational as the trajectory and speed of the current headlines.

No Matter What: Gold Wins

The case for gold, of course, does not change just because the debate about the speed and scope of the new BRICS+ trade currency rages today.

No matter what, the very fact that such a gold-backed trade settlement unit will inevitably come to play will be an equally inevitable tailwind for global gold demand and hence global gold pricing in all currencies, including the USD.

The Dollar Will Die from Within, Not from Without

Furthermore, and despite all the hype as well as substance behind the BRICS headlines, I see the evolution of such a gold-backed trade currency as a reaction to, rather than attack upon, the USD, whose real and ultimate threat comes from within, rather than outside, its borders.

The world is losing trust in the USD because US policy makers killed it from within.

Ever since Nixon took the gold chaperone away, politicians and central bankers have been deficit spending like drunken high school seniors in a room filled with beer but absent of parental consent.

The entire world has long known what many Americans are finally seeing from inside their own walls, namely: The US will never, ever be able to put its fiscal house in order.

Uncle Sam is simply too far in debt and there’s simply no way out as it approaches a wall of open and obvious fiscal dominance in which fighting inflation will only (and again, ironically) cause more inflation.

Or stated simply, Uncle Sam can’t afford his own ever-increasing and entirely unpayable deficit spending habits without having to resort to trillions and trillions of more mouse-clicked Dollars to keep yields in check and IOUs from defaulting.

And that, far more than a BRICS new currency, is what will put the final rose on a fiat system (and Dollar) that is already openly but slowly dying—first slowly, then all at once.

But I don’t think that day will be August 22.

The Four Stages of the AI Learning Curve

Here is my latest AI article fully corrected by ChatGPT.

The Four Stages of the AI Learning Curve

"In the fast evolving world of AI, we are witnessing a transformative learning curve that encompasses four distinct stages. From simplistic Google-like queries to seamlessly integrated AI systems, this journey delves into the intriguing realm of human-machine collaboration, which will revolutionize our lives first and society as we know it soon after." (A skillful resume of my article, written by AI)

The key to the article is that instead of speculating on the AI itself and looking far ahead to conscious super-intelligent machines (There are already many such articles on the Internet.), it focus on the immediate human interface and the consequences over the next few years. For illustration purpose, I have posted both my take on the subject and the correction from AI. ChatGPT starts great with perfect and improved version of my text but then as the concepts become more complex and abstract, ends up with colorless generalities. so from very good to close to useless... and this in itself is part of the answer.   

 1 - The Google Stage

(AI version) "The Google Stage marks the initial foray into AI, where users pose simple questions and receive similarly straightforward responses, akin to using a search engine like Google. While single-answer questions pose no issue, the frustration arises when AI fails to address more complex queries, leading users to perceive it as a limitation. In reality, the key lies in crafting precise questions and providing contextual clarity. AI's understanding of human language demands meticulous interaction, as it lacks the ability to interpret non-verbal cues, unlike humans. Regrettably, many become entangled at this stage, erroneously attributing communication failures to AI's shortcomings rather than acknowledging their role in the exchange." (Here, I asked for a shorter version of the text below.)

- - -

(My version) The Google stage is the first stepping stone to AI where you ask simple questions and get likewise simple answers, Google-like. If the question has only one answer, it is fine but most questions do not and we have seen that people get easily frustrated, interpreting the inaccuracies of the answer as a limitation of AI.

This is most often not the case but rather based on the fact that the question was not asked the right way or that the context was not properly defined. The fact that AI understands human language instead of computer language does not reduce the need for accuracy. People understand context and get non-verbal cues from their interlocutors. AI does not and the interaction therefore needs to be more precisely circumscribed to be productive. 

Unfortunately, this stage also tends to be the tar sands of AI where many people gets bogged down, not understanding and assessing the obstacle properly as they interpret wrongly an erroneous answer as a AI failure (the machine's fault) instead of a communication failure (their fault).  

2 - The Prompt Stage

(AI version) "At this stage, you become aware that you're interacting with a machine, and to achieve optimal results, you must learn how to interface effectively using prompts.

Prompts bear resemblance to programming, but with human language replacing traditional computer code like Python or Java. The key lies in formulating questions precisely, avoiding approximate or inaccurate language that might hinder the machine's performance.

A prompt typically comprises a meticulously crafted question, followed by all the necessary elements for generating the desired answer. For instance, to translate a text from English to Chinese, you would input the content of the text, followed by the translation request. Additionally, clear instructions on the purpose and style of a letter for example are crucial to avoid generic responses.

By following this process correctly, you unlock the true power of AI. The internet already boasts extensive lists of prompts, catering to a myriad of requests, with even more specific and intricate prompts on the horizon. Leveraging the vast database behind the AI interface, we witness the emergence of awe-inspiring answers, often combining several prompts to address complex questions.

At this juncture, the AI's ability to seamlessly integrate various elements of a question showcases its intelligence, a true measure of its capabilities. It is vital to recognize that AI's intelligence does not equate to consciousness. While lacking purpose or original thoughts, AI systems are remarkably proficient at solving intricate problems, often rivaling or surpassing human intelligence." (Here, I asked for a more accurate version.)

 - - -

(My version) At this stage, you realize that you are talking to a machine and that in order to get optimum answers, you need to learn how to interface with it by using prompts. 

Prompts are in fact quite similar to programming but using human language instead of a computer code such as Python or Java. The machine will simply perform much better if the question is formulated the right way instead of using approximate, inaccurate language which we naturally tend to do. 

More practically, a prompt is a question formulated in a very precise way, followed by all the elements necessary to answer the question. At the most simple level, to translate a text from English to Chinese, you will need to input the content of the text followed by the request. But there can also be several steps necessary to get the answer and these steps needs to be explained clearly. The purpose and style of a letter, for example, must also be defined to avoid a generic answer. 

Only by going through this process the right way can you start leveraging the power of AI. This is why, we can already find long lists of prompts on the internet to answer all kinds of requests as illustrated bellow.

Soon, the number of prompts will become much larger, more specific and far more complex to answer all kind of questions, optimizing the incredibly large database hiding behind the AI interface we are currently using. 

We are already starting to see all kind of complex questions where several prompts are combined together to generate truly amazing answers. (insert SIO example later)

It is at this stage that we can start being amazed by the true power of AI. The machine has to truly understand the purpose of what it is doing in order to combine the different elements of the question seamlessly and the fact that it actually can do this, is to my opinion the true measure of the intelligence of the system. 

Most people tend to conflate intelligence and consciousness. These AI systems are of course not conscious, in the sense that they do not have a purpose or have their own original thoughts, yet... But, as for intelligence, defined as the ability to solve a complex problem, they are now in many cases on par with human intelligence and sometimes already performing better. 

3 - The Personal Assistant Stage

(AI version) "This pivotal stage marks a groundbreaking revelation: mastering the art of efficient prompts unlocks a realm of fascinating and original answers from AI. Some are anticipated, while others surprise us entirely, opening new horizons of thought.

At this juncture, AI metamorphoses into an indispensable ally, akin to an ever-available, knowledgeable friend. Seeking a second opinion from AI becomes second nature, ensuring no stone is left unturned. Like how machines amplified our physical capabilities centuries ago, AI now expands our mental faculties, honing our focus on core matters.

Language barriers crumble as you effortlessly write in any dialect, while the addition of computer code elevates your abilities to create web pages and automate mundane tasks, lightening the burden of monotonous chores. The once-costly services of mobile applications become increasingly flexible and nearly free, prompting a choice between integrating AI into apps (likely) or building more customizable AI platforms (a better but time-consuming option).

The implications of this seamless merger between human and artificial intelligence remain enigmatic. The allure of AI becomes irresistible, bordering on addiction, and its indispensability grows ever clearer. Those resisting its allure will suffer a significant disadvantage, vanishing from the competitive landscape. Yet, a delicate balance must be struck, for overreliance on AI risks rendering individuals incapable of functioning independently.

In this juncture, trust and confidence take center stage. We must scrutinize those who build AI code and retain control, ensuring it genuinely serves our best interests. The handling of confidential information by AI demands trustworthiness, and the potential for leakage of original solutions warrants careful consideration. Addressing these issues is imperative before AI earns its role as a trusted personal assistant in our lives. " (Here, I asked for a very accurate version.)

- - -

(My version) Once you learn how to use prompts efficiently, you realize that by reformulating and submitting all kind of questions to AI, you will reliably get interesting and original answers. Some you already thought about, others you didn't.

At this stage, the AI slowly becomes indispensable. It becomes a reflex to always look for a second opinion, just in case you missed something. It is similar to having a friend, always available, always in a good mood who will answer all your questions however trivial and offer valuable insight on an almost infinite array of subjects. What the machine did to our muscles two centuries ago, the AI does to our brain: A seamless expansion to our thinking ability which allows us to focus on the core issues. 

You now can write in any language, add computer code to any task allowing you, for example, to design a Web page using the http protocol, automatize simple tasks such as answering e-mails and in many ways make your life much easier by getting rid of most boring and time consuming cores. The service that some mobile applications offered becomes more flexible and almost completely free. We will see if the mobile environment can adapt to this change by integrating AI in its applications (likely) or if people go directly to AI platforms to build more flexible solutions. (A better but more time consuming option)  

It is difficult to understand the implications of such a merger of human and artificial intelligence but it is likely to become very quickly addictive and indispensable. Those people who resist the tend will find themselves at such a disadvantage that their number, in business first, will quickly tumble and disappear. The risk is that with too many tasks becoming automatic, people will become dependent and unable to function without AI.   

A crucial issue at this stage will be trust and confidence. Who is building the AI code and who controls it? Is it really working in your best interest? Can you trust the AI with confidential information? Will original solutions be leaked as soon as they are generated? All these important issues must be answered before AI becomes a trusted personal assistant.

4 - The Integration Stage

(AI version) "As individuals seamlessly incorporate AI prompts into their daily routines, companies must also strive for comparable efficiency in their processes and operations. However, achieving this level of integration presents a formidable challenge. Unlike a simple add-on, AI represents a profound transformation, reshaping everything it touches—meetings, client interactions, and various activities—into streamlined, highly adaptable processes. The potential of AI appears limitless, leading to a substantial divide between AI-powered companies and those lagging behind.

Amidst this AI revolution, companies face the pressing need to establish AI policies, outlining its uses, goals, and limitations. Crafting such policies will prove arduous, as experience with AI is still developing, and mistakes are inevitable. The race to stay competitive drives companies to experiment with AI projects, all the while grappling with concerns over trade secrets and data protection. Striking a delicate balance between harnessing AI's benefits and controlling its potential risks will be a step-by-step process, learning from each misstep along the way."

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(My version) People using seamlessly hundreds of prompts a day will obviously become extremely efficient but they will likewise require a similar effectiveness from companies process and activities. This by definition will be a challenge of a higher order since AI will have to be integrated and inbeded in countless systems, similar in many way to moving sales and other activities from mortar to the internet..

The difficulty here is that AI is not a simple process that you add to existing ones but a thinking process which must come on top and completely transform the nature of what existed before. Meetings, client interface, almost every activity will be completely streamlined and made more flexible. The sky will literally be the limit and the gap between AI-powered companies and those that are not will quickly become very large. 

But this also means that companies will need to define the uses, the goals and the limits of AI, and therefore set up their AI policies, while experimenting with actual projects thanks to extreme pressure from competitors. 

We are already seeing the first premises of such a trend with companies being worried that trade secrets will leak to the AI and therefore to competitors and consequently wondering how the system can be controlled while keeping the benefits. The answer to this question is far from trivial and will have to be discovered step by step, one mistake at a time...

5 - The Social Stage (conclusion)

(AI version) "AI, with its dynamic and boundless capabilities, serves as a harbinger of a profound societal shift. As we explore its current transformative stages, we must recognize that the journey does not culminate here. Undeniably, more unfathomed phases lie ahead, reshaping our world in ways beyond our current comprehension.

While I refrain from delving into speculative subjects like the singularity, (I asked the AI not to talk about the singularity, not to say that I didn't want to talk about it. My mistake!)  the evolving landscape demands a forward-thinking approach. As AI continues to unfold, staying competitive necessitates keeping pace with the curve, remaining agile to adapt to the unforeseen. Embracing the unknown's potential risks while maintaining a cautious balance will be key in navigating this uncharted learning curve.

The horizon stretches before us, inviting new possibilities, and while we cannot predict with certainty what the future holds, it is vital to foster a culture of innovation and adaptability. As AI's impact reverberates across industries and human endeavors, we must embrace the journey with a spirit of exploration, curiosity, and ethical contemplation. Together, we embark on a transformation that will shape the course of humanity's future." (In this paragraph, I asked the AI to complete the article and it got carried away with generic junk. Which is exactly what good prompts are supposed to avoid!)

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(My version) AI being by definition a dynamic tool with unlimited potential, the transformation cannot stop there. Other phases we cannot fathom yet will come as the consequences of what we have just discussed to transform even further our society beyond what can be thought or understood now. 

To stay competitive in such an environment will require not being too far behind the curve while avoiding the risks of the unknown. Still, the learning curve will be extremely steep.

Here is the final advice from the AI:  (Mostly generalities but useful ones nevertheless.)

You're welcome! I'm glad I could assist you with the suggestions. It seems you have covered the key concepts and ideas related to the stages of AI learning, the significance of prompts, the integration of AI in companies, and the future implications. However, I'll mention a few aspects that you might want to consider while revising your article: (PS: If this is not understanding, then what is?)

1. Ethical Considerations: You briefly touched on trust and control in the context of AI policies, but it might be beneficial to delve deeper into the ethical implications of AI adoption. Topics like data privacy, bias, transparency, and accountability are crucial when discussing the widespread use of AI in various domains.

2. Impact on Jobs and Workforce: While you've highlighted the efficiency AI can bring to tasks, it's essential to address the potential impact on jobs and the workforce. The automation of certain jobs might lead to job displacement and require a transition to new skill sets.

3. AI in Various Industries: Consider providing examples of how AI is being utilized in different industries, such as healthcare, finance, education, and manufacturing. This will illustrate the broad applicability of AI and its potential benefits in various sectors.

4. Responsible AI Development: Mention the importance of responsible AI development, including the need to avoid biased data, ensuring fairness, and safeguarding against unintended consequences.

5. AI and Creativity: Discuss the intersection of AI and creativity, showcasing how AI-generated content or AI-assisted creative processes are reshaping industries like art, music, and content creation.

6. Public Perception and Education: Address the role of public perception and awareness in AI adoption. Promote the importance of educating people about AI's capabilities and limitations to dispel myths and fears surrounding the technology.

7. Government Regulation: Consider mentioning the role of governments in establishing AI regulations and policies to ensure responsible and ethical AI deployment.

Remember that these are just suggestions, and you can focus on the aspects that align with your article's main theme and scope. Good luck with your revisions, and if you have any further questions or need additional assistance, feel free to reach out!