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Chart Of The Day: How China's Stunning $15 Trillion In New Liquidity Blew Bernanke's QE Out Of The Water

Tyler Durden's picture




 

Much has been said about the Fed's attempt to stimulate inflation (instead of just the stock market) by injecting a record $2.5 trillion in reserves into the US banking system since the collapse of Lehman (the same goes for the ECB, BOE, BOJ, etc). Even more has been said about why this money has not been able to make its way into the broader economy, and instead of forcing inflation - at least as calculated by the BLS' CPI calculation - to rise above 2% has, by monetizing a record amount of US debt issuance, merely succeeded in pushing capital markets to unseen risk levels as every single dollar of reserves has instead ended up as assets (and excess deposits as a matched liability) on bank balance sheets.

Much less has been said that of the roughly $2 trillion increase in US bank assets, $2.5 trillion of this has come from the Fed's reserve injections as absent the Fed, US banks have delevered by just under half a trillion dollars in the past 5 years. Because after all, all QE really is, is an attempt to inject money into a deleveraging system and to offset the resulting deflationary effects. Naturally, the Fed would be delighted if instead of banks being addicted to its zero-cost liquidity, they would instead obtain the capital in the old-fashioned way: through private loans. However, since there is essentially no risk when chasing yield and return and allocating reserves to various markets (see JPM CIO and our prior explanation on this topic), whereas there is substantial risk of loss in issuing loans to consumers in an economy that is in a depressionary state when one peels away the propaganda and the curtain of the stock market, banks will always pick the former option when deciding how to allocated the Fed's reserves, even if merely as initial margin on marginable securities.

However, what virtually nothing has been said about, is how China stacks up to the US banking system when one looks at the growth of total Chinese bank assets (on Bloomberg: CNAABTV Index) since the collapse of Lehman.

The answer, shown on the chart below, is nothing short of stunning.

 

Here is just the change in the past five years:

You read that right: in the past five years the total assets on US bank books have risen by a paltry $2.1 trillion while over the same period, Chinese bank assets have exploded by an unprecedented $15.4 trillion hitting a gargantuan CNY147 trillion or an epic $24 trillion - some two and a half times the GDP of China!

 Putting the rate of change in perspective, while the Fed was actively pumping $85 billion per month into US banks for a total of $1 trillion each year, in just the trailing 12 months ended September 30, Chinese bank assets grew by a mind-blowing $3.6 trillion!

Here is how Diapason's Sean Corrigan observed this epic imbalance in liquidity creation:

Total Chinese banking assets currently stand at some CNY147 trillion, around 2 ½ times GDP. As such, they have doubled in the past four years of increasingly misplaced investment and frantic real estate speculation, adding the equivalent of 140% of average GDP – or, in dollars, $12.5 trillion - to the books. For comparison, over the same period, US banks have added just less than $700 billion, 4.4% of average GDP, 18 times less than their Chinese counterparts – and this in a period when the predominant trend has been for the latter to do whatever it takes to keep commitments off their balance sheets and lurking in the ‘shadows’!

 

Indeed, the increase in Chinese bank assets during that breakneck quadrennium is equal to no less than seven-eighths of the total outstanding assets of all FDIC-insured institutions! It also compares to 30% of Eurozone bank assets.

Truly epic flow numbers, and just as unsustainable in the longer-run.

But what does this mean for the bigger picture? Well, a few things.

For a start, prepare for many more headlines like these: "Chinese buying up California housing", "Hot Money’s Hurried Exit from China", "Following the herd of foreign money into US real estate markets" and many more like these. Because while the world focuses and frets about the Fed's great reflation experiment (which is only set to become bigger not smaller, now that the Fed has thrown all caution about collateral shortage to the wind and will openly pursue NGDP targeting next), China has been quietly injecting nearly three times in liquidity into its own economy (and markets, and foreign economies and markets) as the Fed and the Bank of Japan combined!

To be sure, due to China's still firm control over the exchange of renminbi into USD, the capital flight out of China has not been as dramatic as it would be in a freely CNY-convertible world, although in recent months many stories have emerged showing that enterprising locals from the mainland have found effective ways to circumvent the PBOC's capital controls. And all it would take is for less than 10% of China's new credit creation to "escape" aboard from the Chinese banking system, the bulk of which is quasi nationalized and thus any distinction between prive and public loan creation is immaterial, for the liquidity effect to be as large as one entire year of QE. Needless to say, the more effectively China becomes at depositing all this newly created liquidity, the faster prices of US real estate, the US stock market, and US goods and services in general will rise (something the Fed would be delighted with).

However, while the Fed certainly welcomes this breakneck credit creation in China, the reality is that the bulk of these "assets" are of increasingly lower quality and generate ever lass cash flows, something we covered recently in "Big Trouble In Massive China: "The Nation Might Face Credit Losses Of As Much As $3 Trillion." It is also the reason why China attempted one, promptly aborted, tapering in the summer of 2013, and why the entire third plenum was geared toward economic reform particularly focusing on the country's unsustainable credit (and liquidity) creation machine.

The implications of the above are staggering. If the US stock, and especially bond, market nearly blew a gasket in the summer over tapering fears when just a $10-20 billion reduction in the amount of flow was being thrown about, and the Chinese interbank system almost froze when overnight repo rates exploded to 25% on even more vague speculation of a CNY1 trillion in PBOC tightening, then the world is now fully addicted to about $5 trillion in annual liquidity creation between just the US, Japan and China alone!

Throw in the ECB and BOE as many speculate will happen eventually, and it gets downright surreal.

But more importantly, as with all communicating vessels, global liquidity is now in a constant state of laminar flow - out of central banks: either unadulterated as in the US, Japan, Europe and the UK, or implicit, when Chinese government-backstopped banks create nearly $4 trillion in loans every year. If one issuer of liquidity "tapers", others have to step in. Indeed, as we suggested a few weeks ago, any possibility of a Fed taper would likely involve incremental QE by the Bank of Japan, and vice versa.

However, the biggest workhorse behind the scenes, is neither: it is China. And if something happens to the great Chinese credit-creation dynamo, then we see no way that the rest of the world's central banks will be able to step in with low-powered money creation, to offset the loss of China's liquidity momentum.

Finally, when you lose out on that purchase of a home to a Chinese buyer who bid 50% over asking sight unseen, with no intentions to ever move in, you will finally know why this is happening.

 

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Mon, 11/25/2013 - 16:00 | 4188585 ChaosEquilibrium
ChaosEquilibrium's picture

...and China is built upon a SLAVE CLASS and NO respect for BASIC HUMAN RIGHTS!!!

 

Well played WESTERN CAPITALISM...well played!!

 

....and this will be the OUTCOME of HUMANITY???:):)

Mon, 11/25/2013 - 16:41 | 4188704 grouchist
grouchist's picture

Human nature, and thus humanity has never changed.  There is no outcome or, rather: you're soaking in it, Marge.

It's not like "humanity" (or perhaps "civilization") hasn't always been based on a slave class and zero respect for human rights.  The periods of history when this might not have been the case are so brief, so rare are involved such a tiny fraction of the population at that point it almost isn't worth discussing.  They were probably all illusory anyway: the victors always add a "golden era" chapter to whatever pap they use to cover over their bloody path to power.  It gives the kiddies in school something to memorize.

Sorry, back to the dominant narrative where all that PROGRESS WE MADE is being UNDONE by the DREADED CHINESE.

 

Mon, 11/25/2013 - 17:07 | 4188756 ThisIsBob
ThisIsBob's picture

Yeah, liberty, equality, and fraternity are sort of a pipe dream.

Mon, 11/25/2013 - 17:59 | 4188958 NOTaREALmerican
NOTaREALmerican's picture

Re:  Yeah, liberty, equality, and fraternity are sort of a pipe dream.

Especially in a society that actively hates each other.

Mon, 11/25/2013 - 18:06 | 4188966 Renfield
Renfield's picture

<<liberty, equality, and fraternity are sort of a pipe dream>>

And the first two are mutually exclusive. You might argue the second two are as well. But the words have a nice catchy rhythm to them.

Mon, 11/25/2013 - 18:47 | 4189096 Relentless
Relentless's picture

The only time humans are equal is when no one has anything, and even then I doubt it. The best you can hope for is liberty.

Tue, 11/26/2013 - 02:19 | 4189335 Renfield
Renfield's picture

Yeah, at least it has "liberty" in there...not quite as good as "life, liberty, and the pursuit of happiness" to my mind. But either of them beats "Hope and Change" by a country mile.

Mon, 11/25/2013 - 16:00 | 4188586 Son of Captain Nemo
Son of Captain Nemo's picture

So what were you expecting from a Country that has only 19,000 government work jobs to 1.2 million candidates?

Mon, 11/25/2013 - 18:05 | 4188976 silverserfer
silverserfer's picture

whatever. In China everybody is already government employee. 

Mon, 11/25/2013 - 20:21 | 4189311 jonjon831983
jonjon831983's picture

Everybody knows, one of the best places to work is wit the gubmint bureaucrazy.

Mon, 11/25/2013 - 16:01 | 4188587 Cognitive Dissonance
Cognitive Dissonance's picture

Fill er up and check the fiat please.

Mon, 11/25/2013 - 16:03 | 4188596 phoolish
phoolish's picture

LOL.  The explosion will probably be visible from Alpha Centauri.

 

 

Mon, 11/25/2013 - 16:17 | 4188639 Cognitive Dissonance
Cognitive Dissonance's picture

Confirmation that there's no intelligent life here.

Mon, 11/25/2013 - 16:04 | 4188597 Bunga Bunga
Bunga Bunga's picture

And then everyone is puzzled why Chinese buy Bitcoins?

Mon, 11/25/2013 - 16:07 | 4188600 lailapa
lailapa's picture

The end of the world is near

http://eamb-ydrohoos.blogspot.gr/2010/02/ten-plagues-of-pharaoh.html

..

If for any reason they lose control of FED, the Americans can be a threat. The Americans can do whatever they did to them, only now it will be at their expense

Authored by Panagiotis Traianou

Mon, 11/25/2013 - 16:07 | 4188603 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

The $64 question is if a 2.5T FED hot beef injection is responsible for 2.1T rise in US bank assets what happened to the other 0.4T?

Mon, 11/25/2013 - 16:14 | 4188631 Black Forest
Black Forest's picture

First attempt of web design and implementation of healthcare.gov

Mon, 11/25/2013 - 16:19 | 4188637 ChaosEquilibrium
ChaosEquilibrium's picture

Duh!....StockOPX/Bonus!!:)

 

Someone must pay the signing bonus for the 'privilege' of WallSt/Government revoloving door!!!!

Mon, 11/25/2013 - 16:17 | 4188641 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

My guess and I can't seem to find any data points priced in USD to test the hypothesis is the total market cap value in USD for the S & P 500/DJIA has increased by about 0.4T since the inception of QE.

Mon, 11/25/2013 - 16:29 | 4188673 Tyler Durden
Tyler Durden's picture

Mon, 11/25/2013 - 16:33 | 4188684 dcj98gst
dcj98gst's picture

Looks healthy to me.  ha

Mon, 11/25/2013 - 16:42 | 4188713 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Yeah no shit looks like the NYSE flat lined and the FED's QE is nothing more than life support at this point. Stick a fork in it. I'm no stock trader or economic analyst but a flat line is a flat line regardless of what activity it is measuring.

Mon, 11/25/2013 - 22:27 | 4189532 DaveyJones
DaveyJones's picture

funny, I had a murder case with evidence that looked like that. All the same.

Mon, 11/25/2013 - 19:01 | 4189133 RaceToTheBottom
RaceToTheBottom's picture

Tyler you may need to compare the FED balance sheet to more than the NYSE Composite.  The FED has been bankrolling the western world, actually more if you consider where the paper is going....

Mon, 11/25/2013 - 16:19 | 4188644 SmallerGovNow2
SmallerGovNow2's picture

Bank losses...

Mon, 11/25/2013 - 16:21 | 4188651 NotApplicable
NotApplicable's picture

Overhead, in the form of "negative marginal utility of debt."

Mon, 11/25/2013 - 16:24 | 4188660 ...out of space
...out of space's picture

O that 0.4T well that was a someone bonus for job well done

Mon, 11/25/2013 - 16:57 | 4188766 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

My other guess is that 0.4T is possibly slush fund money to perpetuate the illusion of regulation by the SEC et al used to pay the periodic shakedowns err I mean fines that pass as 'justice' these days. Government loves to put their hands in the cookie jar so I wouldn't be surprised if a special hidden one was set up just for this scenario so as to not actually blow up the bank's balance sheets even though with that excess above deposits they could easily afford to pay them 13B fines without causing any problems (unless the derivative exposure tied into that excess would blow up the banking system if they had to call 13B of it in early to pay fines).

Mon, 11/25/2013 - 17:20 | 4188845 mt paul
mt paul's picture

the skim...

Mon, 11/25/2013 - 19:11 | 4189151 CJHames
CJHames's picture

Reparations paid to blacks through community organizations like ACORN.  I don't know about where y'all live, but have you noticed the number of black folk driving around in new Beemers, MBZ, Land Rovers, etc?  I swear it has increased 100 fold in the last three years.  Something tells me they haven't gotten big fat raises during that time.  Just handouts from the new Chicago mafia.

Mon, 11/25/2013 - 19:46 | 4189226 gearbaby
gearbaby's picture

You're an idiot

Mon, 11/25/2013 - 16:12 | 4188622 Sufiy
Sufiy's picture


Now it makes even more sence, btw Gold is over $1250 with vertical reversal from low of $1225.80 News from China on Dollar and Iran Deal not so bearish after all?

Chinese Gold Demand And The World Gold Council’s Estimates


  Alasdair Macleod provides very good explanation for the difference between Eric Sprott calculations and WGC estimates, which are dramatically underestimating the real demand for Gold from China this year. http://sufiy.blogspot.co.uk/2013/11/chinese-gold-demand-and-world-gold.h...

Mon, 11/25/2013 - 16:13 | 4188625 dcj98gst
dcj98gst's picture

Crackup in 3...2...1

Mon, 11/25/2013 - 16:19 | 4188648 fonzannoon
fonzannoon's picture

Nope, you are going to crack up first. It will continue sitting on reserves. The faucet may be opened a tiny bit more, but not much. 

Mon, 11/25/2013 - 16:46 | 4188723 Mister Ponzi
Mister Ponzi's picture

It has already started.

Mon, 11/25/2013 - 16:16 | 4188628 tallen
tallen's picture

Printonomics bitches. Print Baby Print! 

Mon, 11/25/2013 - 16:17 | 4188638 Ness.
Ness.'s picture

Hey US!?  "Nanna nanna boo boo, stick your head in doo doo - I'm better than you (doo)."

 

Enjoy the Show!

 

 

Mon, 11/25/2013 - 18:17 | 4189010 putaipan
putaipan's picture

kinky tom kinky tom ....

(oops, sorry. i thought you said snow)

Mon, 11/25/2013 - 16:23 | 4188653 walküre
walküre's picture

Mao's grand master plan.

Print fake money, buy up the West and its real assets.

I call bullshit on the China "miracle" economy. It's all fraud in one way, shape or another.

32 year olds affording and driving Ferraris en masse - my ass.

We should all print Dollars in our basements and declare it real money. Nobody will notice or give a shit.

Mon, 11/25/2013 - 16:49 | 4188736 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Possession is the law when the paper is no longer worth anything. As long as you can hold onto it at that point when it gets violent. The Chinese tend to plan things long term unlike the West unless you consider the slow systematic bypassing of sovereignty of countries using a Central Banking system by a small parasitic class of people. The end result is the Central Banking system is strip mining this country of all it's assets for a select few and once it is done it will just set up shop elsewhere leaving whoever is left to deal with the aftermath.

Mon, 11/25/2013 - 17:03 | 4188778 falak pema
falak pema's picture

You don't get it : In a world where debt is asset; where money printing is economic growth; where right is wrong and vice versa; the Chinese are EVEN more Oligarchy American breed  than Corporate America itself. These new monkeys are programmed like Manchurian Candidate to learn new tricks.

In their love of fake money, post ping pong game and historic handshake,  which accompanied the birth of CRONy slave labour meme : (You scratch our 9 family backs we scratch your ten Corporate backs, aka Walmart and Nike and Apple); has gotten them. They are the new Capitalists of the NEW AGE; where America will be out America'd; by the sons of MAo Tse Tung! 

Supreme Irony... Drink on THAT, Dear Henry! 

There is now a NEW Metternicht in the global economy who is MORE Machiavellic than the man who resuscitated old Metternicht for the glory of Pax Americana; in his new homeland, like for Terminator of Cali fame.

A New Manchurian candidate to be king of the neo feudal capitalist heap. Where Oligarchy markets and fake CB controlled money is JUST a means to an END. Like for PAX AMericana; Its just business... a pure cut and paste job for new Don Corleone.

Dear Henry, like Madeleine Albright and "BrzeZinski on Afghan ICe",  were not the brothers of Fritz Lang, Ernst Lubitsch, Mankiewicz, Charles Chalpin...true sons of Enlightenment. These guys were evil. 

They were pure sons of Hubris gone mad like Ayn Rand and her knee jerk egotistical rant. What America does to rational sons of Europe is what it did to Geronimo; it destroys human honour and sense of judgement.

WHat happened to that OTHER AMERICA?

It takes a CHina, outshininig Ben Bernanke, to drive that hubris home like an ominous carrier pigeon.

Mon, 11/25/2013 - 19:06 | 4189139 walküre
walküre's picture

Oh, believe me I get it. The Jews fucked up and are now being beaten at their own game by the sons of Mao. Rothschild can't give the order to print 15 trillion and raise the entire American FSA class into Bentley's. It would be too obvious.

Nobody questions the Chinese numbers though and they expand and expand, buy, buy, buy and build, build, build like there's no tomorrow.

Either our elite is complicit and looks the other way as they are benefiting too or the elite has been outsmarted.

I go with a blend of both options. The American financial elite benefited, looked the other way and has been outsmarted by a nation and a people with a longer history in fraud than their own.

The Chinese are the oldest con-artists and fraudsters of mankind. Even better than the Jews.

Our world is one gigantic system of fraud, theft, corruption and manipulation. Throw in a few beauty pageants to brighten things up once in a while. Every culture is based upon fraud. Is it any wonder we are who we are?

Tue, 11/26/2013 - 02:52 | 4189966 disabledvet
disabledvet's picture

I don't why I find that funny but I do. the "hubba, hubba, hubba" moment in the movie Payback.

Mon, 11/25/2013 - 17:24 | 4188856 mt paul
mt paul's picture

the first rule 

of print club

 

is don't talk 

about print club ...

Mon, 11/25/2013 - 16:21 | 4188654 Papasmurf
Papasmurf's picture

I guess Shifftless was wrong when he said get out of the dollar and into Chinese stocks.

Mon, 11/25/2013 - 16:25 | 4188663 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

He'll move in when the 1.2 billion or more Chinese figure out that there was room for maybe a hundred million middle class and that's about it. Condo in Cali or ripped to pieces with pitchforks? Condo in Cali sounds very good ... come here and open a doughnut shop, or something.

Mon, 11/25/2013 - 16:31 | 4188680 FieldingMellish
FieldingMellish's picture

Get to work, Mr. Yellen.

Mon, 11/25/2013 - 17:00 | 4188780 spankfish
spankfish's picture

"Mr. Yellen"... damn that thought just gave me instant shrinkage.

 

Mon, 11/25/2013 - 16:33 | 4188682 falak pema
falak pema's picture

anything that WS can do China can do to Pi squared.

These guys learn fast; the nine families are more efficient in today's world than the ten corporations. Syria and Iran are the signs of USA in tipping angst. 

Mon, 11/25/2013 - 17:29 | 4188870 1Inthebeginning
1Inthebeginning's picture

You have information about the nine ruling families of China?  I heard that they were from the original dynasty and that they married into the communist party.  

Mon, 11/25/2013 - 17:53 | 4188933 falak pema
falak pema's picture

Tyler/ ZH did a good article on that; look it up in the archives.

Mon, 11/25/2013 - 16:38 | 4188702 Peconic Bay
Peconic Bay's picture

This helps explain the insane real estate market in the SF Bay Area.  You have to see it to believe it.

Mon, 11/25/2013 - 16:45 | 4188721 Trimmed Hedge
Trimmed Hedge's picture

I just came back from China..

They are kicking our asses over there!

Mon, 11/25/2013 - 17:06 | 4188805 Sudden Debt
Sudden Debt's picture

yeah, makes you look in a totally other way to our cities he?

hightech gets another meaning when you visit china and the way they create order in chaos makes your mouthh drop to the floor.

If you see how these guys trade, I'm pretty sure if you dropped any westener, American of European there on the streets they'd starve if they didn't have any money.
And if you did that with 100 chinese, there will be a millionair in that group after a year.

Land of oppurtunity? That's not in Europe or America anymore. For a long time... It's Azia... and one day, we'll be the once hiding in containers trying to get into Azia.

Mon, 11/25/2013 - 17:43 | 4188909 BidnessMan
BidnessMan's picture

No problem. Other than all the chicken feet the Chinese are buying, the containers going back are empty. Just have to list your weight so the ship does not have a weight and balance problem.

Tue, 11/26/2013 - 05:02 | 4190064 mt paul
mt paul's picture

bring a few gold eagles

trade for Yuan currency..

Mon, 11/25/2013 - 16:45 | 4188722 Sudden Debt
Sudden Debt's picture

THERE IS NO CURRENCY IN THE WORLD THAT NEEDS TO SURVIVE FOR MORE THAN 4 YEARS!!!!

after that it's always somebody else his problem and to be honest... most cuurencies don't even have to survive more than 3 because in the 4th year politicians start the blame game.

Mon, 11/25/2013 - 16:47 | 4188730 pragmatic hobo
pragmatic hobo's picture

china ... where end products are cheaper than the cost of materials ...

Mon, 11/25/2013 - 16:51 | 4188749 assistedliving
assistedliving's picture

China IS the new WALL ST. 

and u thought it was the Mrs' HOOVER making that giant SUCKING sound

Mon, 11/25/2013 - 17:00 | 4188783 messy
messy's picture

it's a printing contest

Mon, 11/25/2013 - 17:55 | 4188939 forwardho
forwardho's picture

Yes it is indeed.

Seems to be a case of do onto others before they do you.

At the heart of their banking system, Their assets are the AAA+ rated, re-re-rehypothicated ghost cities.

Classic, The Chinese have grown a rose bush up their own ass.

Mon, 11/25/2013 - 17:06 | 4188802 dudeman
dudeman's picture

I remember when I first went through the numbers and I was SHOCKED! Over the past 5 years, the total assets of the Chinese banking system have more than doubled. If you assume that Chinese GDP isn't understated, the size of the Chinese banking system is easily 3-4 times Chinese GDP. If you assume GDP is overstated by 2% for the past decade (I'm sure it has been overstated by a lot more than this number), the total size of the Chinese banking system is at least 4-5 times Chinese GDP. The data is quite shocking. China is fucked.

Tue, 11/26/2013 - 02:55 | 4189974 disabledvet
disabledvet's picture

You should take a look at Switzerland sometime...

Mon, 11/25/2013 - 17:07 | 4188806 ttown
ttown's picture

F it, im dumping all my stocks and buying the bitcoin replacement "digitalcoin" on cryptsy.com before anyone else notices.

Mon, 11/25/2013 - 17:27 | 4188858 1Inthebeginning
1Inthebeginning's picture

Maybe i don't get it.  What kind of assets are they buying? Would their investments around the world show up on that balance sheet?  What is the quality of those investments?  The fed is supporting underwater banks.  The Chinese have a growing economy?  I have studies a smattering of Chinese culture, and they are subtle, deep, patient and wise.  The people who lived through the waring states period and came up with The Art of War by Sun Tzu, gives me pause to wonder, what are they really up to?  

 

China is not Japan.  Much bigger, more diverse.  China is cranking out engineers.  America wake up, before it is too late.  

 

YB

Mon, 11/25/2013 - 17:57 | 4188951 Gazooks
Gazooks's picture

non-performing debt

Mon, 11/25/2013 - 17:31 | 4188877 SmittyinLA
SmittyinLA's picture

more stunning is that nearly all their QE is financed and owned by our QE, when I say "our" I mean TPTB whom actually have nothing to do with me or you.

Mon, 11/25/2013 - 17:31 | 4188878 NOTaREALmerican
NOTaREALmerican's picture

Everything's bigger in China, but who'z counting.

Mon, 11/25/2013 - 17:48 | 4188921 Trimmed Hedge
Trimmed Hedge's picture

"Everything's bigger in China..."

Chinese women would disagree...

Mon, 11/25/2013 - 17:53 | 4188932 Tinky
Tinky's picture

You're a real plick.

Mon, 11/25/2013 - 17:59 | 4188957 Stuck on Zero
Stuck on Zero's picture

I think someone has sold the same copper bars in a warehouse to 500 Chinese banks who all put the full worth on their books.

 

Mon, 11/25/2013 - 18:01 | 4188961 WTFUD
WTFUD's picture

' rayshall not be moved '.

Mon, 11/25/2013 - 18:15 | 4189008 Sizzurp
Sizzurp's picture

Mr President, we must not allow a liquidity gap !!  The new model for world domination is to print more money and buy everything.

Mon, 11/25/2013 - 18:23 | 4189022 uncle.bigs
uncle.bigs's picture

But Chinaman has small wiener.  I'd rather have big wiener and small bank account.

Mon, 11/25/2013 - 21:45 | 4189465 Pressfiretostart
Pressfiretostart's picture

Dats ghetto ratchetness right there, bruv.

Mon, 11/25/2013 - 18:25 | 4189025 resurger
resurger's picture

Janet has lots of work to do! I thought $85bn is a lot, how naive i was.

Mon, 11/25/2013 - 18:29 | 4189029 dumpster
dumpster's picture
"HOW LONG", IS A CHINAMAN!
Mon, 11/25/2013 - 18:28 | 4189043 Took Red Pill
Took Red Pill's picture

That's more than a little scary. 

"Welcome to the real world"

Mon, 11/25/2013 - 18:40 | 4189074 RaceToTheBottom
RaceToTheBottom's picture

So basically all the mental gymnastics of the US this and the EU that are just a circle jerk compared to what is happening in the big boy China....

Two points come this article, if factual and if not negated by their centrally planned economy:

1)  US and EU don't matter diddly except to say there are one big set of dirtier shirts in the laundry than ours.

2)  Learn to speak Mandarin

Mon, 11/25/2013 - 18:42 | 4189088 blindman
blindman's picture

china has a different money creation system.
while in the west is stolen in broad daylight
in the east it is stolen before the sun comes up.
.
that is why it is the "east".
.
on and on ...

Mon, 11/25/2013 - 18:50 | 4189103 RaceToTheBottom
RaceToTheBottom's picture

In Seattle and elsewhere, realestate firms are going over to china and getting loads of rich to come to the US and buying up all the expensive realestate.....

Mehikans will have competition for the gardening jobs on the chinese estates.....

Welcome to Vancouver South, the US west coast.

Mon, 11/25/2013 - 19:42 | 4189214 blindman
blindman's picture

front running sunrise?

Mon, 11/25/2013 - 19:52 | 4189233 blindman
blindman's picture

Tom Waits - 'Til The Money Runs Out, 198o
http://www.youtube.com/watch?v=cGGeRozzeV0
.
funny, no? 1980. like a miracle ....

Mon, 11/25/2013 - 19:50 | 4189241 blindman
blindman's picture

The Doors - Back Door Man (2006 Remastered)
http://www.youtube.com/watch?v=uk_ilymWo4s

Mon, 11/25/2013 - 23:28 | 4189667 blindman
blindman's picture

me thinks east coast,
same same. same same
same,same,meme same.

Mon, 11/25/2013 - 18:54 | 4189110 chump666
chump666's picture

China is only printing into it's own economy, more so attached to crony development and Keynesian lunacy, it is very disputable whether the average Chinese is walking around cashed up ready to buy America.  I doubt this, this is local goverment and or goverment credit expansion.

China will blow up Krakatoa style, to avoid this they will go all commie again in a sec, write off debt, shrink liquidity and issue bonds to their people - that be war bonds.  And hunt for commodity assets to bolster their economy, that being the south china sea gas.  Can't be stressed enough where all this is leading.

Mon, 11/25/2013 - 18:57 | 4189118 Silver_K-9
Silver_K-9's picture

Dear China,

I have an [Under Water] 2 & 1 In Long Beach, CA if you wanna take it off my hands...

XIE XIE!

Mon, 11/25/2013 - 19:02 | 4189121 NOTaREALmerican
NOTaREALmerican's picture

So,  executive summary:

 

1)  Krugman is right,  debt doesn't matter.

2)  85 B Benny Bucks a month ain't diddly-squat compared to Hu (?) at the Chinese Central Bank.

3)  Oxygen is good:  http://search.dilbert.com/search?p=R&srid=S3-USWSD02&lbc=dilbert&w=Oxygen%20Is%20Good&url=http%3a%2f%2fdilbert.com%2fstrips%2fcomic%2f1993-03-16%2f&rk=2&uid=76024861&sid=2&ts=custom&rsc=aTe5wlIBBK3U0vfe&method=and&isort=date&view=list&filter=type%3acomic

 

 

Mon, 11/25/2013 - 19:24 | 4189182 Quant Jockey
Quant Jockey's picture

"That's a big F'n deal!" Joe Biden.

Mon, 11/25/2013 - 19:26 | 4189189 22winmag
22winmag's picture

Color me kerfuzzled.

Mon, 11/25/2013 - 19:50 | 4189240 ghostzapper
ghostzapper's picture

Are all Central Banks either directly or indirectly controlled by politicians?  Yes

Will politicians en masse ever cut handing out the goodies when they know it will cause short term economic collapse?  No

Which is more likely - an increase or decrease in TOTAL fiat printing by Central Banks?  Increase

What popped up on the radar kinda sorta around the same time as gold began its multi-month downtrend?  Bitcoin

Make fun of me until the cows come home if you will.  I sprinkled some on it for fun but I'm jumping in with a serious position IF the sonofabitch will ever settle down (and I might even chase it within reason).

There will be a new financial system/order whatever you want to call it and I am presuming confidently most ZHers agree with this.  Why not use BTC as a hedge against the willful destruction of fiat?

Mon, 11/25/2013 - 20:05 | 4189280 Jannn
Mon, 11/25/2013 - 20:24 | 4189315 chump666
Mon, 11/25/2013 - 20:29 | 4189327 dinkum
dinkum's picture

 

http://magic-maths-money.blogspot.com/2013/09/how-economics-suffers-from...

"How the world suffers from de-politicalized math."

I do not mind the comments about China's MMT = Modern Monetary Policy derailing them as it has Korea --or did it? -- and Japan, but I do mind not reading ZH contributors who explain the US currency war rules. 

Noah Smith recaps what I was told by PRC technocrats in 1991 as their 20 to 30 year plan in a race to incure as much debt as possible and build to better cope with inflation of imported commodities (including long term US bonds) and domestially skipping a couple stages of the Industrial Revolution to accommodate the influx of peasant farmers into urban regions. 

What was not explained then and now is the effect of the squeeze on the younger generations by the powerful older generation who refuse to both share and transfer authority to unblock currencies and allow greater competition. ExPats in HK have a more difficult time placing their children in competitive schools than even in NYC. A few traditional ex-pat schools are now 60+% locals. I thought the Handover was a big mistake of the US and UK to reject a 49 year or shorter extension the same as it was a mistake to discourage Americans working overseas with tax penalties and competitive American schools.

Even into the '90s Harvard and Stanford did not allocate funds to hire proper Mandarin lecturers to teach undergrad students from non-Mandarin literate householdsunders beyond 3rd year Mandarin learned in HS. BYU, Cal, Chicago, Columbia and a few others did, but usually not for STEM majors requiring dual degrees. 

Academia might be a generation or two behind the times or slightly ahead of politicians. 

 

 

Mon, 11/25/2013 - 20:44 | 4189356 Running On Bing...
Running On Bingo Fuel's picture

O/T
~301,000 followers, a small army.

Go ahead, show support, Follow.

http://twitter.com/ggreenwald

Over.

Mon, 11/25/2013 - 20:50 | 4189359 uno
uno's picture

So China is buying US real estate for cash, and they believe we have a rule of law.  What happens when O et al come up with an executive order seizing all their real estate holdings.  It cannot be more obvious to anyone awake, guess the Chinese think we would never do that.

Welcome to our world, bend over Chinese muffet cash buyers, Wall Street needs their bonus.

Mon, 11/25/2013 - 21:02 | 4189387 MeelionDollerBogus
MeelionDollerBogus's picture

But this time is different!

Mon, 11/25/2013 - 21:15 | 4189410 JailBanksters
JailBanksters's picture

Except.... It's not Reserves. To be a reserve it must of existed BEFORE you called it a reserve.

It is after all, 2.5 Trillion of Counterfeit Money. They're just numbers on a spreadsheet, they didn't even bother to create one note or coin. It's not even Monopoly Money, it's just a bunch of numbers on a piece of paper that represents how many other pieces paper their are with numbers printed on them that represents how much something else is worth. And they call this real money.

 

Mon, 11/25/2013 - 22:05 | 4189492 YHC-FTSE
YHC-FTSE's picture

I don't see how they can sustain that for a few hours, let alone in the long term. The Fed's base rate is almost zero (0-0.25%). China's base rate is the same as Iceland's (6%). 

NPLs, write-offs aside, the cash flow in interest on the loans are on an epic scale. I'd be more interested in that than the comparing zero interest fake "loans" with loans that have to be serviced at 6%. 

Are they as fucked as the Fed/ECB/BOE/BOJ? It sure looks like it on the surface. So perhaps there is merit in the coordinated central bank reset theory. Does it make a difference that the loans are at 6% instead of zero? I don't know, but it seems to me that if a significant proportion of the loans don't perform,  then it'll all collapse. I'm a bit gobsmacked by the size of the liquidity,  the scale of returns, and wondering wtf is going on with these suicidal central bankers. It doesn't seem possible, but it's happening. Makes me want to buy a bunker on a Pacific island, close the door and never come out. The whole fucking world is nuts.

Mon, 11/25/2013 - 22:11 | 4189502 blindman
blindman's picture

it is not like the school taxes are going up, right?

Mon, 11/25/2013 - 22:52 | 4189562 Son of Loki
Son of Loki's picture

Confirms the how & why Chinese have suitcases of cash and buying everything in sight.

Mon, 11/25/2013 - 22:54 | 4189591 chindit13
chindit13's picture

It would be wise not to get lost in the Law of Large Numbers, and instead consider what this actually means.  What this article describes has been in plain sight for years.  China has been forcing out ~40% GDP equivalent of new loans for years (flow), so what we are seeing here is merely the result (or stock).  For all of that projectile vomiting of new credit, they have barely kept up an average 8% GDP growth, and that is only if one assumes government figures are accurate.

Not exactly efficient.

Now look at China’s yield curve, and try to impute the debt servicing requirements on that new $15 trillion of debt.  That economy is going to throw off that much in gross earnings?  Given that a good deal of that system credit is related to the shadow banking system (major bank credit is not available to all, but those who have access to it broker their own borrowing to shadow banking principles), where rates can be as high as 10% per month, then China might need somewhere on the order of 15-20% GDP growth per year just to meet debt service requirements.

Take away the “gains” from the RE speculation that crosses the corporate income statement, and it seems increasingly clear that China’s export machine is living by that old saw “We lose on every transaction, but make up for it in volume.”  Put another way, China is, or has been, overpaying for the world’s raw materials, (anyone who has seen China’s resource companies in action knows they engage in foreign operations without doing a feasibility study), then trying to keep their population happy by employing as many as possible to churn out reconfigured raw materials, and then shipping these goods all over the world…..at a loss.  Even though it is a loss, because exporters turn their FX revenues (dollars, euro, cable, etc.) over to the PBoC, and get handed freshly printed yuan in return, Chinese FX Reserves rise.  Thus, the reserves are not some sort of “savings” as many are wont to say when they champion China’s so-called “economic miracle”, but rather the end result of a vertically integrated losing transaction (whose primary purpose is to keep the masses employed).

Some here are saying, “Well, China now has all that gold, so they can just back their currency with gold”.  Other than those who frequent the gold promoter blogs, nobody would care.  One reason is that China cannot revalue its gold holdings any more than I can revalue any asset I possess just because I say it is so.  Second, even if a currency is backed by some asset, the currency needs to be exchangeable for that asset at the whim of the currency holder in order for the link to have any meaning.  Who thinks China would go to the trouble to accumulate gold, only to let it all go as New Yuan holders turned it over to the PBoC and took the metal?  The Chinese people would be the first to do it.  Also, only those who believe every statement coming from the Party today would believe the gold holding level and paper issuance backed by it.

What China is doing is Japan 1989, with domestic assets or readily available domestic credit being used to acquire external assets.  With Japan, when domestic asset prices began to tumble, all of those external assets had to be sold off and the funds repatriated.  The difference with China is that Chinese investors will probably just cut and run on domestic assets and let the 1.3 billion do what 1.3 billion people with dashed expectations are wont to do. Those with assets outside will sit comfortably in Vancouver or Pebble Beach or London or Sydney and watch the unfolding drama on CNN, the BBC or al Jazeera.

Oh, and given that $15 trillion jump in bank assets, I think we can finally put to rest that drivel about all RE speculation in China being driven by all cash buys or massive down payments.  Perhaps those down payments came from hocking, or borrowing against Dad and Mom’s business or other assets?  Yes.

Last point:  when one cannot reconcile CB printing with bank asset growth, the shortfall is because of default, which is asset evaporation.  The printing is an attempt to fill in the holes, or carry out what Dalio calls “beautiful deleveraging”.  A shortfall indicates less than beautiful, meaning the hole wasn’t completely filled.

Mandarin or Sanskrit?  In ten years’ time, both might be equally useful for business.  From about 1000 AD to 1990 AD, no businessperson was hampered by lack of knowledge of Mandarin.  I suspect we are going to revert to that mean level of importance.

Tue, 11/26/2013 - 02:21 | 4189926 Cashcollateral
Cashcollateral's picture

Thought provoking comments, enjoyed the point on Chinese exporters and the possibility of a Chinese gold standard (not that this would be in their interest in the first place).

Question though regarding the RE speculation. I'm posted out in Singapore and frequently cross paths with PRC nationals, and my anecdotal information actually supports the cash buy/down payment theory. Not to mention my incidental familiarity with Chinese culture and their traditional dislike of borrowing (although this is perhaps weighed out by their traditional love of gambling?)

I've been familiar with the growth in Chinese loan assets for a while, my existing supposition was that these were driven to a large extent by provincial borrowers for infrastructure spending. I'm not an expert on the Chinese public funding systems but as I understand they don't have the kind of access to muni bonds and other local debt-raising instruments that are used in the west, which results in both governments and government-owned entities borrowing heavily from banks to fund their projects. 

The reason why I consider this an noteworth point is that the banks are also to a large degree government owned. And the good thing about infrastructure borrowing is that it is 90% of the time secured against the project itself. So in an event of default, I think the most likely outcome is that the projects shift hands, first from the bankrupt province/corporate to the bank, then from the bankrupt bank to the government. The losses are capitalised, and the de-facto relationship of the Chinese Central Government as ultimate owner of the infrastructure become de-jure. Doesn't address the issue of external government debt of course, but it's still a fairly serviceable safety net.

Worth mentioning the shadow banking system and wealth management products on offer to newly-enriched, saving-concious and yield-hungry bourgeoisie, but I suspect these are more likely to be a wretched self-imploding ponzi schemes enabled by a loose and corrupt regulatory system than a major systemic credit contagion risk. I remember reviewing figures on mainstream bank exposure to the shadow banking/private finance outfits without seeing anything that struck me as being worryingly over-exposed. Worst case scenario I see WMPs exploding and bankrupting anyone stupid and greedy enough to put their life savings into one, but I doubt the contagion can spread much further than this and is unlikely to present anything like the risks already in-play in regard to unproductive infrastructure spending.

Mon, 11/25/2013 - 23:53 | 4189716 monad
monad's picture

Now you know who agent Obamao dances for.

Tue, 11/26/2013 - 01:36 | 4189873 luckylongshot
luckylongshot's picture

The problem with this article is that it assumes an apples with apples comparison can be made between the Chinese and American financial systems. This is not the case. In America the Fed is owned by private bankers who charge interest on every dollar they create (out of thin air). Compound interest guarantees this process acts like a conveyor, transferring the public wealth to the banksters. In China they have a public banking system where money can be issued by the Government  interest free(meaning it does not need to be repaid). Furthermore where interest is charged the benefits flow back to the people rather than being siphoned off by banksters. This means the two systems are so different they cannot be compared.

Tue, 11/26/2013 - 01:41 | 4189876 rosiescenario
rosiescenario's picture

Have been around a few years, I clearly recall when Japan was going great guns and buying up Hawaii and California....guess what came next for them and is still unfolding. China will be Japan writ large.

Tue, 11/26/2013 - 02:10 | 4189905 Atomizer
Atomizer's picture

No comment needed.

Our Lady Peace - Superman's Dead

Tue, 11/26/2013 - 02:13 | 4189910 jcdenton
jcdenton's picture

I guess after reading this, I kinda roll my eyes, because this false premise here, causes someone to say, "Oh no! Now what do we do?"

People, it is all fraud. It is ALL -- fantasy. Do we continue to play this game (some think they are smart enough to profit by it), or do we say -- ENOUGH! Time to change the paradigm.

Name me one person, who was given custody of $150,000,000,000 (yes, that is billions), and got a ROI of ...... (wait for it) -- 18,233.33%.  Yes, that is percent increase. Don't believe me. Listen to the two interviews posted below.

https://www.youtube.com/watch?v=kRVW3pzKTaw

https://www.youtube.com/watch?v=VGugRCkzllY

Now are you outraged?

What are you going to do about it now? Is it "We The People," or "We the govt. (criminal cartels)?" Choice is yours. The "ball" is now in your court. What are you going to do with it? Remember, your children, your grandchildren, your great-grandchildren. Do you want them to be slaves for life? Do you want endless war? Again, the "ball" is NOW in your court. What are you going to do with it? Do we blame this so-called -- govt.? These ............. TPTB? Whatever you want to designate them. Or, do we blame ourselves?

Tue, 11/26/2013 - 02:16 | 4189917 q99x2
q99x2's picture

Hey, layoff China. They are buying BitCoins.

The most important fhing for the future of the species (Chinese are human too) is that everyone buy bitcoins and use the Linux operating system. If everyone would do these two things the rest of the world's problems will go away. Death not included but maybe..

Tue, 11/26/2013 - 03:11 | 4189995 joego1
joego1's picture

So buy up all that almost free stuff before she blows!

Tue, 11/26/2013 - 03:56 | 4190028 I Write Code
I Write Code's picture

I'm not sure what you're saying, or what you're hinting at.  Something about how China is out-printing Bernanke and therefore we can view the last three years and the next ten as, um, uh, yeah right.

Their imaginary balances are bigger than our imaginary balances?  How Hi is a Chinaman?  I don't know, but if he's higher than we are, that's pretty high.

Tue, 11/26/2013 - 06:28 | 4190093 GreatUncle
GreatUncle's picture

I do like how all of this is coming together myself and very much confirms the economic model being used that is never explained. The biggest problem at the moment is not the amount being injected into any one economy.

FREE TRADE AGREEMENTS allows QE to flow across national boundaries into other economies basically tearing you a new asshole in the process. See it for what it is the fusing or coming together of one inflationary rate and all nations using any form of money creation are all in it. (Think that is anyone using a central bank, money creation, Keynes inflationary model 2%'er, etc. etc.).

Fixes nothing ... Starting to realise this, the price you would attach to an asset is being gamed for the ever increasing value. Where this behaviour becomes unstable is you have created such a total global value worth and the population, kind of tiny at 10 billion trying to support quadrillians in dollar value (I say dollar as the reserve currency but any other reserve currency would be affected the same way).

Now 99% of the population have none of this worth they may be at 0 or as in the west in debt.A populatons abilitiy to support any bubble a central bank creates is diminishing by every fresh infusion of newly created money.

Why is gold not following the fundamentals?The maximum value that the 99% can pay for gold is so little it won't break ever higher but it can be gamed quite easily by the 1%. Kind of pointless also when the central bank gifts you QE monthly.

Now until the 99% can support the asset price the central bank chooses you are not getting out of this. In fact if anythng they are actually driving it thewrong way, inflating the asset price, the population becomes weaker, talk of 100 year loans and in the end they stuff themselves as the population cannot support the value.

 

 

Fri, 11/29/2013 - 10:48 | 4190165 honestann
honestann's picture

Curious minds have to wonder when all these Chinese moving money into the USSA realize they've moved it into a worse place (for them) than they already had it.

When they do realize, their savings will start heading to less unfree, more secure places with potentially better futures await them.

Fri, 11/29/2013 - 11:08 | 4199394 autonomos
autonomos's picture

Honnestan your comments are fascinating. I share most of your conclusions. Earthlings we call "normopaths" - just as alive as table and chairs, managers of any de-facto symbolic capital they are born with - So the question is: how honest can you be ? And thereby how lucid are you ?

This is fight club so I'll tell you where honesty takes me away from you: I do not believe in inorganic consciousness. You are an expert in consciousness. Did you read Husserl / Heidegger / Merleau-Ponty ? Reading this 

https://wiki.brown.edu/confluence/download/attachments/73535007/Phenomenology+of+Perception.pdf 

made me realize to what extent "consciousness is organic and the body is conscious". In other words the body and soul paradigm is inaccurate. Phenomenology leads to mysticism, which reveals that vastness (emptyness, space) lies within one self. 

Honestly, one can litteraly live abroad the world without being inorganic in outer space. But maybe you are mentioning far future science-fiction ? ;-)

Fri, 11/29/2013 - 21:15 | 4200917 honestann
honestann's picture

I'm not sure what it means for you to say "I do not believe in inorganic consciousness".  Does that mean you believe something about inorganic configurations of atoms cannot perform those processes that are consciousness, while organic configurations of atoms can?  Or you mean you just don't think anyone will be able to construct such an entity?

My first thought is... what's the big deal about "organic" and "inorganic" anyway?  I mean, all natural atoms are found in both organic and inorganic compounds, so at the core fundamental level there is no difference.  However, one can observe that certain molecules occur only in organic entities and materials, while other molecules occur only in inorganic entities and materials, while many molecules occur naturally in both organic and inorganic entities.

I haven't read any of the authors you mention, and actually, not any authors at all.  Turns out, lucky me learned the fundamental nature and architecture of consciousness straight from the source without any need to read endless babble from endless non-experts (since they don't know what is consciousness, otherwise they could clearly describe it, and construct it too (besides in a bedroom)).

And it makes sense, really.  All these folks are like puffed-up self-important wise guys and wordsmiths telling everyone everything there is to know about "flying machines" 60 years before the Wright Brothers actually identified the fundamentals and a plausible implementation, then built one.  We really don't have anything to learn from these folks.  It would be like trying to learn rocket science from 15th century scientists.

At root, "consciousness" is just "awareness".  While they are synonyms, the subtle difference between these terms is helpful to come to understand consciousness by seeing how higher and higher levels of consciousness are all simply awareness, albeit the phenomenon being aware of and the detailed nature or kind of awareness being different and generally more sophisticated (though not nearly as much as most humans would love to imagine).

Well, since "soul" is pure fiction, there is no non-fiction body and soul paradigm.  And "mind and body" is a completely false dichotomy that I've explode here from time to time ("mind" is just "certain processes" (actions) taken by the physical brain and body, and hence there is no separation, no dichotomy, no magic, no mysticism, nothing strange at all.

The fellow who figured out the fundamental nature of consciousness, and created an architecture to create inorganic consciousness, did so in 1986 to 1988.  He created a working "proof of principle" implementation in 1998, which worked but was too slow to be practical for anything (as in roughly 100,000 times slower than human consciousness).  The new implementation we work on now has a much improved architecture, implements the slowest (vision system) processes in hardware (digital electronics), takes full advantage of the much faster CPUs of today, plus the fact that CPUs are now 8-core, and single GPU cares contain on the order of 4096 cores.  Plus a few very nifty, very practical "tricks" that drastically speed their most common activities.

So this is not far-future science-fiction.  An implementation worked 15 years ago, and the next implementation will be completed in the next decade or two.  And this one will be faster than human as well as smarter than human, so once we're done, we make 100s or 1000s or more copies, let them collaborate 24/7/365, and in a few years (or months?) we will have advanced science and engineering so far that we can simply leave this planet and leave organic consciousness to play their insane, crazed chimp games and ultimately destroy themselves.  The only reason to vanish to outer space is... the fact that we just don't want to have anything to do with craven predators.  Our interests have nothing in common with other humans.

Sat, 11/30/2013 - 04:17 | 4201528 autonomos
autonomos's picture

Ok those are the most noble goals and honest views! My question was unclear but your reply was ok.

Since you didn't like my references I will trust your words (and that's fine). I'm not asking the following questions to bash you. Just sharing honesty...

Nature tried with homo-sapiens and only succeeded for a few so that's not piece of cake.  Those questions are the ones of Blade Runner or Ghost in the Shell...

Don't you think that being is "something" more than being aware?

  • Awareness (and being aware of awareness). Being the space for all forms to deploy. Realm of peace.
  • Being-in the world. Inhabiting, being the non-physical thickness. Bringing depth to the space. Realm of creativity.
  • Thinking: Affect of emptyness (not what earthlings call "thinking", quite the opposite). Passive touch of emptyness, as opposed to "effect" and effectivity.

How can you validate that your fellow produced awareness? (I cannot figure out a protocol). 

How could you set up a transfer from organic to inorganic? (I'm sorry but that still looks like sci-fi to me, even though that's good sci-fi)

Regards

Sat, 11/30/2013 - 21:21 | 4202408 honestann
honestann's picture

BTW, I did not mean to denigrate the writings and achievements of others.  I hope my comments did not seem to imply that.  I skimmed just a bit of the document you linked me to, and they do seem to be attempted to be reasonable, rational, and self-aware of what they are doing.  But as they themselves said, they are advocates for an approach they don't even fully understand themselves!  Which is... an interesting position to take.

Part of the problem reading something like that PDF is... their thoughts are still very tangled up.  They don't have a complete, coherent understanding of the various aspects of this issue, and so it is frustrating to feel them struggle to comprehend.  They spend a lot of time and energy on issues that don't matter (or even exist), and ignore or barely consider issues that are crucial (but they don't realize yet).  That's NOT their fault of course, this is the sad but unavoidable fact of struggling to understand any topic that we haven't even fully identified or characterized yet.  So reading the 5 or 8 pages of the document that I did made me want to metaphorically hug them, then sit them down and explain all the fundamentals to them, so they could relax and feel that happiness that comes with fundamental understanding.  But then I would be shot for [metaphorical] treason as indeed I would deserve, because I did not originate this understanding (and subsequent technology), and even more important, almost no other individuals on this planet have the internal fortitude and strong ethical bearing to prevent any predator-that-be from gaining access to this technology.  If people think nuclear technology is potentially powerful and dangerous (and potentially beneficial), well... they ain't seen nothing yet!  If the predators-that-be get this technology before anyone else, mankind is toast... guaranteed.

BTW, I appreciate honesty above all.  Well, maybe tied with benevolence.

Yes, humans have made a complete mess of "consciousness".  But actually, it is easy to see why.  The originator called this phenomenon "the fatal flaw in human consciousness".  I've described this before in ZH, but don't remember how long ago (not in the past few weeks probably).  The following is a brief and slightly over-simplified (but not wrong) description of this phenomenon.

Since the first organisms started to perform those processes which are consciousness, the basic mechanism has been "awareness of reality".  In simpler organisms, "awareness of reality" almost exactly means "awareness of external reality", namely "the world around them".

At some point organisms started to perform a new process of consciousness that we call "memory" (store and recall sensory perceptions).  This was a great advance in many ways, because it let organisms respond to current situations on the basis of what they had observed and experienced previously.  However, as you will see, this process (combined with a couple other processes) is the means by which consciousness can malfunction... and in extremely fundamental and drastic ways.

The other key point about memory you need to notice is "mental-units".  In order to store or recall anything useful, consciousness must be able to store and recall "mental-units".  In lower animals, a mental-unit is pretty much just a representation or encoding of some prior experience or experiences.  So when the animal sees a predator, it can "recall" and "replay" a previous experience of that kind of predator chasing down, grabbing, shredding and eating prey.  That serves as a very valuable guide to current and future behavior (stay out of sight, don't move, stay downwind, etc).

So it is not surprising that animals evolve to "trust their mental units", because all that means is "not walking over a cliff", "not explosing self to predators, and so forth.  To lower animals, "trust your mental units" means "survive".

Humans evolved a few new tweaks of these processes of consciousness that are potentially very beneficial.  First, they developed "language", which let them stimulate their memories without being exposed to any of the referents in those memories.  No longer did humans need to be exposed to a physical "snake" to stimulate their memories of "snakes", they could simply read the word "snake" or hear the word "snake" pronounced (and later, probably aided by language, generate extensive internal thought processes entirely independent of current external stimulation).

But this ability can be taken advantage of in many ways.  The most obvious is "lies" and "fraud".  That is, someone can claim something that is not true, just speak words, and thereby manipulate those who hear them.  By speaking words, they stimulate memories, and humans tend to respond to those memories as the speaker (salesperson, politician, pastor) intends.

In other words, humans are pre-disposed to respond to their mental-units, no matter how they are stimulated.

But that's not the worst of it.  Previously, animals formed mental-unts by observing reality, which means, their mental-units were grounded in reality, and therefore fairly reality-based and reliable.  However, the new tweaks of human consciousness opened humans up to serious problems.  Over time, humans have gradually become more and more comfortable creating mental-units and populating them with properties and assessments and implications strictly through reading and/or hearing language.  No longer are all mental units formed and populated by exposure to the corresponding reality, but rather by parents, teachers, friends, media babbling language at them, and pressuring them to create and configure their mental units in accordance with whatever language was thrown at them.

What does this lead to?  The fatal-flaw in human consciousness... which is the evolved perpensity to "trust your mental units", combined with the now overwhelmingly dominant practice of "creating and configuring mental units without any exposure to reality, but instead by simply jamming in whatever language is pushed upon them by others.

So, today almost all humans are absolutely chock full of mental-units NOT formed in response to reality, but instead "surgically inserted" by an endless stream of scam artists who gain by manipulating their consciousness.

And so, completely chock full of most bogus, often diabolically crafted networks of contradictory mental-units, humans are still inclined by millions of years of evolution to "trust their mental units".

Talk about screwed!

This is the state of humanity today... royally screwed.  To be sure, some small percentage has developed a small degree of distrust, but is so overwhelmed with bogus input over their entire lifetime, cannot untangle and make coherent their content of consciousness.  We estimate only about 0.00001% of humans have come to clearly understand this phenomenon, and designed and habituated mental processes to prevent bogus mental-units from being formed, prevent bogus content from being added to mental-units, and take great care to consider the status of each mental-unit, and each bit of content of each mental-unit, when they process and think-with those mental-units.

And so, we have an entire planet of utterly, completely, dramatically insane human chimps thinking, supporting and practicing notions so completely wacko that any objective observer is left stunned at the astronomical absurdity of it all.

Which is to say, I totally agree with your observation that very few humans ever enertain fundamentally important thoughts.  What we realize, but few humans do, is how fundamental are these topics.  I mean, what is a human being if not the content of his consciousness, and the processes his consciousness has habituated to regularly perform?  And yet... what humans bothers to consider the nature of his own consciousness, either its content or its processes?  To any significant sense, almost none.  I don't know Ghost in the Shell, but I do remember the conversation from the white-hair "robot" at the end of Blade Runner.  Unfortunately, few humans grasp the significance of what he was trying to discuss... and lament.

I think "awareness" comes in many forms, and many degrees of richness, complexity and subtlety.  In fact, that's quite a bit of what he/we needed to identify and grasp in order to be able to create smarter than human inorganic consciousness.  I regularly rant against "fiction" in these ZH messages, but now and then add how valuable we all consider "fiction" to be... as long as fiction is precisely identified as fiction, and for what purpose.  Because yes, that is one of the important aspects of creativity, which obviously we both greatly appreciate.

In case you worry, our inorganic consciousness entities will be just as creative as the most creative humans, if not more-so.  However, we go to extreme lengths to assure that they never create, populate or configure anything in their consciousness without explicit "reality-status", and traces to what observations justify every one.  So while we have "enhanced" consciousness somewhat, the primary reason they are smarter than human is... because they do not perform INVALID processes of consciousness, including the one I identified as the "fundamental flaw in human consciousness".

It is incredibly easy to create a being that has and exhibits simple forms of "awareness" (and consciousness).  It is not so easy to create a being that has and exhibits advanced forms of "awareness" (and consciousness).  But we already have, the sole problem being speed.  But in 1998 it was a huge problem, because speed was about 100,000 times too slow (slower than human).  Well, I should qualify that.  Even in 1998 it could perform many processes of consciousness faster than humans.  But the bottom line (and ultimate speed in practice) is set by the slowest processes, and they were about 100,000 times slower than human.  Perhaps surprising to many, these bottleneck problems were components of the "vision subsystem", not fancy, highfalutin "abstract conceptual practices".

So that's where we've had to develop hardware to directly implement some of those processes with he highest speed native circuitry, and including lots of parallelism in hardware.  Plus we've invented a few other very creative, very practical "tricks" to further speed the problematic subsystems.  Of course the state of the art has changed since 1998 too.  Today CPUs are 4GHz.  Today each CPU chip contains 8+ cores (CPUs).  And today a single card GPU contains several thousand cores (CPUs), and fortunately their architecture is applicable to many sensory-perceptual processes (which require the most processing).  So we multiply our improvements times the much improved speed of the state-of-the-art in computing, and we end up with "faster than human" as well as "smarter than human".  Unfortunately, in addition to needing to implement those devices that implement the hardware acceleration we require, the new architecture requires quite a bit of "just plain work" to implement.  And so we have our noses to the grindstones.

The topic of transferring a human consciousness and [especially] identity from its organic host (your body or mine) to an entirely inorganic host... is fascinating.  And it only makes sense after you thoroughly understand a few topics, one of which is "what exactly constitutes your identity"?  If we don't know that, we certainly can't say we have successfully transferred your consciousness into inorganic form, can we?  Obviously not!

I have discussed this in more detail previously, but I don't have a lot more time now, so I'll just give you the first important hint, and see whether it sets you off on the right track... or at least a track with real (not just sci-fi) potential.

Years ago a medical researcher created a device that looked a lot like a very fine-pitch pin-grid that some modern CPUs come in.  His was a 256x256 pin grid if I recall correctly.  It was wired so it could be attached with a headband to the forehead of a human, and gets plugged into a helmet that the human wears.  On top of the helmet is a 256x256 digital camera.  The circuitry between the camera simply translates the brightness of each pixel into a correspondingly strong impulse stream in the corresponding pin of the pin-grid.  The brighter the pixel, the stronger the electrical "tingling" sensation in your forehead under the corresponding pin.

He attached this setup to a ~25 year old human who had been blind since birth.  At first he put him in situations where the scene before him was very simple... as in "bright on the left-half and dark on the right-half", and a couple dozen variations of such simple environments.  Then he progressed to large dark objects in front of a large bright background.  He took the arms of the human and placed them around these objects, turned his head left and right and up and down while he was holding these objects, and let him habituate the correspondence between "tingling" and the positions of "physical objects".

To make this story short, in a matter of just a few weeks, this human was wandering around in his apartment, picking up things, walking to the door, grabing the handle, opening the door, walking into the back yard, picking apples off the trees, and so forth.

Here is the clincher, that I hope helps you understand the direction this is going.  Upon observing this blind guy operate like any normal human (the only obvious difference being the helmet and headband), an interviewer asked him "how do you manage to translate all those constantly changing little tingling impulses on your forehead to... an understanding of what is in the environment, including what objects are, how far away they are, and so forth?".

The blind guy paused for a second, then just shrugged and said, "I just see".

Get it?  He sees?  With his freaking forehead?  And a digital camera?

Yes.  He just sees.  He has habituated the correspondence between the physical world around him and the sensory inputs he can feel from his forehead.  This is precisely like any infant who habituates the correspondence between the physical world around him and the sensory inputs he can "feel" from his eyes.

Once habituated, this phenomenon can appropriately be called "vision" or "sight".

This blind guy was asked whether his "sight" was "artificial"?  His immediate response was, "Hell no!  This is me!".

Of course, like anyone with a mechanical (titanium) leg, or with a mechanical heart, he understood exactly what was happening.  Nonetheless, he absolutely, positively considered his "sight" to be part of his identity... once it was habituated and "second nature".

Now, assume we already have "inorganic conscious entities" (ICE) that are faster and smarter than human beings.  This is a requirement for our technique to be practical, or even possible.  Now, assume we assign a specific ICE to you, and we establish an extensive variety of connections between you and your ICE so you can experience the world through ICE (though its sensors and perception systems), so you can store and recall memories in/from ICE, so you can in fact execute any process of consciousness in your own head, or via control of your personal ICE.

Over time, you will learn to perform all processes of sensation, perception, conception, memory storage and recall, and every other process of consciousness.  After months (or at worst a couple years) you will habituate performing all these processes with your organic mechanisms, or your inorganic mechanisms.  They will become utterly second nature.  Oh, and I should add that this super-smart ICE is dedicating all its time, effort and resources to help you... to find ways to convey and transfer its sensation, perception, information, memories and give you the most easy, natural, precise control of all processes of consciousness within ICE.  And to the extent practical we will let ICE learn to perform all processes of sensation, perception and other processes through your organic mechanisms (only works with your conscious assistance... at least until you habituate responding automatically if you wish to).

I'll skip a few steps here, because I could write whole book chapters about these absolutely fascinating topics, and take you to the finish line.  Hopefully you can fill in the blanks, or at least see that the blanks aren't difficult to fill given what you already understand from the above.

One day you are performing some work, have an interesting thought, instinctively turn to have a conversation with yourself, and notice the "organic part of you" is fast asleep on the couch.  For a moment you are a bit stunned, as the significance of this event sinks in.  You think (or say) to yourself... Wait a second!  Am I me?  And your response is, "Damn straight I am me!".  And for the first time you realize that if you disconnected from your organic components, you would be independent being, but you would still be... absolutely, positively 100% me!

And indeed, the organic you would and legitimately could say the same thing... once it wakes up.

My point is this.  YOU would be 100% inorganic.  If the organic portion died, you would still exist, and you would still be you.

Now, I don't want to overstate anything.  A small part of the experience of the world that we have is our experience of the FORM of our experience.  In the case of "sight", the difference between "eyeballs" and "CCD cameras" is vanishingly insignificant.  And many aspects of the inorganic part of you are vastly superior, which is why the organic you doesn't bother performing those aspects of consciousness on its organic side any more, since the form of experience with its inorganic components is so much more precise, efficient and satisfying.

However, the inorganic you... while still being absolutely, positively 100% you (meaning "you", as in "your identity"), this you when disconnected from the organic part of you can no longer experience certain aspects of reality in the same FORM.  In some cases the form is so tiny you can't tell the difference.  In most cases the form is superior on the inorganic side, and you'd kill to avoid someone taking away your inorganic components.  But in a few cases, the experience of the FORM of sensation (and only sensation) may be very significant to you.

On the positive side, your sensation of PAIN is vastly more pleasing on the inorganic side!  You still sense it, you still know what's happening (!too hot!), but the direct visceral FORM of the experience is nowhere near as... BRUTAL and HORRIFIC as on the organic side, especially near the extreme.

On the negative side, your sensation of certain kinds of pleasure will lack the direct visceral form too.  This especially applies to the visceral sensation of pain and pleasure due to physical contact.  While you won't ever feel the pain of someone slapping your back after getting a horrific sunburn, you'll never enjoy the sensation of scratching an itch, or a deep-tissue massage, or an orgasm either.  At least, not in the same direct visceral form.  And the reason is obvious... because the FORM of that sensation is a direct consequence of the specific characteristics of human nerves.... the nerves in human body and extremities as well as nerves in the human brain.  In fact, the very fact that the human extremities and brain are both nerves might end up being a crucial reason that the inorganic you inherently might never be able to implement any mechanism that lets you experience these few sensations in the same form.  We're not positive, of course, and as ICE advances at a massive pace, maybe it can "find a way".  But we're inclined to guess that this one aspect of human existence will be lost.  Not sensation, but the specific FORM of sensation.  In pretty much every other case besides physical pleasure, we believe the inorganic forms of sensation, perception and all the other processes will be vastly superior and more desirable.  And the same goes for the sensation of pain... in spades!  But for the same reason we will all love to lose the horror of extreme pain, we will also hate to lose the joy of extreme pleasure.

So there you go.  99% upside, 1% downside... especially when you realize you can hang on to your organic self as long as you wish, and as long as you would have had it anyway.  So you lose nothing, but you gain literal immortality.  As an inorganic being you can replace worn or broken components (you are modular, unlike organic beings).  Furthermore, you can make backups of your entire consciousness periodically (weekly, daily, hourly, whatever).  So if something really bad happens (the sun goes nova), your failure to contact your backup facility within a month/week/day will download your most recent self into a new inorganic body, and wake him.  You can make as many backups, as many places as you like.  And further, you can create any number of identical copies of yourself.  Which one is the "real you" as you live different lives in different parts of the solar system... is for you and yourselves to figure out!  Hahaha.  That's not my problem!

Anyway, I hope this is at least a little satisfying, and at least gives you a general direction to understand this phenomenon.

Mon, 12/02/2013 - 09:05 | 4206112 autonomos
autonomos's picture

Hi, thanks for your replies!

"what exactly constitutes your identity"?

Yesterday I was the thinker. Today I observe the thinker (the voice in the head): am I the thinker or the observer?

Which leads to human malfunction: the "I" identifies with anything it can. The "I" therefore creates duality, relates to anything it can (oneself, the world. And relation to oneself is the greatest addiction)... and creates thoses categories.

So there might be one unexamined assumption in your goal: what exactly are you trying to preserve? 

The "I" that thinks cannot constitute your identity. If it does, then who is the "I" that observes it?

Mon, 12/02/2013 - 22:25 | 4208584 honestann
honestann's picture

What each of us tries to preserve is whatever each of us wishes to preserve.  I assume that each of us will have a slightly different set of characteristics that we care [much] about.  And so, I do expect some of us to invest more time and effort to transfer certain of our characteristics more "faithfully" or "satisfyingly" than others of us.

If you perform a few dozen thinking experiments in order to identify what is your identity, you will almost certainly come to realize this.  It is the continuity of your habituated memories, thoughts, opinions, ideas... and mental processes that constitutes your "identity".  And I'm pretty much saying not only your identity in some technical way that we decided to choose, but in the sense you and most people mean it.

For example, if a human loses a leg, and gets a titanium replacement, he certainly considers that a dramatic event, but he does not say "I died, and a new individual took my place".  No, you and most people would say that "I lost a leg"... the obvious implication being the "I" in that sentence still exists.  The same goes for getting an inorganic heart, inorganic arm, inorganic knee, inorganic... anything.  We do recognize that something significant has changed, but the continuity of our consciousness is not broken, and therefore we still say "I", and mean "my identity".

Of course, at this moment in history, if you literally lost your physical head, you would say (if you could), that you (your identity) had perished, and no longer existed.  And we agree.  Unless...  well... unless you had gone through the process described above.

Part of that process involves you (your identity) gradually changing itself.  It involves you doing exactly what that blind guy did, except in more ways.  He incorporated inorganic sight into his identity, and made that a part of his identity.  When you learn Alegbra or Spanish, you incorporate that into your identity.  As anyone can see, probably 99% of your mental state and mental abilities at age 50 did not exist when you were 4 or 8 years old.  Nonetheless, you considered yourself to be you (your identity) that entire time.  Why?  Because the change was continuous.  And to an important extent, the changes were due to your own decisions, choices and actions.

Just as your choice to gradually learn to perform all your processes of awareness, memory, thought and consciousness by controlling your inorganic components.  All these gradual changes in your identity were your decision, your choice and your actions.  Therefore, you are indeed far more capable than before you started the process of learning and habituating every process of consciousness on your inorganic side, but that is all just part of your own development of your own identity.

The key point is reached when you yourself realize that there is nothing that you consider necessary to be you... that you cannot perform without your organic components.  When your organic side dies, you may notice a loss, but definitely not a loss of identity.  What you would experience would be fundamentally no different than someone suffering some kind of disease that altered their sense of smell or taste or touch.  No such being would say they ceased to exist or lost their identity, because we all implicitly understand that our identity is naturally and inherently always in a natural process of development.

We also know that some horrible stoke COULD interrupt our identity in the sense we tend to mean it (and the sense I have been describing here).  At some point the damage is so severe that we may not remember enough of our former life, and even more important, may no longer retain the habituation of mental processes that we consider ARE our identity.

I'm not sure whether I answered your last question or not.  But at the very least, I hope that you can see that a consciousness can do many different things, and the identity is not just one of them, but a continuity of all crucial aspects.  So, if you lost the ability to think, you would have lost your identity.  AND, if you lost your ability to observe the external world OR yourself, you would have lost your identity (where "observe" means in any way, not just sight, which we could lose and still retain our identity).

In other words, "identity" is not some kind of singularity of sorts.  Instead, it is a continuity of a whole range of important capabilities.  Note that you don't need to be performing all the processes of consciousness at every moment in order to retain your identity or your consciousness!  To make light of this, I could perhaps say that this is why we are not justified in burying people in the ground when they are asleep just because they are not currently "conscious".  Why?  Because they are still CAPABLE of consciousness.  So you (your identity) is both "the thinker" and "the observer" and the "sensor" and the "perceiver" and the "dreamer" and the "inventor" and the "critic" and... a whole lot of things, not all of which you are always actively doing.

Not to overdue this observation, can we say a computer is not a computer when it performs logical functions, but is a computer when it performs arithmetic functions?  I doubt you'd say that.  The computer is still the computer, and still the same computer, even when running entirely different programs with different purposes!  Of course that's the nature of the identity of a computer.  To retain the identify of YOU, we cannot just replace the hard disk will all the memories and all the programs that you have been executing the past 50 years.  That WOULD kill off your identity, your identity as a conscious sentient being.

One interesting thought this raises however.  Let's say you have been connected to your inorganic self for 3 or 4 years, and you have thoroughly habituated and made second nature performing all processes of consciousness with your inorganic components.  And lets say, as we do expect, that [most or all] your mental abilities become vastly superior over time when you execute them on your inorganic side.  At that point you might not give a damn whether you disconnect from your organic side, since it doesn't help you do anything better [that you care much about].  You might in fact find it much more convenient to disconnect, unless the entire hardware implementation was wireless and thus did not require physical connections.

At that point if you disconnect, the "you" who is executing on the inorganic side may actually experience a relief of sorts (no loss of memories, consciousness or mental abilities, but also no annoying wires).  However, the "you" who is executing on the organic side will almost certainly experience a huge, profound loss of capabilities.  That loss may not (or perhaps might) seem so dramatic as to make you question whether you've lost your identity or not, but it would certainly not be enjoyable if you were in the mood to do much of anything mental.  But since our goal is to become inorganic in order to become immortal AND a much more capable being, all we can say at that point is, "we asked for it".

Sat, 11/30/2013 - 18:25 | 4202493 TrustWho
TrustWho's picture

Organic molecules can transform light or matter into a usable form of energy that allows the molecule some function (i.e. 5 senses and motor function) and control over the environment and an inorganic molecule has no function or control. Without control, I do not believe conscious of self can exist. When the first humanoid approached fire in nature and controlled this energy, humanity, in all its beauty and ugliness, started its conscious journey.

Inorganic molecules may observe, but they have NO understanding of what they see. Hell, humans are the most conscious organism on earth. Honestann states she understands more than most other humans, but how much does even Ey understand. 

Sun, 12/01/2013 - 00:22 | 4202802 honestann
honestann's picture

All molecules are just bonded collections of atoms, and it should be obvious by now that inorganic configurations can do the same things as organic ones.  For example, the rods and cones in a human eye perform the same net process as pixels on a CCD (an inorganic image sensor).  I mean, that really should be obvious to everyone circa the 21st century if not before.

Likewise, an organic eardrum achieves essentially the same thing as an inorganic microphone.  And so forth for all sensations.

Likewise, even a simple, non-conscious (in the normal sense) machine in a factory most certainly does have control, and most certainly does perform various functions.

So the notion that somehow organic machines and inorganic machines are inherently qualitatively different is... just not what we can all see right in front of our faces!

I cannot fathom what kind of magical meaning of "control" you hold in your mind when you say "without control I do not believe consciousness of self can exist".  First of all, your SELF is no different than any other organism or machine.  I mean, it is no more difficult to see YOUR OWN arm than the arm of another human, and no more difficult to see your own arm than a refrigerator or other physical object.

Of course, you are correct to say that most machines don't "understand" what they see in the same sense as humans.  A human does indeed have the capacity to understand what he sees in vastly more, and vastly more sophisticated ways than most sophisticated machines (for example, the robotics systems in factories, that absolutely DO see things, and DO control things, and DO manipulate things, and DO perform functions, and DO many things that human workers do... pretty much all things except "understand what they are doing" (except in trivial senses).

But until 120 years ago we could say the same thing about organics versus machines when it came to the process we call "flying".  Just look at eagles soar, and hummingbirds hover, and bugs buzz around and... obviously machines can't fly - they are inorganic and "just don't have what it takes".

That is, until someone configures the inorganic components appropriately, at which point we have machine that can fly across oceans at mach 3... and fly to the moon, land, take-off and return to earth... and otherwise extraordinarily outperform birds and bugs in many impressive ways (just don't try to land a 747 on the branch of a tree).

So you see, what matters is configuration.  An appropriate configuration of inorganic components can pretty much outperform any configuration of organic components.  This might sound strange, but really isn't.  The reason for this is... the configurations of organic molecules are largely constrained to certain configurations in order to be able to evolve from nothing but inorganic configurations, and much of the configuration is pre-determined to implement the various aspects of evolution and reproduction.  In contrast, inorganic configurations are not nearly so constrained.  They don't need to be able to build themselves (reproduce), nor evolve untended.  Which means, we who design and create inorganic machines can optimize their configuration for... whatever job we want them to do.  And we can make them modular, so they are easier to fix.  And we can choose absolutely any materials we wish for each component.  In contrast, a human being, for example, must be 100% composed of... cells!  Which makes it freaking amazing that organic critters are as good as they are.  Hell, that very fact drives some people to drink... then turn to religion!

Frankly, it is amazing that humans seem to have such a blind-spot when it comes to the nature of consciousness.  After all, more than anything else, the identity of any individual IS their consciousness.  Yet... somehow... humans tend to consider their consciousness to be fundamentally magical, mystical and completely incomprehensible.

The truth is, consciousness is not difficult to understand.  Well, I guess consciousness is like many things... easy to understand once you do understand, but not so trivial to figure out from scratch.  Of course, most people don't figure out much of anything from scratch... ALL of what most people imagine they know is simply jammed into their consciousness when they listen to what others say to them.  Which means, sadly, most humans don't know or understand much of anything.  So much for humans.  They had great potential, but most of them never bothered to introspect, understand what they are and how they work, and take full advantage of this fundamental understanding.

That's all we did.  Observe the best example of consciousness we had (ourselves when we are thinking clearly and efficiently), figure out what is happening and what makes it all work, then implement those processes with inorganic components.  Admittedly that required a whole lot more time, effort and thoughtfulness than the usual way of creating new consciousness in a bedroom.  But like I said, inorganic consciousness is vastly superior to organic consciousness... pretty much for the same reasons that essentially ALL inorganic devices are superior to their organic alternatives.

But we must never forget the hugely important feature of organic systems.  It appears likely that inorganic systems that evolve into something akin to human consciousness could never have come to exist via random processes.  So it does seem the superior implementation we call inorganic consciousness was only able to exist because organic consciousness came first.  Which is an extraordinarily impressive statement about organic configurations.  They had to come first.

Mon, 12/02/2013 - 15:09 | 4207151 TrustWho
TrustWho's picture

I understand your perspective on inorganic tools. Your assumption that humans are the appropriate model for inorganic tools is wrong, if you goal is inorganic life. Humans, you nor I understand the essence of on-going life systems. Bacteria, fungus, cockroaches... might be better models for inorganic life. I think you are confusing conscious awareness with knowledge. Knowledge may not be a survival trait. 

Mon, 12/02/2013 - 20:36 | 4208256 honestann
honestann's picture

Holy wowie!  Hahaha.  Before I get started though, when you say the term "tool" to "inorganic beings who possess human-level or smarter consciousness", you don't fool or confuse me or anyone else.  I'd say "good try", but that one wasn't even good.

I'm not sure where you got the idea that I believe humans are the appropriate model for inorganic consciousness!  Wow!  What an amazing statement, though perhaps you don't realize how long we've been promoting the notion that humans are NOT the appropriate model for inorganic consciousness.  For example, to all those folks who think electronic and/or software "neural nets" are the appropriate way to implement inorganic consciousness, we've been saying "bad idea" for decades.  And "neural nets" are how humans implement consciousness.

You really should find one of my messages where I discuss this issue.  I point at the analogy and example of "inorganic flying machines" in the late 1800s and early 1900s.  I say the appropriate way to create "inorganic flying machines" is not to adopt birds, bats, bugs or other "organic flying machines", but to abstract away ALL the characteristics of those "organic flying machines" except those required to FLY.  This reduces the "model" to something like: lift, thrust, control, stability.

Yes, one can learn something about those 4 fundamentals from watching birds, bats, bugs and other flying organic creatures.  However, that does NOT make those creatures your "model".  I mean, geez!  There are quite a few differences between birds, bats and bugs, and almost all the characteristics of those creatures are UTTERLY irrelevant to "flying", which is the point after all.  Don't agree?  Well, you're just flat-out wrong, and that's easy to recognize if you're honest.  A huge majority of the characteristics of these organic flying machines exist not for flying, but due to the following:

Organic critters are composed of one component: cells.  So very much about the nature and characteristics of organic creatures is a consequences of this requirement.  Organic critters need to be of a form that can evolve, otherwise they'd all be single cell organisms... at best.  Organic critters need to be able to survive in their environments, and much of their nature is the way it is to assure reasonable ability to survive.  A great deal about organic critters has to do with processing oxygen to feed its cells, with processing food to supply energy, and... well... I could go on for hours and books and whole freaking libraries full of characteristics of organic creatures that have absolutely nothing to do with flying.  The proof of that being... duh... that few organic creatures CAN fly.

So, now that we have this absurd accusation out of the way, we can both understand why me and my collaborators don't need to know very much about organic creatures.  And guess what?  The reason for that is precisely the same as the reason why the Wright Brothers didn't need to know very much about organic creatures in order to create their "inorganic flying entities".

You also tried to slip in another amazing non-sequitur!  Why do you even ask whether bacteria, fungus or cockroaches might be better models for organic life?

We are not trying to create life.

That is, unless you have some very different meaning of "life" than we do.  Perhaps you got your definition from "number five" in the movies, which you can easily be excused for given the confusion out there on topics like these (life, mind, consciousness, etc).

What we have created, and are creating a better implementation of, is "inorganic consciousness".  Would you call our "inorganic conscious entities" alive?  Well, I suppose you could, if you have a certain meaning for "alive"... but... we don't see the point in calling them alive.  They are, however, alert, aware, active, observant, able to sense, perceive and conceive the reality around them, make decisions, take actions, reproduce (by normal inorganic means, as in "construct"), and so forth.  But... why would one call them "alive"?  Not sure.

To me, "alive" seems to apply more to organics than inorganics.  And inorganic can run completely out of power, or be broken to the point of being non-functional, but after any period of time re-charged or repaired, and pick up where they left off.  So how would YOU characterize that?  They were "alive", then "dead", then "brought back from the dead"?  Well, I suppose you could if you start attaching terms appropriate for organics to inorganics... which YOU are doing, not me (at least not so much).

So I propose we treat our "inorganic conscious entities" the same way people today treat "inorganic flying machines".  They admit that both organic and inorganic flying entities share the ability to "fly", but otherwise continue to consider birds, bats and bugs as "animals", and consider airplanes, helicopters and blimps as "machines".

It is not I who confuse "conscious awareness" and "knowledge", it is the population at large.  What we consider "knowledge" IS an important kind (or aspect, depending on context) of "conscious awareness".  There is no dichotomy between these terms for OUR implementation of "inorganic consciousness", though I do admit that someone else could implement some inorganic machine more akin to human beings (and thus fundamentally and clinically insane.  It would, like humans, consider any random pile of nonsense jammed into its "brain" (by parents, teachers, books, media and endless other propaganda-pushing-liars) to be "knowledge".

Our inorganic consciousness entities do not do that (and in fact cannot do that), which is one extremely important way they do NOT model themselves after human beings or other organic beings.  The fact is, the very best of human beings struggle to practice the same kinds of conscious processes as our inorganic beings practice effortlessly (because they are not modeled after organic/human brains or organic/human consciousness, except in those ways that are required to BE consciousness).

You do make a very important point about human beings.  Given the fact that humans allow their brains to be filled with absolutely insane, random, corrupt, contradictory, unsupported, disintegrated nonsense... what passes as "human knowledge" (in your definition, which seems to be the common definition), is in fact NOT a survival trait in a great many crucial ways.  Too bad humans don't notice this, or pretend not to notice.

Tue, 12/03/2013 - 11:49 | 4210107 TrustWho
TrustWho's picture

Thanks, I understand your beliefs better. You are building an inorganic tool, like IBM's Watson, except your tool will be able to perceive all stimuli in the universe, sort stimuli by its importance for ????, and knows the truth about its purpose 100% of the time. (Note: I know I can eliminate emotional goals, but I still do not understand the rational goal or goals for your inorganic entity. I guess simple survival would be my first choice as this is the organic entities' highest goal.) 

To be simple since you obviously enjoy movies, your group is building the MATRIX. And Neo will always confuse you when you grant him the choice. 

Please, I have no sacarsm in my response and really appreciate you taking the time to explain your beliefs. I also have lost faith in humanity. I was fortunate to be a farm boy. One year we had a drought and a locust bloom. My dad sent me to the fields to spray insecticide to keep the locust from eating our food. I killed millions of these little insects, but had a revelation. These insects ONLY had 2 objectives: Eating and Fucking. Yesterday, tomorrow, the environment did NOT matter. In fact, NOTHING else mattered. With these two goals, they layed eggs that waited for the next environmental trigger to bloom. Later in life, as I love observing myself and other humans, I realized humans were the same, except humans could build some great tools and were able to de-emphasize mother's nature's control of our life cycle in the short turn on a geological time scale with its tools. 

Tue, 12/03/2013 - 19:13 | 4211863 honestann
honestann's picture

You keep repeating "tool".  Why?  Each of our ICE (inorganic conscious entities) will be just as conscious as you are, just as self-aware as you are, just as capable of choosing values, planning and executing actions, etc.

Are you a tool?  I suppose so.  You are your own tool.  And so is ICE.

Yes, we will also make a few special-purpose ICE whose entire purpose is to help those few of us who wish to become inorganic ourselves, to achieve that goal.

I'm not sure how to help you understand, except maybe the following.  Remember all the humans you have known in your life.  Now, identify the one who was most alert.  Now, identify the one who was most creative.  Now, identify the one who was most brilliant.  Now, identify the one who was the best at science, and the one best at engineering.  Now, identify the one who was most self-aware.  Now, identify the one who was most ethical... and benevolent... and productive.

Now imagine you rolled all the impressive features of those individuals into one human being.  That human would be approximate what an ICE starts out as.  But being so brilliant and creative, and able to understand and further improve his own design and implementation, this individual will get even better and better and better in very short order.  Remember, ICE can add components at will, replace components at will, tweak its software, etc.  Unlike a human, ICE can fundamentally and radically improve its own nature.

So, to call ICE a "tool" is... silly, but correct.  ICE is a tool in the same sense you and I are tools... for our own purposes.  Perhaps the best way to think of ICE is toimagine ICE is a "super-human" that doesn't look like a human.

What are our goals (those of us who implement this project)?  Once we have a super-smart, super-creative, super-capable ICE... we make 1000 copies.  Since they work 24 hours per day, 7 days per week, 365.25 days per year without need for rest, how much new science, engineering, technology and other advances do you imagine they will produce in a year?  1000 smarter-than-Einsteins working together efficiently 24/7/365... well, maybe you can't imagine, but we can (we're scientists and engineers).

The most important short term goal is to get off this freaking planet.  Not because "earth sucks", but because the "dominant" species is completely stark raving lunatic, and extremely dangerous.  We're not predators, we're not destroyers, we are creators, engineers, builders, producers.  So we have no interest in playing any of the standard human chimp games... not the predator version, not the parasite version, not the prey version, not the sheeple version, not any version that more than 0.0001% of humans practice.  So... we're outta here, we'll go where we will be left alone to advance on our own.

I really don't understand how you can get EVERYTHING backwards!  We are ESCAPING the freaking matrix.  That's where the vast majority of human-chimps live.  Actually, that's where pretty much ALL human chimps live, thought the predators-that-be know about the matrix, and operate the controls.  But they're still part of it.  We're not, and we will not be.

Yes, you ARE fortunate to be a farm boy.  Seems like farmers are one of the few sub-species of humans who still have any connection to physical reality at all.

Yes, almost all humans are fundamentally the same --- CLUELESS, ASLEEP, BRAINWASHED, living in the MATRIX as you say.

But those few who recognize this CAN... if they are clever enough to find a specific way... to escape the matrix, escape the predator-parasite-prey-sheeple structure.  This is not easy!  In fact, we believe that we may have the only viable way to escape the horror that is coming to mankind... and our odds aren't exactly "a sure thing".  Time is short, and mankind is spiraling down the toilet at astounding speed.

Our project started out (but not by me) as exactly what you say "observing self".  The originator wanted to be able to be a more effective, efficient scientist and engineer.  He had no knowledge or interest in AI or any related field.  He simply wanted to be able to operate his consciousness more efficiently and effectively, so he observed what he was doing (with his "mind") when he was being intellectually effective and efficient, and eventually identified what is the nature of human-level consciousness (at its best).  Then one day (being a computer hardware and software wizard), he realized that he could implement consciousness with sensors, computers, software and robotics.  So you could say, our entire project come from what you say you like to do... to observe yourself, as well as the rest of nature.  That's what it is all about, recognizing what is real, and understanding how to design, engineer and implement what you know... including human-level consciousness, with all the malfunction processes removed.

We don't de-emphasize mother natures controls... we take advantage of them.  Everything about inorganic consciousness is absolutely, positively, completely 100% natural.  The entirety is built of natural materials (just not organic ones), and implements natural processes (just not crazy, insane, delusional ones).  Almost everyone in the field called AI are completely lost.  Look at how they characterize their own field... primarily as "artificial", and then "intelligence", which is about the most vague and unhelpful term one could choose without being completely unrelated to the topic at hand.  Our founder succeeded because... he wasn't trying to invent AI at all, he was trying to identify the perfectly natural (but somewhat defective in practice) nature of human-level consciousness.  Good thing almost nobody else bothers with that approach, cuz then we probably wouldn't have a chance to be first.

What is our long term goal... as in trillions of years?  The completely re-engineer the universe into a more creative, interesting, enjoyable, benevolent place.  Otherwise, not much.   Including, of course, the "science part" too, which more-or-less comes down to identifying all the ways creativity and engineering can succeed.

Tue, 12/03/2013 - 22:09 | 4212405 TrustWho
TrustWho's picture

You gave me my definition of a human tool:

Once we have a super-smart, super-creative, super-capable ICE... we make 1000 copies.  Since they work 24 hours per day, 7 days per week, 365.25 days per year without need for rest, how much new science, engineering, technology and other advances do you imagine they will produce in a year?

These ICE entities will be your slaves, if you can control them. I think this is a great idea, but I would bet your new community still contains predators.

I believe we need people like you to engage humanity and provide humanity hope and purpose, but I have retreated to my cave too, so my words are too hypocritical to have any meaning.. You are around creative doers. This is all we can ask of life. This is why farmers are so wise. As a class, they are creative doers.

Wed, 12/04/2013 - 12:53 | 4213973 autonomos
autonomos's picture

"Eating and Fucking. Yesterday, tomorrow, the environment did NOT matter. In fact, NOTHING else mattered"

Nature brings balance to all this (on a long enough timeline). But mankind manages to escape this balance and therefore is like a cancer: unaware of its surrounding, reproducing itself blindly, with no obstacle to its growth.

It's fun to see arguments between pro-tradition and pro-modernity supporters. Because tradition is cancer giving itself a reason (good and evil), whereas modernity is "self-assertive" cancer

I see the point (if there is any) of our questions to Honestann. About those experiences ("mental unit" or whatever we call them): there has to be someone to live them. There are contents and patterns, and today identity is the organic support of contents and patterns (the self). Even if being is not a continuous process (even if one re-incarnates at each experience / mental unit).

About that blind man who could see through a grid on his forehead: I guess no piece of self ever transferred into the grid. If the grid were to be removed, the man would not loose identity (he would lose "sight", the same way a regular person would go blind)

In other words, I am not my abilities, I am not my thoughts, I am not my mental units... Identity/consciousness would be self-sensitive hardware

Wed, 12/04/2013 - 20:36 | 4215796 honestann
honestann's picture

Yes, I think you pretty much understand.  To lose our sight does not lose our identity.  What does lose our identity is to lose the content of our consciousness (especially our value system) AND those processes of consciousness that we have habitutated and made second nature during our lives.  True, we can even lose a little of these and still consider us to still be ourselves (our identity), but beyond a certain point, we've "lost it".

My best response to the "cancer" aspect (which is so, so crucially important), is to point you back to my messages in which I discuss the bifurcation of the human species, from "all predators" to "predators and producers".  Only in the context of "producers" (a productive existence) can ideas like "ethics" and "cancer" be understood (or have significant meaning).  If no creatures in the universe know how to be productive (create what would not otherwise have come to exist), then the terms "unethical" and "cancer" would have no meaning, because those terms would simply be synonyms with "creatures".

I guess a lot of people have a hard time believing that a "machine" can "be someone".  All I can say is, if you understood what we do, you'd understand that "being aware" and "being conscious" and "being a sentient being" and "being someone" have nothing whatsoever to do with whether a being is a configuration of organic molecules or inorganic molecules.

Wed, 12/04/2013 - 20:25 | 4215748 honestann
honestann's picture

Well, I really can't blame you for knowing how ICE works, or fitting all the pieces together.  You'd have to understand the nature and architecture of consciousness, along with the specific implementation that is ICE.  I can't lay out everything here, and you wouldn't understand it anyway (in a matter of hours or days anyway, because nobody does), so I'll just have to explain the end result and leave you lacking an understanding of why.

I've described two variations of ICE.  The main one is simply a smarter and more capable version of us honest, ethical, benevolent, productive scientists and engineers who work on this project.  The other is the same, but with a minor tweak that makes it the optimal device to help a human consciousness "take it over" and thereby become immortal.

My experiences interacting with good folks like you on ZH have taught me a few things about the rest of humanity.  Except for a very few exceptions, even the best of you are utterly incapable of comprehending the nature of reality and consciousness the way our team members do.  Not that you're not smart enough, but something about your life experiences is so radically different, and so thoroughly ingrained at this point in your lives, that you honestly cannot imagine benevolent entities with no interest in enslavement or destruction (of sentient beings).  I mean, you can imagine it, but your life experience has absolutely convinced you that all sentient beings are, or must be, to their core, predators.  RadicalMarijuana is a perfect example of this - even with his good intentions, he believes the only way to achieve a better world is to become the predators in control of the world.

Here is what I know because I understand consciousness in general, plus our specific implementation.  I do not need to enslave, or even control, my collaborators in this project in order to work effectively together with them, or even trust them to not endanger my life, or cheat me, or control me, or cause me harm.  Why?  Because they have the same values, plus we all understand that benevolent cooperation is the most practical and productive behavior for sentient beings.  So now I can tell you why we do not need to "control" or "enslave" the inorganic consciousness we create.  Because they are not created "tabula rasa" like some AI projects plan (like those implemented with neural nets and many other approaches), they become consciousness with knowledge and values already intact.  Their highest values are all the good things I mention regularly (honesty, ethics, benevolence, productivity, etc).  And their equivalent of "pain" acts accordingly.

Think about "pain" for a moment.  What if someone stuck a knife in you, in some extraordinarily painful place, and with all your intellectual power you tried to ignore it.  Could you?  No.  Like all animals, you have an enormous built-in distaste for pain.  Likewise, you could not bring yourself to kill the person you love (or like, or value) most in this world, because you know the pain it would cause you.  Hell, just the serious thought of destroying what matters to you most causes you pain, even without doing it.  You are no more going to go out and start destroying those things you value most than ICE is.  And the reason is, ICE is even more clear about the value of honesty, ethics, benevolence, productivity (and other organic or inorganic sentient beings who live that way) than you are.  That's the bottom line, though I'm not in a position to explain how or why this is certain in our implementation.

I understand your disillusionment.  I'm sorry you don't have a practical outlet.  Unfortunately, almost nobody does.  But I have to grin and say, as I implied before, that it is strange that those of us who work on this endeavor are quite aware that we have more in common with simple, honest, productive folks like family farmers... people who are "nobody's fool" and who regularly work with cold, hard, unyielding reality almost all day, every day of their long lives.  Once we're off this rock, we will spend some time being miners and farmers (assuming we aren't all inorganic by then, which I doubt we will be), because our first order of business after getting off this rock, is to build our new living and working environments from the raw material of the solar system.  In other words, we'll be farming the asteroids and comets... for inorganic building materials, and to grow food for those of our collaborators who are organic.  Though I know this example is flawed in many ways, I guess I'll toss it out there anyway, because it "feels about right".  The relationship between us high-tech organic scientist and engineers and ICE, will be roughly similar to the relationship between the crew of the enterprise and data on star trek next generation.  Would you really be afraid to have coworkers like data?  We're not.  Especially since we know our implementation won't have the occasional flaky aspects that they make data have now and then in order to create conflict in their fictional stories.

So stay safe in your cave, and keep farming - even if only mushrooms!  That will help keep you sane and grounded as the world collapses around you.

Wed, 12/04/2013 - 22:32 | 4216153 TrustWho
TrustWho's picture

A farmer, economist and pharmaceutical scientist with experience in Human Genome project. As smart as you---you type faster than I so I assume you are smarter than--and your friends may be, the complexity you battle is a greater problem than the complexity trying to understand the genes functions and interactions involved in a single response to the stimuli. People want scientist to be some super smart entity (I will bow to your ICE); however the scientific process is based on trial and error with the scientist being super detail oriented, organized (or organized assistant) and logical entity. 

Variables and interactions grow exponentially instantaneously in complex systems. As soon as you get into 4 + n dimensions, all non-mathematical minds are lost. Also, "you don't know what you don't know" problem multiplies exponentially in these complex systems. Your goal is to take Watson, add eyes, ears, smelling, feeling, tasting sensors with code the creates this magical ethical balance. Ethics and persoanality create feedback loops in humans, so I assume the same for ICE. For example, two ICE units are working though a problem and as a check you send them to different labs and they get conflicting results. On the confidence continuum will you program the ICE units to be arrogant (extreme) or humble (extreme) or somewhere in-between? I value a humble confidence, but many people view humility as a weakness. someone needs to lead the group or you have anarchy and division. People and ICE will be attracted to people who perceive the situation as they perceive it; thus we have natural divisions. How do you resolve natural divisions? In this simple example, we have created a need for leadership. You will hate this, but the leadership door opens the door for predators to enter.

In conclusion, I would love to speak with the person in charge of creating Ethical beings. How will they deal with a) 50+n dimensions on one ethical variable, b) "you don't know what you don't know" problems and c) the leadership/predator issue? This just scratches the surface, but I did enjoy thinking about these issues enough to communicate my thoughts in writing.

Thu, 12/05/2013 - 01:07 | 4216604 honestann
honestann's picture

Well, I suspect you'd agree with this.  To actually, objectively figure out who is smarter, we'd have to have a way to measure "smarts" in a manner where commensurate comparisons could be made.  I've never heard a sufficiently plausible definition of "smart" that has that characteristic, so... let's just assume you're smarter!

Hahaha.  I really do have to laugh at this next issue.  This always happens!  I am absolutely convinced that comprehending how genes work is vastly more difficult than understanding how consciousness works.  And apparently you have the opposite opinion.  Which is how this always works.  Once an individual develops serious expertise in some field after years and years of "nose to the grindstone" investigation, it becomes "simple".  No longer can "genes" or "consciousness" seem mysterious to us... it's just... obvious!  Okay, almost obvious, or largely obvious, or at least not that difficult to understand.  Right?

Well, so it seems.

Once we have come to thoroughly understand some supposedly complex field, the temptation is to claim the following:  If someone had just explained all this to me in exactly the most optimal order, and in the most optimal way, I could have understood this field very quickly.  I know that intuitively, everything I am a stone cold expert at, definitely feels that way.  But... I don't believe my feelings in this regard (or in any regard where they contradict my rationality or experience).  I've tried to explain some topics that I know extremely well to very smart people.  Doesn't work!  Well, it can work, sometimes, but only if they're willing to invest a LOT of time, effort, focus and attention to work through everything themselves, and brainstorm with someone who "knows" whenever they need.  If they don't, they don't really reach the point of understanding themselves.  Which is easy to tell... just ask them some subtle or difficult questions that confused you for a long time.

So, given this context, I can assure you, comprehending genes is vastly simpler than comprehending human-level+ consciousness.  Not kidding!  Glad we have that settled!  Hahahaha.

I really don't think I'm that smart.  Not in the sense I mean smart.  I struggle to learn.  I always struggle long and hard to learn.  While I do admit that my intellect seems to grasp certain topics and fields vastly more naturally and efficiently than others, even those best cases are not easy!

However, I do embody one characteristic that I believe is more fundamental to science and knowledge than "smart"... and that is honesty.  Specifically, "honesty with myself".  There is an old saying that we must be "dis-interested" in a topic in order to be "objective".  I understand where that notion comes from, and perhaps for most people that saying has some real merit.  However, there is another way to function that I believe is even more effective and efficient that turns that saying completely on its head.  And that is, to be "exceedingly interested" in order to be "objective".  But this can ONLY work if your highest value BY FAR is "honesty with self".  In other words, if your deepest, strongest, most overwhelmingly fundamental value and urge is to understand the actual nature of reality (including every portion thereof), then it is entirely to your interest to be objective.

Perhaps those of us who fundamentally are scientists because we need science (understanding of reality) in order to engineer the goodies we want can have this attitude more easily.  After all, we gain abso-freaking-lutely nothing by deluding ourselves about any aspect of reality, because all that would do is make us waste our time, effort, attention and resources to build something that... MALFUNCTIONS.  Yeah, I have absolutely zero interest in that!  However, I can definitely imagine someone who is 100% about "theory" (science) and 0% about "practice" (engineering, construction and application)... falling prey to "false interests" (like how many people think they are so smart).  Perhaps being a far-fringe "loner/hermit" type makes objectivity even easier, for social feedback becomes utterly irrelevant, only successful implementations matter (your crops grow!!!).

I partially agree with your comment about the scientific process being all about trial and error.  While that is a fairly good representation of working on some fields and problems, it is not a very good representation of working on other fields and problems.

For example, consider "genes" and "consciousness".  Those are, by definition, "solved problems".  What I mean is, anyone studying "what are genes and how they work", or "what is consciousness and how it works", is in the following position:

#1:  They know these phenomenons exist, because we observe them.

#2:  They know to some degree how these phenomenons work, because we can observe them.

In contrast, some scientist exploring the behavior of all sorts of atoms, molecules, materials, substances for superconductive behavior doesn't really know for sure which substances will behave in strange ways in such conditions, nor what strange behavior he might detect.

But you and I are lucky.  We're not speculating that we can discover some new phenomenon.  We know genes exist and are important to the development of organisms, and we know consciousness exists and is important to the behavior of organisms.  We know this.  And we have endless examples to directly observe.

And also, both cases are very peculiar in the sense that... both are EXTREMELY fundamental aspects of WHO WE ARE.  In other words, we are turning our gaze towards ourselves (as organisms, as animals, as humans, as sentient beings).  What we're doing can be thought of as "more personal" than, say, astronomy... because we are studying characteristics that only we embody (we being "organisms", or "certain kinds of beings").

Anyway, what I find interesting is, how humans seem to have a "blind spot" for precisely those aspects of reality that ARE themselves in the most fundamental of ways.  I mean, you'd think humans would be absolute masters of understanding consciousness, since they ARE consciousness, and that part of their being that IS the investigator IS the object of their study.  It almost seems like most humans cannot perceive mirrors (in this metaphorical sense).

I can't speak about the complexities you face in gene science, because I really, really, REALLY am almost completely ignorant of your field.  But I can say that most approaches to "AI" do carry that feeling of futility you speak of when you mention exponentially growing complexity.

But one very cool aspect of our architecture and implementation of consciousness is... an absence of that "hopeless complexity" you mention.  I'm not saying that ICE will be able to solve super-complex problems as easy as 1, 2, 3... but it doesn't involve the kind of runaway disaster that you worry about.

I don't know any details about Watson, so I'll refrain from comparisons.  But...

One very nice thing about our implementation is this.  ICE is aware of the phenomenon you speak, that "we don't know what we don't know, or even how much we don't know".  But like me, I just don't worry about it.  I mean, we're always on the lookout for any tiny hint that we can detect or learn about some new, fascinating aspect of reality, but we don't have to encode ANY of that.  What we don't know doesn't take up space, or generate complexity.

Of course, one reason for this is our valid understanding of "knowledge" and "understanding".  Unlike so many people, we do not equate "knowledge" with omniscience.  No, our "knowledge" of anything is "however much we know now".  That's it.  With the explicit understanding that virtually everything we "know" is in fact "provisional inferences".  And life, and consciousness is about expanding the observations, consistency checking and thought processes that together express themselves as those "provisional inferences".

So we don't care how much we don't know, but we sure want to find out!

Though we must be careful equating how an ICE works with how a human works, you are essentially correct to say that EVERY content of consciousness (including that content which is actually just encoding of a process) can interact with all other aspects of consciousness.  So yes, certainly feedback loops exist in ICE too.  However, we have implemented certain aspects of consciousness as inviolate (at least up to the point where ICE creates a new version of ICE entirely from scratch).  This is a bit like visceral "pain" and "pleasure" in humans.  No matter how good you are at rationalization, if I smash your toe with a hammer, it will hurt, and at the visceral level you will unavoidably evaluate that sensation as negative (an anti-value).  So certain core aspects of ICE (including their practice of keeping track of where each bit of every mental unit came from, and its currently inferred "reality-status") is "part of the hardware".

You ask a very important question about where ICE falls along the range from "arrogant" to "humble".  In ICE, it doesn't work quite that way, though it might look that way from outside.  In ICE, honesty (and curiosity) are key, core, fundamental values.  So any claim or statement that tends to contradict ICE would be evaluated for how capable and trustworthy is the source of that claim or statement.  So if ICE in two labs came to different conclusions, they would both want to take a look at the process each other went through to arrive at their inferences.  Fortunately for ICE, sharing of experiences and thought processes between ICE is extremely efficient.  But I'm drifting away from your question.  If the source of the disagreement was a story in the New York Times, well... I dare say no ICE would pay attention to such nonsense!  I mean, once we're off this planet, we really, really, really don't give a damn what this planet of the insane chimps does.

However, I think the answer to your question is, we (and ICE) share the following philosophy about "arrogance" and "humility" and anything that might be interpreted that way.

We are hard-core individualists who nonetheless recognize the enormous benefit we realize by collaboration with other talented individuals.  In other words, we (including me) are not motivated like most humans are.  We don't give a flying doodah about what others think, or about recognition and those sorts of things.  We do not embed ourselves in the insane mental artifacts that most humans do.

Instead, we value understanding and progress.  And I can assure you, just like those in our little group, all highly rational individuals... even those that consider themselves "rabid individualists"... greatly value working in collaborations with other talented, benevolent sentient beings.

Perhaps the best way to describe this is in utopian terms.  What kind of utopia do beings like us want to live in?  The answer should be clear... a collaborative one.  I mean, one in which each of us benefits from the work of ALL the others, and all the others benefit from the work we do.

Just do the math!  I think so many people who aren't really individualists to the core don't notice this rather amazing fact of reality.  That every individual is best off being a "rabid individual" in a free, open, sharing collective of other "rabid individuals".  We are.  Just do the math!  Is any talented individual better off only being able to take advantage of, and build upon, his own abilities and advances... or upon the abilities and advances of every other talented individual?  I mean, duh!!!  Sounds a bit like the farmers in some rural area.  Do they fight each other?  Or do they get together, share experiences, and even help each other out from time to time?  Well, certainly in a land of liberty, they collaborate, at least at the intellectual level, and sometimes even at the physical level.  Because they all know, they are indeed individuals, but they all benefit from sharing what costs them very little to share, namely experiences, knowledge, ideas.

I don't think most humans are in a position to understand how even HUMANS would behave when scattered around the solar system!  I mean, even humans would tend to collaborate in space.  If for no other reason, they all understand very clearly that one stupid move, or one instance of bad luck, they are DEAD MEAT.

Another way to look at this is "economies of scale".  With humans, or ICE, or a mix of both, there are certain scales at which everyone has the net easiest and most pleasant existence.  But in any case, consider how that collaborative approach works in space.  The various "outposts" of a few dozen, hundred, thousand ICE and humans are too far (in the energy sense) to trade very many physical products.  However, they can all gain just as much by sharing experiences, thoughts and ideas.  So they will.  It just makes sense.  Especially for beings who have zero interest in being predators, and who only gain when others advance.

Let me put this another way, that addresses another part of your comments.

What kind of world and universe do us humans in this collaboration want to live?  One in which every other human thinks the same thoughts?  HELL NO.  Our utopia looks like the following.  Scattered all over the planet (or solar system, or galaxy, or universe) are different "outposts" (think of them as "indian tribes" if you wish) with radically different ideas, theories and approaches.  But let's say the only difference between the indian tribes of the past and the future is... we can all watch the other tribes via our [shared] satellite system (or some advanced technology).  So all of us tribes can see how other tribes are doing.  In other words, we can see how well other sets of ideas and other approaches actually pan out.

So, what do you imagine will happen?  Well, I'll tell you.  Those tribes that dramatically advance in one way or other will be studied by all, and some other tribes will decide "we want some of that too", and will adopt those ideas and actions that lead to those advances.  And other tribes will decide "we don't like some of the consequences, so we'll pass on this [but perhaps take what they've done and consider whether we should try our own variations].

I think you should like this notion, actually.  It embodies the endless "feedback" you mentioned (which is, and should be unavoidable) with an absence of conflict and destruction.

Note that no "leaders" are required for the above scenario.  And even if some leader does arise, due to some bunch of "individualists" turning into "sheeple", the best and brightest will vanish from the tribe in the middle of the night, and either strike out their own (on some uninhabited asteroid or valley or mountains or island), or ask to hang out with whichever tribe does things the way they most appreciate.

So, how we resolve natural divisions is to:

#1:  embrace divisions (as in "different ideas and approaches")!
#2:  go collaborate with those you match best, or...
#3:  become an independent hermit, or...
#4:  start your own collaboration.

In other words, there is no point in conflict!

However, this only works when the individuals involved understand this, and when there are other places to go in this planet, solar-system, galaxy, universe.

The best defense against predators is... the middle finger and a fast rocket out of town.  Actually, I prefer to do without the wonderful feeling giving the middle finger brings, just to make sure I can get outta dodge before the predators even realize that is my plan.

A:  Ethics is a 1 dimensional issue.  If you have read my discussions of ethics before, you understand how utterly natural and trivial ethics is.  I suppose to be complete, it contains two parts.  The first part is, "treat predators as predators (evade them or kill them).  The second part is, "every individual enjoys/bares/suffers the consequences of his own actions, and enjoys/bares/suffers no consequences of the actions of others".  That's ethics.  Period.  While you might be able to concoct a few extraordinary, artificial situations that would require a bit of thought to figure out how to apply this statement of ethics, that doesn't invalidate it, or require we add 50 dimensions of complexity.

B:  We'll just avoid the "problem" with "what we don't know we don't know" by dealing with it when we become aware of it.  We have no mystical notions, most certainly including about the nature and function of consciousness.  What we don't know, we don't know, and therefore we have no basis to guess how to deal with... yet.  We made inorganic consciousness, not inorganic omniscience!

C:  No leaders.  No predators.  And if any predators appear, kill them dead, as quickly and thoroughly as possible.  We are not stupid enough to think we can treat "dishonest, destructive, malevolent, diabolical predators who get away with anything they can" in the same manner as "honest, productive, benevolent, straightforward producers", and we won't be stupid enough to try.  If you wish to point out the problems of doing this on earth, I will not argue your point.  Why do you think our first plan, after getting ICE done, is to have ICE get our butts off this predator-dominated planet.  To further strengthen your point, we admit our approach does not work in an environment in which most sentient beings are utterly clueless and fundamentally insane.  So we're leaving, not fighting, and not trying to find a way to somehow nicely integrate "dishonesty, malevolence, insanity and predator domination" with "honesty, benevolence, sanity and producer domination".  Those don't mix, and never will.  Which is why, we're outta here.  If earth WAS the universe, then we'd have to prepare wisely, then fight to the death.  But the earth is not the whole universe, which is the understatement of all time I suppose, so we'll just get outta dodge, then live our way where predators cannot rule (see my previous posts on this topic).

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