- Outlawing Orwell?
- Americans’ savings are drying up…
- “THIS IS HUGE”
Dear Reader,
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in tech and biotech. Today, I’ll do my best to answer them.
If you have a question you’d like answered next week, be sure you submit it right here. I always enjoy hearing from you.
“You can play in this space, but it must by on our terms…”
Hello Jeff,
I have a couple of concerns/questions about ChatGPT being deployed and the SEC’s response to stablecoins. They are actually somewhat related.
First, the question, are there any blockchain projects working on an unbiased generative AI? For example, Brave or the DuckDuckGo search engine? It would be wonderful if someone more trustworthy than Microsoft or Google was working on this problem. I stopped using Google quite a while ago when I saw your recommendation for Brave.
In regard to the SEC’s actions against Paxos and stablecoins in general, I feel like this is being done deliberately because the Fed is getting ready to mass deploy it’s CBDC.
It seems like they are trying to “dirty the brand” of any other stable coin other than the one the US Govt puts out so that they can control more people.
I keep seeing more evidence that a much darker side of CBDCs is going to be rolled out. For example, not allowing certain purchases like guns or books that are considered “extremist” like 1984 or Lord of the Rings.
It just seems like the worst implementations of both potentially world-changing technologies is what is being put out there for the masses to use and most people will accept it without question.
Thank you for your thoughts.
– Synthya G.
Hi, Synthya. I appreciate your questions and for being a reader. And I certainly share your concerns.
I’m not familiar with any blockchain projects working on unbiased generative AI. There is one project, SingularityNET, that is AI focused. It is effectively an AI marketplace where all kinds of AI services are available for use and transacted with using the native AGIX token (not a recommendation).
With that said, simply having a decentralized marketplace won’t ensure that the technology available through the marketplace is unbiased.
The real problem right now is the speed with which this is all happening. Companies operating in this space are moving so quickly that they don’t have time to thoughtfully curate the information compiled in the training data.
Just imagine the time and expense involved to curate a billion words, let alone 100 billion words. Doing so will delay time to market significantly and increase costs.
Companies want to train their AIs cheaply, so the open internet is the place they must go.
With that said, we can only hope that once we get past this explosive phase where everyone is rushing, a handful of companies will take the time to curate and “clean” their data inputs from bias so that their AI outputs are unbiased.
As for your question on stablecoins, I completely agree with your conclusion. The SEC is essentially alleging that stablecoins are a form of security. This makes absolutely no sense. By the SEC’s own definition, a security is something an investor buys with the “expectation of profit.”
But a stablecoin—by definition—is pegged one-to-one to the U.S. dollar (for a U.S. dollar-backed stablecoin). How could anybody expect to profit from purchasing such an instrument? By this standard, the U.S. dollar would also be a security. It’s absurd.
I suspect you’re right. The SEC is putting a chill on the entire industry until the federal government can roll out its own stablecoin, a central bank digital currency (CBDC). In essence, they want to “hit the pause button” until the federal government is ready to enter the field.
Once a US CBDC is launched, I do expect regulatory bodies to allow blockchain companies to operate within the confines they create. The message will be, in essence: You can play in this space, but it must be on our terms.
And the darker implications of a U.S. CBDC do worry me. As I’ve shared several times, this digital currency would be under the direct control of the Federal Reserve and the federal government. Imagine the possibilities.
As you said, certain purchases could simply be denied. Firearms, ammunition, gasoline, unapproved literature; denying these purchases would be as easy as a few keystrokes.
It’s not a guarantee that something like this will happen. But with a central bank digital currency, it would absolutely be possible.
And not to scare any of us, but there could be some applications of AI here.
It’s easy to program in a set of “guardrails” linked to something like a social credit score, or a monthly carbon footprint score that are linked to our government digital wallets.
If we exceed our carbon footprint in a given time period, certain transactions would be prohibited. That’s just programming.
But AI can also be used to analyze all our activity, and if it sees the kind of activity that usually leads to breaking the rules, it could take action.
This kind of idea reminds me of The Minority Report by Philip K. Dick. For any subscribers that haven’t read the book, I highly recommend it.
We’ll continue to cover developments as this trend progresses. And I don’t think we’ll have to wait long. I predict we’ll see the beginnings of a U.S. CBDC take shape sometime later this year.
Consumers are getting desperate to make ends meet…
Hi Jeff,
First, I’d like to say that you are answering far fewer questions than you were a year ago.
Regarding the Johnson Redbook Index, the data offers a year-to-year comparison. We are out of Covid, but a year ago, we were just starting to open up the economy. So, it is a false comparison.
Why not find a comparison of retail economic activity from month to month as opposed to year to year, and see if the economy is strengthening or weakening? I am not sure you will come to the same conclusion. Will you respond is the question.
– Gordon E.
Hi, Gordon. I can assure you that I’m answering the same number of questions. My team and I have been preparing these mailbag editions every Friday for years now. I don’t always pick each question myself, but each week is always three questions just like the daily three topics that I tackle.
We’ve even added several “mailbag” sections to the updates for our premium products, which actually means that I’m answering more questions that I used to. That way, I can answer questions specific to our research products.
It’s true I can’t answer every question that comes through. I wish I could. But I’m committed to answering as many as possible. So, let’s turn to your comment.
Below, we can see consumer spending on a monthly basis as measured by the Bureau of Economic Analysis (BEA). What we see is the big drop-off in spending during the lockdowns. This was followed by a quick rebound through 2021. Then, we see consumer spending does grow slightly through 2022.
On the surface, this seems good. Consumer spending is growing. The economy must be humming along. But there’s some nuance for us to understand.
First, this data is measured in dollar terms. It shows how much money American consumers are spending in total. We would think that—as this number goes up—more goods and services are being purchased. Thus, economic activity is growing. But that’s not necessarily the case.
As we know, inflation—as measured by the Consumer Price Index (CPI)—really took off in 2022. The chart below gives us some idea.
In other words, it is highly likely that the 2022 growth we saw in consumer spending was not indicative of more economic activity. Very likely, it was consumers buying the same level or less of goods and services, which now cost significantly more.
And there’s another question we should consider: Where are consumers getting the money to spend? The answer is starting to come into focus. It’s from their savings.
In January, JPMorgan published research that showed excess savings from U.S. households now stand at $900 billion. That’s down from $2.1 trillion at its peak in 2021. And it’s down from $1.9 trillion since the start of 2022.
This paints an ugly picture. It tells us that the American consumer is eating into their savings account just to make ends meet. This might last for a few more months, but it can’t go on forever.
Eventually, savings will dwindle. And I expect many people will be forced to make some hard choices. And when that happens, we’ll see consumer spending collapse. All of this leads me to continue to believe that the economy is not nearly as healthy as we are told.
Gordon, it sounds like you want to believe that the economy is strong and that things are going well. I’d like you to know that I want to believe that too.
By my own nature, I like to see myself as a rational optimist. My worldview is heavily influenced by the exponential growth of technological advancement that will ultimately bring the last billion people out of poverty and improve the world’s standard of living to a level that most can’t imagine.
But I can’t ignore the numbers right now. Things are quite bad and about to get worse. We have a stretch to fight thorough before we get back to growth. I’m excited for that day to come as soon as possible.
“Sounds like a gamechanger to me…”
And finally, we’ll conclude with several pieces of feedback from readers around Apple’s new innovation for diabetics.
This does sound like a game changer to me. Having Type-II Diabetes it would be easier to properly monitor Blood Sugar levels.
Price is still an option but then my insurance company spends a lot on testing supplies every few months or so. I vote yes.
– Michael F.
Hi Jeff,
I am a diabetic and I would certainly purchase the Apple Watch to get serum glucose levels instantaneously.
– Jeffrey S.
Hello:
While you are on the right track, I think you are understating the potential value of E5.
THIS IS HUGE.
One of the primary problems with diabetics is “non-adherence”. That stems from two things:
1. The pain and nuisance of checking blood glucose – especially for those with glucose levels that are difficult to manage.
2. Lack of will power to modify their diet to conform to recommendations for their condition
While solving both problems would be ideal, solving either is immense progress. In addition, there would be a huge expense savings; the test strips are very expensive and additional supplies include the meter itself, syringes, the lancets, the lancet device, and alcohol swabs.
I see both governmental and commercial plans willing to pay for the Apple watch with E5, provided Apple pricing is appropriate. And uptake should be fast, again, depending on the pricing. Absolutely tremendous value for management of this disease.
Thanks,
– Mike M.
I’ve worked in the developing world much of my life where it is impossible to manage diabetes due to the lack of capacity to measure blood sugar. This could help billions if it’s affordable.
– Paul G.
There are many that have elevated A1C but are not or not yet diabetic. This new watch could provide feedback to the wearer to cut back or change diet until the A1C levels return to normal.
– Mike W.
This would be a Dream come true and a big seller as well.
If Apple can perfect this technology, it can certainly incorporate continuous BP (Blood Pressure) and certain abnormal heart rhythm monitoring as well. Because these two technologies are already out there with other medical devices.
However, others likely will put up a fierce battle and maneuver against Apple on the line of not having a clinical trial to delay FDA approval. Apple certainly has a deep pocket to do such as well.
But early FDA approval through partnership with a medical device maker may provide much needed massive public good.
– Muhammad I.
Dear Jeff,
Sign me up for an Apple Watch with blood sugar level monitoring. I have type 2 diabetes which is well controlled. I have had it for 25 years and all the testing I do is through a regular (3 monthly) blood test monitoring my A1C levels except when I go into hospital where they do the finger prick test.
I currently have an Apple Watch 6 after having a 1st Generation Apple Watch. The thing I like most about it is the always on capability. The thing I use the most, other than telling the time, is the timer function which I use daily for cooking. I have the GPS and cellular version which I occasionally use for taking calls independent of my iPhone.
I would instantly pre order a new Apple Watch as soon as they announced blood sugar monitoring. That would be a game changer for me. My existing watch has given me heart rate warnings which have changed what I was doing, and I can imagine the same thing happening if it was managing my diabetes status.
I am really excited by this news and cannot wait until it is announced.
Cheers.
– John K.
Thanks to all subscribers who wrote in with their feedback. Amazing comments that bring even more color to this exciting development at Apple. I enjoyed hearing about your experiences and what Apple’s new technology might mean.
For any subscribers who missed the news, on Wednesday, we discussed something called “E5” from Apple.
At a high level, the technology allows users to measure blood glucose levels simply with the Apple Watch. It involves using a process called “optical absorption spectroscopy.”
This process basically transmits a form of lasers from the watch into the wearer’s wrist. Then artificial intelligence (AI)-powered sensors on the watch determine glucose concentration levels based on the light that’s reflected back.
It’s incredible technology that, as Mike M. says, will be “HUGE”. I agree.
If there’s only one thing that I’m disappointed about is that this device is not developed by a small, publicly traded company. I wish it were. It would be one heck of an investment.
But buried within Apple, while still great for consumers, limits direct investment exposure simply because Apple is so massive.
But there still are ways to gain exposure to blockbuster product releases like this. The way to do it is to focus on the suppliers to Apple for the Apple Watch. That’s exactly what I do in the model portfolio of Exponential Tech Investor.
I hope you all have a great weekend,
Jeff Brown
Editor, The Bleeding Edge