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Cake day: June 20th, 2023

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  • It comes in different versions, some of which are enormous and some that are pretty modest. The thing is they are not competing with 4o, but with o1, which has really massive resource requirements. The big news this week was supposed to be o3 opening up to the public, which involved another huge resource jump, and set a clear trajectory for the future of AI being on an exponential curve of computing power. This was great news for companies that made the parts and who could afford the massive buildout to support future developments. Deepseek isnt so much disruptive for its own capabilities, its disruptive because challenges the necessity of this massive buildout.







  • That would be the possibility of concerning market distortions I mentioned earlier. They could totally be neck deep in pyramid building schemes or running unprofitable factories at a loss just to keep production up. This should still be putting inflationary pressure on the market, as material and labor markets should be heating up, but other factors might be pushing aggregate inflation down. For example, they might be building many billions of dollars worth of new condos while housing prices fall. Material and labor prices might be rising, but declining housing costs are pushing inflation into negative rates despite that. A free market economy would reduce construction in that case and the economy might slide into a recession while housing prices stabilize, but China could order SOEs and even private companies to keep building anyway. This would keep GDP growing, but would have other long and short term consequences.