Begun, The AI Price Wars Have
The Rise of SkyNet: The Algorithmization Of Finance Part III
The headlines from this past week tell a story that would have seemed like sci-fi only a few years ago. Bloomberg’s Matt Levine reported on AI tradebots that taught themselves to collude, fixing prices and hoarding profits (link here), and Bloomberg published an additional article exposing the proliferation of tradebots in the bond markets (link here). Today, the FT examined how pricing algorithms are being used to determine people’s wages:
The impact of algorithmic prices we’ve been writing about over the past five years is now becoming a mainstream topic—yet the full implications for the price system that coordinates our economy and markets remain poorly understood.
Part I of our SkyNet series introduced the concept of HyperPrices through a thought experiment set in an imaginary Costco where ChatGPT dynamically set prices for everything in the warehouse.
Part II thrust us into the unsettling reality of HyperPrices in our own world—including algorithmically driven Flash Crashes, Melt-Ups, and other glitches (link here) in the Financial Matrix. From a “crypto bro” literally using prices as his easel to “paint the tape”, to an algo price war that resulted in a $24 million Amazon book:
These extreme cases reveal a profound truth: HyperPrices permeate our entire economic landscape. Beyond the sensational outliers, the tendrils of algorithmic pricing have infiltrated virtually every corner of our economy, and are increasingly warping the fabric of the price system itself.
Like Mickey Mouse enchanting brooms in the Sorcerer's Apprentice, we’ve conjured forces that operate beyond our full control or comprehension—and unleashed them in the heart of our financial markets and economy. The prices flashing across our screens represent...what, exactly?
Read the full Part Three on our website, here:
Algorithmic Terraforming
New to the Sorcerer’s Apprentice series? Start with our foundational posts on Hyperreality and the Financial Matrix for essential context, or explore the full Table Of Contents.
Get gold an silver coins and burry them When *super-hyper-stagflation* hits — that is, a scenario with *extremely high inflation**, **economic stagnation**, and possibly **rising unemployment* — most *traditional investments* don't do well. However, *some assets historically hold or gain value* in these extreme conditions.