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Why bankers are like time travelers who grab value from the future

How do bankers create money? Here's your incredibly frustrating answer: they just create money.

Yanis Varoufakis: Ever since humanity emerged, we've all had debts to one another. We are a collaborative species. We survived the evolutionary struggle in the jungle and in the steppes, in the desert only through collaboration.

Collaboration requires reciprocity. I do something for you today, you do something for me tomorrow. That is a debt. It’s a form of debt but it’s a nonfinancial, noneconomic debt. It’s an ethical debt. It’s the good side of debt.

As society became commodified and all activity started getting channeled through the anonymous market most of this reciprocity took the form of financial debt. What turbocharged the economy once the economy got separated from society through this process of commodification was banking.

Because, let’s face it. Bankers have a fantastic power over the rest of society by definition, by way of existence, to create money. When you get a loan from a bank it is a crazy idea that you are getting it from “somebody else”. You’re not getting it from somebody else. It is not true. This is a major fallacy that occupies most people’s minds, infects most people’s minds, that you are being given money that somebody has saved. That is not true. What the bank does it creates money from thin air. It just types into your account, you know, $20,000 if you borrow $20,000. It comes literally out of thin air.

And the hope of the banker is you will be able to repay it, because what happens is you take that $20,000, you buy equipment for your studio, you buy a new bicycle, a new car, whatever. So the money goes from your bank account to the bank account of the company or the person that sold you something.

And the idea is that through this circular flow of income and through this economic activity a new income is going to begin, new value will be created. You will be able to repay the bank. The bank will have obtained the interest and therefore the bank is going to profit. So the more they lend to you the more profits they make.

So it is a little bit—and that’s why I’m trying to explain to my daughter in the book—It’s a little bit like the bank is having a capacity to push their arm through the timeline into the future and grab value that has not been created yet, bring it to the present, invest it into some productive activity, hopefully to create the value that we need to replay the future.

But to the extent that this is successful—and it has always been successful—bankers suddenly get the idea that the more they reach into the future, the more value they snatch from the future to bring it into the present, the greater their own personal profit. But when they overdo it—and, of course, they always overdo it, they overreach—they take too much value from the future, bring it into the present. That value is not realized, and then you have a banking crisis.

And because they play such a crucial and powerful role in society they have the political clout – political clout that you and I don’t have because they usually are the ones for finance our politicians to get elected to congress and so on—that can use the political system in order to have themselves bailed out—you know, socialism for the bankers, and austerity for everybody else.

Like it or not, banks — and the bankers they employ — hold incredible sway over the economy of the world. The former Finance Minister of Greece, Yanis Varoufakis, has a great way of describing how they continue to consolidate this huge amount of power. He posits that bankers time travel. Not by a DeLorean traveling at 88mph, but by taking value from the future—for instance, how much the housing market is going to be—and apply it to the present to essentially create value out of thin air. It's economic black magic. And it can lead to major consequences for the rest of us... but rarely for the bankers themselves. Yanis's new book is the fascinating Talking to My Daughter About the Economy: or, How Capitalism Works-and How It Fails.

Does conscious AI deserve rights?

If machines develop consciousness, or if we manage to give it to them, the human-robot dynamic will forever be different.

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  • Does AI—and, more specifically, conscious AI—deserve moral rights? In this thought exploration, evolutionary biologist Richard Dawkins, ethics and tech professor Joanna Bryson, philosopher and cognitive scientist Susan Schneider, physicist Max Tegmark, philosopher Peter Singer, and bioethicist Glenn Cohen all weigh in on the question of AI rights.
  • Given the grave tragedy of slavery throughout human history, philosophers and technologists must answer this question ahead of technological development to avoid humanity creating a slave class of conscious beings.
  • One potential safeguard against that? Regulation. Once we define the context in which AI requires rights, the simplest solution may be to not build that thing.

A new hydrogel might be strong enough for knee replacements

Duke University researchers might have solved a half-century old problem.

Photo by Alexander Hassenstein/Getty Images
Technology & Innovation
  • Duke University researchers created a hydrogel that appears to be as strong and flexible as human cartilage.
  • The blend of three polymers provides enough flexibility and durability to mimic the knee.
  • The next step is to test this hydrogel in sheep; human use can take at least three years.
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Hints of the 4th dimension have been detected by physicists

What would it be like to experience the 4th dimension?

Two different experiments show hints of a 4th spatial dimension. Credit: Zilberberg Group / ETH Zürich
Technology & Innovation

Physicists have understood at least theoretically, that there may be higher dimensions, besides our normal three. The first clue came in 1905 when Einstein developed his theory of special relativity. Of course, by dimensions we’re talking about length, width, and height. Generally speaking, when we talk about a fourth dimension, it’s considered space-time. But here, physicists mean a spatial dimension beyond the normal three, not a parallel universe, as such dimensions are mistaken for in popular sci-fi shows.

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Predicting PTSD symptoms becomes possible with a new test

An algorithm may allow doctors to assess PTSD candidates for early intervention after traumatic ER visits.

Image source: camillo jimenez/Unsplash
Technology & Innovation
  • 10-15% of people visiting emergency rooms eventually develop symptoms of long-lasting PTSD.
  • Early treatment is available but there's been no way to tell who needs it.
  • Using clinical data already being collected, machine learning can identify who's at risk.

The psychological scars a traumatic experience can leave behind may have a more profound effect on a person than the original traumatic experience. Long after an acute emergency is resolved, victims of post-traumatic stress disorder (PTSD) continue to suffer its consequences.

In the U.S. some 30 million patients are annually treated in emergency departments (EDs) for a range of traumatic injuries. Add to that urgent admissions to the ED with the onset of COVID-19 symptoms. Health experts predict that some 10 percent to 15 percent of these people will develop long-lasting PTSD within a year of the initial incident. While there are interventions that can help individuals avoid PTSD, there's been no reliable way to identify those most likely to need it.

That may now have changed. A multi-disciplinary team of researchers has developed a method for predicting who is most likely to develop PTSD after a traumatic emergency-room experience. Their study is published in the journal Nature Medicine.

70 data points and machine learning

nurse wrapping patient's arm

Image source: Creators Collective/Unsplash

Study lead author Katharina Schultebraucks of Columbia University's Department Vagelos College of Physicians and Surgeons says:

"For many trauma patients, the ED visit is often their sole contact with the health care system. The time immediately after a traumatic injury is a critical window for identifying people at risk for PTSD and arranging appropriate follow-up treatment. The earlier we can treat those at risk, the better the likely outcomes."

The new PTSD test uses machine learning and 70 clinical data points plus a clinical stress-level assessment to develop a PTSD score for an individual that identifies their risk of acquiring the condition.

Among the 70 data points are stress hormone levels, inflammatory signals, high blood pressure, and an anxiety-level assessment. Says Schultebraucks, "We selected measures that are routinely collected in the ED and logged in the electronic medical record, plus answers to a few short questions about the psychological stress response. The idea was to create a tool that would be universally available and would add little burden to ED personnel."

Researchers used data from adult trauma survivors in Atlanta, Georgia (377 individuals) and New York City (221 individuals) to test their system.

Of this cohort, 90 percent of those predicted to be at high risk developed long-lasting PTSD symptoms within a year of the initial traumatic event — just 5 percent of people who never developed PTSD symptoms had been erroneously identified as being at risk.

On the other side of the coin, 29 percent of individuals were 'false negatives," tagged by the algorithm as not being at risk of PTSD, but then developing symptoms.

Going forward

person leaning their head on another's shoulder

Image source: Külli Kittus/Unsplash

Schultebraucks looks forward to more testing as the researchers continue to refine their algorithm and to instill confidence in the approach among ED clinicians: "Because previous models for predicting PTSD risk have not been validated in independent samples like our model, they haven't been adopted in clinical practice." She expects that, "Testing and validation of our model in larger samples will be necessary for the algorithm to be ready-to-use in the general population."

"Currently only 7% of level-1 trauma centers routinely screen for PTSD," notes Schultebraucks. "We hope that the algorithm will provide ED clinicians with a rapid, automatic readout that they could use for discharge planning and the prevention of PTSD." She envisions the algorithm being implemented in the future as a feature of electronic medical records.

The researchers also plan to test their algorithm at predicting PTSD in people whose traumatic experiences come in the form of health events such as heart attacks and strokes, as opposed to visits to the emergency department.

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