So, a Chinese financial firm (not even a software or computer company) has put out an open source AI model which is 50 times more efficient than Chat-GPT or any other American AI. It’s so simple you can run it on some phones, it doesn’t have to call home.
The sound you hear is Sam Altman screaming at the Devil as he realizes he sold his soul to become the world’s richest man, and it ain’t gonna happen.
(Faintly, in the background, the devil laughing his ass off.)
Absolutely hilarious. Oh, and they did it with a tiny team for hardly any money. Didn’t take billions. Doesn’t require massive amounts of energy.
And that whole open source thing matters: everyone else can build off their model. Deepseek, being Chinese, has some censorship in it (type Xi Jingping’s name to see it in action), but you can build your own without the censorship.
One of the interesting things is that it was built by a team of quants. Seems that the Chinese have been crushing the finance industry lately, since they saw what it has done to the West, so the Quants decided to try their hand at a bit of optimized AI code.
This chart is one of the most illustrative of Xi’s policy over the last six years or so:
Seems Xi has also figured out (as I’ve noted in the past) that billionaires suck. They form a power center outside the party and they act against the best interests of everyone in society but themselves.
Turns out that having lots of billionaire is a policy choice. The West made that choice and so did China, for a while, but when they saw how dangerous and harmful billionaires are, they reversed themselves and changed policy to crush them. They’ve even thrown them in prison. (Vietnam recently executed a mogul, though she wasn’t quite a billionaire.)
China’s CCP wants prosperity for everyone in the country. It’s the best way for them to stay in power, and hell, there’s every indication they really believe it’s the right thing to do. They’ve deliberately crushed their housing bubble and the state is moving heavily into building housing, they cracked down on exam-prep tutors, because that’s a red-Queen’s race which favors the rich and hurts everyone else, including kids. They built recreation centers just for delivery workers and forced companies to treat them better.
And they have the tech lead in about 80% of fields, plus, it appears, one more now. Just as Trump announces his five hundred billion dollar AI fund, launches his own shitcoin so people can bribe him without having to stay at one of his hotels and juices crypto, a fraudulent field which caters to the Western desire to get rich without actually doing anything useful for society.
America’s flailing around. Their only real plans is “let’s loot our vassals and satrapies”, and they’ll manage to do more of that. But it isn’t going to change America’s trajectory. It’s a failing Empire, it’s swirling the drain and nothing is going to stop that, since the actual necessary steps require policies like, y’know, slashing home prices, gutting billionaires, raising taxes on the rich, taking utilities and other public goods back into public control and so on: all the stuff no one, Trump included, wants to do.
Empires die hard, and a lot of suffering goes with that. But die the American Empire is, and will. China has already won, and they deserve to.
david lamy
Billionaires are a waste of resources, period.
For a cool demo of Deepseek, read the following by Stephanie Kelton:
https://stephaniekelton.substack.com/p/the-impact-of-25-tariffs-on-canadian?publication_id=423556&post_id=155833557
sbt42
But damn, the hits just keep on comin’.
Altandmain
Its been pointed out that China is more democratic in the sense that the Chinese government reflects the will of the Chinese people more than the Western governments do. I believe that the French intellectual Emmanuel Todd pointed out that China and Russia implement the will of the people, while the Western politicians only have given lip service to it, while serving the rich. I’d have to find the link though.
Another consideration is that the people of China see their own government as democratic, more so than the West. The author of the Tweet below speculates that the reason why is because of the governments addressing the will of the people, rather than a small amount of rich people inevitably gain more legitimacy among the people.
https://x.com/RnaudBertrand/status/1789936780063723829
Democracy isn’t jusy voting – the spirit of the democratic ideals is more important and when only the candidates that the public of the nation can vote for are picked by the rich, trust inevitably falls as the public is screwed over by the corrupt political class. People realise that the democracy they have is a sham.
Meanwhile, in America, although the US gives loud propaganda to democracy and the supposed superiority of the US system, it is really a plutocracy.
https://youtube.com/watch?v=5tu32CCA_Ig
That’s news to the Western people who have been fed a load of propaganda about the superiority of the Western system and propaganda about how China should be like the US in adopting the US system. I have long believed that the West wants China to have corrupt politicians so that the West would be able to bribe them and loot China, like they do to the Global South.
Thankfully that isn’t happening and China is rapidly growing.
Oakchair
It is quite hard to do a pump and dump type scheme when in the middle of the pumping some small foreign nobody produces a similar product that beyond any doubt proves how much your product is an overpriced piece of old rotting vegetative matter being consumed by black mold.
We’ve been bombarded with marketing on how AI is going to change the world, create millions of jobs, trillions in growth, and solve all our problems. With the risk being it will be too intelligent for us to handle.
In current reality AI still can’t even cite sources at a 6th grade level, spell check at a level beyond this hastily un-proof read blog comment, remember what it said at the start of a conversation, not tell people to drive into a lake, or sift through google at a level beyond copy and paste.
We could argue that China releasing its AI was a mistake. They should have let us keep dumping more resources into it until it became so massive that what remains of the Wests collective intelligence collapsed into the Event Horizon to never appear again.
NR
What’s probably even more important than the China vs. America aspect of this is the open-source vs. closed-source aspect. There’s no barrier to use or modification with Deepseek, as opposed to Open AI and other American AI projects (although apparently NVidia is developing an open-source AI).
A user on Reddit tested r1 (Deepseek) vs o1 (Open AI), and this is what they found:
So it’s better in some ways and worse in others. However it’s much cheaper and apparently less power-intensive (although you still need some serious hardware to run the full version, the version that works on a phone is pretty stripped-down). Bottom line, Deepseek is already very impressive and it’ll be interesting to see how it develops from here.
Duncan Kinder
The United States may be sliding downhill, but with open source AI, you or I might do very well.
Deepseek for Dummies, anyone?
different clue
I am a good normal patriotic American. I consider Sam Altman( and all the ‘Sam Altmans’) a domestic internal social class enemy of the American majority, myself included. (Including Elon ‘Twitler’ Musk, who may well be an illegal alien. I wonder if a strictly legal ‘Spirit of Saint Luigi’ movement could sell little red hats with MMMA on them — MMMA standing for Make Musk Millionaire Again).
So I am happy to see them crushed and impoverished, and their dirty filthy AJI ( Artificial Junk Intelligence) crushed as well. I feel sad that it took a Chinese company to do it, but if that is what it takes, then so be it.
( By the way, I hope that TikTok is eventually cancelled and forced to Go Dark in America, and that ByteDance never ever sells. Then perhaps a raging mass of young TikTok Americans will rise up and kick some shit over sideways and stomp on it. And they can be a Single Issue voting bloc which votes for Single Issue Reps and Sens and Prez to repeal the law against TikTok. And if TikTok is still judged to be a security threat, they can then bring in narrow surgically tailored controls such as have been brought in by certain European countries).
Mark Pontin
To add to your glee — and to spell out the obvious — DeepSeek is the technology desk of High-Flyer, a hedge fund, so they’ll have shorted Nvidia and other candidates last after having run intensive scenarios to figure out how to do that to maximum effect.
That’ll be one big reason for releasing the open source models to validate what their AI can do. So a lot of that $600 billion that just flowed out of Nvia (as well as from elsewhere in US stocks) flowed directly High-Flyer.
Sweet.
GrimJim
The Soviets never understood Socialism, but then, it was never really of interest to the rulers who won their way to the top of the heap.
The Chinese flailed about for a while, but then studied what went wrong, and discovered what the Soviets and all other Socialists missed — Capitalism is an absolute pre-requisite for a Socialist society and economy to develop.
You can’t just jump from Feudal Agrarian Society to Democratic Socialist Republic through Forced Industrialization.
It’s not just about the technology or the buildup of Capital (proper Capital, the things that make things, not Money).
It’s also about the people.
People born and raised in a Feudal Agrarian Society will never adapt to Democratic Socialism; well, not en-masse.
A society needs to go through those stages of Capitalism to get to the kind of moral and ethical base where Socialism can work.
The problem, as you noted, is the Billionaire Class. The Elite of the Elite. The Takers.
If you let that build up, all it leads to is Post-Capitalist Financialization, the thorough propagandization and utter destruction of the Working Classes — the 99% — anomie, self-cannibalization and feasting on the seed corn, and collapse.
China can, if it holds to the current trajectory, build a proper Democratic Socialist Republic. They just have to keep that Elite of the Elite from developing.
Of course, they also have to deal with the wrath of the collapsing West and Climate Change.
But if they can survive the collapse of the West, they might, just might, have enough time for everyone in China to enjoy a short generation of life, liberty, and happiness before their heartland is inundated and everything else freezes or boils.
KT Chong
IMO, DeepSeek exposes a lot of fraudulent nature of the US tech industry. IMO, most of those billions of dollars that went into AI research and development in the US… went into the pockets of CEOs, top execs, and boards. Everyone at the top must have skimmed off some money. The money that finally ended up going into the actual R&D of the AI was less than $1 billion, which is what DeepSeek spent on developing their AI.
KT Chong
Here is my personal intuition about Trump’s Stargate Initiative:
In the past 5-6 years, the US tech industry and its peripheral sectors have made too many bad bets, they have overspent, and many were outright scams: Metaverse, FTX, Binance, NFT, WeWork, Silicon Bank, Theranos, overhiring and overexpansion during the pandemic, crypto lending platforms, overvalued startups, etc.
The US tech industry is heading and overdue for a crash. The crash would impact the entire US economy.
The Stargate Initiative is just Trump (who has always had great instinct) pre-emptively bailed out the tech industry, inject a trillion dollar into the industry, so there would not be a disastrous economic meltdown during his second term.
KT Chong
Firstly, a fun clip from a movie about the 2008 US financial and housing crisis, The Big Short.
• “That’s my quant…” https://www.youtube.com/watch?v=QpsI_Gvn7C8
Here is another a relevant clip from another movie about the day before the 2008 financial crisis, Margin Call.
• “What’s your background?” https://www.youtube.com/watch?v=Elyfo1DIlzs&t=55s
And here is how China has been cracking down on quants and rocket scientists working in the financial industry:
• Breaking Points interview Arnaud Bertrand on DeepSeek: https://www.youtube.com/watch?v=quILe6WoLgs&t=340s
Z
I’d imagine that Miriam Adelson’s Personal Pedicurist will still toss the $500B to his pals who are already at the trough snorting for it. It’s all free money essentially. It’s money that’s not going to be created by increasing taxes on anybody and is simply being “produced” by the U.S.’s power to create funds without paying for it since the U.S. got the king fiat currency and the military to recklessly seize resources, if need be, to back it. That’s the naked truth of it.
I expect Trump to use this power more brazenly and openly than past presidents … fits his profile … and dare the rest of the world to do something about it because, in fact, it is quite difficult to for the rest of the world to protect themselves from a U.S. dollar blitzkrieg unless BRICS creates a gold-backed currency. Obviously, the countries that use a gold-backed currency will also need to have a mutual defense agreement to protect themselves from the U.S. stealing from them and/or destabilizing their governments and society. They are going to have to toss out U.S. companies and NGOs and whatnot, as well, and detach from the U.S. economically as much as possible. We are already starting to see Trump’s hubris and bullying nudging the rest of the world in this direction.
Z
Z
I had it wrong, the $500B investment into AI is supposed to be a private investment.
Z
Oakchair
GrimJim’s comments apply more generally especially in low and middle income countries. Governments try to skip the steps of development. Left leaning politicians try to just give everyone education, healthcare, and social services while their right leaning counterparts go for financialization, real estate, and making the rich rich.
Rich countries have all those traits/services not because those things create wealth –more often they are counter productive– but because they got rich and had the money to throw at them.
A country becomes wealthy due to a rapidly expanding productive sector primarily manufacturing with help from agriculture and mining.
Likewise, a country rich in say oil needs a government to actively develop and protect their industry or else shit will go downhill fast when the oil is gone.
Ian Welsh
The Japanese/Asian model has shown that universal primary, then secondary education is hugely helpful in industrial takeoff. This is what Japan did, and China, and it’s what India didn’t do — they concentrated on tertiary education and flopped big time.
A productive sector requires literate, educated employees, even for a lot of jobs where you’d think it doesn’t matter. Certainly necessary for the light industry which is required for the ramp up of Japan/China style industrial takeoff.
This is what Mao did right: he got everyone educated and massively improved their health and lifespan. That allowed Deng’s policies to work.
Soredemos
A gold backed currency would quickly implode, and not because the US would invade and squash the ‘threat’, because it wouldn’t be a threat. It’s actually a monumentally stupid concept, inherently deflationary, and would have no longer term future before it ripped itself apart.
It’s also not how money originated. The notion that humans went from barter > ‘precious’ metals > coins > paper money > abstract notions of credit and purely balance sheet money is a myth. In fact, it’s essentially a lie. The reality is it went balance sheet credit > state coinage > paper money > purely balance sheet accounting, with barter only happening between people already familiar with notions of credit in extreme circumstances, eg two tribes briefly encountering each with a lack of mutual trust, or the siege of Leningrad.
Revelo
@Mark Pontin: bingo, DeepSeek originated from a hedge fund. They understand perfectly that making money from AI is hard and uncertain due to lack of moats. Big fast money comes from the financial economy, and shorting a bubble as it pops is among the fastest financial economy money of all (trading a crypto bubble is faster, and i wouldn’t be surprised if the hedge funders at DeepSeek were involved using AI to win at that). If you are the one who pops the bubble, then you can be sure of avoiding a short squeeze, which is the dangerous part about shorting.
Z
In some form or another, the U.S. used some sort of metallic backed currency standard up until 1971. I know that it was a different world back then, but it didn’t quickly implode during that period.
The idea behind it, as you probably know, is to tie money to some sort of valuable, universally physically store-able, finite resource. And gold … and silver … fits the bill. They both have valuable industrial uses, particularly in the electronics/semiconductor industry.
Otherwise, what do you end up with? Madness such as the U.S. making claims on world wealth by mere computer keystrokes and all the corruption that comes forth from that. In fact, I suspect that a major factor as to why Syria folded so easily was due to the U.S. bribing Syrian military officials, which came at little or no cost to the value of the U.S. dollar. I’d imagine that a large reason that EU countries are so subservient to U.S. interests is also due to bribing their leaders in some form or another, again, at little or no cost to the value of the U.S. dollar.
The West, led by the U.S., IMO has basically cornered control of the currency markets because they can create money to produce the leverage to do it. And who knows what money is being created off the books, which isn’t being counted by the Fed, possibly passed to BlackRock through their special vehicle arrangements with the Fed to supposedly stabilize markets? Obviously, there is no magic money counter out there that keeps track of all the U.S. dollars in circulation and neither is there a magic market that fairly and efficiently properly values the dollar.
I understand that this is a very complex subject and I’m not going to make claims that I have a complete understanding of how it would all turn out … nobody can … but what more incorruptible solution is there to what the U.S. is doing, which is corrupting the world economy … and foreign governments … with mere keystrokes by creating dollars?
Crypto currencies, in my mind, are corruptible because there are no finite physical constraints on them, which, IMO, is why folks like Larry Fink are so supportive of them.
Z