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Dear pals, The United States Federal Reserve Bank has signified that it will continue to raise rates of interest. As one repercussion, the stock exchange is considerably down, especially tech stocks, relative to the beginning of the year. What does this mean for AI? In this two-part series, I want to discuss what I believe will occur which might have implications on your AI tasks and what I believe ought to happen.
The U.S. has enjoyed low interest rates over the previous decade. Simplifying a bit, if r is the rate of interest (if the rates of interest is 2%, then r = 0. 02), then one dollar T years in the future is worth 1/(1+r)T as much as one dollar today. The bigger r is, the less that future dollar deserves relative to its value today.
However if the rate of interest were 5%, then an ensured pledge of one dollar in ten years would deserve just 61 cents today. What Did you see this? indicates is that financiers in the stock exchange are moving to put a greater premium on money today instead of cash in the future.
This has important ramifications for AI. Over the past decade, many ambitious AI efforts looked for to construct essential technology that may settle over lots of years. A few years back, extremely speculative bets on an experimental technology from strong initiatives such as self-driving to more determined ones in which a team sought to perform a clear roadmap for a specific company looked like affordable risks.
Lots of investors are wondering if the stock exchange's 13-year bull run has actually come to an end, and if the next period will be extremely various. If rates of interest continue to increase, then: Highly speculative, long-lasting innovation development will have a more difficult time getting funded. I think this is regrettable, since we will forgo lots of developments.
There will be more pressure for groups to demonstrate short-term company impact. For example, projects that are likely to create monetary rois within a few years will look more attractive than long-term bets. What this means for our neighborhood is that we must be prepared for increased pressure to develop projects that show near-term, tangible worth.