Money/Intelligence/Energy/Humanity
031.
AI shenanigans are getting out of hand...
Also on YouTube.
The Claude Fable 5 saga — released in June, pulled at the government's request days later, and now returning briefly on a metered leash — becomes the entry point into a deeper structural conflict: an inherently deflationary technology being force-fit into a financial system that requires ever-expanding moats. The register lands on a parallel between Bitcoin block production and frontier AI training, and on what it means that retirement portfolios are increasingly anchored to businesses whose product undermines the moats their valuations depend on.
Takeaways
- 01
Any AI moat that relies on gating access is structurally leaky — once a model can be used, it can be distilled, resold, or reverse-engineered by rational actors on the periphery.
- 02
Frontier AI capability rations along the same lines as the money supply: those closest to new money creation get first access to the newest capability, and everyone else gets the previous generation on a delay.
- 03
The technology AI companies produce is deflationary by nature — it distributes capability to individuals — while their business models require concentration and moats. That is a structural conflict, not a management problem.
- 04
Bitcoin blocks and frontier AI training share the same asymmetry — costly to create, nearly free to verify — but Bitcoin's design directs that asymmetry toward distribution rather than concentration.
- 05
The financial system's growing exposure to AI companies means retirement funds and index funds are increasingly anchored to businesses whose product undermines the very moats their valuations depend on.