Our economy is literally criminal

Why are convicted criminals at the heart of the financing and roll-out of AI? Because the global economy is based on practices which in any other realm would be a complex criminal conspiracy.

I'm writing about AI again today so you might think this is an article about AI and it isn't. So then you might think it's about data centres (which are not the same thing as AI), and it's not about them either. It's actually about vape shops. Or police colleges. Or the Royal Mail. And it's definitely about the Dark Triad. And political lobbying.

Because it is about almost everything in our economy. Because it's about company financial accounting.

But don't go! Because it isn't really about accounting at all. It's really about criminals. Well, criminals and vape shops and the Royal Mail and data centres and a police college. Because they're all sort of the same thing. That thing is Dark Triad. Oh dear, I'm going to have to slow down...

This week the International Monetary Fund placed a collapse in AI stock as a top five global risk along with nuclear war. That is quite a statement, but it is not an exaggeration. The US stock market is so reliant on Big Tech just now and the US is so reliant on stock markets these days and the world is still so reliant on the US as the foundation of the global economy that risk means big risk.

But from whence does the risk emanate? The short answer to this question is 'from the same place that subprime debt risk came from', because basically AI investment is almost exactly the same financial scam as subprime. I am not going to go into all of this here but you'll need a slightly longer explanation than that...

So here's the basics; there is a gold rush and you want to profit from the gold rush but the chances of success are a long way from guaranteed (your plot might not have gold on it) so there's a lot of risk involved. How do you make the profit without the risk? Basically you don't seek to profit from the actual gold but from the potential for gold.

You'd get first refusal on a plot and then you'd go to investors and explain that the plot has lots of gold (‘probably’ in small print) making it a highly profitable opportunity. So investors pay for the plot in return for a share, you take a management fee and some share of the gold as well and so you... can't lose. All you have to do is persuade them there is gold on the plot, whether there is or isn't.

That's what happened with subprime. Unscrupulous dealers sold mortgages to people who couldn't afford them, then packaged them up for bigger investors and told them there was gold contained in them, even though there wasn't. But if you tie them up the right way and make them look more golden than they really are, investors buy them and you've won.

None of those people lost money when the whole thing went down; the investor was ultimately your pension so it was your pension that took the hit because the bogus asset was now sitting with equity financiers, not the people who made them up in the first place. It's all just trickery.

If this sounds like it's not entirely legal, it's because it isn't if you overstate value and reliability. Yes, buyer beware, but that doesn't mean seller can lie. Stock manipulation or false reporting of financial details is against the law. Complaining about the fact that almost no-one was charged over the 2008 crisis is not a complaint about moral failure but legal failure. Crimes were committed and swept under the carpet.

That financial jiggery pokery broke the world as we knew it, led to Trump and the rise of the far right and created a simmering financial and economic crisis we've never escaped and which is behind all the worry about western economic performance. So to stifle those worries, here's a new scam...

I mean literally. AI might prove the breakthrough western economies need but it can't be financed using methods that would get through normal accounting practices (like being able to show how you will get a return from trillions of dollars of investment). It is massively speculative and might fail as a business model (AI may just need too much energy for what it can do so and so be financially unviable at scale). So we're instead doing this through the power of scam.

Hence meet Firums, a neocloud company. I'm lifting a lot of info from this excellent analysis which explains things in more detail. But basically a neocloud is a sort of speculative venture where you wangle your books to hide debt. It works really simply; rather than a big tech company building a data centre with borrowed money, it promises to buy 'processing time' from general purpose data centres.

Without that processing power there is no AI technology company. Without those five big tech companies there is no-one who will buy a data centre's processing power. It's basically an Aleo for conning investors and markets. And if you trace who runs these neoclouds, that becomes clearer.

Firmus was founded by a criminal, a man who spent two years in prison for stock manipulation, insider trading and other financial crimes. His partner ran a loss-making lingerie firm. This is Laurel and Hardy, if Hardy was a literal felon. If these guys turned up at the pub with a bag of knock-off perfumes for sale you'd be hesitant.

So why on earth were they floating for $30bn? Not least due to a close working deal with the world's biggest company, Nvidia, and some of the world's largest banks. Nvidia makes the chips that power AI and is clearly and knowingly using this dodgy outfit to create a circular debt-hiding scam. They give Firmus cheap chips, Firmus builds a warehouse to put them in, Nvidia buys the processing, no-one has any debt.

“The system itself is basically a sprawling organised crime network which has only one purpose – strip wealthy from the general public and the government and direct it all to the very, very rich”

But it's a lie. And it failed because they exposed the lie themselves. When a company properly launches on the stock market it has a series of conditions it sets. One of them is that the company's existing shareholders (the owners about to profit from a public launch) promises not to sell their own shares for an extended period of time, so that they have as must skin in the game as the new investors.

Well the Firmus owners refused to have such a period which more or less painted 'this is a scam and we are going to use your money, goose our assets and run with the profits before it falls down' on their foreheads. Investors said 'no way' and the whole global financial and technology markets were rocked by a $30bn failure. The company had to cancel the IPO and didn't sell a single share.

But it ain't just Firums. TeraWulf is another neocloud, this time part founded by the wife of a disgraced financier who was charged with another case of market manipulation. Sharon AI is run by a man who owned a hotel which burned down in mysterious circumstances which led to him being grilled by the police (though arson is difficult to pin on an individual).

Applied Digital is revealing. It was in film production (another sphere rife with scams) then flight safety technologies then plasma then potato processing then blockchain then AI. If I tell you that potato processing in the US was subject to a massive legal action for illegal cartel and price rigging and that blockchain generally means 'money laundering' you'll realise that all these people are just serial scam artists.
Yet they are scam artists with the backing of the most powerful corporations and financiers in the world. This is all cognitive dissonance – how are companies running towards convicted fraudsters and not away from them?

Because it's not 'like a scam', it is a scam, and stock market listed companies can only get their hands dirty so much before it becomes a problem for them. So they outsource their dodgy dealings but hide it behind these seemingly legitimate businesses which are really just accounting tricks.

In case you're not linking this, all the companies behind Scotland's proposed data centres are neoclouds, and since we're currently the mugs considering hosting the biggest data centre in the world, Scotland would become the 'AI subprime capital'. Yet again can I emphasise that being the property subprime capital was the absolute opposite of a good sign for your community...

Then again, if you've got a vape shop near you and Sherlock Holmes couldn't work out who owns it, that isn't a good sign for your community either. But for that matter if you're training to be a police officer and you find out your college is owned via 27 shell companies nested in tax havens, that's not a good sign either.

The global economy is based around things that economists tell you are 'necessary'. The analogy with the priesthood is not a loose one; literally, they dictate reality to us because they are the ultimate power and decide reality.

So let me just have a go here. No, raising interest rates doesn't lower supply shock inflation. No GDP growth does not reliably make the public wealthier. No, wealthy never trickles down, it congeals upwards. No, complex and risky financial products and practices like derivatives or CDOs or short selling are not essential to the economy. No, an honest man never, ever needs a shell company.

What is important about every single one of these examples (and countless others) is that in any other context they would be considered fraud, illegal, immoral. If I lied and charged you for a roof repair that wasn't needed and wasn't done, that would be illegal. That's what is happening with inflation. We're being lied to that the roof needs fixed when actually we just need Donald Trump to get the fuck off the roof.

If I offered you a contract that said 'give me money, I'll multiply it and give you back more than you gave me' and then I didn't, I'd be imprisoned. That is what ever politician has said about wealth concentration and GDP growth for 50 years.

If I sold you a half-kilo bag of nails and you discovered half the contents were stones, you'd call the police. That is half the financial assets in the world just now. If I told the tax man I was 27 different people before admitting who I really was, I'd be charged. That's what nested shell companies are.

Yes, all this is now normalised. The argument is that once this kind of effectively criminality is embedded in the system, it is key to maintaining the integrity of the system. But that is because the system itself is basically a sprawling organised crime network which has only one purpose – strip wealthy from the general public and the government and direct it all to the very, very rich.

I amn't talking metaphorically here. Every single element of this economy is either a public agency or regulator with 'GDP growth' as its priority, or it is a corporation legally obliged to maximise shareholder profits. It is set up to rob. Then they created university economic departments to indoctrinate another generation into this scam, and then they bought up all the media just in case.

This is what happens when, in 1979, Britain decided to elect a woman who believed that handing the world over to the Dark Triad was the best thing for us all. Now we have an economy shaped by manipulative, narcissistic sociopaths. I mean literally – one in 20 members of the public are probably sociopaths but among CEOs it is one in five. Being a sociopath is lucrative when your economy is sociopathic.

That is why we have the remarkable fact that when Forbes Magazine highlighted 30 entrepreneurs under 30 years of age who 'represent the future of capitalism', loads of them ended up in prison. Read the list here. Between them they raised $5.3B in funding but have been arrested for frauds and scams worth over $18.5B. Forbes was right, this lot really were the future of capitalism.

And that's all the warning we need.