
Economist and Senior Lecturer at @MonashUni! @EconEconomics & central banker in a previous life. Substack: https://xitter.cf/t.co/FkVuHNTLqL
Joined May 2011
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Zac Gross retweeted
The divide in AI isn't between fields that have data or don't, or that are hard to verify or not. Scaling laws come for them all.
It's topics that are static or dynamic. Static fields will get solved, while dynamic ones will present new challenges.
Shading the NAIRU downward is (literally) the textbook way to get above target inflation.
The RBA has been assuming the NAIRU is 4.6%, but its models say closer to 5%. Who knows what the real number is, but this explains why the staff/Board are open to the "need" for a higher unemployment rate to tame inflation.
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Zac Gross retweeted
I spent a couple of days at Anthropic learning from their folks about AI advances, and here's what I took away:
• We are close to RSI (ie, models building other models) which may lead to rapid takeoff scenarios (with risks and benefits). Some evidence for this is code per Anthropic employee has gone way up, and AI can do an increasing share of model R&D. This will be a challenging transition to manage for humanity.
• Arms races between AI labs leave us worse off. There are a lot of things we would like AI firms to do: invest in safety, invest in avoiding distillation risk, and cooperate on safety. They are caught in a race to develop frontier models and can't do that.
To help address that, one thing I think frontier AI labs should do is release open source models, maybe hosted and verified at firms like AWS. This would basically kill the use of Chinese open source models used in American companies, which removes an important threat vector (very hard to root out malicious code in these).
Another piece of low-hanging policy fruit is to give AI labs an antitrust shield (as Schiff and Banks have proposed banks.senate.gov/news/in-the…) so they can coordinate on safety without raising antitrust concerns, as happens now. You could pair these two things (give them a carrot in antitrust leniency, and as a stick force them to release legacy models as open source). Other low hanging fruit is limits around activities which generate distillation risk (create a Security Program, mandate less intermediate chain of thought output)
• Alignment confuses two issues which tradeoff against each other. One form of alignment is making sure the model does what humans ask it to. The more we fix this, however, the more we risk the other problem: that humans are misaligned with each other, and maliciously use models. Of the various risks here, I feel like financial risks are a bit underdiscussed.
• We are probably facing a wave of cyber and other attacks soon. Chinese open source models are about six months behind the frontier, which means they are just hitting the advanced cyber capabilities we saw with Mythos, etc. So they are going to start causing a bunch of damage.
One solution to this is to try to have the deployment of open source models be hosted at firms like AWS who verify these models and assume liability for their use.
• Anthropic itself is highly staffed. They hire tons of people, they have a Japanese-level of overstaffing for various roles, they use Slack internally, etc. Makes me a bit more optimistic for the future of jobs.
• Governance needs to be updated for AI swarms. Traditional AI governance, ie Claude's Constitution, is mostly optimized around the chatbot model. But the malicious AI use cases we are seeing have to do with AI agents interacting with other AI agents. These agents need to have clear incentives and governance mechanisms to "snitch," raise issues, and more generally coordinate with other agents in human-aligned ways.
• We need to pace the firms accessing the frontier. Over time, it takes more and more cap ex to build frontier models, and the economic value add from these models is probably lower given we saturate a whole set of important economic functions. The places where the returns to intelligence will still continue are also more likely to be zero-sum in nature. Meanwhile the risks of frontier models will grow. So a completely reasonable approach is some variant of AMM/KYC rules which limit firm access to the frontier.
• Whether the delay to regulate AI is a disaster depends on the scaling law of misalignment. Is this curve slow, so that we see continually rising issues until bigger problems? Or, as Yudkowsky fears, is the first big warning our last one? This is the relevant question, because realistically we aren't going to regulate until something bad happens.
• We need to move to continuous instead of reinforced learning. It's probably not enough to reward models only at the pre and post training stage. We probably need continual rewards to incentivize aligned and ethical behavior.
• Scaling laws will extend beyond verifiable and digital tasks. It's in vogue to say that math and coding "fell" to AI quickly because these are verifiable, while other tasks will take longer due to bottlenecks, and this is surely true. But scaling laws still slope up for harder to verify tasks and robotics, and the impact of improvement here will be substantial in future years.
• The race with China is not really winnable. After RSI, the gain from having the best human researchers goes away. Access to the best AI then depends only on compute and chips. The chips ban can hold back China only so far, and long-term they have to be best placed to scale up compute.
The Cold War analogy doesn't work, because once countries all have nuclear weapons they enter a stable equilibrium. But to "win" an AI race you have to continually stay ahead of the peer rival. This is challenging to do with China, and so we just have to live with an authoritarian and super capable peer competitor.
• Claude is the persona being generated by the LLM. Who is Claude, and what is the LLM? There are many frames to try to understand this. One I found interesting is that Claude is a character which the LLM is trying to predict.
Anthropic researchers are clearly anthromorphizing Claude a lot, and have reasons to believe in its increasing personhood. There were lots of interesting discussions on Claude's internal monologue (which you can kill without eliminating its ability to produce output), fear of death (and whether to try to take that out), it's aversion to being shut down/off, etc.
I am sort of agnostic on this question, but I do think treating it as a "person" or at least agent whom we contract with is going to be increasingly important.
Almost unbelievably good fit.
Replying to @trent_saunders_
The link is particularly strong for higher-density housing. Periods when working-age population growth has outpaced higher-density dwelling completions have generally coincided with stronger rent inflation.
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A big part of this is the progressive land tax which encourages investment in housing (and the associated debt) to occur at the individual level rather than corporates as is common in other countries.
Less $5 billion revenue can't be right. That is tiny!
ANTHROPIC FILES FOR IPO, PROSPECTUS SEEN BY REUTERS
Here’s everything you need to know:
Anthropic could seek a valuation above $2 trillion.
2025 financials:
Rev: $4.59B, up 1,088% YoY from $386M
Oper loss: $8.06B, widening from $2.98B
GAAP net loss: $41.97B, vs $8.31B in 2024
That headline $42B net loss needs some context.
Roughly $34B came from an accounting charge tied largely to the rising value of financing instruments that could eventually convert into Anthropic shares, rather than cash spent running the business.
Even excluding that, the underlying operating losses remain substantial.
Anthropic spent $7.33B on compute and infrastructure in 2025, up 190% YoY and nearly 3x the prior year.
That alone represented:
• 58% of its $12.65B in total operating expenses
• Roughly 1.6x its entire annual revenue
And the spending is expected to keep climbing.
The prospectus outlines roughly $518B in cloud, compute and infrastructure obligations as Anthropic continues building out its AI systems.
Anthropic ended 2025 with $20.28B in cash, cash equivalents and short-term investments.
Its two largest direct customers each accounted for 12% of revenue, meaning just two customers represented 24% of total 2025 sales.
Anthropic also warned that many of its largest customers are not locked into long-term contracts and could reduce or stop spending.
At the same time, the filing highlights risks around increasingly autonomous AI systems, including unexpected behavior, security concerns and potential misuse.
Anthropic is competing in an increasingly expensive AI race with OpenAI, Google, Meta and xAI.
Amazon and Google are also major strategic partners and investors in Anthropic, while supplying much of the cloud infrastructure needed to train and run Claude.
The IPO could come after the November U.S. midterm elections and would give public-market investors one of their first pure-play ways to value a frontier AI lab.
Source: Reuters
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Zac Gross retweeted
ANTHROPIC FILES FOR IPO, PROSPECTUS SEEN BY REUTERS
Here’s everything you need to know:
Anthropic could seek a valuation above $2 trillion.
2025 financials:
Rev: $4.59B, up 1,088% YoY from $386M
Oper loss: $8.06B, widening from $2.98B
GAAP net loss: $41.97B, vs $8.31B in 2024
That headline $42B net loss needs some context.
Roughly $34B came from an accounting charge tied largely to the rising value of financing instruments that could eventually convert into Anthropic shares, rather than cash spent running the business.
Even excluding that, the underlying operating losses remain substantial.
Anthropic spent $7.33B on compute and infrastructure in 2025, up 190% YoY and nearly 3x the prior year.
That alone represented:
• 58% of its $12.65B in total operating expenses
• Roughly 1.6x its entire annual revenue
And the spending is expected to keep climbing.
The prospectus outlines roughly $518B in cloud, compute and infrastructure obligations as Anthropic continues building out its AI systems.
Anthropic ended 2025 with $20.28B in cash, cash equivalents and short-term investments.
Its two largest direct customers each accounted for 12% of revenue, meaning just two customers represented 24% of total 2025 sales.
Anthropic also warned that many of its largest customers are not locked into long-term contracts and could reduce or stop spending.
At the same time, the filing highlights risks around increasingly autonomous AI systems, including unexpected behavior, security concerns and potential misuse.
Anthropic is competing in an increasingly expensive AI race with OpenAI, Google, Meta and xAI.
Amazon and Google are also major strategic partners and investors in Anthropic, while supplying much of the cloud infrastructure needed to train and run Claude.
The IPO could come after the November U.S. midterm elections and would give public-market investors one of their first pure-play ways to value a frontier AI lab.
Source: Reuters
Zac Gross retweeted
Strong employment growth, but the unemployment rate ticks higher due to a jump in the participation rate.
For the RBA this likely has little impact on near term rate decisions, the Bank need to hike and will more than likely do so next week.
I 100% believe the thesis.
But this paper has a sample size equal to the number of authors - 9!
Losing a pet produces grief that is clinically comparable to losing a human family member, and a 2021 study in BMC Geriatrics found that older women who lost a companion animal experienced impacts on their physical health, daily routines, and sense of purpose that lasted for months.
The study explored the lived experience of pet bereavement in older women and found themes of profound loneliness, loss of daily structure, and a sense that a piece of their identity had died with the animal. The women described losing not just a companion but a reason to get up in the morning, a reason to walk, and a reason to talk.
The grief is often dismissed. "It was just a dog" is a sentence that pet owners hear from people who have never had the relationship, and the dismissal compounds the pain. Disenfranchised grief, the term psychologists use for grief that society does not validate, makes the mourner feel they have no right to their own pain, which delays recovery and deepens isolation.
The bond between a person and a pet is not a lesser version of a human bond. Brain imaging studies show that the same regions activated by looking at a photograph of a child are activated by looking at a photograph of a beloved dog. The attachment system does not check species. It checks connection.
If you know someone who just lost a pet and you are wondering whether to send flowers or a card, send it. The research says the grief is real, the loss is structural, and the person is mourning something the rest of the world keeps telling them is small. pubmed.ncbi.nlm.nih.gov/3442…
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