US prepares for Currency war As a general rule, the most successful man in life is the man who has the best information The 1997 Asian Financial Crisis serves as a reminder of what happens when competing economies engage in a round of competitive currency devaluations. The crisis began after impressive growth in the so-called tiger economies abruptly stopped, leading to stock market crashes and currencies losing about 70% of their value. The recession that followed lasted two years, during which time the IMF loaned South Korea, Indonesia and Thailand $110 billion. In exchange those countries had to adhere to strict austerity measures including higher taxes, reduced public spending, privatizations and higher interest rates, to cool their overheated economies resulting from the stimulus package. By 1999 growth returned, albeit with stock markets and currencies far below pre-1997 levels. The currency meltdown was triggered by the default of a large property developer and a financial company in Thailand. When the Thai baht wasn’t able to maintain its peg to the US dollar, it was devalued and floated. Other Asian currencies soon followed, including the Malaysian ringgit, Indonesian rupiah and Singapore dollar. The resulting inflation/ currency crashes in the countries involved - Thailand, Singapore, Malaysia, Indonesia, the Philippines and South Korea - led to ghastly inflation, massive job losses and a dramatic fall in the standard of living. The only people unscathed were Western tourists who, carrying a fistful of dollars, were able to enjoy cheap vacations.  But that was over 20 years ago, and politicians have poor memories. In America today, we have what is shaping up to be a currency war between the world’s major powers, the effects of which could be far more severe than the ‘97 crisis that was, thankfully, confined to a regional contagion. What is a currency war? A currency war is what happens when those on the losing end of trading relationships decide to engage in a policy of currency devaluation. By keeping their own currency low against their trade competitors their exports will be cheaper. The race to worth less soon becomes a competition with successive rounds of currency devaluation spreading amongst former trade partners. Trade war to currency war? Arguably, the US government now, under President Trump, is preparing for what could be a full-blown currency war, between the United States, the European Union and China – plus whoever else the US President happens to be targeting. As seen in the chart below, in 2018, the Chinese yuan was strengthening hitting 6.25 (6 yuan to a dollar is stronger than 7 to the dollar) to the dollar. But due to China opening its economy to more foreign investment the Chinese currency weakened. The People’s Bank of China (PBOC) has to allow market forces to play a greater role in setting its value and China’s currency might weaken further - overseas funds will increasingly play a role in China’s bond market which might lead to increased flow of funds out of the country further depreciating the currency. US$ to CNY, www.xe.com Then in May of this year the yuan suffered a crisis of confidence due to the escalation of the trade war. US President Trump cried foul over what he deems as unfair currency devaluation saying China can nullify the effects of the billions of tariffs the US has levied against it, by cutting the yuan’s value, something it has done for years. “We should be entitled to have a fair playing field ... because our Fed is very, very disruptive to us,” Trump told SquawkBox, via CNBC, referring to the central bank’s policy of raising interest rates, thereby keeping the dollar high. South China Morning Post notes that China’s exchange rate is at the heart of trade negotiations because the US administration has demanded that Beijing agree to limit the yuan’s decline to the extent that it did not fully offset the US tariff increase – a condition that analysts said was acceptable to Beijing to end the trade war. Meanwhile the euro has appreciated about 20% against the US dollar. That, combined with comments from European Central Bank President Mario Draghi, has put Trump in a foul mood regarding the European Union, even as he agreed to defer for six months a planned US tariff on cars and car parts from the trading block. Draghi said last week that “in the absence of any improvement”, referring to low growth and low inflation, more stimulus will be needed to goose the European Union’s economy. That could include interest rate cuts or a return to quantitative easing, where the ECB, like the US Federal Reserve, prints dollars to purchase government bonds.   After he signaled two rate cuts this year as the solution, the euro sunk 0.3% against the dollar, prompting Trump to complain on Twitter that a weaker euro made it easier for Europe to compete against the US.  “Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others,” the president wrote in a tweet. The irony in Trump’s comments is that the United States is the ultimate currency manipulator, by lowering interest rates and buying trillions worth of government bonds during quantitative easing, between 2008 and 2015, thus pushing down the value of the US dollar. The question is, are we moving from a trade war to a currency war? Trump’s comments about Draghi appear to suggest a hardening of his stance against competitive devaluations. Presumably the same spiral of currency devaluations and tariffs could apply to the China-US trade war, if China decides to purposely devalue the yuan to gain an advantage over the US - say as leverage for getting a trade deal.  But it’s not just China. We are seeing signs of competitive devaluation in other countries, with many loosening their monetary policies as the global growth machine grinds to a halt and economies cool off.  Struggling to deal with too-low inflation, the European Central Bank is promising to hold already rock-bottom interest rates until mid-2020; for the same reason the US Federal Reserve signaled a rate cut is on its way. Reuters points out that reducing interest rates or at least sounding off on the possibilities, is “in vogue at the moment.” US$ to EUR, www.xe.com The news service notes that, along with the Fed, the ECB and the Bank of Japan pursuing a dovish monetary policy, so are emerging markets, such as India and Russia which have already started easing. Indonesia, the Philippines and Brazil have flagged interest rate cuts in the near future. Switzerland, Japan, Sweden and Denmark have all gone to negative or near-negative interest rates, to try and spur growth and to stimulate exports.  The fact that the Bank of Indonesia, which has been extremely cautious about easing, has cut banks’ reserve ratio by half a percentage point, and is hinting at cheaper money, shows how dovish the world has gone. But being dovish doesn’t necessarily mean a currency war, does it? No, but it certainly appears the Trump administration is preparing to go on the offensive. Recently the Treasury Department came out with a report that recommended nine trading partners should face scrutiny over their currencies - China, Germany, Japan, South Korea, Ireland, Italy, Malaysia, Vietnam and Singapore. Also notable, the latest report expanded the list of nations under review, from 12 to 21. Echoing what was said about the 1997 Asian Financial Crisis, at the top, Andrew Moran, writing for Liberty Nation, argues nothing good can come of a race-to-the-bottom round of currency devaluations. Even though cheaper imports would help middle class Americans’ purchasing power, it’s not worth it considering the damage it would due to the international monetary system, Moran writes:  Like a military conflict and a trade war, there aren’t any victors. It can be difficult to determine when central banks fire the first shots, but these bullets are usually pointed at their own heads because a currency war is more like currency suicide. The act of destroying any semblance of value will inevitably harm a nation and its economy in myriad ways, from slashing rates to creating price inflation. Trump’s low-dollar obsession The Trump administration wants to keep interest rates and the dollar low. This is a shift from Trump’s predecessors in the White House who have lobbied for a strong dollar. For Trump, a low dollar is the way to bring jobs back to the US after so many were exported abroad to take advantage of lower labor costs, and therefore rebuild the US manufacturing sector, primarily, through cheaper exports. He’s particularly targeted China for competitively devaluing its currency to dump cheap exports into the US, such as steel and aluminum.  The problem for the United States is that throughout the past several years, the dollar has remained high in relation to other currencies, and that has created a large trade deficit – $825 billion for 2018. As the country with the world’s reserve currency, the United States has to run trade deficits, because the US dollar is far and beyond the most demanded currency in the world. Just about all commodities are priced in US dollars and the USD is the currency in which most international transactions are conducted. A relentlessly high dollar means the US will always run a trade deficit.  It’s a problem though, because a trade deficit means the US imports more than it exports – consumers are buying more goods and services from abroad than locally. Think Walmart. However, US exporters face resistance from foreign buyers because products priced in dollars are more expensive. They want a low dollar. It is primarily the result of the trade deficit – and especially the trade deficit with China, – that prompted the Trump administration to engage in a series of tit for tat tariffs, now totaling hundreds of billions worth of goods, with its most powerful economic competitor. Here’s where the problem comes in. If the US deliberately lowers its currency, through interest rate reductions, and injecting billions of dollars into the economy, through bond-buying, even under the guise of fixing its trade deficit, America’s trading partners get miffed. Because the US under Trump is not only going after China, it’s targeting Canada, Mexico and Europe, in threatening or hitting them with tariffs. The only way for them to respond is competitive devaluation.  The ‘stubborn child’ The latest in the Trump versus Fed Chair Jerome Powell clash is an accusation by Trump that the Federal Reserve is behaving like “a stubborn child” in refusing to cut interest rates, in response to other countries’ dovish monetary policies.  His contention is that if only the central bank were to slash interest rates, make the Fed’s objective a weaker dollar, the economy would be stronger.  The problem right now for the Federal Reserve, is it’s not clear whether the economy is booming or busting. Last week’s decision by the Fed to keep interest rates unchanged, while paving the way for a cut in July, sent the S&P 500 to a new record high. At the same time though, US Treasury yields sunk to three-year lows. The former indicates a booming economy while the latter is screaming recession, Zero Hedge writes, in explaining the “alligator jaws” in the graph below:  The problem boils down to one simple observation: on one hand stocks are telegraphing substantial market upside and, at least in theory, a booming economy, while bond yields - at 3 year lows - are screaming recession. We have reached a point where the consequences of the Fed's actions are dire in either case, resulting in either recession or loss of Fed credibility and independence: In the case of unresponsive Fed it is a recession, while in the case of an accommodative Fed it is the loss of central bank independence and potentially another round of trade wars and even more pressure on the Fed to cut rates with further markets addiction to stimulus and possibly higher inflation etc. Changing the rules  Back to the currency war, while we’re not yet racing to the bottom, the US Commerce Department has just been appointed new powers that certainly appear to take the fight with China in this direction.  France24 reports on a proposed new rule that allows the United States to impose tariffs on any country it determines is manipulating its currency.  The publication explains that, while previous presidents and lawmakers “have floated plans to go after governments that manipulate their exchange rate to compete in the global trading system,” none have followed through because they were thought to be a violation of global trade rules.  A careful reading of the France24 story reveals a startling fact: under the new rules, the US Commerce Department is being given a wide scope of power to decide whether or not a country is manipulating its currency to the detriment of the United States.  Right now, the US Treasury produces a report every six months on whether any country is manipulating their currency to the disadvantage of the United States. A finding of currency manipulation could lead to trade sanctions - although none has been named since 1994 when the Clinton administration slapped the label on China.  Under the new rules, that power would be given to the Department of Commerce, which “could impose tariffs to offset the weaker exchange rate against the US dollar,” states France24 - the same quid pro quo the US is demanding of China during current trade negotiations. If the EUR has depreciated 20% against the USD, no problem, immediately slap a minimum 20% tariff on imports to the US. And now for the real kicker:  According to the proposal, Commerce said it would defer to Treasury's evaluation of whether a currency is undervalued, “unless we have good reason to believe otherwise.” In other words, the list of 21 trading partners that the Treasury Department said should face scrutiny over their currencies are now, or are after June 27th, open to getting tariffs equal to, or likely slightly more, then their currency has been devalued. Commerce doesn’t have to investigate further. Or at the very least, it’s ambiguous as to what the department has to do. The Treasury’s finding ‘of undervalued’ could conceivably be enough to move forward with trade sanctions. The plan “would grant the Commerce Department excessive discretion.” Mark Sobel, a former Treasury department officer quoted by France24 The proposal is currently receiving public input but is due to become law by June 27. If it does the Commerce Department has been granted sweeping jurisdiction over exchange rates and implementation of tariffs. Courting catastrophe  It doesn’t take a whole lot of rumination to conclude where the Trump administration is going with this: Where governments before it were too timid, too much of a team player maybe, to act on powers the Treasury Department has had since the 1980s, in leveling a finding of currency manipulation on a trading partner, Trump has gifted this power to the Commerce Department. Commerce is a “Cabinet-level agency” of the federal government, which among its duties, negotiates bilateral trade agreements. Note that for 2020, Trump asked for $12.2 billion for the Department of Commerce, a billion dollars more (+9.3%) than was budgeted in 2019. It is this kind of unilateralism, often born of hubris - one pictures a gun-toting sheriff walking into a saloon looking to bust some heads - that has got the US into trouble before. Trump may mean well in putting America’s interests first, but the difference is that historically, the US has always gone with the carrot and the stick. With Trump, it’s all stick. Here’s Project Syndicate:  Far from displaying a capacity to persuade, as the title of his book The Art of the Deal might imply, Trump is attempting to use raw power alone to force his “America First” agenda on the rest of the world. “Tariffs,” Trump recently gloated, “are a beautiful thing when you’re the piggy bank, when you have all the money.” And yet the message of history is clear: by embracing force and eschewing persuasion, the US is undermining its own authority – and courting catastrophe.  Project Syndicate gives the following as examples of how the US drew its pistol first, and asked questions later:  In 1950 when General Douglas MacArthur, after driving North Korean forces out of the South, heedlessly marched north, where his forces and their allies encountered – and were overrun by – Chinese forces. in 1964, when the US used attacks by North Vietnamese torpedo boats on American destroyers in the Gulf of Tonkin as a pretext for adopting a congressional resolution that allowed President Lyndon B. Johnson, and then President Richard M. Nixon, to escalate US military involvement in the Vietnam War. (The parallels with the current situation in the Gulf of Oman are concerning, to say the least.) in the 2000s in the course of the War on Terror, which relied on massive force and shunned the strategic cunning favored by many American diplomats, sowing instability throughout an already-fragile Middle East. It concludes:  For now, the US still has enough power to force countries to bend to its will. But the world is already working to change that. There is a growing push away from dollar-denominated transactions. The European Central Bank is promoting increased use of the euro internationally, while China signs currency-swap agreements to promote the renminbi. We agree and have made the same argument in previous articles. Indeed, on economic concerns, the United States under Trump seems bound and determined to bully its way into the next financial crisis, blissfully ignoring the economic warning signals while repeating the endlessly cliched, “Make America Great Again”.  Columnist Stephen Roach eviscerates the administration for its frequent policy blunders and lack of historical knowledge - particularly of America’s disastrous dalliance with protectionism:  Ignoring the cascading stream of direct and retaliatory taxes on consumers and businesses that stem from a tariff war, Trump extols the virtues of tariffs as “a beautiful thing.” That is painfully reminiscent of the 1928 Republican Party platform, which couched tariffs as “a fundamental and essential principle of the economic life of this nation … and essential for the continued prosperity of the country.” Trump ignores the lessons of the 1930s at great peril... Trump’s vindictive bluster has steamrolled economic-policy deliberations – ignoring the lessons of history, rejecting the analytics of modern economics, and undermining the institutional integrity of the policymaking process. Policy blunders of epic proportion have become the rule, not the exception. It won’t be nearly as easy to spin the looming consequences. Conclusion The United States came awfully close to attacking Iran a few days ago. Thankfully Trump saw sense in standing down after being told 150 Iranians would die. Sensibly, the commander in chief decided 150 dead wasn’t proportionate to shooting down an un-manned drone. No kidding.  Now talk has shifted to the possibility, if not of a shooting war, of a currency war. In these fragile times, when the yield curve is inverted and flashing red for recession, when the economy is so weak that prices aren’t even growing 2%, when investors are mindlessly piling into stocks like Pavlov’s dogs and are happily locking into 10-year bonds with .22% real yields, we have a problem, Houston.  The last thing we need is for the White House to devalue the dollar trying to out-export China, the greatest exporting nation of all time, while taking on Europe, and its sickly euro, in a second currency war front. We saw what happened in Asia in 1997: hyper-inflation, mass unemployment, living standards flushed down the toilet of debt, the IMF eventually having to bail them out.  Everyone dissed Trump for imposing tariffs for reasons of “national security” but the president has blocked that channel of criticism by imbuing the Department of Commerce with the power to slap tariffs on currency manipulators. I think we can all believe that order will come directly from Trump himself. Just another way that Trump is doing an end-run around conventional politics in Washington to get things done his way. Unfortunately for American’s their dollar just took another hard kick to it’s ‘Exorbitant Privilege.’ Richard (Rick) Mills subscribe to my free newsletter aheadoftheherd.com Ahead of the Herd Twitter Ahead of the Herd FaceBook Legal Notice / Disclaimer This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified. Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report. 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The Promise of AI Politics / AI Nov 22, 2019 - 09:09 PM GMT By: Richard_Mill

The Promise of AI

Politics / AI
Nov 22, 2019 - 09:09 PM GMT
By: Richard_Mills

Politics
In ‘The Terminator’ series of action films starring Arnold Schwarzenegger, a cybernetic organism (cyborg) is programmed from the future to go back in time and kill the mother of the scientist who leads the fight against Skynet, an artificial intelligence system that will cause a nuclear holocaust.

Terrifying and at times comical (“I’ll be back”, “Make my day”) The Terminator cyborg was among the first presentations of artificial intelligence (AI) to a global audience. (“C3PO” and “R2D2” of Star Wars fame and “Data” from Star Trek also qualify) The robotic assassin also depicted an extreme scenario of what could happen when “machine learning”, a vital element of AI, runs amok - ie. when machine intelligence surpasses human intelligence to the point when the machines take over and try to eliminate the humans who created them.

While numerous facets of AI have been developed over the past couple of decades, all with positive outcomes, the fear of AI being programmed to do something devastating to the human race, of computers “going rogue”, continues to persist. 




On the other hand, AI holds tremendous potential for benefiting humanity in ways we are only just starting to recognize. This article gives an overview of artificial intelligence including some of its most interesting manifestations.

What is AI?

The first step is defining what we mean by artificial intelligence.

One definition of AI is “the simulation of human intelligence processes by machines, especially computers.” Such processes include learning by acquiring information, understanding the rules around using that information, employing reasoning to reach conclusions, and self-correcting.

Another definition understands artificial intelligence as “a machine’s ability to understand, think and act on a problem in the same way a human would in the same situation. But there is no limit placed on the form the AI will take. AI can manifest itself invisibly. Far away from the human eye, working on advanced problems, it can take the form of a self-driving car, parts of a factory, or even in the future some sort of advanced robotics. What is important to understand is that there is no limit on the forms AI can or will take, now or in the future, to interact with us.”

Optimistically, AI is seen as a new industrial revolution, with the unprecedented ability to unlock the constraints of the human mind. Perceived as one of the most interesting and powerful innovations that will shape the next 100 years, EI’s potential for radical industrial and social transformation is on par with the invention of the steam engine, electricity, and the personal computer.

A computer is thought to be EI-capable when, presented with a task, it can find a solution without human intervention. It learns as it goes. Two landmark examples are the 2016 victory of a computer in the complex Chinese board game “Go” versus the game’s world champion (there are said to be as many moves in Go as atoms in the universe); and when a computer, playing hundreds of games of Atari’s “Breakout”, played the game better than humans, even figuring out a creative way of winning, by digging a tunnel that helped it efficiently knock out rows of blocks.

12X growth potential

Before getting into its applications, a brief market analysis of AI reveals some startling numbers from an investment perspective. The global market for artificial intelligence was valued at US$20.67 billion in 2018, with North America accounting for nearly half, $9.72 billion. A recent report from Fortune Insights has the North American market growing at a blistering 33.1% CAGR to 2026, with global AI revenues soaring 12-fold, to around $118 billion. In junior resource investing, that’s what we call a 12-bagger.

Growth areas are expected to be in natural language processing (programming computers to analyze human language), robotic process automation, and machine learning. Major drivers also include the industrial Internet of Things (IoT), higher usage of big data and robotics in manufacturing, significantly more venture capital investment, and cross-industry partnerships.

Another report, published this week, says the growth of AI in manufacturing will be influenced by the largest players in the market including NVIDIA, Oracle, Microsoft, Intel and IBM. The Research and Markets report states that North America will dominate the AI manufacturing market until 2024, but that Asia Pacific will be the fastest growing region, due to increasing investments in AI technologies.

US vs China

Central to this dynamic is China’s push to lead the world in artificial intelligence. In 2017 Beijing stated its intention to dominate the sector by 2030. China has rolled out facial recognition technology on a wide scale, prompting many observers to claim the Chinese Politburo is using AI to extend the long arm of the state through widespread surveillance.

“On AI, China is implementing the technology very fast in facial recognition, speed recognition, self-driving vehicles, smart cities and medical diagnoses,” Rebecca Fannin, author of ‘Tech Titans of China,’ told CNBC.

The country is already the leader in financial technology, well ahead of North America. Chinese consumers pay for purchases on their phones - through apps like WeChat - or facial recognition software. Need a loan? An application made via smart phone can be processed within seconds, using software that evaluates hundreds of variables including the ability to pay based on body language and cell phone habits. “Cash is dead in China. So are credit cards,” says Fannin.

Many believe that over time, the ever-expanding artificial intelligence industry will be split between the US and China, with increasing animosity between the two superpowers as they jostle for global AI and tech supremacy.

Computer science professor Tom Mitchell, who founded the world's first research center for artificial intelligence at Carnegie Mellon, believes that, while the US has more experience building tech companies, China has a clear advantage in using big data sets. He uses the the medical field as an example. The US has had an electronic medical records system for over 20 years but it has yet to employ machine-learning algorithms, due to privacy concerns and for-profit medical care. “In China, it's a different situation. If the government decides that it’s going to have country-wide electronic medical records... then it’s going to happen,” he told BBC News.

Cancer detection

Sticking with the medical theme, advancements in AI could be a powerful force for good, particularly with respect to early cancer detection.

The ability to identify breast cancer early is a critical factor in determining how a patient will respond to treatment. Researchers are beginning to use AI to diagnose cancerous lesions before it’s too late. At MIT’s Artificial Intelligence Lab in Boston, Professor Regina Barzilay is using deep learning to teach a computer how to understand language, and read text and data. Accessing thousands of images from the Breast Imaging Center at Massachusetts General Hospital (MGH), Prof. Barzilay and Dr. Connie Lehman, head of the Breast Imaging Center, amassed a large data set of all the patients who had had breast surgery, for a certain type of high-risk lesion. With machine learning, they could separate out the patients who needed surgery, from those who could avoid it.



The predictive outcome of artificial intelligence was astounding. The AI-enabled computer could read hundreds of thousands of images where the outcome is known, learn the properties of the cancer-spot images, such as how the pixels are distributed, and then determine, what are the patterns that correlate highly with future occurrences of breast cancer?

“So instead of using human capacity to recognize patterns, which is inherently limited by our cognitive capacity, and how much we can see and remember, we’re providing the machine with a lot of data and making it learn this prediction,” says Prof. Barzilay, in a recent Frontline documentary titled ‘In the Age of AI’.

“It’s going to change the face of breast cancer,” adds Dr. Lehman. “We are using this technology not only to be better at assessing the breast density, but to get more to the point of what we’re trying to predict. Does this woman have a cancer now, and will she develop a cancer in five years? That’s where deep learning and artificial intelligence can really help us in our patients.”

Digital Science reported in 2018, a study showing a computer could detect melanoma nearly 10% more accurately than dermatologists. Shown over 100,000 images, the deep-learning computer diagnosed skin cancer with 95% accuracy, compared to 86% accuracy from 58 dermatologists shown the same images.

An even higher level of accuracy was found in a 2015 study that used Artificial Immune System technology to detect mesothelioma, a cancer affecting the thin layer of tissue covering the lungs, frequently caused by exposure to asbestos fibers.

The New York Genome Center relies on an artificial intelligence system by IBM’s Watson supercomputer, for screening its patients for glioblastoma, a form of brain cancer.

Finally, Chinese start-up Infervision is using image recognition technology and deep learning to diagnose signs of lung cancer with X-rays.

Robots that care

Artificial intelligence contained within the sterile, inhuman shell of a robot is a concept that has been with us since the 1950s. For decades robots have been thought of as rather dumb, simple machines that talk in monotone. They’ve even found their way into our language. “Robotic” refers to someone who performs a task mechanically, or is devoid of personality.

Factory workers fear that robots will replace them, and to some extent, they have. US manufacturing has become heavily automated. It's very unlikely that we will ever see a return to the middle class being paid high wages to do repetitive tasks. Widespread factory automation is here to stay.

Lately however, research is developing to turn the job-killing robot into an emotionally-intelligent machine that can actually deliver care to those who need it most. With advances in medicine, people are living longer. As Baby Boomers get into their golden years and Generation Xers begin to retire, the need for at-home and long-term care is likely to outstrip the number of health care workers available.



A mechanical doctor or assistant would come in useful in cases where constant monitoring and follow-up is needed, such as recovering from a heart attack or stroke.

A mobile robot called ENRICHME is designed to help older people with a range of tasks that become challenging later in life.

Nova reports, The robot was tested in retirement homes in three European countries to see if it could help combat cognitive decline and improve quality of life. Early results show that the users accepted the robot, that it helped them be both more cognitively and physically active, as well as solving some difficulties they meet in everyday life, like finding missing items.

Mabu, a smiling yellow robot holding a touch screen, reminds residents at care homes to take their medications. Aifloo, a Swedish company that develops e-health solutions based on AI, is working on a system for tracking nursing home patients.

AI can also be put to use detecting strokes and heart attacks. An organization called Cambio Health Care developed a product that alerts a physician when a patient is at risk of having a stroke. Coala Life’s heart monitor quickly analyzes heart sounds and rhythms to detect atrial fibrillation and other arrhythmias and heart murmurs.

Robots are also slowly being incorporated into classrooms.

An expressive classroom robot called Milo, developed by robotics company RoboKind, says Milo “never gets tired, never gets frustrated and is always consistent”. The robotic ability to repeat something again and again in the same tone without tiring is particularly suited to helping children with ASD [Autism Spectrum Disorder]learn, states Nova, adding that Milo is also showing benefits for kids with Down Syndrome, ADHD and other social or learning problems.

Driverless vehicles don’t make mistakes. Or do they?

Automated vehicles are often pointed to as the poster child for artificial intelligence, with great strides having been made in recent years to dispatch driver-less vehicles to easily-driven routes.

In 2016 Uber made history for making the first automated truck delivery, 50,000 cans of beer from a brewery in Fort Collins to Colorado Springs, 120 miles away.

Wired reminds us that, in December 2018, Waymo, the product of Google’s self-driving car project, officially started its commercial self-driving car service in the suburbs of Phoenix. Its monopoly is being challenged by smaller start-ups like May Mobility and Drive.ai. Ride-hailing companies Lyft and Uber are on board with autonomous driving, as are tech giants like Apple, IBM and Intel.

While many believe the shift from human- to robot-piloted vehicles is inevitable, with the substantial benefits of adding $7 trillion to the global economy and saving thousands of lives, others are skeptical. The collapse of unionized trucking in the US has whittled a truck driver’s income from what used to be a decent wage, to barely scraping by. Autonomous vehicles are likely to be the final nail in the coffin of the once-might Teamsters. Other victims are likely to include big chunks of the auto industry, gas stations, drive-thrus and taxi drivers.

As for being the safer alternative, in March 2018 the first death by an autonomous vehicle was recorded in Tempe, Arizona. A 49-year-old woman was struck at 39 mph by a fully-automated, self-driving Uber car, as she was walking her bicycle across the road in the dark. In its investigation, the Transportation Safety Board revealed that the car couldn’t recognize her as a pedestrian because she wasn’t crossing at a cross-walk.

Autonomous vehicles apparently aren’t programmed to identify jaywalkers. In my opinion, there’s still a long ways to go before driverless vehicles become a common sight on North American roads and highways.

Making life better

More likely to inhabit our personal spaces now, and in the near future, are very task-specific AI inventions that, while not necessary for daily living, make life just a little bit better. Some of these have been with us for awhile.

Robotic vacuums such as iRobot’s popular Roomba clean your house, remember the layout to clean more efficiently, dump their own dirt in a receptacle, and even find their way back to the recharging station. Siri and Alexa, the ubiquitous voices installed on your smart phone, may know your comings and going better than your spouse. The revolutionary voice-recognition programs help us to quickly scan the web, shop and schedule appointments. They also help power and heat smart homes, and assist those with mobility issues.



Cogito, Boxever and John Paul are examples of AI programs that improve both customer service and a client’s shopping experience. While not generally recognized as AI, major shopping portals like Amazon, Netflix and Pandora are also employing machine learning to identify a user’s tastes and suggest products, movies or songs, based on the user’s search history.

AI for evil

Of course, artificial intelligence is not all about positive outcomes. There are some decidedly negative consequences of allowing machines to do the work human beings used to do. Two of the best examples are AI’s ability to conduct Orwellian-like video surveillance, and AI-powered drones that can kill or maim with clinical precision.

It’s estimated there are about 500,000 CCTV cameras mounted in London, and 4 to 6 million throughout the United Kingdom. Londoners would probably be less okay with CCTV if they knew the power of today’s surveillance technology.

Before artificial intelligence, surveillance cameras had limited use. The computers at the other end being monitored by a bored security guard were only capable of storing the footage, usually for a limited time before getting deleted. As Vice reports,

Increasingly, none of that is true. Recent developments in video analytics—fueled by artificial intelligence techniques like machine learning—enable computers to watch and understand surveillance videos with human-like discernment. Identification technologies make it easier to automatically figure out who is in the videos. And finally, the cameras themselves have become cheaper, more ubiquitous, and much better; cameras mounted on drones can effectively watch an entire city. Computers can watch all the video without human issues like distraction, fatigue, training, or needing to be paid. The result is a level of surveillance that was impossible just a few years ago.

An ACLU report called "the Dawn of Robot Surveillance" says AI-aided video surveillance "won’t just record us, but will also make judgments about us based on their understanding of our actions, emotions, skin colour, clothing, voice, and more. These automated 'video analytics' technologies threaten to fundamentally change the nature of surveillance."

Nowadays, the computers connected to the cameras can tell whether someone is walking in the right direction, they can count people and cars, identify people based on their clothing, analyze their body language, and even tell a customer’s sentiment, such as Amazon’s in-store cameras. The technology already exists for cameras to automatically identify someone, in real time. As Vice presciently notes, Facial recognition technology is improving all the time, made easier by the enormous stockpile of tagged photographs we give to Facebook and other social media sites, and the photos governments collect in the process of issuing ID cards and drivers licenses.

Think your online identity is private? Police already have the ability to track cell phones, and identify people from information broadcast by smart phones, laptops and Bluetooth-connected devices.

Western governments deem such power to be in the interests of national security and/ or crime prevention, but as we all know from the case of Edward Snowden, the former CIA employee/ subcontractor and whistle blower who copied and leaked highly classified information from the National Security Agency, it can also be used to spy on citizens.

Among the most disturbing uses of AI for social control and suppressing political activity is what is currently happening in China. Starting next month, telecom carriers must scan the faces of anyone applying for mobile or Internet service. Is there any doubt the Chinese government will make good use of this valuable information?

Quartz reports that on Oct. 4, the Hong Kong government invoked emergency powers outlawing demonstrators from wearing face masks. Rioters who are identified face up to 10 years in prison, or worse in Mainland China.

There, facial recognition software and AI have combined to produce a “social credit score” for every citizen that helps authorities to reward or punish behaviour - even jaywalking. This program that in the West would be considered abhorrent, a gross invasion of privacy, is reportedly quite popular among Chinese citizens.

A 2019 report by the Carnegie Endowment for International Peace finds a growing number of countries are deploying AI surveillance tools to surveil citizens for “a range of policy objectives - some lawful, others that violate human rights, and many of which fall into a murky middle ground.” The report, via Al Jazeera, says at least 75 of 176 countries are actively using AI for surveillance purposes. China is the largest supplier of these technologies.



The use of drones, (or UAVs, short for unmanned aerial vehicles) is probably the most frightening manifestation of AI, for their ability to be used in first-strike attacks and futuristic machine-to-machine warfare. Drones under the control of a human operator can target and kill enemies from thousands of miles away.

In September Houthi-backed rebels in Yemen claimed responsibility for drone strikes on two oil facilities in Saudi Arabia including Aramco’s largest oil processing plant.

The Pentagon recently warned that China is exporting “next-generation drones” to countries in the Middle East - who under a weapons embargo are banned from purchasing advanced American UAVs. The graphic below shows China’s drone fleet has a ceiling of between 4 and 9 kilometers, and a payload from 80 to 1,200 kilograms. China’s killer drones are most frequently seen flying the skies above Saudi Arabia, Jordan, Nigeria, Yemen, Iraq, and the UAE, writes Zero Hedge.



Of course, drones are being flown in plenty of other scenarios, some extremely useful. For instance, a group of Virginia Tech engineers is hoping to employ drones in search and rescue missions: Using mathematical models based on historical data that reflect what lost people actually do combined with typical searcher behavior, the researchers hope this novel approach of balancing autonomy with human collaboration can make searches more effective, Eureka reports.

Unmanned vehicles are also being used to increasingly greater effect for scanning and mapping building sites; helping to solve traffic problems; to drop supplies to disaster victims; for providing farmers with intel as to when is the best time to plant their crops, and how much fertilizer to use; for inspecting infrastructure like pipelines and power lines; surveying damaged buildings for insurance purposes; and by film-makers or news media to capture aerial footage.

Conclusion

From this relatively brief analysis, it should be apparent that artificial intelligence, despite being a force for good and evil, opens up a genie’s bottle worth of investable ideas. The AI “revolution” has only just started and it is moving forward at a rapid pace. We are talking about a 33% compound annual growth rate - a 12-bagger, in resource investing terms.

In particular I like how AI shows the potential of being bolted onto just about every industry - including 3D printing which to me is a mini-revolution in itself, transforming the manufacture of everything from rockets to human organs.

Keep an eye on your inbox, and my home page - some very interesting AI-related investment opportunities might soon be hitting the emails of AOTH subscribers.

By Richard (Rick) Mills

www.aheadoftheherd.com

rick@aheadoftheherd.com

If you're interested in learning more about the junior resource and bio-med sectors please come and visit us at www.aheadoftheherd.com Site membership is free. No credit card or personal information is asked for.

Richard is host of Aheadoftheherd.com and invests in the junior resource sector. His articles have been published on over 400 websites, including: Wall Street Journal, Market Oracle, USAToday, National Post, Stockhouse, Lewrockwell, Pinnacledigest, Uranium Miner, Beforeitsnews, SeekingAlpha, MontrealGazette, Casey Research, 24hgold, Vancouver Sun, CBSnews, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor, Mining.com, Forbes, FNArena, Uraniumseek, Financial Sense, Goldseek, Dallasnews, Vantagewire, Resourceclips and the Association of Mining Analysts.

Copyright © 2019 Richard (Rick) Mills - All Rights Reserved

Legal Notice / Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.






======================================

The Promise of AI

Politics / AINov 22, 2019 - 09:09 PM GMT

By: Richard_Mills

In ‘The Terminator’ series of action films starring Arnold Schwarzenegger, a cybernetic organism (cyborg) is programmed from the future to go back in time and kill the mother of the scientist who leads the fight against Skynet, an artificial intelligence system that will cause a nuclear holocaust. 

Terrifying and at times comical (“I’ll be back”, “Make my day”) The Terminator cyborg was among the first presentations of artificial intelligence (AI) to a global audience. (“C3PO” and “R2D2” of Star Wars fame and “Data” from Star Trek also qualify) The robotic assassin also depicted an extreme scenario of what could happen when “machine learning”, a vital element of AI, runs amok - ie. when machine intelligence surpasses human intelligence to the point when the machines take over and try to eliminate the humans who created them. 

While numerous facets of AI have been developed over the past couple of decades, all with positive outcomes, the fear of AI being programmed to do something devastating to the human race, of computers “going rogue”, continues to persist.   

On the other hand, AI holds tremendous potential for benefiting humanity in ways we are only just starting to recognize. This article gives an overview of artificial intelligence including some of its most interesting manifestations. 

What is AI? 

The first step is defining what we mean by artificial intelligence. 

One definition of AI is “the simulation of human intelligence processes by machines, especially computers.” Such processes include learning by acquiring information, understanding the rules around using that information, employing reasoning to reach conclusions, and self-correcting. 

Another definition understands artificial intelligence as “a machine’s ability to understand, think and act on a problem in the same way a human would in the same situation. But there is no limit placed on the form the AI will take. AI can manifest itself invisibly. Far away from the human eye, working on advanced problems, it can take the form of a self-driving car, parts of a factory, or even in the future some sort of advanced robotics. What is important to understand is that there is no limit on the forms AI can or will take, now or in the future, to interact with us.”

Optimistically, AI is seen as a new industrial revolution, with the unprecedented ability to unlock the constraints of the human mind. Perceived as one of the most interesting and powerful innovations that will shape the next 100 years, EI’s potential for radical industrial and social transformation is on par with the invention of the steam engine, electricity, and the personal computer. 

A computer is thought to be EI-capable when, presented with a task, it can find a solution without human intervention. It learns as it goes. Two landmark examples are the 2016 victory of a computer in the complex Chinese board game “Go” versus the game’s world champion (there are said to be as many moves in Go as atoms in the universe); and when a computer, playing hundreds of games of Atari’s “Breakout”, played the game better than humans, even figuring out a creative way of winning, by digging a tunnel that helped it efficiently knock out rows of blocks. 

12X growth potential

Before getting into its applications, a brief market analysis of AI reveals some startling numbers from an investment perspective. The global market for artificial intelligence was valued at US$20.67 billion in 2018, with North America accounting for nearly half, $9.72 billion. A recent report from Fortune Insights has the North American market growing at a blistering 33.1% CAGR to 2026, with global AI revenues soaring 12-fold, to around $118 billion. In junior resource investing, that’s what we call a 12-bagger. 

Growth areas are expected to be in natural language processing (programming computers to analyze human language), robotic process automation, and machine learning. Major drivers also include the industrial Internet of Things (IoT), higher usage of big data and robotics in manufacturing, significantly more venture capital investment, and cross-industry partnerships. 

Another report, published this week, says the growth of AI in manufacturing will be influenced by the largest players in the market including NVIDIA, Oracle, Microsoft, Intel and IBM. The Research and Markets report states that North America will dominate the AI manufacturing market until 2024, but that Asia Pacific will be the fastest growing region, due to increasing investments in AI technologies. 

US vs China

Central to this dynamic is China’s push to lead the world in artificial intelligence. In 2017 Beijing stated its intention to dominate the sector by 2030. China has rolled out facial recognition technology on a wide scale, prompting many observers to claim the Chinese Politburo is using AI to extend the long arm of the state through widespread surveillance. 

“On AI, China is implementing the technology very fast in facial recognition, speed recognition, self-driving vehicles, smart cities and medical diagnoses,” Rebecca Fannin, author of ‘Tech Titans of China,’ told CNBC.

The country is already the leader in financial technology, well ahead of North America. Chinese consumers pay for purchases on their phones - through apps like WeChat - or facial recognition software. Need a loan? An application made via smart phone can be processed within seconds, using software that evaluates hundreds of variables including the ability to pay based on body language and cell phone habits. “Cash is dead in China. So are credit cards,” says Fannin. 

Many believe that over time, the ever-expanding artificial intelligence industry will be split between the US and China, with increasing animosity between the two superpowers as they jostle for global AI and tech supremacy. 

Computer science professor Tom Mitchell, who founded the world's first research center for artificial intelligence at Carnegie Mellon, believes that, while the US has more experience building tech companies, China has a clear advantage in using big data sets. He uses the the medical field as an example. The US has had an electronic medical records system for over 20 years but it has yet to employ machine-learning algorithms, due to privacy concerns and for-profit medical care. “In China, it's a different situation. If the government decides that it’s going to have country-wide electronic medical records... then it’s going to happen,” he told BBC News. 

Cancer detection

Sticking with the medical theme, advancements in AI could be a powerful force for good, particularly with respect to early cancer detection. 

The ability to identify breast cancer early is a critical factor in determining how a patient will respond to treatment. Researchers are beginning to use AI to diagnose cancerous lesions before it’s too late. At MIT’s Artificial Intelligence Lab in Boston, Professor Regina Barzilay is using deep learning to teach a computer how to understand language, and read text and data. Accessing thousands of images from the Breast Imaging Center at Massachusetts General Hospital (MGH), Prof. Barzilay and Dr. Connie Lehman, head of the Breast Imaging Center, amassed a large data set of all the patients who had had breast surgery, for a certain type of high-risk lesion. With machine learning, they could separate out the patients who needed surgery, from those who could avoid it. 

The predictive outcome of artificial intelligence was astounding. The AI-enabled computer could read hundreds of thousands of images where the outcome is known, learn the properties of the cancer-spot images, such as how the pixels are distributed, and then determine, what are the patterns that correlate highly with future occurrences of breast cancer? 

“So instead of using human capacity to recognize patterns, which is inherently limited by our cognitive capacity, and how much we can see and remember, we’re providing the machine with a lot of data and making it learn this prediction,” says Prof. Barzilay, in a recent Frontline documentary titled ‘In the Age of AI’. 

“It’s going to change the face of breast cancer,” adds Dr. Lehman. “We are using this technology not only to be better at assessing the breast density, but to get more to the point of what we’re trying to predict. Does this woman have a cancer now, and will she develop a cancer in five years? That’s where deep learning and artificial intelligence can really help us in our patients.” 

Digital Science reported in 2018, a study showing a computer could detect melanoma nearly 10% more accurately than dermatologists. Shown over 100,000 images, the deep-learning computer diagnosed skin cancer with 95% accuracy, compared to 86% accuracy from 58 dermatologists shown the same images.

An even higher level of accuracy was found in a 2015 study that used Artificial Immune System technology to detect mesothelioma, a cancer affecting the thin layer of tissue covering the lungs, frequently caused by exposure to asbestos fibers. 

The New York Genome Center relies on an artificial intelligence system by IBM’s Watson supercomputer, for screening its patients for glioblastoma, a form of brain cancer. 

Finally, Chinese start-up Infervision is using image recognition technology and deep learning to diagnose signs of lung cancer with X-rays. 

Robots that care 

Artificial intelligence contained within the sterile, inhuman shell of a robot is a concept that has been with us since the 1950s. For decades robots have been thought of as rather dumb, simple machines that talk in monotone. They’ve even found their way into our language. “Robotic” refers to someone who performs a task mechanically, or is devoid of personality. 

Factory workers fear that robots will replace them, and to some extent, they have. US manufacturing has become heavily automated. It's very unlikely that we will ever see a return to the middle class being paid high wages to do repetitive tasks. Widespread factory automation is here to stay.

Lately however, research is developing to turn the job-killing robot into an emotionally-intelligent machine that can actually deliver care to those who need it most. With advances in medicine, people are living longer. As Baby Boomers get into their golden years and Generation Xers begin to retire, the need for at-home and long-term care is likely to outstrip the number of health care workers available. 

A mechanical doctor or assistant would come in useful in cases where constant monitoring and follow-up is needed, such as recovering from a heart attack or stroke. 

A mobile robot called ENRICHME is designed to help older people with a range of tasks that become challenging later in life. 

Nova reports, The robot was tested in retirement homes in three European countries to see if it could help combat cognitive decline and improve quality of life. Early results show that the users accepted the robot, that it helped them be both more cognitively and physically active, as well as solving some difficulties they meet in everyday life, like finding missing items.

Mabu, a smiling yellow robot holding a touch screen, reminds residents at care homes to take their medications. Aifloo, a Swedish company that develops e-health solutions based on AI, is working on a system for tracking nursing home patients. 

AI can also be put to use detecting strokes and heart attacks. An organization called Cambio Health Care developed a product that alerts a physician when a patient is at risk of having a stroke. Coala Life’s heart monitor quickly analyzes heart sounds and rhythms to detect atrial fibrillation and other arrhythmias and heart murmurs. 

Robots are also slowly being incorporated into classrooms. 

An expressive classroom robot called Milo, developed by robotics company RoboKind, says Milo “never gets tired, never gets frustrated and is always consistent”. The robotic ability to repeat something again and again in the same tone without tiring is particularly suited to helping children with ASD [Autism Spectrum Disorder]learn, states Nova, adding that Milo is also showing benefits for kids with Down Syndrome, ADHD and other social or learning problems. 

Driverless vehicles don’t make mistakes. Or do they?

Automated vehicles are often pointed to as the poster child for artificial intelligence, with great strides having been made in recent years to dispatch driver-less vehicles to easily-driven routes. 

In 2016 Uber made history for making the first automated truck delivery, 50,000 cans of beer from a brewery in Fort Collins to Colorado Springs, 120 miles away. 

Wired reminds us that, in December 2018, Waymo, the product of Google’s self-driving car project, officially started its commercial self-driving car service in the suburbs of Phoenix. Its monopoly is being challenged by smaller start-ups like May Mobility and Drive.ai. Ride-hailing companies Lyft and Uber are on board with autonomous driving, as are tech giants like Apple, IBM and Intel. 

While many believe the shift from human- to robot-piloted vehicles is inevitable, with the substantial benefits of adding $7 trillion to the global economy and saving thousands of lives, others are skeptical. The collapse of unionized trucking in the US has whittled a truck driver’s income from what used to be a decent wage, to barely scraping by. Autonomous vehicles are likely to be the final nail in the coffin of the once-might Teamsters. Other victims are likely to include big chunks of the auto industry, gas stations, drive-thrus and taxi drivers. 

As for being the safer alternative, in March 2018 the first death by an autonomous vehicle was recorded in Tempe, Arizona. A 49-year-old woman was struck at 39 mph by a fully-automated, self-driving Uber car, as she was walking her bicycle across the road in the dark. In its investigation, the Transportation Safety Board revealed that the car couldn’t recognize her as a pedestrian because she wasn’t crossing at a cross-walk. 

Autonomous vehicles apparently aren’t programmed to identify jaywalkers. In my opinion, there’s still a long ways to go before driverless vehicles become a common sight on North American roads and highways. 

Making life better 

More likely to inhabit our personal spaces now, and in the near future, are very task-specific AI inventions that, while not necessary for daily living, make life just a little bit better. Some of these have been with us for awhile. 

Robotic vacuums such as iRobot’s popular Roomba clean your house, remember the layout to clean more efficiently, dump their own dirt in a receptacle, and even find their way back to the recharging station. Siri and Alexa, the ubiquitous voices installed on your smart phone, may know your comings and going better than your spouse. The revolutionary voice-recognition programs help us to quickly scan the web, shop and schedule appointments. They also help power and heat smart homes, and assist those with mobility issues. 

Cogito, Boxever and John Paul are examples of AI programs that improve both customer service and a client’s shopping experience. While not generally recognized as AI, major shopping portals like Amazon, Netflix and Pandora are also employing machine learning to identify a user’s tastes and suggest products, movies or songs, based on the user’s search history. 

AI for evil 

Of course, artificial intelligence is not all about positive outcomes. There are some decidedly negative consequences of allowing machines to do the work human beings used to do. Two of the best examples are AI’s ability to conduct Orwellian-like video surveillance, and AI-powered drones that can kill or maim with clinical precision. 

It’s estimated there are about 500,000 CCTV cameras mounted in London, and 4 to 6 million throughout the United Kingdom. Londoners would probably be less okay with CCTV if they knew the power of today’s surveillance technology. 

Before artificial intelligence, surveillance cameras had limited use. The computers at the other end being monitored by a bored security guard were only capable of storing the footage, usually for a limited time before getting deleted. As Vice reports, 

Increasingly, none of that is true. Recent developments in video analytics—fueled by artificial intelligence techniques like machine learning—enable computers to watch and understand surveillance videos with human-like discernment. Identification technologies make it easier to automatically figure out who is in the videos. And finally, the cameras themselves have become cheaper, more ubiquitous, and much better; cameras mounted on drones can effectively watch an entire city. Computers can watch all the video without human issues like distraction, fatigue, training, or needing to be paid. The result is a level of surveillance that was impossible just a few years ago.

An ACLU report called "the Dawn of Robot Surveillance" says AI-aided video surveillance "won’t just record us, but will also make judgments about us based on their understanding of our actions, emotions, skin colour, clothing, voice, and more. These automated 'video analytics' technologies threaten to fundamentally change the nature of surveillance."

Nowadays, the computers connected to the cameras can tell whether someone is walking in the right direction, they can count people and cars, identify people based on their clothing, analyze their body language, and even tell a customer’s sentiment, such as Amazon’s in-store cameras. The technology already exists for cameras to automatically identify someone, in real time. As Vice presciently notes, Facial recognition technology is improving all the time, made easier by the enormous stockpile of tagged photographs we give to Facebook and other social media sites, and the photos governments collect in the process of issuing ID cards and drivers licenses. 

Think your online identity is private? Police already have the ability to track cell phones, and identify people from information broadcast by smart phones, laptops and Bluetooth-connected devices.

Western governments deem such power to be in the interests of national security and/ or crime prevention, but as we all know from the case of Edward Snowden, the former CIA employee/ subcontractor and whistle blower who copied and leaked highly classified information from the National Security Agency, it can also be used to spy on citizens. 

Among the most disturbing uses of AI for social control and suppressing political activity is what is currently happening in China. Starting next month, telecom carriers must scan the faces of anyone applying for mobile or Internet service. Is there any doubt the Chinese government will make good use of this valuable information?

Quartz reports that on Oct. 4, the Hong Kong government invoked emergency powers outlawing demonstrators from wearing face masks. Rioters who are identified face up to 10 years in prison, or worse in Mainland China. 

There, facial recognition software and AI have combined to produce a “social credit score” for every citizen that helps authorities to reward or punish behaviour - even jaywalking. This program that in the West would be considered abhorrent, a gross invasion of privacy, is reportedly quite popular among Chinese citizens. 

A 2019 report by the Carnegie Endowment for International Peace finds a growing number of countries are deploying AI surveillance tools to surveil citizens for “a range of policy objectives - some lawful, others that violate human rights, and many of which fall into a murky middle ground.” The report, via Al Jazeera, says at least 75 of 176 countries are actively using AI for surveillance purposes. China is the largest supplier of these technologies. 

The use of drones, (or UAVs, short for unmanned aerial vehicles) is probably the most frightening manifestation of AI, for their ability to be used in first-strike attacks and futuristic machine-to-machine warfare. Drones under the control of a human operator can target and kill enemies from thousands of miles away. 

In September Houthi-backed rebels in Yemen claimed responsibility for drone strikes on two oil facilities in Saudi Arabia including Aramco’s largest oil processing plant. 

The Pentagon recently warned that China is exporting “next-generation drones” to countries in the Middle East - who under a weapons embargo are banned from purchasing advanced American UAVs. The graphic below shows China’s drone fleet has a ceiling of between 4 and 9 kilometers, and a payload from 80 to 1,200 kilograms. China’s killer drones are most frequently seen flying the skies above Saudi Arabia, Jordan, Nigeria, Yemen, Iraq, and the UAE, writes Zero Hedge. 

Of course, drones are being flown in plenty of other scenarios, some extremely useful. For instance, a group of Virginia Tech engineers is hoping to employ drones in search and rescue missions: Using mathematical models based on historical data that reflect what lost people actually do combined with typical searcher behavior, the researchers hope this novel approach of balancing autonomy with human collaboration can make searches more effective, Eureka reports. 

Unmanned vehicles are also being used to increasingly greater effect for scanning and mapping building sites; helping to solve traffic problems; to drop supplies to disaster victims; for providing farmers with intel as to when is the best time to plant their crops, and how much fertilizer to use; for inspecting infrastructure like pipelines and power lines; surveying damaged buildings for insurance purposes; and by film-makers or news media to capture aerial footage. 

Conclusion

From this relatively brief analysis, it should be apparent that artificial intelligence, despite being a force for good and evil, opens up a genie’s bottle worth of investable ideas. The AI “revolution” has only just started and it is moving forward at a rapid pace. We are talking about a 33% compound annual growth rate - a 12-bagger, in resource investing terms. 

In particular I like how AI shows the potential of being bolted onto just about every industry - including 3D printing which to me is a mini-revolution in itself, transforming the manufacture of everything from rockets to human organs. 

Keep an eye on your inbox, and my home page - some very interesting AI-related investment opportunities might soon be hitting the emails of AOTH subscribers.

By Richard (Rick) Mills

www.aheadoftheherd.com

rick@aheadoftheherd.com

If you're interested in learning more about the junior resource and bio-med sectors please come and visit us at www.aheadoftheherd.com Site membership is free. No credit card or personal information is asked for.

Richard is host of Aheadoftheherd.com and invests in the junior resource sector. His articles have been published on over 400 websites, including: Wall Street Journal, Market Oracle, USAToday, National Post, Stockhouse, Lewrockwell, Pinnacledigest, Uranium Miner, Beforeitsnews, SeekingAlpha, MontrealGazette, Casey Research, 24hgold, Vancouver Sun, CBSnews, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor, Mining.com, Forbes, FNArena, Uraniumseek, Financial Sense, Goldseek, Dallasnews, Vantagewire, Resourceclips and the Association of Mining Analysts.

Copyright © 2019 Richard (Rick) Mills - All Rights Reserved

Legal Notice / Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.