Our Post-Truth, Post-Trust World

A system that comes to depend on synthetic signaling for its "information" is doomed to Model Collapse, as its signaling has completely detached from the real world.

That we inhabit a post-truth world seems to accepted wisdom. But that's only half of it. We also live in a post-trust world. In a post-truth world, everything is shaped by the implicit goals of the entity claiming to state the "truth," as the entire point of claiming to state the "truth" is to persuade the target populace to agree to something favorable to the issuer of the claimed "truth."

In other words, the "truth" as something that has no intentional spin of self-interest no longer exists. What is passed off as "truth" is spin intended / designed to serve the interests of those doing the spinning.

This is the definition of propaganda and marketing, which are pure expressions of self-interest, and they've been around since the dawn of civilization, as persuading others to do what serves your private interests is much lower cost / more profitable than having to modify their behaviors with force.

The first step in the con of propaganda and marketing is to win the trust of the mark. This is a fascinating process, as some people are willing believers and others are skeptical, and so the trust campaign must speak to both the skeptics and those primed to embrace the message for reasons that have less to do with the entity issuing the message and more to do with their internal beliefs.

The trick with skeptics is to present persuasive evidence--the "facts." These can be first-person accounts, scientific studies, or something presented as self-evident. The con artist presents the facts as if they are objective and the mark is invited to "decide for yourself:" the con artist claims he has no intent to persuade.

This is humorously illustrated in Melville's classic novel The Confidence-Man.

The rise of the collection of data and the scientific method introduced the idea of "objective truth" that was based on facts collected from observations that were repeatable by anyone able to isolate the same variables. In other words, these truths could be verified by anyone using the same tools to collect data that isolated the same variables, so it wasn't a private truth, it was a public truth everyone had to accept as fact.

The power of "objective fact" was too good to pass up, and so manipulating the metrics of data collection and analysis became the new territory of developing trust and establishing "truth" to serve private interests. Sample sizes were kept small, subjects were selected for their likelihood of yielding the desired data, and analytic tools weeded out outliers that undermined or contradicted the pre-selected "results."

As McLuhan observed, The medium is both the message and the massage, and so the synthetic media that broadcast the human voice and visual images captured our attention and imagination in ways the written word could not. Now we have AI, which mimics human speech so engagingly that we attribute it with human characteristics: intelligence, emotions, empathy, etc.

With social media and smartphones, these media/ AI technologies have scalable visibility and virulence: they are ubiquitous (everywhere) and extremely contagious / virulent, spreading quickly through vast populations.

Few would claim to trust the "truthiness" of social media content or its sources, but that no longer matters. what matters is the signal embedded in the content that triggers a dopamine cascade in the "consumer" of content--what Big Tech calls engagement and others call addiction.

Signals are symbolic short-cuts that bypass rational filters by firing dopamine receptors. This makes them ideal on two counts: they don't require the lengthy processes required to nurture trust or establish the "truth," processes which require some connection between the real world and the claim being made.

Signals are small in size and easy to replicate, in effect cognitive/emotional viruses that bypass our cognitive/emotional immune system of skeptical wariness of anything that smacks of self-interest, i.e sure things, guarantees of immense gains and grandiose claims.

Signals bypass the process of connecting a claim to the real world. This is their unmatched power. In the ancient world, pageantry and public displays acted as signals of power, status and victory. The power and status were symbolically on display, as only those with wealth and power could afford such performances.

The importance of these symbolic displays reinforcing the legitimacy and power of elites should not be underestimated. This is why Leonardo Da Vinci was hired to design and engineer lavish parades of movement and color, extravaganzas designed to impress and entrance onlookers.

Such symbolic signaling was enormously costly, and so they reflected real wealth and power, for only those possessing those resources could manage such expense.

Now digital synthetic signaling is virtually free. When Leonardo's pageantry came to life, it was unmistakably authentic, for it demanded real world resources and labor. Digital synthetic signals require nothing but visibility and virulence--no connections to the real world are required.

So AI's mastery of natural language signals intelligence, money signals wealth, technology signals Progress, a diploma signals "hire me, I'm a valuable worker," and so on. Signaling replaces persuasion that is still connected to the real world with dopamine cascades.

Synthetic signaling is inherently self-referential: it's "trustworthy" and "plausible" because we've already seen it elsewhere, and ubiquity is itself a signal of plausibility and trustworthiness, because could so many others be completely wrong?

"Breaking news" must be real, right? Words, images, speech are all easily turned into symbolic signals that carry implicit claims of retaining some connection to the real world when in fact there is none.

Signaling is easily gamed, falsified, curated, edited, cosmetically enhanced and generated by automation, while the real world it supposedly symbolizes / reflects is not so pliable. The Late Western Roman Empire can be viewed as a system that retained sufficient resources to stage signals of continuity and power that had lost all connections to the real world beyond Imperial enclaves.

But this expenditure of scarce resources on signaling is self-liquidating: the costs of issuing symbolic representations of power consumes the resources needed to sustain the system's core structures, which then collapse even as the signals continue engaging us.

In summary: the post-truth / post-trust world is self-liquidating, as its synthetic claims of connection to the real world are fake, and the hollowness of its self-referential nature and its rampant overuse exhausts the dopamine cascades' effectiveness. Drained of authentic cognition and emotion by the ceaseless onslaught of synthetic digital signaling, our engagement withers. We lose interest, become detached, unresponsive, or hyper-aggressive, in either case stripped of the capacity for independent thought or action, just like the mice trapped in Mouse Utopia.

A system that comes to depend on synthetic signaling for its "information" is doomed to Model Collapse, as its signaling has completely detached from the real world.






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Oil, Inflation and Recession

It's not the price of oil per se that triggers recession, it's the underlying vulnerabilities that have been cloaked with happy story narratives to keep the game going.

Recessions don't require a spike in the price of oil/gasoline, but spikes in energy prices trigger recessions. This makes sense, as hydrocarbons are the foundation of every industry, from the so-called "green" industries to all the high-tech industries (SpaceX, AI data centers etc.) to transport, plastics and everything else.

Recessions have other causes, of course: the business cycle of over-indebtedness and speculative excesses leading to defaults and the contraction of credit and spending, the collapse of speculative asset bubbles, the inflationary spiral of overborrowing to fund "guns and butter," and disruptive events such as plagues and wars.

Inflation reduces discretionary income as a larger share of earnings must be devoted to essentials. In a consumer economy, this reduction of discretionary income leads to households borrowing more to fill the widening gap between what they reckon is their rightful lifestyle and the purchasing power of their earnings.

This increase in debt leads to a higher percentage of net earnings being devoted to interest and principal, further reducing discretionary income. The eventual retrenchment--reducing debt by reducing spending and default--leads to a contraction in consumption, i.e. recession.

Recessions occur when a happy story about the economy that doesn't reflect reality encounters reality. Before recessions, the happy story is always the same: corporate profits are solid and rising, consumer spending is rock-solid, employment is strong, unemployment is low, the household balance sheet is healthy, technology is increasing productivity, and so on.

According to the happy story, a recession is impossible, so borrow and buy, buy, buy--stocks, houses, experiences, cruises, buy it all because the good times are permanent.

The vulnerabilities generated by over-reliance on borrowing to fund spending and the corrosive effects of inflation are buried beneath statistical trickery: add all the wealthy households to the mix and then take the average, and voila: look how rich the average household is. All is well, borrow and buy to your heart's content. Mix in hedonic adjustments and pixie-dust and voila, 8% inflation is magically reduced to 2.5%.

The suspension of disbelief / confidence is the magic of the happy story narrative. As long as people are complacent and confident, they act on the belief that their income and wealth will continue rising, enabling more borrowing and spending.

That this is not necessarily in their best interests in the long term is what must be hidden, lest they curtail borrowing and spending because the whole point of the economy is to maximize profits and this is only possible if people who don't earn enough money to spend freely borrow to spend freely.

This is where the other magic in the happy story becomes essential: the wealth effect generated by credit-asset bubbles. If people see their house and stock portfolios rising in value, they feel wealthier and are more confident in borrowing and spending because they have this wealth piling up in the background.

It's like a savings account that increases without the sacrifice of deferring consumption: in credit-asset bubbles, we get to have our cake and eat it, too.

The problem that must be hidden by the happy story is that excessive debt and speculation are self-liquidating: the machinery that makes them work self-destructs by its very nature. Debt accrues interest which reduces discretionary income which sets up contraction of credit and consumption, and all credit-asset bubbles pop, regardless of the intensity of the propaganda / happy story that this isn't a bubble, it's "capitalism" or "technology" or "animal spirits."

It's not a specific price point or metric that causes recession: it's the decay of confidence and discretionary income that leads to recession. Confidence is fragile by its very nature. We've been selected to be wary of surplus suddenly becoming scarcity, and rising prices of energy cascading through the entire economy activates a reappraisal of our complacent confidence.

Every business is hammered by rising costs for literally everything they buy to operate, and since the discretionary income of the bottom 80% is already under pressure, they can't raise prices much without losing sales.

Households feel the pinch of rising utilities and fuel immediately, and for both enterprises and households, confidence in the future is at risk of eroding like a sand castle in a rising tide.

Here is a chart of the average price of gasoline in the US from 1976 to February 2026. I've added the recent spike to the current average price of $4.11 / gallon. Interestingly, this is pretty close to the inflation-adjusted price of gasoline in the 1973-74 Gas Crisis, and the nominal price in July 2008. Adjusted for inflation, $4.11 in July 2008 is $6.11 in today's dollars.



The point I want to make here is that there is no price trigger for recession, as it depends on the underlying fragilities and vulnerabilities of the economy. Put another way, it depends on the width of the gap between the happy story narrative intended to keep confidence and complacency high and the realities of higher costs and rising debt service reducing discretionary income.

Credit-asset bubbles pop for many reasons, but what we experience is a collapse of confidence that the bubble will continue inflating, making us richer every day, in every way. The core fragility of today's economy is the expansion of consumption now depends on the spending of the top 10%, who just so happen to own the lion's share of income-producing assets such as real estate, stocks, corporate bonds and enterprises.

Once the Everything Bubble pops, the confidence of the top earners and spenders will collapse, leading to a decline in their borrowing and spending.



Oil doesn't need to hit $147/barrel and gasoline doesn't need to reach $6/gallon to trigger a recession. (Gasoline is over $6/gallon in California and over $5/gallon in states with high fuel taxes.) There is no specific price-point, any more than there is some specific metric that enables us to predict an avalanche. It all depends on the underlying vulnerabilities and excesses of the economy at that moment in time.

When he's confident, Wile can walk on air. It's when he suddenly discerns reality that his confidence vanishes. Recessions always catch conventional economists by surprise because the collapse of confidence triggers a sudden rise in unemployment and defaults and a sharp decline of credit and spending.



It's not the price of oil per se that causes a recession, it's the underlying vulnerabilities that have been cloaked with happy story narratives to keep the game going.


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The Inevitability of the AI Depression

The collision of hype and euphoric hallucinations with the real world will manifest across the entire socio-economic-political-legal spectrum.

The conventional narrative views AI dominance as inevitable. What's actually inevitable is the AI Depression, the economic fallout of unrealistic but oh-so-profitable hype, malinvestment, unprecedented legal liabilities and the second-order effects of AI replacing workers while generating dysfunction in core systems.

Correspondent SValleyBoy responded to my post The AI Depression, (3/24/26) with these comments:

"Totally agree. I am not a luddite by any stretch of the imagination AND indeed have built two companies that have 2-3X the productivity of VLSI designers AND biology experts.

Most productivity TOOLS over the last 30 years have put humans in the driver seat and allowed them to create more 'stuff' faster. SW (software) to automate the design of chips allowed designers to focus on architectural and coding design rather than manually connecting lego blocks and having to change it manually every time a process change happened. They could therefore design more chips.

Railroads took workers/humans to other geographies where they could produce more things thus enabling the economy to grow. Electricity did the same, it allowed humans to work easier irrespective of the Sun being up and do more motors to help humans do things faster, same with communication devices. TV/Media arguably spawned an entertainment industry which went hand in hand with workers who were engaged in the transportation industry, making-buying cars. Railroads/Cars displaced horses/local ships.

AI-ML (machine learning)is very different because it can/will dis/replace the bottom 10-25% of knowledge focused service workers. i.e., phone support across industries. 24 million workers in the US in these industries. if you displace 1 in 4 that is 6*10**6 * 50*10**3 = 300 * 10**9 = $300 Billion of earned income gone.

AI-ML in terms of coding will enable older programmers to easily create simpler code which earlier would have been coded by newer, fresh grads without sucking the time of the experienced programmers who were working on more senior projects. It is not really getting to help the creation of more products because if Humans are the consumers of products there is some rate at which they can adopt newer products. Shorter product lives also means that there is less you can charge and less profit to make and fewer people to buy/spend.

Money going to corporations means it is now funneled to shareholders so in effect the money in circulation will drop and thats not good for the economy. More money to shareholders means less money in circulation and more misallocation of investments, more chasing of the same investment because the wealth owning class have very similar backgrounds and very tight networks.

Do a little bit more of this across other industries and you are really putting $1 Trillion in earned income that is circulating at speed out of the picture, no bueno. If you reduce the velocity of money you will reduce the economy as a multiple of the income that you are subsuming. All in all, this is not sustainable and definitely not one in which private corporations can own the AI-ML utilities that can/should be used by everyone.

These utilities should be thought of as Libraries which held the knowledge of the world and were accessible by everyone, not just people who could afford books. Imagine the world if there were no libraries and only people with money could afford to gain knowledge."

Thank you, SValleyBoy, for the insightful overview. The key takeaways here in my view are:

1. There are limits on what functions can be wholly replaced by AI.

2. SValleyBoy raises the key question few ask: should these utilities be viewed not merely as private property, i.e. shares of stocks of a tiny handful of private corporations, or should they be available to all as a library of knowledge like public libraries of books, music and video recordings?

3. The channeling of earned income from the workforce to the investor class will simply accelerate the trend of the past 50 years of income being diverted from the workforce (labor) to the investor class (capital), which is highly asymmetric in distribution, as the top 0.1% own the lion's share of this wealth and the rest is distributed in descending quantities to the top 10%.

Here we see the percentage of the economy going to labor is in a long-term slide--a slide that AI will accelerate as it replaces the lower tranche of cognitive labor employees.



Here is the distribution of net personal wealth: the top 1%'s share has skyrocketed, the top 10% (dominated by the top 0.1% and the top 1%) has gained ground while the bottom 90% has lost ground.



Here's a chart of financial assets held by the top 1% (up 42%), the next 9% (90% to 99%, down 3%) and the bottom 50% (down 28%)



Beneath the self-serving hype, the limits and perverse consequences of AI are being elucidated in studies. Consider the implications of this selection of recent papers:

Agents of Chaos
Focusing on failures emerging from the integration of language models with autonomy, tool use, and multi-party communication, we document eleven representative case studies. Observed behaviors include unauthorized compliance with non-owners, disclosure of sensitive information, execution of destructive system-level actions, denial-of-service conditions, uncontrolled resource consumption, identity spoofing vulnerabilities, cross-agent propagation of unsafe practices, and partial system takeover. In several cases, agents reported task completion while the underlying system state contradicted those reports. We also report on some of the failed attempts. Our findings establish the existence of security-, privacy-, and governance-relevant vulnerabilities in realistic deployment settings. These behaviors raise unresolved questions regarding accountability, delegated authority, and responsibility for downstream harms, and warrant urgent attention from legal scholars, policymakers, and researchers across disciplines.

AI, Human Cognition and Knowledge Collapse (economics.mit.edu)

Social media is harming adolescents at a scale large enough to cause changes at the population level

Sycophantic AI decreases prosocial intentions and promotes dependence

Who's in charge? Disempowerment patterns in real-world LLM usage

Marriage over, 100,000 down the drain: the AI users whose lives were wrecked by delusion

Artificial Intelligence, Real Misallocation

A deepfake can ruin you before breakfast: Digital forensics pioneer Hany Farid explains what it will take to rebuild trust in the deepfake era.

ARC-AGI-3: A New Challenge for Frontier Agentic Intelligence (via Tom D.)
Like its predecessors ARC-AGI-1 and 2, ARC-AGI-3 focuses entirely on evaluating fluid adaptive efficiency on novel tasks, while avoiding language and external knowledge. Our testing shows humans can solve 100% of the environments, in contrast to frontier AI systems which, as of March 2026, score below 1%.

To summarize: No AGI (Artificial General Intelligence) for you, Big Tech.

The collision of hype and euphoric hallucinations with the real world will manifest across the entire socio-economic-political-legal spectrum. All new technologies go through this cycle of extremes of hype, greed and claims of inevitability substituting for financial realities leading to a crash of extreme overvaluations.

What's different this time is our economy is larded with cognitive-labor busy-work that isn't actually productive, and this is the tranche of workers that AI can replace because this work can largely be automated as it's process-based rather than results-based. That's a critical distinction that's lost in all the hype.

What we get when we add these up--the limits of AI, extremes of hype and malinvestment, a bubble of overvaluation that bursts, extremely asymmetric distributions of wealth and income and the replacement of workers who cannot be redeployed in a shrinking economy--is a Depression, not a recession.

As I've repeatedly noted here, when tools become commoditized, their profitability vanishes, and if there's one thing that's inevitable about AI, it's the commodification of every AI utility. AI will not be profitable, it will be just another expense, one with legal liabilities that have yet to be defined.

And if we ask AI to resolve this for us, we run into the intrinsic limits of all AI models:




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Disney World's New Theme Park: The White House and Congress

A "Pirates of the Caribbean" themed experience is planned, where the taxpayers are repeatedly robbed by a motley crew of miscreants.

In a blockbuster deal, an obscure federal agency has granted Disney the rights to develop the White House and Congress as a new FantasyLand Theme Park. "In an effort to reduce the federal deficit, we've created a new federal income stream by granting Disney the rights to monetize the daily activities of The White House and Congress as a unique theme park."

A spokesperson for the deal explained, "Since much of this activity is already theater, it's a very easy transition." What's new is the theme park will offer public access and participation in activities that were previously conducted behind closed doors.

The plan calls for a variety of interactive experiences visitors can choose, much like rides in Disney World. Initial plans include:

1. A warehouse filled with $1 trillion in fake cash so visitors can revel in just how much money the federal government spends annually on interest on its debt, and an even larger warehouse containing $1.8 trillion in fake cash--the sum the federal government borrows every year to fill the slop-troughs of special interests conducting business under the cover of "healthcare, education, defense/war" and keeping the stock market propped up.

"We'll have briefcases with $1 million in cash so people can feel how heavy it is," the spokesperson enthused, "and a stack of $1 billion in cash--one thousandth of $1 trillion."

2. Join congressional and White House staffers as they crank out social media posts and tweets that create the illusion that elected and appointed officials are serving the public interest. According to the press release, "Visitors will get to experience the melding of info-tainment, entertainment, virtue-signaling and fantasy in real time" as staffers cloak the actual self-dealing and auctioning of influence with narrative control.

3. The parallel universe of political theatrics and circus acts will be staged to be interactive, so visitors can be filmed as they pontificate, self-righteously virtue-signal and blatantly misrepresent reality. "The concept here is to include circus acts and song-and-dance routines in with the political circus."

4. Visitors will participate in the "sausage-making" of lobbyists writing congressional bills and regulations to serve the interests of their corporate clients while elected officials pocket the proceeds of political contributions and insider deals.

Visitors will get to apply these same tools of influence to their own finances, for example, crafting language that gives a tax break to "occupants of 123 Broad St" and adding regulations that limits competition to their own business.



5. A Pirates of the Caribbean themed experience is planned, where the taxpayers are repeatedly robbed by a motley crew of miscreants representing Big Tech, Big Sickcare, Big Defense, Higher Education, Big Processed Food, etc., philanthro-capitalist foundations and NGOs, and assorted public officials masquerading as "the law."



"What's absolutely unique about this new theme park concept is the artificial realm will be more authentic and honest than Washington's phony show of serving the public while enriching themselves and their cronies," the spokesperson said, shortly before they were hurried off stage.

This is an April Fools post.


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The "Good News" Is Always the Same: the Stock Market Is Up--Until It Isn't

Cloaking a fake "market" with artifice to maintain its asymmetrical distribution of wealth and income also cloaks its detachment from the real world.

I often refer to the dynamics of self-correction and self-liquidation. Systems that use feedback to rebalance extremes are self-correcting: rather than accelerate as they approach a cliff, they slow down and reorganize to avoid runaway self-reinforcing feedback (i.e. positive feedback), a.k.a. run to failure.

Some things are self-liquidating by design. A mortgage, for example, is intended to be self-liquidating: the monthly payments reduce and eventually extinguish the debt.

Other systems become self-liquidating when artifice becomes the "solution" for those seeking to lock the system down to maintain their share of the spoils. This is the inevitable consequence when a culture veers into the black-hole spiral of moral decay, where integrity is dissolved by maximizing self-interest by any means available.

Responding to real-world feedback threatens to reduce insiders' share of the spoils, and to make sure this doesn't happen, insiders steer the system away from the real world, creating an artificial, synthetic representation of the system that relies not on real-world feedback but on signals and symbolism that can be engineered to serve the interests of those holding the levers of power and influence.

To those benefiting from a system, corrective feedback is anathema because it reduces their share of the spoils. The "solution" is various forms of artifice that maintain the illusion that the system is stable and responsive to the interests of all, when in fact it's been locked in a configuration that benefits the few at the expense of the many.

Self-serving artifice comes in many forms: the gaming of statistics to put lipstick on the real-world pig, the TACO Trade--announce some fabrication as a pending agreement with magical powers, virtue-signaling legislation that changes nothing in how the spoils are being distributed, grandiose claims of technological innovations--innovations that just happen to be owned by a handful of corporations--that will benefit everyone, and so on.

This substitution of artifice for authenticity relies heavily on signals and symbolism. Rather than attempt to manipulate all the complexities of the real-world economy, the stock market is now the signal for the entire economy: if stocks are going up, the economy is good.

This elevation of the stock market as the one true indicator rests on an entire universe of symbolic meanings and mythologies. The stock market is the invisible hand, the magic mechanism of price discovery, the engine of growth that rewards innovation and ingenuity while enriching us all with fabulous new technologies, the perpetual-motion device that makes America the greatest generator of prosperity in history, and so on.

Like all good cons, there is some truth buried beneath the hype. An unmanipulated market does indeed have the potential to reward innovation and ingenuity and generate widespread prosperity.

But the whole point of these mythologies is to cloak a manipulated market in the finery of an authentic market. This bewitchment is akin to the Emperor's New Clothes: a fabrication, a tale, that takes on a life of its own as a mass delusion.

Cloaking a fake "market" with artifice to maintain its asymmetrical distribution of wealth and income also cloaks its detachment from the real world. This is how systems veer into Model Collapse and self-liquidation: the artificial representations, the reliance on easily faked signals and euphoria-inducing mythologies collapse once they collide with reality.

Which brings us to the present, where the stock market has become the economy, the driver of wealth and prosperity as the top 10% who own the majority of stocks can spend freely enough to employ the bottom 90% and pay the taxes needed to fund an out-of-control state sector that lavishes subsidies on every class to stave off a reckoning.

Here is reality: all credit-asset bubbles are inherently unstable and so they pop. While the timing isn't predictable, the collapse of what is intrinsically self-liquidating is entirely predictable.



Here is the Emperor's New Clothing version of mass delusion: the Everything Bubble is permanent and will never pop, and if it does, some agency with god-like powers will rush to the rescue.



But self-liquidating systems are not permanent. Their internal dynamics guarantee the end-game is extinguishment. Here is a projection of the Everything Bubble based on bubble symmetry and scale invariance: what goes up will come down on a similar trajectory.



That the Emperor is buck-naked should not surprise us, but awakening from mass delusion is by its very nature a stunning surprise.



These dynamics are drawn from my Revolution Trilogy.


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