The Weekly Startup #20

A.K.A. The AInformer

Keeping you informed, engaged, and open to new ideas.

Welcome to The Weekly Startup: Igniting your inner fire in an AI-driven world. Our mission is to empower you with hands-on strategies for thriving and adapting to the ever-changing landscape of technology and life.

In today's email:

• Decoding the U.S. Debt Ceiling: An insightful breakdown of what the U.S. debt ceiling is and why it matters to us all.

• Predicting the Global Impact: We delve into the implications of potential outcomes, including an unlikely default and its effects on global markets.

• Surviving the Economic Downturn: Tips on managing finances and weathering potential economic storms.

• Understanding the Housing Market Impact: Analysis on how a global economic crisis could affect homeowners in the Netherlands and Spain.

• AI-generated photo of fake Pentagon explosion sparks brief stock selloff

• Sci-fi author says he wrote 97 books in 9 months using AI tools, including ChatGPT and Midjourney

• Apple's tax on AI inventions has begun. It will cost OpenAI and others hundreds of millions of dollars a year.

Dear Reader,

Welcome to another edition of The Weekly Startup, your trusted guide to staying on top of the business landscape, understanding the global economic shifts, and leveraging the power of emerging technologies like artificial intelligence.

This week, our focus is on the ongoing discussions around the U.S. debt ceiling and its potential ramifications worldwide, including how it could affect you directly. With an understanding of the situation, we aim to provide you with strategies and insights to navigate the potential economic challenges that lie ahead.

And as always, we wrap up with The AInformer, a roundup of the latest news and developments in artificial intelligence. This week's AInformer includes significant AI advancements that could transform your startup operations, so be sure to check it out.

Join us on this journey as we demystify complex economic issues, explore their impacts, and find the silver lining to turn challenges into opportunities. It's going to be an enlightening ride!

Stay tuned, stay informed.

Best,

Erwin

Goldman Sachs says the US has an extra 8 days before it runs out of money to pay its bills.

Goldman Sachs' chief political economist, Alec Phillips, suggested that the United States has until June 8 or 9 to avoid a default on its debt, giving it a week longer than the previously estimated June 1 "X-date".

This X-date is the date when the U.S. runs out of money to pay its bills if the debt ceiling isn't raised. This estimate is based on the balance of incoming revenue versus outgoing payments, which can vary.

This extended deadline could offer more time to negotiate raising the debt ceiling, but Phillips emphasizes that it's important to act promptly, regardless. He warned against waiting until the last minute, suggesting it's better to address the issue sooner rather than later.

Treasury Secretary Janet Yellen, however, maintains that the hard deadline is still June 1. She has warned that the U.S. could run out of money as soon as that date, due to the ongoing deadlock between Democrats and Republicans over raising the country's $31.4 trillion debt ceiling.

Some substantial tax payments are expected on June 15, which would provide some income, but Yellen expressed uncertainty about whether they would arrive in time to prevent a default. She noted that the odds of being able to pay all bills and reach June 15 are quite low.

The U.S. government's cash balance dropped significantly to $57.3 billion recently, the lowest since December 2021, demonstrating the urgency of the situation. The U.S. relies on debt, raised from selling bonds, to finance its spending, and a default could have serious repercussions for both the domestic and global economy.

It could impact borrowing costs for various forms of credit, including credit cards, car loans, and mortgages, leading to financial strain for families.

Understanding the Debt Ceiling: Why It's Like Your Parents' Credit Card Limit and How It Can Impact Us All

So, the "debt ceiling" is like a credit card limit for the United States. It's the maximum amount of money the government can borrow. The government uses this money to pay for things we need, like schools, roads, and military expenses. The government borrows money because it spends more than it collects from taxes.

Now, imagine if your parents hit their credit card limit. To keep spending, they'd need to ask the bank to raise the limit. That's kind of what the government has to do. But instead of a bank, it's the politicians in Congress who decide whether to raise the limit or not.

But here's where it gets tricky: if the limit isn't raised, the government can't borrow more money. This means it might not be able to pay for all the things it needs to, which can lead to a lot of problems like people not getting paid or losing jobs. That's why people are worried about a "default," which is when the government can't pay back the money it owes. This could cause a big mess in our economy.

In 2011, there was a similar situation where it was uncertain if the limit would be raised. This made people nervous and caused problems in the economy, like stock prices falling and people having less confidence in spending money.

Right now, it's looking like we might have the same situation again. The Republicans and Democrats in Congress are disagreeing about whether to raise the limit and how to handle government spending. If they don't figure it out soon, we might face some problems, like higher interest rates. This means it could become more expensive to borrow money, making things like student loans and mortgages more costly.

So, in a nutshell, it's really important that they figure this out soon to avoid causing a lot of problems for everyone!

The Debt Ceiling Dilemma: Understanding the Risks and Options of U.S. Government Borrowing

The debt ceiling can't just be raised indefinitely. If the government continues to borrow more and more, it could lead to several problems. The more the government borrows, the more it has to pay back with interest. This could lead to higher taxes, or cuts to government services, or both. Additionally, if investors start worrying that the U.S. government might not be able to pay back its debt, they might stop or slow down their lending. This would make it harder for the U.S. government to find people to borrow from, which could also lead to a financial crisis.

If the U.S. government can't or doesn't want to raise the debt ceiling and needs more money, there are a few options, but all of them have downsides:

1. Cut Spending: The government could decide to cut spending on some services, but this could lead to negative impacts on people who rely on those services.

2. Increase Taxes: The government could increase taxes to bring in more revenue. However, this could slow down economic growth if businesses have less money to invest or if consumers have less money to spend.

3. Monetize the Debt: The government could print more money to pay off the debt. However, when there's more money circulating in the economy, each unit of money becomes worth less, leading to inflation. If not controlled properly, this could result in hyperinflation, which can be very destabilizing.

In general, managing a country's economy and debt is a balancing act. It's important for a country to have enough money to spend on services for its citizens, but it's also important not to borrow so much that it leads to economic instability. It's a tough job that requires careful consideration and decision-making.

Debt Ceiling Showdown: Possible Outcomes and Their Potential Economic Impact

The negotiations about the debt ceiling could result in a few different outcomes:

1. The Debt Ceiling is Raised: This is the most common outcome. If the debt ceiling is raised, the U.S. can continue borrowing money to pay for government services. In the short term, this would prevent an economic crisis, but it would still leave the longer-term issue of the national debt unresolved.

2. The Debt Ceiling is Not Raised: If the debt ceiling is not raised, the U.S. government would need to find ways to cut spending or increase revenue to meet its obligations. This could result in a variety of negative impacts, such as reduced government services, higher taxes, or, in the worst case, a default on the national debt which would likely trigger a severe economic crisis.

3. A Compromise is Reached: A compromise might involve raising the debt ceiling along with measures to decrease spending or increase revenue. For example, the article you provided mentions that in 2011, the debt ceiling was raised along with cuts to labor, health, and education programs.

Depending on the specific results of the negotiations, the outcomes could have a variety of impacts. If spending cuts are part of the deal, then the programs that have their funding cut could be affected, potentially leading to job losses or reductions in service. Similarly, if tax increases are part of the deal, this could impact people's take-home pay and potentially slow down economic growth.

If the debt ceiling isn't raised and the U.S. defaults on its debts, the impacts could be far-reaching. A default could lead to a financial crisis and potentially a recession, with job losses, reductions in government services, and many other negative impacts. The mention of higher interest rates in your article would affect loans like mortgages and student loans, making them more expensive for the borrower.

Remember, all these scenarios involve complex economic factors and are influenced by the specifics of the situation, so these are just potential outcomes. The actual results will depend on the details of the negotiation and other factors in the economy.

Global Domino Effect: How a U.S. Debt Default Could Impact Western Economies

If the United States were to default on its debt, it would have significant implications for economies around the world, including Western countries. Here's why:

1. Global Financial Instability: The U.S. dollar is the world's reserve currency and U.S. Treasury bonds are considered one of the safest investments. A U.S. default would create uncertainty about the value of these investments, causing instability in global financial markets.

2. Economic Impact: Western economies have close economic ties with the U.S. through trade and investment. If a U.S. default were to lead to a recession in the U.S., demand for exports from these countries could decrease. This would negatively impact their economies.

3. Impact on Financial Institutions: Many financial institutions in Western countries hold U.S. government debt. A default could result in losses for these institutions. In a worst-case scenario, if the losses are large enough, it could even cause some weaker institutions to fail, leading to a financial crisis.

4. Currency Fluctuations: In the event of a U.S. default, there would likely be significant fluctuations in currency exchange rates as investors move money around in search of safe havens. This could impact the value of the Euro and potentially make imports and exports more expensive for countries in the Eurozone.

5. Long-term Interest Rates: A U.S. default could potentially lead to higher interest rates globally, as investors would demand higher returns to compensate for the increased risk. This could increase borrowing costs for governments, businesses, and consumers in other countries.

It's important to note that these are potential effects, and the actual impacts would depend on a variety of factors, including the severity of the default, the reaction of global financial markets, and the actions taken by governments and central banks to mitigate the impacts.

Homeowners on the Edge: The Potential Impact of a U.S. Debt Default on the Housing Markets

In a worst-case scenario, where the U.S. defaults on its debt and this causes a global economic crisis, homeowners could potentially face several challenges:

1. Drop in House Prices: A significant economic downturn could lead to a drop in house prices. If the housing market collapses, homeowners could find themselves in negative equity, which means owing more on their mortgage than their house is worth.

2. Higher Interest Rates: If global interest rates rise as a result of the crisis, this could affect homeowners when they come to remortgage or if they have variable rate mortgages. Their monthly mortgage payments could go up, making it more expensive to own a home.

3. Unemployment: In a serious economic crisis, job losses can rise significantly. If homeowners lose their income and are unable to find new jobs quickly, they may struggle to keep up with mortgage payments.

4. Difficulty Selling or Buying Property: In times of economic uncertainty, the housing market can slow down, with fewer people willing to take the risk of buying property. This could make it more difficult for homeowners to sell their homes if they need to.

5. Decreased Rental Income: For those who rely on rental income from properties, there may be issues if tenants can't afford to pay rent due to job loss or economic uncertainty. Additionally, rental rates may decrease due to lower demand.

Keep in mind, though, that these are just potential outcomes in a worst-case scenario. There are many factors that could influence these results, including actions taken by national and international financial institutions to mitigate the impacts of a crisis. The governments in Western countries, as well as the European Central Bank, would likely take steps to protect their housing markets and support their economies in the event of a U.S. debt default.

Crisis-Proof Your Finances: A Survival Guide for a Potential U.S. Debt Default and Global Economic Downturn

When facing the potential consequences of a U.S. debt default and global economic downturn, there are several steps that individuals can take to manage and mitigate the damage:

1. Financial Planning and Savings: Establishing a solid financial plan and building an emergency fund are the first steps in preparing for financial uncertainty. Having savings can provide a cushion to cover increased costs or lost income.

2. Diversify Investments: Diversification is a key principle of investment that can help reduce risk. This includes diversifying across asset classes (stocks, bonds, real estate, etc.), sectors, and geographical regions.

3. Debt Management: In times of financial uncertainty, managing debt effectively becomes even more important. This might mean paying off high-interest debt, refinancing a mortgage to a lower interest rate, or avoiding new debt.

4. Fixed-Rate Mortgages: If interest rates are expected to rise, it might be beneficial to refinance to a fixed-rate mortgage. This would protect against rising costs in the event of variable interest rates increasing.

5. Career Resilience: Building skills and networking can help protect against unemployment. In a difficult job market, having a broad skill set and a good professional network can provide more opportunities.

6. Insurance: Ensuring that you have adequate insurance coverage, like income protection insurance or mortgage insurance, can provide a safety net in the case of job loss or other financial difficulties.

7. Professional Advice: In times of economic uncertainty, it can be helpful to seek advice from a financial advisor or a mortgage broker who can provide guidance tailored to your specific situation.

It's important to note that these are general guidelines, and the best approach can vary depending on individual circumstances. Everyone's financial situation is different, so it's important to consider personal factors when making financial decisions.

Wrapping it up

In this rapidly changing economic landscape, understanding complex issues like the U.S. debt ceiling and its global implications becomes crucial. We hope this edition of The Weekly Startup has provided you with valuable insights, helping you navigate any uncertainty and make informed decisions for your future.

Your views and knowledge matter to us. If you have any questions or comments about the topics we've covered, or if you believe you have information that could benefit other readers, we encourage you to reply directly to this email.

At The Weekly Startup, we believe in the power of community and shared knowledge to make a difference. By fostering a collaborative environment, we can all become more resilient in facing the challenges of tomorrow. We look forward to hearing from you and continuing to serve as your trusted guide in these complex times.

Until next week, stay informed and stay secure.

Best,

Erwin

The AInformer: Your weekly AI recap in 1 minute!

AI-generated photo of fake Pentagon explosion sparks brief stock selloff

An artificial intelligence (AI)-generated photo depicting a fictitious explosion at the Pentagon was widely shared on social media platforms on May 22, 2023, leading to a temporary dip in U.S. stock markets. The picture, which displayed smoke rising from the Pentagon, was distributed by several accounts, including a Russian state media outlet. The image was later removed.

Arlington County Fire Department promptly refuted the claims of an explosion at the Pentagon via a tweet, and reassured the public that there was no immediate threat or danger.

While U.S. stocks momentarily fell during the circulation of the photo, they recovered swiftly when the image was exposed as a hoax. Some observers pointed out obvious signs of AI manipulation in the false Pentagon photo.

This incident is set to intensify ongoing debates about the potential misuse of advanced AI systems for spreading misinformation and causing unrest. The case adds to previous instances of misleading AI-generated images going viral, and reiterates calls from industry figures like Elon Musk for halting the development of advanced AI until proper safety guidelines are established.

Dr. Geoffrey Hinton, often referred to as the 'Godfather of AI', recently resigned from his position at Google to freely discuss potential risks of AI technology, including its misuse by malicious actors.

Adobe is adding AI image generator Firefly to Photoshop

Adobe Photoshop is introducing a new AI-powered feature called Generative Fill. This tool leverages Adobe's AI image generator, Firefly, to allow users to easily expand images and add or remove objects using text prompts.

Generative Fill provides three options for image manipulation, and works optimally when provided with some direction by the user. It can mimic light sources and even reflect existing parts of an image in generated water. This tool will be introduced as a regular feature within individual Photoshop layers.

Generative Fill also supports Content Credentials, a system that attaches attribution data to images, indicating if the content was created or edited using AI. Adobe ensures that Firefly's training data is legally sound for commercial use.

The Generative Fill tool is currently in beta, with a full release expected in the latter half of 2023.

Apple's tax on AI inventions has begun. It will cost OpenAI and others hundreds of millions of dollars a year.

OpenAI recently launched an iPhone app for its popular AI model, ChatGPT. The app quickly ascended to the top of the App Store charts, with Apple categorizing it as a "must-have" app under its "Essentials" category.

A premium version of the app, ChatGPT Plus, offers faster response times and priority access to new features for a $20 monthly subscription fee.

As OpenAI is using Apple's in-app purchasing system instead of directing users to a website for subscriptions, Apple is earning its standard 30% cut from the subscriptions.

If ChatGPT Plus were to gain 5 million new subscribers on iOS, that would potentially generate about $360 million annually for Apple.

Despite concerns about privacy and limited contribution to AI research, Apple benefits significantly from such AI apps due to its control over the App Store and its in-app purchasing system.

Sci-fi author says he wrote 97 books in 9 months using AI tools, including ChatGPT and Midjourney

Sci-fi author Tim Boucher has created 97 books in just nine months using AI tools, including ChatGPT and Midjourney, as well as Anthropic's Claude.

In an article for Newsweek, Boucher explained that he used the AI image generator Midjourney to create illustrations for the books, while using ChatGPT and Claude for brainstorming and generating text.

His books typically contain between 2,000 to 5,000 words and feature 40 to 140 AI-generated images.

According to Boucher, these books usually take about six to eight hours to create and publish using these AI tools, and some can be completed in as little as three hours. He sells these books online, priced between $1.99 and $3.99.

Boucher praised AI for increasing his output while maintaining quality and enabling intricate world-building.

As we wrap up this edition of The AInformer, I'd like to extend a heartfelt thank you for taking the time to read and engage with our content. Your continued support means a great deal to us. If you have any questions or feedback, please don't hesitate to reach out and email me directly. I'm always eager to hear from you and address any concerns or suggestions you may have.

Also, if you found value in our newsletter and think someone in your network could benefit from it as well, we'd be deeply grateful for your referrals. Word-of-mouth recommendations are the highest form of compliment and truly help us grow our community of like-minded individuals.

Once again, thank you for being a part of our journey, and we look forward to bringing you more insightful content in the upcoming editions. Until next time, take care and keep exploring the incredible world of AI!

Stay safe.

Erwin