We cannot ignore the major trend — Artificial Intelligence is bringing the global economy to the brink of recession.

Artificial Intelligence has created many new phenomena, at least in terms of investment, it has made NVIDIA in the US stock market outstanding, almost dominating the technology stock market.

So, how does Artificial Intelligence affect our lives and the economy？

In fact, it’s not difficult to understand Artificial Intelligence. We often hear about things like LLM, the so-called large language models, which can truly act as these models doing a person’s job. Like a newborn baby, it already has a brain, although it’s empty and doesn’t understand anything, but it has the ability to absorb knowledge, and the neural network of LLM plays this part of the function.

Alright, once the baby has this little brain, it can learn in the future, and machine learning is what this means.

Brains can be smart or not smart, and neural networks also have such distinctions, one way to classify them is by how many parameters they can handle; so, different versions of LLM have different neural networks and corresponding abilities to absorb and process information, which is analogous to the different stages of human brains, where ChatGPT 1.0 is a child, and version 4.0 is an adult; or you can also compare it to different intelligent people.

In fact, many lower-level jobs, and even some higher-level ones, no longer need humans to do them, various types of LLMs can do the job, this is no longer just theoretical, but has actually appeared in our physical economy. I’ve had several former students who were graphic designers lose their jobs, and a friend who translated documents back and forth also got fired.

This is an age-old discussion in economics, every technological breakthrough tends to make certain low-skilled workers unemployed, often requiring several years to retrain for new employment situations, this is called structural unemployment. The current AI digital revolution is not only affecting low-skilled labor, but it also has a wide-ranging impact across industries of all levels.

If, as the owner of a game design company or a thriving VTuber company in Japan, I’ve found that some graphic design work can be done by AI for only a quarter of the price of hiring an employee, why not take advantage of that?

If you’re a manager in an investment analysis department and you find that Artificial Intelligence can write investment reports better than humans, would you continue to employ those analysts?

If you’re the chief in an accounting firm, and audit reports can be perfectly done by Artificial Intelligence, you can lay off several clerks.

Different versions of LLM represent different abilities of people, and the charges are also different. Employers can use different versions of LLM depending on the complexity of the work, rather than hiring different talents.

In the next few years, the global economy will have to digest this structural change through recession.