What if the FOMC or the FRB was a bunch of AI agents?
It looks like a great candidate. The goals and objectives of the federal reserve system are clearly laid out. The targets for monetary policy are also well established and agreed. The macroeconomic, fiscal and banking data which the fed analyses is, well, and after all, data. And AI can consume it real-time. All past research has been consumed by AI, with excellent remember and recall. Some of those near-superintelligent AI models US wants to keep for itself can be deployed here. In fact, it often seemed to me that Jay Powell was himself a superintelligent humanoid robot.
The only problem - the biggest one - would be 'independence', which is fundamental to the federal reserve system - in principle at least. While a totally human Fed has appointees pushing political agendas and personal idiosyncrasies / biases, and then there's an occasional law-suit on the Chairman, an agentic AI based system can be misled with false data. And who knows, agents may also have personalities and affiliations, depending on what went into their training. Which means for a well-intended agentic AI based Fed, there has to be a tightly controlled training mechanism, that ensures the agents are unbiased, transparent, goals-driven, meticulous, diligent and clean. But the interface with humans is where it'll all still fail, given humans will never let their control go, for both good and bad reasons. Good reasons - we can only trust humans to protect our best interests. Bad reasons - humans are divided at various levels - individual, communities based on religion, region, beliefs, experiences, economic status, affiliations, and so on; interests served vary, and not necessarily in any order or priority, and not generally good for most. What if you extend agentic AI to all governance so that Fed is not meddled directly by humans? One - AI can screw us more bigly and widely. Two - the interfaces with humans would still be there, albeit farther from the center of the agentic system, and humans at the interface can still manipulate AI to screw us. The mechanisms would be far too complex to comprehend and the outcomes far too unpredictable.
Seems humans anywhere are a problem after all. But then, who is AI for?
And...
Isn't AI 'human' too?
Fun question - What do you think an Agentic AI based Fed would have done with the policy rates yesterday?
