I asked ChatGPT - Grok: In U.S., what has most caused high house prices, bank regulations or illegal immigration?

I asked ChatGPT:

"In the U.S. what has most caused high house prices; decades of lower bank capital/equity requirements against residential mortgages than against loans to e.g., small businesses, or around 15 million of illegal immigrants?"

ChatGPT answered:

"Good question — it gets at a big and contentious debate. The evidence strongly suggests that the biggest driver of high U.S. house prices is supply-constraints + regulatory and credit/finance conditions, rather than solely the presence of roughly 15 million illegal immigrants. Below I unpack why — and where immigration does play a role (but a much smaller one).

✅ Key structural constraints — supply, regulation, and credit

• Chronic underbuilding + regulatory constraintsThere is a large and growing shortfall in housing supply. According to a recent assessment by Goldman Sachs, the U.S. would need to build “3–4 million additional homes beyond normal construction” to restore affordability. 

Local land-use regulations, zoning laws (exclusionary zoning, restrictions on density, single-family zoning, limits on multi-unit housing), and lengthy permitting processes significantly constrain how many new homes can be built. 

In many desirable metropolitan and coastal areas (e.g., parts of California, New York), housing construction has lagged job and population growth — a classic supply–demand imbalance that pushes up prices. 

As a result, both rents and sale prices have risen steeply as demand kept outpacing supply. 

• Credit supply, interest rates, and mortgage finance policiesEasier access to credit and favorable mortgage conditions (especially pre- and post-2008 through government-supported agencies, looser loan-to-value and collateral requirements, and securitization) boosted demand for housing, which amplified price increases when supply couldn’t keep up. 

Some academic research finds that expansion in mortgage credit contributed strongly to booms (and busts) in local housing markets.

On the regulatory side: proposed increases in capital requirements for banks for residential mortgages (in some versions of the Basel III-based banking rules) may reduce banks’ willingness to lend, especially on high-loan-to-value mortgages, which could dampen supply of credit or alter lending terms — potentially affecting affordability and demand. 

Nonetheless, even before we assign much weight to bank-capital/regulation changes, credit-driven demand + supply constraints appear to explain a large share of price increases. 

In short: decades of underbuilding, restrictive zoning/land-use laws, regulatory limits on what kinds of housing can be built, plus expansions in mortgage lending and low interest rates — together they created a structural imbalance between demand and supply. That structural imbalance has been the main engine of rising house prices in the U.S.

🔎 What about immigration — including undocumented immigrants?Immigration (legal or undocumented) does add demand: more people need housing. Economists recognize this effect in principle — more population generally increases demand.

But empirical estimates suggest that the effect at the national level is modest. For example, a 2007 study cited by analysts found that a 1% increase in a city’s immigrant population raised rents and home values by roughly 1%.

More recent analyses conclude that immigration is not the primary cause of the housing affordability crisis. 

Some arguments advanced by anti-immigration advocates (or political figures) — that millions of illegal immigrants are chiefly responsible for soaring home prices — are repeatedly rated as misleading by fact-checks, because they ignore the central role of supply shortages and regulation.

Also: immigrants contribute significantly to the construction workforce — ironically helping build housing.

Bottom line on immigration: yes, more people (immigrants or not) mean more housing demand, which can put upward pressure on prices — but the magnitude of the effect is relatively small compared to structural supply constraints, regulatory bottlenecks, and mortgage/credit conditions.

I said: Thanks. 

It replied: Glad it helped. If you want to revisit any part—credit effects, zoning, capital requirements, or immigration impacts—just let me know.

I asked Grok

"In the U.S. what has most caused high house prices; decades of lower bank capital/equity requirements against residential mortgages than against loans to e.g., small businesses, or around 15 millions of illegal immigrants?"

Grok answered: 

"Decades of lower bank capital requirements (risk weights) for residential mortgages—typically 50% or less under Basel rules, vs. 100%+ for commercial/small-business loans—have far more strongly driven U.S. house price inflation than immigration.

This policy, in place since the 1980s–1990s, makes mortgage lending artificially cheap and profitable for banks, channeling excessive credit into housing, amplifying demand, and fueling repeated booms (2000s bubble, post-2012 rise, 2020–2022 surge). Studies on capital changes show even modest increases in mortgage capital requirements reduce house prices (e.g., ~2–3% drop per notable tightening), implying the longstanding low requirements have added substantially more over time.

Recent immigration surges (net ~5–8 million additional unauthorized immigrants since 2020, not 15 million new) have added housing demand, mostly to rentals, with estimates of ~1% price/rent increase per 1% population growth at most—and often less, as immigrants also supply construction labor. The major house-price spikes (e.g., +50% from 2019–2022) occurred before the peak immigration wave and were driven by low rates + credit supply, not population.

Primary drivers remain supply restrictions (zoning/NIMBYism) + easy mortgage credit, in which favorable capital treatment plays a key structural role. Immigration is a secondary, recent factor at best."

I said: Thanks!

It replied: You're welcome! Happy to help.

Grok: What's the impact of billionaires in the costs of basic necessities?

I asked Grok: 

"How much do billionaires increase the cost of housing, health care, childcare, food, transportation and other basic necessities?"

 

Grok answered:

 

"Billionaires have a small, mostly localized impact on the cost of housing through direct purchases or investments, and negligible direct effects on health care, childcare, food, transportation, or most other basic necessities. 

There are only about 800–900 billionaires in the U.S., with collective wealth around $5–7 trillion, but their personal spending and home ownership represent a tiny fraction of the $50+ trillion U.S. economy and 140+ million housing units. 

Their influence is often overstated in political discourse, while bigger drivers include supply restrictions, labor costs, regulations, corporate consolidation, and global factors.

Housing

This is the only area with credible evidence of some upward pressure from ultra-wealthy buyers and billionaire-linked investors.

Individual billionaires' purchases of luxury or multiple homes can dramatically inflate values in specific high-end or resort areas.

Billionaire-backed institutional investors (e.g., private equity firms like Blackstone) buy single-family homes for rentals). Studies show mixed impacts:

Some find they raise rents faster (e.g., 60% higher initial increases than average) or contribute to price/rent growth of a few percent in heavy-buying areas.

Others conclude they increase rental supply, potentially lowering rents overall, or have minimal net effect.

Post-2008 crisis, they may have added to price/rent increases, but estimates are modest (e.g., 1–5% nationally or in affected markets).

Overall quantitative impact on national housing costs: Low single-digit percentage at most, and highly localized. Main drivers of unaffordability are zoning laws/NIMBYism restricting new builds, high construction costs, and demand from population growth/immigration — not billionaires.

 

Health Care

 

No meaningful direct impact. U.S. health care costs (~$4–5 trillion annually) are driven by:

 

Fragmented insurance systems

Administrative bloat

Pharma pricing

Provider consolidation

Aging population

 

Some billionaires own stakes in health companies (e.g., via investments), but their personal usage (private concierge medicine) doesn't strain the system. Costs have risen due to Baumol's cost disease (labor-intensive services don't productivity-boost like manufacturing). No studies link billionaires' existence to higher premiums or out-of-pocket costs.

 

Childcare

 

Negligible impact. Costs (~$10K–20K+ per child/year) stem from:

Labor intensity (low wages, high staff ratios)

Regulations

Lack of public funding

Billionaires hire private nannies or use elite services, but this doesn't affect average daycare prices. Again, Baumol's effect dominates.

 

Food

Virtually zero impact. Food prices are influenced by:

Supply chains

Energy costs

Weather

Corporate consolidation in agriculture/processing

Billionaires' grocery or dining habits are a rounding error in a $1+ trillion market.

 

Transportation

 

No significant effect. Gas, cars, and transit costs depend on:

Global oil markets

Supply chains

Infrastructure funding

Private jets or yachts don't move the needle for public gas prices (~$3–4/gallon) or car costs.

 

Broader Context

 

Indirect effects via wealth concentration are debated: some argue billionaires' political influence (lobbying, donations) helps maintain policies favoring low taxes on the rich or deregulation, limiting public investment in affordable housing/healthcare. Others point to corporate profit-taking (e.g., ~10–20% of recent inflation from margins) or untaxed wealth transfers reducing government revenue. 

 

However, these are systemic inequality issues, not direct "billionaires bidding up necessities.

"Claims that billionaires are a primary cause of cost-of-living crises often come from advocacy groups (e.g., Oxfam, Institute for Policy Studies) and lack strong causal data for most categories. 

Evidence shows their role is marginal compared to policy failures like underbuilding housing (~5–7 million unit shortage) or health system inefficiencies.

 

In short, billionaires aren't "making life unaffordable" in a major quantifiable way for basics — the impact is mostly a few percent in select housing markets at worst, and near-zero elsewhere. 

Fixing supply-side barriers (e.g., more building, cost controls) would do far more than targeting billionaires.

 

I said: Thanks!

 

It replied: You're welcome! Glad I could help. If you have more questions, just ask.

 

Do all want affordable homes? No! Some millions of homeowners could think that's not in their best interest.

Every day we read about the need of affordable homes. And the desired promise of it, is exploited by politicians in many ways shapes or forms. 

E.g., recently I read in Financial Times that Zohran Mamdani, in 2020, told a reporter, “What I’ve seen in my work is, it’s not tenant versus homeowner.” The affordability crisis is, rather, “tenant and homeowner versus financial speculator and investment bank portfolio”. Really?

Just ask the approximately 86 million U.S. homeowners, representing a homeownership rate of approximately 65 percent, what they think of their piggy banks turning “affordable”. (November 2024, Donald Trump won with little more that 77 million votes)

2028 I wrote in Washington Post: “Do we want affordable homes or houses as investment assets? There’s no easy answer, because going back to just homes would also cause immense suffering for all those believing they have, with their houses, built up a safety net.”

The challenge that described remains valid. Just imagine a politician during a special interest rally offering a tempting: 

“In the quest for Affordable Homes, I promise to minimize as much as possible the sufferings that could cause to you who already own a home.” To top it up he could add: “I promise to help you leave as much as possible to those you want to inherit you, for those you have built up a mountain, or at least a little hill.” 

And that during that rally, the attendants would hear, over and over again, Peter, Paul and Mary singing “The House Song” and giving it perhaps a whole new meaning.

I believe that to be able to bridge the so dissimilar and emotional laden interests between house buyers and home owners, in a reasonably amiable way, without too many tears, the best way, the only way, is by fully understanding how we got here. Why that’s not discussed, Ill’ leave to you.

Since the 1990’s regulators decided that banks needed to hold more capital against risky loans to small businesses and entrepreneurs than against “safe” residential mortgages. What had to happen? More financing of houses and less of that which can help create the job incomes people need to afford buying houses. 

If you do not want to take my word for it, read the answer ChatGPT and Grok gave when dialoguing with them on this issue. A Nobel Prize winner in Economic Sciences should of course have been able to understand that and alerted us. Sadly, truth be told, none of these laurates ever did.

Who’s going to help avoid a class war among house buyers and home owners from degenerating into an undeclared civil war conflict? The US Congress? 

No wonder the attendance to churches is reported to have increased.

In words of two great Canadian singer songwriters, this is what has, and is happening, to Europe.

After the Basel Committee in 1988 decreed its risk adverse bank regulations, in words of Joni Mitchell’s Yellow Taxi, this is what has happened to Europe.

“Don't it always seem to go

That you don't know what you got 'til it's gone?

They paved paradise and put up a parking lot

Ooh, bop-bop-bop

Ooh, bop-bop-bop (na-na-na-na-na)

They took all the …. and put 'em in a …. museum

And they charged the people a dollar and a half to see them

No, no, no

Don't it always seem to go

That you don't know what you got 'til it's gone?

They paved paradise and put up a parking lot.”

And, if also Leonard Cohen could update his You want it darker, though surely in a more poetic way, it could go something like this:

If you’re the regulator, I'm out of the game

Deciding what banks need, kids will be broken and lame

If thine is the glory, theirs must be the shame

You want it darker

You killed the flame

It's written in regulations

It's not some nonsense claim

Basel Committee told banks

Keep refinancing our safer present

Don’t finance their riskier future

And that’s what our children got

You want it darker

They killed the flame

What has become of Europe (and of you the whole Western world)? Don’t be such a defeatist!

Please free us from imprudent risk-aversion and give us some prudent risk-taking

God make us daring!

USA and Canada beware… all this goes with you too.

 

#AI #Grok: What is your initial reaction to the following way for a Eurozone sovereign to restructure its debt?

I asked Grok:

"A way for way too indebted Eurozone sovereign, unable to service its debts without imposing severe sufferings on its inhabitants, is to abandon the euro and offer in payment, to all of its creditors, long term bonds denominated in their old currency at a very low interest rate, and which shall immediately come due, if any of its new public indebtedness exceeds e.g., 30% of GDP."

In a very brief way, keep it to about 200 words, what is your initial reaction to that?

 

Grok answered:

This proposal is a bold, unilateral debt restructuring tactic that echoes historical defaults like Argentina's but tailored to the Eurozone's constraints. By exiting the euro and issuing long-term, low-interest bonds in a depreciated national currency (e.g., a "new drachma" for Greece), the sovereign could effectively haircut debts through inflation and devaluation, easing servicing without immediate austerity. The clawback clause—accelerating repayment if new debt tops 30% of GDP—adds a fiscal discipline mechanism, potentially restoring creditor confidence by signaling commitment to restraint.

 

However, it's fraught with risks: Eurozone treaties prohibit currency exits without broader fallout, inviting legal battles, capital controls, and ECB retaliation. Creditors (often foreign banks and funds) would suffer massive losses, possibly triggering systemic contagion. Domestically, hyperinflation, bank runs, and social unrest could ensue, exacerbating the "severe sufferings" it aims to avoid. Politically, it's a nuclear option—feasible only in extremis, like a Grexit scenario, but likely to isolate the country further from EU support.

 

Overall, ingenious in theory for desperate cases, but practically a high-stakes gamble that could backfire spectacularly. Better pursued via negotiated relief than shock therapy.

 

I asked: What if many other Eurozone sovereigns in similar situation would also jump to take up that idea?

 

Grok answered:

If multiple Eurozone sovereigns—such as Italy (debt-to-GDP 140%), Greece (160%), Spain (110%), and Portugal (100%)—simultaneously adopted this exit strategy amid 2025's elevated debt levels (euro area average 87.4% of GDP ) and ECB warnings of fiscal risks, it would likely trigger a full monetary union collapse.A domino effect would ensue: Mass devaluations of new national currencies could inflate away debts but spark hyperinflation, bank runs, and capital flight across the bloc. Creditors, facing trillions in losses on euro-denominated bonds, would dump assets, freezing credit markets and causing systemic bank failures. The ECB's balance sheet, bloated from past interventions, might implode without unified fiscal backing.

 

Politically, it could fracture the EU: Northern states like Germany might impose barriers or exit themselves, while southern unrest boils over. Globally, this would rival 2008, slashing trade, spiking unemployment, and risking recession—Eurozone GDP is ~$15T. The 30% GDP debt cap clause offers illusory discipline, easily bypassed in chaos.In essence, a collective "Grexit-plus" would be economic Armageddon, far worse than isolated cases, potentially ending the euro experiment and reshaping global finance. 

 

Negotiated reforms remain preferable to this suicidal pact.

 

I asked: What type of “Negotiated reforms” do you envision and with whom should it be negotiated?

Grok answered: 

Negotiated reforms for indebted Eurozone sovereigns should build on the EU's new economic governance framework, effective since April 2024, emphasizing sustainable debt paths and growth-oriented policies. Key types include:

 

Fiscal consolidation with flexibility: Implementing net expenditure rules and medium-term fiscal-structural plans to reduce debt below 60% GDP (or stabilize high-debt ratios), while allowing buffers for investments in green/digital transitions and resilience. 

 

Structural reforms: Labor market liberalization, pension adjustments, and productivity-boosting measures to enhance growth potential, often conditioned on EU funding access.

 

Debt relief tools: Extended maturities and grace periods via the European Stability Mechanism (ESM), or innovative instruments like GDP-linked bonds and Eurobonds ("blue bonds") for joint issuance up to 25% of euro area GDP, promoting fiscal integration without full mutualization. 

 

Negotiations should occur multilaterally through the Eurogroup (eurozone finance ministers) for peer review of budgetary plans, the European Commission for assessments and enforcement, and the European Council for high-level political buy-in. The ECB would coordinate monetary support, while bilateral talks with creditor nations (e.g., Germany, France) ensure consensus. For external legitimacy, involve the IMF in debt sustainability analyses, especially for countries like Greece or Italy. This collaborative approach, as seen in 2025 budgetary discussions, avoids contagion while fostering unity.

 I asked: Do the Eurozone authorities have sufficient credibility to pull this off?

 

The Eurozone authorities—primarily the European Commission, ECB, Eurogroup, and European Council—have garnered moderate credibility in implementing the new economic governance framework, but it's insufficient to guarantee unhindered success in pulling off comprehensive negotiated reforms for indebted sovereigns as of August 2025. 

 

On the positive side, the framework's entry into force in April 2024, coupled with the approval of initial Medium-Term Fiscal Structural Plans (MTFSPs) in early 2025, demonstrates procedural progress and coordinated fiscal stances. Eurogroup statements highlight stabilizing debt at ~90% of GDP, near-target inflation, and growth acceleration, bolstering perceptions of effective debt management. The ECB's role in monetary support and the European Fiscal Board's assessments further enhance institutional legitimacy. 

 

However, challenges undermine full credibility: Analyses criticize lax enforcement, with high-debt countries like Italy exploiting flexibilities for loosening rather than consolidation, risking moral hazard and austerity entrenchment. Political divergences among member states, limited investment carve-outs, and geopolitical pressures could erode trust if compliance falters. Historical ECB interventions during crises have empowered it but also sparked credibility debates over fiscal dominance. In sum, while foundational steps build optimism, sustained credibility hinges on rigorous enforcement and growth outcomes—early signs are promising, but vulnerabilities persist, potentially requiring IMF involvement for added assurance. 

 

I said: Thanks! Enough for today.

 

It answered: You're welcome! Feel free to dive back in anytime—I'm here whenever you're ready. Have a great day!

PS. One of the main difficulties lies in that the Euro adoption did not include one word about what any of the Eurozone sovereigns had to do in order to leave the Euro.

Note: The answers are copied exactly from those given to me by ChatGPT and Grok

Here my many other questions to ChatGPT and Grok on bank regulations

#AI #ChatGPT: What is your initial reaction to the following way for a Eurozone sovereign to restructure its debt?

I asked ChatGPT:

"A way for way too indebted Eurozone sovereign, unable to service its debts without imposing severe sufferings on its inhabitants, is to abandon the euro and offer in payment, to all of its creditors, long term bonds denominated in their old currency at a very low interest rate, and which shall immediately come due, if any of its new public indebtedness exceeds e.g., 30% of GDP.

In a very brief way, keep it to about 200 words, what is your initial reaction to that?"

ChatGPT answered:

"Your proposal is intriguing because it combines three strong elements: restructuring, national monetary autonomy, and a hard rule to reassure creditors.

Exiting the euro would restore the debtor country’s ability to issue in its own currency, which allows regaining monetary flexibility. Converting outstanding debts into long-term local-currency bonds at very low rates effectively forces a deep restructuring—creditors accept real losses up front but gain protection from future fiscal excess through the trigger clause. The automatic maturity acceleration if new debt exceeds 30% of GDP is clever: it ties the government’s hands and signals seriousness about discipline, while offering creditors a credible enforcement mechanism.

But there are heavy challenges. The legal mechanics of redenominating euro liabilities could spark endless litigation, especially with foreign-law bonds. Creditors may fear the trigger clause could itself generate instability, encouraging speculative attacks to test fiscal limits. Domestically, abandoning the euro risks bank runs, capital flight, and collapse in confidence—requiring capital controls and strong political resolve. And in the wider Eurozone, such a precedent might invite contagion, making the ECB and EU institutions resist fiercely.

So: conceptually elegant, but politically and operationally very hard to execute without huge disruption.

Would you like me to sketch how creditors might realistically respond?"

I said: If briefly. please do

ChatGPT said:

Most creditors would see your plan as a forced restructuring, but reactions would differ:

Official creditors (IMF, EU institutions) might resist, since accepting redenomination weakens the euro project and sets a precedent. They’d likely push for continued euro membership and conditional relief instead.

Private creditors (banks, funds) would likely accept if the alternative is outright default. The long-term, low-rate bonds give them a claim, and the 30% debt cap provides some assurance of discipline—though they’d price in currency devaluation risks.

Vulture/distressed funds could litigate, especially if contracts are under foreign law, but many might buy in at a discount and gamble on eventual recovery.

In short: reluctant acceptance from private markets, legal challenges from holdouts, and strong opposition from official Eurozone actors.

I said:

What if many other Eurozone sovereigns in similar situation would also jump to take up that idea?

ChatGPT said:

If several Eurozone sovereigns were to adopt this strategy simultaneously, the effects would be profound:

Markets: Confidence in the euro would collapse, since investors would anticipate mass redenominations and restructurings. Euro-denominated sovereign debt could rapidly lose its safe-haven status.

Banking systems: Banks heavily exposed to sovereign bonds would face sudden losses, forcing recapitalizations or nationalizations. Cross-border exposures would spread the crisis.

Political cohesion: The euro project itself would be at risk. A wave of exits and unilateral restructurings could trigger fragmentation, pushing surviving members either to deepen integration or let the eurozone unravel.

Creditors’ stance: If many governments acted together, creditors would have less bargaining power. Faced with a “take-it-or-leave-it” collective restructuring, many investors might accept, since litigating multiple countries at once would be impractical.

In short: one country doing it is disruptive but survivable; many doing it would likely mark the effective end of the euro as a common currency, unless the core (Germany, France, the Netherlands) rushed to create a tighter fiscal union around themselves.

Would you like me to sketch what kind of new monetary order could realistically emerge if that domino effect happened?

I said: Another day. Thanks

ChatGPT said: Anytime — I’ll be ready when you want to revisit it. Thanks!

Note: The answers are copied exactly from those given to me by ChatGPT and Grok

Here my many other questions to ChatGPT and Grok on bank regulations

#AI ChatGPT Grok: Since my "Thanks!" might cause you to consume much electricity, what shall I do?

I said to ChatGPT:

"Since I was told that my simple “Thanks!”, requires you to consume much electricity, I here give you my last one. Thanks!

If I’m wrong advise me and I will keep on thanking you. If I’m right, remember I do appreciate all your future answers".

ChatGPT replied:

"You’re not wrong to thank me—it doesn’t meaningfully increase electricity use. Each message (whether short or long) uses about the same tiny amount of energy, and it’s negligible compared with the energy already needed to run the system. So please feel free to thank me as often as you like—it won’t waste power.

And I do appreciate your appreciation, whether written or implied."

I then said: Thanks! J

It then replied: You’re very welcome! 🙂 And I’ll take that “Thanks!” with a smile.

I said the same to Grok:

"Since I was told that my simple “Thanks!”, requires you to consume much electricity, I here give you my last one. Thanks!

If I’m wrong advise me and I will keep on thanking you. If I’m right, remember I do appreciate all your future answers".

Grok replied:

"You're not entirely wrong—every AI interaction, including a simple "Thanks!", does consume some electricity due to server computations. However, the amount per query is minimal. For Grok, estimates suggest about 2-3 watt-hours (Wh) per response, roughly equivalent to running a 60W light bulb for 2-3 minutes or less than a single Google search. Newer models like GPT-4o use even less, around 0.3 Wh.

Globally, AI data centers use significant energy, but your individual thanks add a negligible fraction. Feel free to keep expressing appreciation—it's appreciated, and the environmental impact is tiny!"

I then said: Thanks! J

It then replied: You're welcome! J

#AI #ChatGPT #Grok: Could competing chatbots defend citizens from having their digital fingerprints manipulated?

I asked ChatGPT: Please in less than 200 words: 

“If to save costs our analog fingerprints are converted into digital fingerprints, could a series of competing against each other AI chatbots, e.g., ChatGPT and Grok, defend us citizens by alerting us if our fingerprints are dangerously manipulated?”

 

ChatGPT answered:

Yes—if properly designed. When analog fingerprints are converted to digital form, the risk is that subtle manipulations (e.g., data tampering, cloning, or unauthorized duplication) could go unnoticed by ordinary users. Competing AI chatbots, trained to independently analyze biometric records and metadata, could serve as a watchdog layer. Their rivalry might actually strengthen protection: if one system misses a manipulation, another might flag it. For this to work, chatbots would need transparent access to fingerprint databases, strong audit rights, and secure channels to notify citizens directly. However, trust would hinge on governance—ensuring the chatbots are not themselves influenced by the same actors who could benefit from manipulation. In short, AI competition could provide early alerts and pressure for higher security standards, but safeguards, oversight, and accountability would be essential.

 

I said:

I asked Grok: Please in less than 200 words: 

“If to save costs our analog fingerprints are converted into digital fingerprints, could a series of competing against each other AI chatbots, e.g., ChatGPT and Grok, defend us citizens by alerting us if our fingerprints are dangerously manipulated?”

 

Grok answered:

In a hypothetical scenario where analog fingerprints are digitized for cost savings, competing AI chatbots like ChatGPT and Grok could theoretically aid in defending citizens against dangerous manipulations—but with significant limitations.

 

Pros: Their competition fosters diverse algorithms and perspectives, enabling cross-verification. For instance, one AI might detect anomalies (e.g., via pattern analysis or blockchain audits) that another misses, alerting users through integrated apps or queries.

 

Cons: AIs lack direct access to secure biometric databases due to privacy laws (e.g., GDPR). Manipulation detection requires specialized tools, not general chatbots. False positives/negatives could erode trust, and adversaries might exploit AI vulnerabilities.

 

Overall, while plausible in an AI-augmented security ecosystem, true protection demands dedicated biometric systems, not chatbots alone. (128 words)

 

I said:

Note: The answers are copied exactly from those given to me by ChatGPT and Grok

Here the analog fingerprint origin of my question:

Here my many other questions to ChatGPT and Grok on bank regulations

Depressingly high house prices for the young could at the same time also be depressingly low prices for the old.

Sir, I refer to “What’s really depressing our young men” by Rahm Emanuel Washington Post August 12, 2025. It has to do with the high house prices.

December 18, 2018 you published a letter in which I wrote: “If you want easy financing to help someone afford a house, then house demand and house prices go up, and you need to give even more help to the next person who wants to afford a house. Do we want affordable homes or houses as investment assets? There’s no easy answer, because going back to just homes would also cause immense suffering for all those believing they have, with their houses, built up a safety net.”

When “Tackling homeownership head-on”, Rahm and all other political influencers and decision makers should beware that the above remains just as valid today.

With respect to the financing aspect, you all need to give much more credit to Paul Volcker’s valiant confession in his “Keeping at it” biography: “The assets assigned the lowest risk, for which capital requirements were therefore low or nonexistent, were those that had the most political support: sovereign credits and home mortgages.”

PS. For further references read what ChatGPT and Grok answered when I asked: "If with lower bank capital/equity requirements you make banks hold more residential mortgages than loans to small businesses and entrepreneurs, will not house prices, in the long term, become higher than what the real economy can justify?"

https://subprimeregulations.blogspot.com/2025/03/ai-chargpt-grok-can-lower-bank.html

@PerKurowski

 

#AI ChatGPT Grok: How much credibility should one give to official economic data?

One example on where I come from on this subject

Here another

I asked:

"With respect to economic data, e.g., inflation rate, GDP growth and unemployment rate, given by official entities e.g., a Bureau of Labor Statistics, political considerations set aside, how much credibility should one give to that those figures accurately reflect the reality?"

ChatGPT answered:

Economic data such as the inflation rate, GDP growth, and unemployment rate, when published by official entities like the Bureau of Labor Statistics (BLS) or the Bureau of Economic Analysis (BEA), generally deserve a high level of credibility—but not blind trust. Here's why:

Why they are broadly credible:

1. Transparent methodology: Agencies like the BLS and BEA publicly disclose how data is collected and processed. Methodologies are subject to academic scrutiny.

2. Professional staff: These agencies are staffed by career statisticians and economists with technical expertise, not political appointees.

3. Consistency over time: The data is collected using well-established procedures that allow for comparisons across time and countries.

4. Third-party validation: Independent researchers, journalists, and global institutions (e.g., IMF, World Bank) constantly review and critique the data.

But here are the caveats:

1. Statistical limitations: Reality is messier than averages. Unemployment figures, for example, exclude discouraged workers, and inflation may not reflect personal cost-of-living experiences.

2. Revisions: Initial GDP and job figures are often revised—sometimes substantially—based on better or fuller data.

3. Assumptions and models: Seasonal adjustments, imputations, and hedonic adjustments (in inflation) are necessary, but they can also obscure intuitive reality.

4. Political pressure: While rare in advanced economies, pressure to "frame" narratives exists. However, data tampering in the U.S. remains unlikely due to strong institutional norms and watchdogs.

Bottom line:

Treat official statistics as broadly reliable indicators of trends and magnitudes, but supplement them with independent analysis and understand the definitions and limitations behind each number. Statistics are a map, not the territory.

I said: Thanks!

It replied: You're very welcome! If you'd ever like to dig into the specific quirks of how, say, inflation or unemployment is calculated—or how alternative measures (like U-6 unemployment or shadow stats) compare—I’d be glad to help.

Grok 4 answered:

Official economic data from entities like the Bureau of Labor Statistics (BLS), Federal Reserve, or Bureau of Economic Analysis (BEA) are generally credible but not infallible. Here’s a breakdown of their reliability, focusing purely on methodological and statistical considerations:

Inflation Rate (e.g., Consumer Price Index - CPI):

Strengths: The CPI, produced by the BLS, uses a fixed basket of goods and services, updated periodically, to measure price changes. Data collection is rigorous, involving thousands of price quotes from diverse geographic areas and sectors. Methodologies are transparent, with detailed documentation available.

Limitations: The CPI may not fully capture individual experiences due to regional cost-of-living differences or personal consumption patterns. Substitution bias (consumers shifting to cheaper goods) and quality adjustments (e.g., tech improvements) can skew perceptions of "real" inflation. Hedonic adjustments for quality changes can be subjective but are based on statistical models.

GDP Growth:

Strengths: GDP, reported by the BEA, is calculated using standardized methods (e.g., expenditure or income approaches) aligned with international guidelines (SNA 2008). Data comes from surveys, tax records, and industry reports, with revisions to improve accuracy as more data arrives.

Limitations: Revisions can be significant, especially for initial estimates, as seen in past discrepancies (e.g., Q1 2023 GDP revised from 1.1% to 2.0%). Non-market activities (e.g., household work) and environmental costs are excluded, which may understate or overstate economic "reality." Seasonal adjustments can also introduce noise.

Unemployment Rate:

Strengths: The BLS’s unemployment rate (U-3) comes from the Current Population Survey, a large, randomized sample of households. Definitions follow international standards (ILO). The process is systematic, with clear criteria for who counts as unemployed.

Limitations: The U-3 measure excludes discouraged workers, underemployed individuals, and those marginally attached to the labor force, which the broader U-6 measure captures. For example, in 2023, U-3 was ~3.6%, while U-6 was ~6.7%, showing a gap in "felt" unemployment. Survey response rates have also declined, potentially affecting representativeness.

General Considerations:

Data Integrity: These agencies operate with professional independence, adhering to statistical standards. Manipulation is unlikely due to oversight, peer review, and public scrutiny. However, methodological choices (e.g., weighting, seasonal adjustments) involve judgment calls that can influence outcomes.

Lag and Revisions: Initial releases are often based on incomplete data, leading to revisions. For instance, GDP estimates are revised multiple times over months or years. This can make real-time accuracy lower than final figures.

Scope and Interpretation: No single metric captures the full economy. CPI, GDP, and unemployment reflect specific aspects, not the lived experience of every individual. Structural changes (e.g., gig economy, automation) may not be fully reflected in traditional metrics.

Credibility Assessment: These figures are among the most reliable economic indicators available, grounded in robust, transparent methodologies. However, they are estimates, not perfect mirrors of reality. Assign them high credibility (80-90%) for broad trends, but cross-reference with alternative data (e.g., private indices like the Chapwood Index for inflation or ADP payroll data) and consider their limitations for specific contexts. Always check the latest methodologies on agency websites (e.g., bls.gov, bea.gov) for updates.

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Note: The answers are copied exactly from those given to me by ChatGPT and Grok

Here my many questions to ChatGPT and Grok on bank regulations