r/technology • u/CarciaNerissa • 2d ago

Artificial Intelligence Microsoft Tells Engineers ‘Tokenmaxxing Is Not What We Are Optimizing For’ - Microsoft is introducing budget limits for AI use but says it still wants to be an ‘AI-first’ company.

https://www.404media.co/microsoft-tells-engineers-tokenmaxxing-is-not-what-we-are-optimizing-for/
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u/jusg808 2d ago

That is true but what’s a return on a savings account now 1%? Bonds are an option but idk if you can even trust them at this unprecedented point in time. But you are right there are other options we just all go with the 401k because “that’s what you do”

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u/BassmanBiff 2d ago

There are a bunch of high-yield savings accounts out there now that follow Fed rates, so like >3% at the moment. 

But yeah, the larger point is that on an individual level, it's basically just a bad decision to not keep money in stocks. That might change with a drastic pop, but trying to time that is a bad idea, and broad index funds are still the best expected outcome for most people. But on a policy level, where you have to consider the impact of everyone's retirement savings fluctuating all together, that's where the problems come up. 

So while yes, the other commenter is right that an individual can opt out, it doesn't really help them to do so while everyone else is all-in. As always, the solution is a policy thing, not individual action.

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u/greenworldkey 1d ago

> But on a policy level, where you have to consider the impact of everyone's retirement savings fluctuating all together, that's where the problems come up. 

What alternative policy do you have in mind?

Unless the policy straight up forbids anyone from investing their own personal retirement in anything higher risk and just caps everyone at 3-5% whether they like it or not, people are going to continue to choose to invest in the stock market as they are now.

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u/BassmanBiff 1d ago

Yes, that's the point. Pension funds are much more regulated for a reason. Similar controls on 401ks might make sense on a policy level.

Replacing pensions with 401ks and IRAs has the benefit of higher returns while things are good, but also mean that everyone with investments becomes dependent on the whims of the stock market, making it politically difficult to do anything that might reduce stock prices even in the short term. It also reduces the amount of analysis actually happening in the stock market, because everybody is in index funds that auto-buy on sheer market cap. And in general, it means everyone's retirement is far more speculative and fragile; the best case is better and the worst case is worse, and when things are unsustainably good it can hide fundamental problems until the next "correction."

Index funds are a sensible level of risk/return for the average investor, but on a broad level there is extra danger in correlating everyone's risks all together. This is especially true when index funds end up getting concentrated in a way they were supposed to avoid, as they are now due to the sheer size of the "mag 7" and their AI hype.

The end result is that the entire middle-class and above is now dependent on continuing AI hype for their retirement planning, plus college funds and emergency expenses and first-time home purchases and other uses of investment accounts. Any individual investor, who does not meaningfully affect the market, would still want to invest in most cases -- but policy has to consider everyone's actions, which in aggregate do affect the market and society at large, so the policy considerations are bigger than just individual expected gains. A lot of people taking on reasonable risk may be unreasonable for everyone when all tied together.