Are all hallucinations failed predictions? When I hallucinate possible futures are they failed predictions? Or might that future actually come to pass? I do not know.

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I can't answer for you, but in AI terms, yes all output is prediction, AI doesn't understand anything, language or knowledge, it is simply predicting the likely outcome from its large language model.

Humans make the distinction between language and knowledge, AI does not. It is all probability which it attempts to make coherent and reduce down to a singularity.