Difficult to call the top with any mania. It is especially more difficult now because many of the private AI companies would have been public already in the 1990s and their financials would have been available for scrutiny. Further, some of the mania has been diverted to Crypto assets, unavailable in the 1990s. I’ve been investing for so long I remember the 1973-4 bear market and the 1966-1982 dead money in equities with high inflation time period. I’ll quote Yogi: It’s difficult to make predictions, especially about the future. Stay diversified my friends.
Some analysts say that the structure of the debt to build data centers is such that the big tech companies such as Meta are ultimately on the hook via lease obligations. If that is true, then is it possible that when the music stops, they, not the public or insurance companies etc. that bought the securitized debt, will be the losers--and their finances will be severely damaged?
Martin - This is a good point, but I'm not in a position to know how prevalent it is. Basically, if the "big tech" vendors are making lease payment or other guarantees (likely), indeed this shifts the risks a bit from the investors to these parties. The good news is that they can afford to pay up (at a great cost to THEIR stockholders), so it wouldn't lead to sudden catastrophic defaults. However, this logic doesn't apply to private AI companies like OpenAI, Anthropic, etc. If THEY are underwriting the debt in some form, look out below! :)
All the debate about Trump trolling aside, the article is well written and makes very valid points. I don't know how this will all play out, but as a long time successful private wealth manager I can tell you it sure looks like there's a bubble here. As always the key to successful investments is diversifcation and long term holdings of quality companies.
So, what I ask economists is this: what happens to our system when there are trillionaires from AI + double digit unemployment in our cities at THE SAME TIME?
If a few winners (Google, Microsoft, OpenAI) sweep up the profits and book hundreds of billions $$ from enterprise investments - our politics get even more populist. Anger against billionaires grows even more strident. Theoretically, we have hyper efficiency in supply while we collapse demand because fewer and fewer humans have income to buy those things.
How does our system of capitalism survive when human beings (“labor”) can no longer collectively bargain or threaten to leave for a competitor because AI + Robotics do most of the work?
This conversation, a current bubble, seems like the minor one in the larger conversation about synthetic beings taking our jobs.
Lukas - As you note, this is a different topic. My short reply: There aren't any "synthetic beings" and they aren't going to be taking "our" jobs (in the sense you likely mean). AI is simply a new wave of automation, full stop. It will have the same effects as previous waves, for instance, the Internet. Did it "take jobs"? Yes, but here we are back at full employment, as with all previous waves of automation. AI will change the nature of work, not throw everyone out of work. It will also make us wealthier (on average)!
I’m not nearly as sunshiny on this Andreessen optimism. You’re right, I don’t know this. And you’re right - past innovation has certainly created accretive wealth. But that isn’t a rule. It just isn’t. If a technology has the ability to replace humans across all general categories + corporations plan billions of investment dollars in it + they have no fiduciary responsibility to our nation or citizens (only shareholders) + our politicians are striking a hands off tone. This feels different not in degree, but in kind.
OMG I'm embarrassed to be compared to Marc Andreessen - I didn't know he could be used an an adjective, but I also didn't realize I sounded so tone deaf.
I agree that the disruption could be quite widespread and difficult, and I'm quite confident this is only going to exacerbate wealth inequality. But having just lived through the same thing with the Internet, we will certainly get through it.
My personal expectation is that the level of disruption will be of the same order of magnitude as the Internet, and it will take about the same amount of time (roughly 20 years). But to be clear, this is just a guess and I could well be wrong!
In comparing Internet vs AI - do you find them apt analogies?
The internet, I would say, shifted channels. From offline to online (media, finance, entertainment, etc, etc). All verticals were affected and transformed.
AI, I would say, shifts actors. From humans to synthetic beings.
If this is a fair statement (though simplistic), would you say that the epochs of channel shift vs actor shift are two separate and very different things altogether? A transformation of KIND vs transformation of DEGREE? 😳
If so, would you still say it’s correct to extrapolate lessons learned from prior experience to this altogether new experience?
These are good but very broad questions that I can't do justice to here. Again, the short version: In terms of bubblology, there are some important differences between the dot com and AI bubbles, but the basics are the same (this is what the article is about of course). The internet certainly shifted channels, but it also destroyed an immense swath of jobs - in too many fields to recount here.
You sound like you're buying into the "synthetic beings" excessive anthropomorphism (AIs as 1-1 electronic human replacements) more than I think is anywhere near justified, but they can be actors (not yet - that's still mostly AI hype - but it is coming). But AI is a great tool, at least for most consumers and businesses. I would put it in the same class as PC "productivity" software in terms of its impact. You wouldn't believe how many people were displaced by word processors, spreadsheets, databases, computer graphics, and electronic storage (PCs and cloud).
If you were my age (I hope you're not!) you would remember what offices looked like in 1960 -- legions of typists, dictation and file clerks, (human) calculators, couriers, not to mention elevator operators, gas jockeys, pin setters, bell hops, skycaps, proofreaders, typesetters, bank tellers, doormen/taxi hailers, milkmen, travel agents, and dozens of other mostly forgotten professions.
I'm confident your children will feel the same about programmers, truck and taxi drivers, mail"men", garbage "men", gardeners, (house) painters, research assistants, copy editors, and many other professions. But if history is a guide (it always is), there will be plenty of new jobs to take their place!
So, I’m a bit confused. You seem confident this is accretive to “abundance” and lifts all boats. I love the optimism of this / and it stands in contrast to my pessimism.
But my pessimism comes directly from the makers of AI. Says Dario Amodei “we need to stop sugar coating what’s coming next - the possible mass elimination of jobs”
Or this from Sam Altman: “AI could replace 40% of jobs by the end OF THIS DECADE” - The Times of India (Sep 2025).
I know you would argue that this destruction of candle makers and horse-drawn carriage jobs can’t foresee electric light bulbs and automobiles from here. I think you would say we can’t imagine, yet, what new jobs will emerge as a byproduct of this.
That may all be true - but the CEOs themselves are more than clear about the destruction their invention will bring and the damage (at least in the short to medium term) to our people.
Okay, so I respect your optimism - but I also note that our society is riven, our politics hateful, our young men are angry - and a near term jobs killer that snuffs out their remaining hope of growing rich, attracting a mate, buying a house, or starting a family (who ❤️s a chronically unemployed computer scientist who had to live with his parents?). AI demands a cohesive society and geopolitical cooperation to onboard well. We are doing none of that.
To my eye, the anti-billionaire rhetoric on the DSA Left will create many more Mamdanis in the cities crushed by this in next half-decade.
Sorry, I know your excellent piece wasn’t this at all. I’m just peeling this strange onion to what I see as its true economic core beyond the bubble burst you rightly cover.
I hope this doesn’t come across disrespectful (as so many do).
This article strikes me as of the boy who cried wolf variety. Or she doth protest too much. Nothing to do with Trump Derangement Syndrome. No, no.
Nine months ago it was tariffs leading to 1929 collapse. That didn't happen and now, apparently, it's on to Plan B: over-investment bubble.
On top of Covid lockdowns and vacines that don't work (at the very least), global warming hysteria, mass immigration of hostile groups, etc., liberals might have a bit of a credibility problem. It's almost as if you don't want normal white men to shine. That would be, eek!, racist – and no doubt sexist too.
Trump actually has an interesting idea about getting average wage-earners into the stock market. That way they will directly benefit from normal white men actually making them money. But you're going to have to jettison the race and sex quotas, folks.
Wow, congrats to me -- my first Internet MAGA troll! Given how quickly this went up after the article was published, I seriously suspect it's an LLM, not a real person. It concisely touches all the MAGA hot buttons; it only tangentially relates to the actual subject of the article (which has nothing whatsoever to do with Trump); and it's nearly all complete nonsense. The big giveaway is the implausibility that anyone dumb enough to believe these things could write such a coherent and typo-free response - especially without resorting to ALL CAPS for emphasis now and then! Go Grok! ;)
I kind of agree with your troll that the "bubble" framing is very unnecessarily partisan coded. Seems like people ought to understand that our economy is a recession with an AI gold rush bolted on.
Which is to say nothing of the alignment problem, the possibility of AI consumers as well as producers, etc.
Thanks for your reply, Jerry, albeit the name-calling. What's specifically dumb about it? I've described real things that have occurred. LLM's aren't programmed to be this honest, or blunt, or racist, or sexist, by the way.
President Joe Biden emphatically said, and his Secretary's of Defense and Justice repeated, that the greatest threat to the US is something called white supremacy. If white men excel wouldn't that be supremacist? Simple question, but nobody seems to be able to answer it. I'm genuinely curious about this and your essay begs the question. I didn't bring this up, Jerry. President Joe Biden did.
Wow check it out - the LLM replied, taking the opportunity to make more extraneous "partisan" comments! (Note no attempt to dispel the obvious evidence of its electronic source.)
A serious question for the "real" people reading this: What motivates this? It costs money and effort to program and run these bots, so at the core, there must be some economic motivation. I genuinely want to understand what it is.
Difficult to call the top with any mania. It is especially more difficult now because many of the private AI companies would have been public already in the 1990s and their financials would have been available for scrutiny. Further, some of the mania has been diverted to Crypto assets, unavailable in the 1990s. I’ve been investing for so long I remember the 1973-4 bear market and the 1966-1982 dead money in equities with high inflation time period. I’ll quote Yogi: It’s difficult to make predictions, especially about the future. Stay diversified my friends.
Some analysts say that the structure of the debt to build data centers is such that the big tech companies such as Meta are ultimately on the hook via lease obligations. If that is true, then is it possible that when the music stops, they, not the public or insurance companies etc. that bought the securitized debt, will be the losers--and their finances will be severely damaged?
Martin - This is a good point, but I'm not in a position to know how prevalent it is. Basically, if the "big tech" vendors are making lease payment or other guarantees (likely), indeed this shifts the risks a bit from the investors to these parties. The good news is that they can afford to pay up (at a great cost to THEIR stockholders), so it wouldn't lead to sudden catastrophic defaults. However, this logic doesn't apply to private AI companies like OpenAI, Anthropic, etc. If THEY are underwriting the debt in some form, look out below! :)
Thanks, agreed!
All the debate about Trump trolling aside, the article is well written and makes very valid points. I don't know how this will all play out, but as a long time successful private wealth manager I can tell you it sure looks like there's a bubble here. As always the key to successful investments is diversifcation and long term holdings of quality companies.
So, what I ask economists is this: what happens to our system when there are trillionaires from AI + double digit unemployment in our cities at THE SAME TIME?
If a few winners (Google, Microsoft, OpenAI) sweep up the profits and book hundreds of billions $$ from enterprise investments - our politics get even more populist. Anger against billionaires grows even more strident. Theoretically, we have hyper efficiency in supply while we collapse demand because fewer and fewer humans have income to buy those things.
How does our system of capitalism survive when human beings (“labor”) can no longer collectively bargain or threaten to leave for a competitor because AI + Robotics do most of the work?
This conversation, a current bubble, seems like the minor one in the larger conversation about synthetic beings taking our jobs.
Lukas - As you note, this is a different topic. My short reply: There aren't any "synthetic beings" and they aren't going to be taking "our" jobs (in the sense you likely mean). AI is simply a new wave of automation, full stop. It will have the same effects as previous waves, for instance, the Internet. Did it "take jobs"? Yes, but here we are back at full employment, as with all previous waves of automation. AI will change the nature of work, not throw everyone out of work. It will also make us wealthier (on average)!
I’m not nearly as sunshiny on this Andreessen optimism. You’re right, I don’t know this. And you’re right - past innovation has certainly created accretive wealth. But that isn’t a rule. It just isn’t. If a technology has the ability to replace humans across all general categories + corporations plan billions of investment dollars in it + they have no fiduciary responsibility to our nation or citizens (only shareholders) + our politicians are striking a hands off tone. This feels different not in degree, but in kind.
OMG I'm embarrassed to be compared to Marc Andreessen - I didn't know he could be used an an adjective, but I also didn't realize I sounded so tone deaf.
I agree that the disruption could be quite widespread and difficult, and I'm quite confident this is only going to exacerbate wealth inequality. But having just lived through the same thing with the Internet, we will certainly get through it.
My personal expectation is that the level of disruption will be of the same order of magnitude as the Internet, and it will take about the same amount of time (roughly 20 years). But to be clear, this is just a guess and I could well be wrong!
Maybe I should plug my latest book here (it's really relevant and covers this exact topic): "Generative Artificial Intelligence: What Everyone Needs to Know", https://www.amazon.com/Generative-Artificial-Intelligence-Everyone-Needs/dp/0197773540
Thank you Jerry!
In comparing Internet vs AI - do you find them apt analogies?
The internet, I would say, shifted channels. From offline to online (media, finance, entertainment, etc, etc). All verticals were affected and transformed.
AI, I would say, shifts actors. From humans to synthetic beings.
If this is a fair statement (though simplistic), would you say that the epochs of channel shift vs actor shift are two separate and very different things altogether? A transformation of KIND vs transformation of DEGREE? 😳
If so, would you still say it’s correct to extrapolate lessons learned from prior experience to this altogether new experience?
These are good but very broad questions that I can't do justice to here. Again, the short version: In terms of bubblology, there are some important differences between the dot com and AI bubbles, but the basics are the same (this is what the article is about of course). The internet certainly shifted channels, but it also destroyed an immense swath of jobs - in too many fields to recount here.
You sound like you're buying into the "synthetic beings" excessive anthropomorphism (AIs as 1-1 electronic human replacements) more than I think is anywhere near justified, but they can be actors (not yet - that's still mostly AI hype - but it is coming). But AI is a great tool, at least for most consumers and businesses. I would put it in the same class as PC "productivity" software in terms of its impact. You wouldn't believe how many people were displaced by word processors, spreadsheets, databases, computer graphics, and electronic storage (PCs and cloud).
If you were my age (I hope you're not!) you would remember what offices looked like in 1960 -- legions of typists, dictation and file clerks, (human) calculators, couriers, not to mention elevator operators, gas jockeys, pin setters, bell hops, skycaps, proofreaders, typesetters, bank tellers, doormen/taxi hailers, milkmen, travel agents, and dozens of other mostly forgotten professions.
I'm confident your children will feel the same about programmers, truck and taxi drivers, mail"men", garbage "men", gardeners, (house) painters, research assistants, copy editors, and many other professions. But if history is a guide (it always is), there will be plenty of new jobs to take their place!
Thank you Jerry.
So, I’m a bit confused. You seem confident this is accretive to “abundance” and lifts all boats. I love the optimism of this / and it stands in contrast to my pessimism.
But my pessimism comes directly from the makers of AI. Says Dario Amodei “we need to stop sugar coating what’s coming next - the possible mass elimination of jobs”
https://www.axios.com/2025/05/28/ai-jobs-white-collar-unemployment-anthropic
Or this from Sam Altman: “AI could replace 40% of jobs by the end OF THIS DECADE” - The Times of India (Sep 2025).
I know you would argue that this destruction of candle makers and horse-drawn carriage jobs can’t foresee electric light bulbs and automobiles from here. I think you would say we can’t imagine, yet, what new jobs will emerge as a byproduct of this.
That may all be true - but the CEOs themselves are more than clear about the destruction their invention will bring and the damage (at least in the short to medium term) to our people.
Okay, so I respect your optimism - but I also note that our society is riven, our politics hateful, our young men are angry - and a near term jobs killer that snuffs out their remaining hope of growing rich, attracting a mate, buying a house, or starting a family (who ❤️s a chronically unemployed computer scientist who had to live with his parents?). AI demands a cohesive society and geopolitical cooperation to onboard well. We are doing none of that.
To my eye, the anti-billionaire rhetoric on the DSA Left will create many more Mamdanis in the cities crushed by this in next half-decade.
Sorry, I know your excellent piece wasn’t this at all. I’m just peeling this strange onion to what I see as its true economic core beyond the bubble burst you rightly cover.
I hope this doesn’t come across disrespectful (as so many do).
This article strikes me as of the boy who cried wolf variety. Or she doth protest too much. Nothing to do with Trump Derangement Syndrome. No, no.
Nine months ago it was tariffs leading to 1929 collapse. That didn't happen and now, apparently, it's on to Plan B: over-investment bubble.
On top of Covid lockdowns and vacines that don't work (at the very least), global warming hysteria, mass immigration of hostile groups, etc., liberals might have a bit of a credibility problem. It's almost as if you don't want normal white men to shine. That would be, eek!, racist – and no doubt sexist too.
Trump actually has an interesting idea about getting average wage-earners into the stock market. That way they will directly benefit from normal white men actually making them money. But you're going to have to jettison the race and sex quotas, folks.
Wow, congrats to me -- my first Internet MAGA troll! Given how quickly this went up after the article was published, I seriously suspect it's an LLM, not a real person. It concisely touches all the MAGA hot buttons; it only tangentially relates to the actual subject of the article (which has nothing whatsoever to do with Trump); and it's nearly all complete nonsense. The big giveaway is the implausibility that anyone dumb enough to believe these things could write such a coherent and typo-free response - especially without resorting to ALL CAPS for emphasis now and then! Go Grok! ;)
I kind of agree with your troll that the "bubble" framing is very unnecessarily partisan coded. Seems like people ought to understand that our economy is a recession with an AI gold rush bolted on.
Which is to say nothing of the alignment problem, the possibility of AI consumers as well as producers, etc.
Thanks for your reply, Jerry, albeit the name-calling. What's specifically dumb about it? I've described real things that have occurred. LLM's aren't programmed to be this honest, or blunt, or racist, or sexist, by the way.
President Joe Biden emphatically said, and his Secretary's of Defense and Justice repeated, that the greatest threat to the US is something called white supremacy. If white men excel wouldn't that be supremacist? Simple question, but nobody seems to be able to answer it. I'm genuinely curious about this and your essay begs the question. I didn't bring this up, Jerry. President Joe Biden did.
Wow check it out - the LLM replied, taking the opportunity to make more extraneous "partisan" comments! (Note no attempt to dispel the obvious evidence of its electronic source.)
A serious question for the "real" people reading this: What motivates this? It costs money and effort to program and run these bots, so at the core, there must be some economic motivation. I genuinely want to understand what it is.