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I get this sinking feeling that this "bubble" may never burst on its own, since the political environment now is different from the 2000s. Inequality is much hi

I get this sinking feeling that this "bubble" may never burst on its own, since the political environment now is different from the 2000s. Inequality is much higher post-COVID, with the ultra-wealthy sucking up the assets of the middle class. Those assets are going into the stock market for AI companies with the objective of eventually replacing people so they never need to pay the working or middle class ever again. Even if the AI doesn't perform quite at the level of normal employees, there's very little competition in the market anyway. I'd be happy for someone to tell me I'm wrong. Otherwise it will take something dire to break this cycle.

matthewdgreen 1y ago
I saw a figure yesterday showing that current AI data center investment exceeds all consumer spending in terms of GDP. This is important, because consumer spending is normally 2/3rds of GDP. This means consumer spending isn't great, and data center investments probably can't sustain this pace forever. It's also not clear that there will be a return on these investments (one that flows to the specific companies seeing the investment.)
- strange_quark 1y ago
  I think the figure wasn't that data center capex exceeded consumer spending, but that data center capex contributed more to GDP growth than consumer spending did. Still really really bad and indicative of a bubble, but an important difference.
smitty1e 1y ago
TINFOIL HAT SAYS: Since you used the P-word, consider the 2008 election and the possibility that a similar bubble-bursting occurring at the appropriate time to maximize chances to flip Congress in 2026.
- techpineapple 1y ago
  You think the kind of people propping up the AI bubble want congress to flip?
techpineapple 1y ago
I've been trying to figure this out, like I think the 2008 bubble burst for a lot of reason but it was basically a ponzi scheme that ran out of new people to buy houses at constantly inflated rates. Bernie Madoff got caught when 2008 happened and he didn't have enough money to pay back investors, if 2008 never happened he maybe keeps going. For Elon Musk, and maybe why he bought Twitter, he has to stay popular enough that enough people believe his companies are the best investment available. If someone surpassed him, and Tesla didn't seem like the place where robots or self-driving might happen, then people would probably move away. For AI, maybe something similar? People would have to start deciding that investing somewhere else is better than investing in AI and let the AI companies start to fail. Presumably the cause of a bubble is just too many people thinking AI is the best place to invest their money? And the bubble will pop when they decide to invest somewhere else?

matthewdgreen 1y ago

I saw a figure yesterday showing that current AI data center investment exceeds all consumer spending in terms of GDP. This is important, because consumer spending is normally 2/3rds of GDP. This means consumer spending isn't great, and data center investments probably can't sustain this pace forever. It's also not clear that there will be a return on these investments (one that flows to the specific companies seeing the investment.)

strange_quark 1y ago
I think the figure wasn't that data center capex exceeded consumer spending, but that data center capex contributed more to GDP growth than consumer spending did. Still really really bad and indicative of a bubble, but an important difference.

smitty1e 1y ago

TINFOIL HAT SAYS: Since you used the P-word, consider the 2008 election and the possibility that a similar bubble-bursting occurring at the appropriate time to maximize chances to flip Congress in 2026.

techpineapple 1y ago
You think the kind of people propping up the AI bubble want congress to flip?

techpineapple 1y ago

I've been trying to figure this out, like I think the 2008 bubble burst for a lot of reason but it was basically a ponzi scheme that ran out of new people to buy houses at constantly inflated rates. Bernie Madoff got caught when 2008 happened and he didn't have enough money to pay back investors, if 2008 never happened he maybe keeps going. For Elon Musk, and maybe why he bought Twitter, he has to stay popular enough that enough people believe his companies are the best investment available. If someone surpassed him, and Tesla didn't seem like the place where robots or self-driving might happen, then people would probably move away. For AI, maybe something similar? People would have to start deciding that investing somewhere else is better than investing in AI and let the AI companies start to fail. Presumably the cause of a bubble is just too many people thinking AI is the best place to invest their money? And the bubble will pop when they decide to invest somewhere else?