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AI Is Too Big to Fail
- capestart 1y ago[dead]
- jqpabc123 1y agoIf it wasn't for AI investments, it's likely the United States would be in a recession right now. So the biggest achievement of this amazing new technology is to artificially prop up Wall Street? For those who can read the tea leaves --- it's absolutely a bubble --- a financial bubble. The real reason why China is ahead in many areas is because their leadership is a little more technologically savvy and progressive than ours. If this really is a pre-war economy, we have invested heavily in unproven tech which in my opinion is a risky move that leaves the US highly vulnerable.
- thewebguyd 1y agoIf this is a pre-war economy, the US is screwed not because of AI but because we started a stupid trade war that's going to cut us off of our supply of dysprosium which is critical for defense manufacturing.
- cricketsandmops 1y agoThe US would only be screwed in that type of scenario if they allowed themselves to be. If things really got to that point they would just take over the deposits.
- bryanrasmussen 1y agohah hah, yeah, the U.S is going to take the dysprosium from China by force. With Hegseth and Trump in charge no less!!
- miningape 1y agoWouldn't the US be cut from the supply if there was a war, regardless of the current tariffs?
- jqpabc123 1y agoThe idea from the Chinese side to prevent a war by limiting the ability of the US to produce weapons. The USA and it's allies won WWII mainly due to superior production capacity. This advantage now works in China's favor. And the USA no longer has allies. Bottom line: If China decides to take Taiwan, the USA will have to choose between either doing nothing or mutual annihilation.
- myko 1y agoNot supporting Taiwan in this conflict would just mean a slow death for the US. Though the US is likely already in that spiral given the trump situation.
- jqpabc123 1y agoYes. It appears that China intends to make this abundantly clear to US "leadership" *before* they launch an invasion --- in hopes of avoiding mutual annihilation which neither side wants.
- hakfoo 1y agoIf they can hold on for another 20 years, the PRC could probably have Taiwan without firing a shot. The US isn't going to get back manufacturing capacity on China's scale, and without real long-term economic plans beyond "bet it all on AGI", what they do have is going to be further strained. They can pump pork into the defense industry specifically, but probably not forever. You can't make a functional economy out of twelve fighter-jet plants and 500,000,000 hectares of unsellable soy. So over time, you've got a defense partner that's finding it harder and harder to play World Police on a grand scale, and a trading partner that's less and less wealthy and able to dictate terms. Eventually, Taipei will pick up a BRICS application form out of self-interest.
- estimator7292 1y agoWe're doubly screwed because we dismantled most of our industrial base and everyone is scrambling to produce basic goods domestically
- alganet 1y agoTwice the pride, double the fall.
- righthand 1y ago> Demand that the titans of tech change, and if they don't, stop feeding them your dollars. Haha okay. Have you met people? Have you seen what they’re using it for? The users of LLMs do not care if they have to pay some of their wages to avoid working and learning. Even if it means they will no longer receives wages (or even close to the same wages) in the long term.
- CuriouslyC 1y agoI prefer to view people through a positive lens. I believe we are capable of living up to our lofty goals, and we should encourage each other to do that.
- righthand 1y agoYeah but there’s a limit to positivity when it comes to the reality. The reality is that people will support OpenAI and sell out the rest of humanity for short term gains. LLMs are just the latest vehicle to do that, it’s nothing new.
- asmnzxklopqw 1y ago[flagged]
- terandle 1y ago> Think of it like WWII, only only instead of planting victory gardens to beat the Nazis, we're building AI apps and finding ways to create the economic value needed to cover the reckless bets being made by the elites. LOL fuck this, the stock market deserves to burn to the ground.
- SamoyedFurFluff 1y agoThe only problem is that the stock market is tied to a bunch of retirement/pension and other accounts. Yes stock market should burn to the ground but also I think pensioners and retirees shouldn’t be put out, just the finance bros and private equity folks which money is just a plaything.
- philipwhiuk 1y agoPensioners and retirees willingly dumping money into index funds without oversight are the dumb money that enables all of this. So yes, they deserve a haircut.
- SamoyedFurFluff 1y agoPensioners don’t have a choice where their stuff goes. A teacher or something simply doesn’t deserve that kind of hardship.
- fredophile 1y agoPension funds should be diversified and have a mix of asset classes that includes more than the stock market. Ideally, most of these assets will move independently so if one is doing particularly badly the others can balance it out to reduce overall volatility. If your pension fund is too heavily weighted to the market, that's a management problem with your fund.
- kjellsbells 1y agoDeserve is a strong word. We're talking about regular folks who want to do nothing else but secure their future in the face of a market that regularly tries to screw it up. Can you explain why you suggest "deserve"?
- lm28469 1y agoThose who don't learn from... whatever, these clowns have it coming
- philipov 1y ago"... but those who do learn from history are doomed to watch everyone else repeat it."
- Yoric 1y agoI think that the sentence is "Those who don't learn from history are condemned to send everyone else to the bread lines while they retire on their private luxury islands."
- mcv 1y agoOr maybe that's exactly what they learned from history. Maybe we should learn from some revolutionary history, then.
- nick__m 1y agoWhere does all this leave us? For one, you better hope and pray that AI delivers a magical transformation, because if it doesn't, the whole economy will collapse into brutal serfdom. When I say magic here, I mean it; because of the ~38T national debt bomb, a big boost is not enough. If AI doesn't completely transform our economy, the massive capital misallocation combined with the national debt is going to cause our economy to implode. My summary: it's too big big to fail so let's transfer the risk on the taxpayer and if it fails anyway, let them eat cake. And by the way, that cake is a lie !
- chadhutchins10 1y agothat's been going on for decades, rinse and repeat
- anon84873628 1y agoWhat can we even imagine that would be so transformative? Cold fusion? Wagyu synthesis from GMO yeast? Healthcare nanobots? Whatever it invents needs costumers who haven't been driven into poverty already. If we could replace the human serfs with robots, we're not even socially configured to yield the benefits. Seems like revolution or dystopian surveillance state are the only realistic options.
- tharmas 1y agoWe already live in a Plutonomy. Already 50% of sales in USA is by the top 10%. The top 1% make most of their money selling to the top 10%. The Elites don't need us for consumption to make money. Walmart is reconfiguring their sales model to carry more "luxury” items. And now with AI the Wealthy wont need human labor hardly at all. We are surplus to requirements. The sad thing is it doesn't have to be like this. AI could be used to reduce peoples working hours and give them more leisure hours.
- bayindirh 1y ago> AI could be used to reduce peoples working hours and give them more leisure hours. I'm completely with you on this, but that won't create "value" for the right people, so it won't happen.
- robertheadley 1y agoAI isn't going anywhere. It won't magically disappear, but that businesses are trying to use AI in situations that are unsustainable and unneeded.
- laterium 1y agoHow do you learn how and when to use AI if you never use it? Just wait another decade to see what others do? Like Kodak and digital photography?
- philipwhiuk 1y ago> The government is practically manufacturing a ponzi scheme and the losers will be anyone who doesn't own stock *anyone American who doesn't own stock
- bigbuppo 1y ago[flagged]
- CuriouslyC 1y agoI'm honored that you would attribute my words to Jan :) Honestly you don't have to believe me, I'm trying to make some things clear to drive change but if you don't want to take a critical look at the world around you and try to push for things to get better, that's your call.
- baggachipz 1y agoThe table of contents on the right blocks a good chunk of text. Safari on MacOS Sequoia
- CuriouslyC 1y agoThanks for the note, I'll look into how I can make it flow better with the document.
- mcv 1y agoAlso on Firefox. But making my screen narrower made that menu collapse.
- candiddevmike 1y agoIMO, the backdrop to all of this is global warming. We're seeing so many warning signs and growth stagnating that governments need something, ANYTHING, to prop up their debt fueled economies and keep the music playing. In the face of impending GDP/population contraction due to global warming and the upcoming breadbasket collapses, GenAI isn't going to do shit for us. All of the money and effort being spent on it is money that could be spent on figuring out how to give our kids a glimmer of hope.
- mrbungie 1y agoYep, but instead of that we're wasting land, energy and resources in data centers that run "you are not the father" memes based on Sora 2.
- gtowey 1y agoIt's the American Way(tm)! We've been this way for a long time. Just look at the glut of holiday decorations made of plastic that will be bought, then end up in landfills in a few months. We have literally fought wars, killed millions, just for control of the oil from which they're made.
- deaux 1y agoYou're having kids while admitting they don't have a glimmer of hope? Ouch.
- Zababa 1y agoI don't think global warming is the cause of population contraction.
- rwyinuse 1y agoI think major breadbasket collapses can be avoided through geoengineering. Thanks to volcanoes and emissions from marine traffic, we know for a fact that climate change can be slowed down by spraying enough stuff reflecting sunlight high in the atmosphere. Of course some conservative US states are enacting laws against geoengineering, but thankfully they can't prevent rest of the world from doing it. I hope we'll eventually reach some kind of a solution where Trump-voting radical Christians can have the biblical apocalypse they want locally, while rest of the world continues to improve.
- igleria 1y agoI really feel like a leaf being blown over reading this stuff while planning on getting a Mortgage. Well, at least I have a rented roof over my head and eat every day. A lot of people can't afford that right now.
- catigula 1y agoThis talk of arms race with China is very, very dangerous. We need to start having a more important conversation if people really believe this because, otherwise, why shouldn't China just kinetically strike US infrastructure and vice versa? If AI is an executioner's blow to your opponent by enabling you to dominate them in terms of hacking, economy, government, politics, etc. kinetic strikes are more than justified. You could destroy most of the US's ability to create AI for decades with Pearl Harbor-esque first strikes. Do people think countries are just going to roll over and die?
- anon84873628 1y agoI don't even understand what people think we're racing towards. What the global masses want are good food, nice houses, fast transportation, TVs and cell phones... Physical comforts. It doesn't matter what a superintelligence dreams up if you can't physically produce any of it. As the article says, China is the only place that actually has the manufacturing and robotics capability. In the US we maybe have a hope of seeing more miracle healthcare, marginally more optimized industrial agriculture, and I guess even more lethal military technology. At best it can design all the factories and energy plants we are missing. And putting all the white collar knowledge workers out of work- what would that accomplish? People aren't ready for the massive social reorganization that this tech would imply. Would it even survive the revolution it causes??
- elzbardico 1y agoI still have the hope that the AI bubble will leave as a side effect a massive build-out of energy infrastructure: Nuclear, Solar and Natural Gas. In my book, prosperity and progress is measured in Terajoules. If you have free, clean and abundant energy, you have industry, jobs, every fucking thing a healthy economy should want or need to have. And on the other side, I think the Chinese are deluding themselves on robotics.
- cantor_S_drug 1y agoImagine robots doing chemistry or biology experiments 24x7. There is so much potential. We don't need grad students to waste their precious time.
- elzbardico 1y agoA lot of lab work that could be automated have already been.
- miningape 1y agoChina (or rather the CCP) have their hands are tied by 3 opposing forces 1. Birthrates 2. Revolt 3. Economic collapse For example, if they try to increase the birthrate by liberalising the economy, reducing social control measures (e.g. hukou), etc. it will give the people the tools to rise up. But it would potentially fix the economy long term. On the other hand, if they try to crack down on freedom to ensure their own power and economic survival - it will collapse the birthrate even further and/or cause revolt. Lastly, if they do nothing the economy will collapse under the weight of the one child policy. Robots would be the perfect solution - birthrates can collapse, they can maintain economic control - and their "workforce" will never decrease. It's of course a pipe-dream. This line of thinking is of course similar to how the US requires the forever growth of the services economy which drives the need/hope for AI to solve that problem.
- seanmcdirmid 1y agoThis is a really bad analysis: China's birthrate has fallen like it has in other richer countries because people have become rich and the amount of time and money needed to raise a kid is expensive. Becoming even richer won't help things at all. Freedom has little to do with the birthrate, you could even say a crackdown on liberalization that has occurred would make china poorer and therefore the birthrate would go up. China just wants to be rich, robots are one way to do that with the demographics that happen in rich economies.
- blitzar 1y ago> AI is Too Big to Fail Now invest in my Ai company, 100mil at 10bn valuation, can't fail, too big.
- CuriouslyC 1y agoYou can't invest in me currently (except by retaining me as a consultant/architect), and if I was in a position to be invested in, the article would have had a different structure. My position is integrity first, you can stalk my LinkedIn to see that if you need proof -- I've never worked in adtech or other predatory industries, most of my work has been in the interest of public good and the protection of democracy.
- jcranmer 1y agoThe idea that the Republicans are going to bail out AI and pay for it with massive tax raises on the plebs is just utter bonkers, if for no other reason than they're currently utterly incapable of getting any legislation passed, let alone one so deeply unpopular as that.
- wrs 1y agoWhat? Did you miss the BBB? They’ll pass any legislation they’re told to.
- jcranmer 1y agoThe BBB, i.e., the bill passed via the special mechanism that only works once a year and has stringent requirements on what can be in the bill for the mechanism to work.
- wrs 1y agoIt's a pleasant surprise that the Senate did respect its own purely parlimentary and nonbinding mechanism [0]. But I'm not sure what point you're making -- the bill did pass, as I suspect would just about any other bill the President wants to pass. [0] https://epicforamerica.org/federal-budget/understanding-the-byrd-rule/ https://epicforamerica.org/federal-budget/understanding-the-...
- marcosdumay 1y agoTheir government is currently closed, but that BBB thing passed... So, I have no idea.
- jhallenworld 1y ago>~75–80% of S&P 500 gains Dot com bust was 50% of S&P / 80% on Nasdaq... we survived it.. For Nvidia: all it will take is for one smart grad student to find a better training algorithm to destroy 75% of their value. Why I think a better algorithm is out there: Total installed GPU Tflops = 4 billion. Tflops of human brain = 1 million
- Yoric 1y ago> For Nvidia: all it will take is for one smart grad student to find a better training algorithm to destroy 75% of their value. I don't think so. We've already seen several generations of better training algorithms, but they all rely on CUDA, hence on NVidia.
- jhallenworld 1y agoFor inference they already face competition: that deal OpenAI announced with AMD .. at a certain point it will be worth broadening away from CUDA.
- cantor_S_drug 1y agoBut the flip side is excess capacity will be used for other fields which are not getting a chance.
- Yoric 1y agoOn the other hand, GPUs die down fairly quickly, so this excess capacity had better prove useful rather quickly.
- tonmoy 1y agoInternet was too big to fail in 2000, and in the long run was a net positive for the economy. Yet, a lot of internet companies still have not recovered the bubble bursting
- sph 1y agoJust because one bubble also brought better infrastructure for everybody, doesn't mean that every bubble has a silver lining. I wish AI wasn't so easily compared with the Internet just because they have exuberant investors in common.
- JohnKemeny 1y agoThe internet caused social media, which caused the attention economy and trumpism, and will be the bane of the next generations. It's too soon to tell regarding "net positive for the economy".
- notepad0x90 1y agoI think a lot of HNers are too close to the topic for the right perspective. LLMs are as much of a feature of an existing technology as computers are features of electricity. ML and neural networks have been around for a long time and the transition to LLM usage for us feels like "yup, another feature, just a really good auto-complete". For most users of LLMs, this is a magical feature that answers any questions and saves so much time and effort. I would even dare say that LLMs are a bigger leap in technology than the internet itself was. The internet connected people, "AI" made it so that we need less of each other! What was the cause of the enlightenment and renaissance period in europe that led to a boom in science, technology and the industrial revolution which is responsible for computers to begin with? It was the discovery of the new world and the expansion of europe into asia and africa. Get gold and pearls from the new world and sell use it to buy things in the near and far east. This meant people can spend time studying science, but it also meant military R&D. Better ships, better guns,better cannons. You need better science for that. Not just for colonization but the competition between european powers. What's my point? AI/LLMs, are a leap in that people can now do a lot less things they don't want to do. Even if it means social instability. There is a very active arms-race in military capability, disinformation, control of markets and influence of governments going on as we speak. and this in turn is going to result in better and better improvements in every sector. The internet meant we had to learn new things, move to more efficient work. LLMs meant without learning as much we tell the computer to do things and all it needs is guidance and some correction. We all see the fads and the hype all over. But there are very real and very dramatic advantages and values to be extracted from LLMs, which in the long run would be the equivalent of the industrial revolution. The pessimism feels a lot like people were being pessimistic about the internet back in the 90s. AI isn't just too big to fail, it isn't something that can fail. Can long distance communication "fail" , can electronic computing fail? can transportation on wheels fail? All the grifters slapping AI on everything will fail, but the AI tech and all the value and change that comes with it, isn't something worth even consider as having a potential for failure. (sorry for the long post)
- zzleeper 1y agoThat kinda misses the point for me. I use LLMs a lot and have become an invaluable part of my work (coding, collecting data, proof-reading text) and even personal time (amazing Japanese menu translator!). But I still think they can "fail" in the sense that current investments need an absurd amount of profits in order to have a positive NPV. Data centers depreciate fast, so if you just did $500bn in capex, you better make sure you will get $50bn/yr out of it from the get go or you will fail. And that's the problem; even if sales are high, all vendors are bleeding money and so far the offerings are commoditized enough that I can't see how they will recoup their investment.
- mcv 1y agoI think this is mostly about the US, right? Most countries haven't invested all that much in AI. Even if all this new AI would completely vanish overnight, I'm pretty sure most of the world wouldn't care one bit. Of course many AI companies and investors would be bankrupt; they'd be the real losers here. Many other companies and organisations would have wasted a lot of money on nothing, but they'll write it off and move on. If it bankrupts Microsoft, that would have a tremendous impact on many companies using Microsoft products of course (maybe MS should hurry up with that EU-US cloud split, so the EU branch would survive the crash). But on the whole, I'm not too worried.
- Yoric 1y agoWell, last few times the US had a big recession, they took down the whole world with them. The biggest recession led almost directly to WWII, and that was before the US centralized that much power or money. I don't live in the US, but I'm rather worried.
- mcv 1y agoThat's true. But thanks to Trump's tariffs, much of the world is working to make itself less dependent on the US. There's talk that the Euro could become the new reserve currency. Maybe the Renmibi. It's quite possible that the American Century will end with a massive crash, and outside of the US, Europe will probably suffer quite a bit of damage too if we don't detach ourselves more from the US, but I still think most of the world will be fine. Though I will admit that could be partially wishful thinking.
- jhallenworld 1y agoOn the Oct 10 drop, I made a list of a bunch country specific ETFs to see who is and who isn't so correlated with the US. oct 10 drop yield ytd total return mchi china -5.73 2.19 28.48 ewh hong kong -4.22 3.54 23.05 qqq nasdaq 100 -3.47 0.46 12.4 argt argentina -3.34 1.39 -16.04 currency problems ech chile -3.2 2.18 24.8 ewz brazil -2.98 5.42 26.49 spy USA: s&p 500 -2.69 1.08 9.15 epu peru -2.62 3.5 52.16 metals norw norway -2.44 4.06 22.77 ews singapore -2.38 3.59 28.19 ewn netherlands -2.31 1.91 25.28 ewx s&p emerging -2.08 2.81 8.58 ewa australia -1.75 3.02 9.26 enzl new zealand -1.65 2.25 -0.59 eww mexico -1.65 4.07 35.96 ewi italy -1.6 2.7 38.21 tur turkey -1.59 1.83 -9.71 currency problems ewq france -1.44 2.79 19.85 ewc canada -1.32 1.69 20.96 divo usa cc -1.07 4.58 8.43 ewp spain -0.68 2.68 52.85 ewd sweden -0.59 4.28 24.82 eden denmark -0.52 1.83 1.93 ewl switzerland -0.275 3.63 20.78 efnl finland -0.21 3.97 31.54 pin india 0 2.09 -4.03 (Edit: here are a few more) btc bitcoin -3.72 19.71 aaau gold 0.97 48.3 dxy dollar -0.69 -2.91 ashr CSI-300 -4.0 .95 22 (domestic China) fltw taiwan -4.8 1.34 23 They are all correlated- even if the countries are different, it's the same set of investors. But if you have to pick one... Finland? Switzerland, Sweden and Norway have low debt / gdp.
- Yoric 1y agoEh, I was just discussing this article on LinkedIn. Even one wasn't _that_ cynical about AI, but yeah, this is clearly one possible reading of the events. I'm in no hurry to live in the future that it entails, though.
- LikeBeans 1y agoI'm skeptical too however I think AI can add value by increasing knowledge worker productivity. Maybe save some money by needing less staff for some tasks. Maybe to mine vast amounts of data looking for a pattern. So I think it is useful however my skepticism is about the cost vs reward. Is it really worth the amount of money pumped into it, not sure. Time will tell.
- b-karl 1y agoSo maybe we are talking too much about AI as a tech bubble (like the dotcom bubble) and it is actually closer to an arms race like the nuclear programs or space race? For better and for worse there are a lot of secondary value and ventures created from those and one could see AI ventures in a similar light. A key difference is of course, at least in the US, that the research is led by corporations as opposed to research institutes and government.
- OptionOfT 1y agoWhat I really find really weird here is that when I buy stock in Apple, I do so because I think Apple will create new value. But with AI the hope is that the value created will be proportional to wages being removed. I.e. if AI creates more value, it means that the large majority of people will actually have less money, bar a few lucky ones. You have to remember that AI is being touted as the final solution to basically do all your administrative work for you, and all your software engineering. So if it fails we all lose a lot of money because the stock market will drastically go down. But I don't think humanity overall will be better off if it succeeds.
- igleria 1y agoUBI never "mathed" to me. It always smelled like a pseudo solution to distract the soon-to-be-replaced long enough until they are replaced.
- anon84873628 1y agoWell, wealth redistribution makes sense. But the idea that it would be voluntary does not. Especially since we're going to have AI soldier robots before AI farmer robots.
- sshine 1y ago> with AI the hope is that the value created will be proportional to wages being removed […] if AI creates more value, it means that the large majority of people will actually have less money, bar a few lucky ones That’s one (not unreasonable) prediction of AI automation. Another is that it will empower the same people whose tasks are made redundant to create value somewhere else. In a way they have to, or they will perish. The sum of all value created does not have a fixed upper bound.
- OptionOfT 1y agoWeirdly enough I have the feeling here that companies don't want to do make more money with the same (retrained) people. They want to make more money with less people: https://www.theregister.com/2025/10/09/mckinsey_ai_monetization/ https://www.theregister.com/2025/10/09/mckinsey_ai_monetizat... > All of these copilots are supposed to make work more efficient with fewer people, but my business leaders are also saying they can't reduce head count yet.
- poisonborz 1y agoIt's not AI that is losing trust, it's the US. It was always the US, the "West". They may invent fusion reactors tomorrow, if they can shut access to my assets on a whim, take direct hostile actions against their allies / my home, or I see they are at a brink of a deep societal chasm / civil war, if I see another economy outpacing them in industrial output, I will just not put my money there.
- stevefan1999 1y agoI'd say the problem is that the fiat currency keeps inflating and thus decreasing in value day-by-day, while AI does not bring that much productivity gain compared to last few decades. Internet boom does substantially decrease communication cost and bring more people together, making much more liquidity. AI, meanwhile, is not only not flawless (and sometimes fatal, see some horror stories of LLM here in HN doing an oopsie deleting production database and do nothing about recovery), but also a costy beast that only corporations or rich individuals could own, in other words, most people can "download" the "means of production", but not totally use and own it. And the biggest problem for AI, still, that compared to Internet, is that AI does not make you that much gain in productivity. Back when we are in the office we use pen and paper, now we use Word or LibreOffice depending on where you are, and PC is therefore a must. Now I don't think AI is going to be a must, and they are still shoveling NPU that would end up being a waste in silicon space, if not vaporware.
- sidcool 1y agoI agree. In fact, the current investor elite won't let AI fail, they will continue pumping money despite losses for years if needed.
- Atomic_Torrfisk 1y agoTitle seems misleading. The quote below implies failure on multiple levels. > Where does all this leave us? For one, you better hope and pray that AI delivers a magical transformation, because if it doesn't, the whole economy will collapse into brutal serfdom
- xg15 1y agoI know he wanted to end the article with some calls to action that don't sound completely grim, but aren't the last paragraphs a bit contradictory? 1) Build more AI products and do everything imaginable to get AI to produce value - because otherwise, we're doomed. 2) Buy stocks of the tech companies that will most likely be nationalized eventually. 3) Boycott unethical tech companies. But the companies in (3) are exactly the ones that you'll buy stocks of in (2) and whose services and/or infrastructure you'll build your product on in (1). So how are you supposed to boycott them?