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Comment by juleiie | Hacker News Reader

Shovels and gold aren’t the problem, humans are the problem

either AI achieves hyper-efficiency and triggers systematic economic demand destruction due to unemployment, or it underperforms and sparks a massive tech-sector asset bubble burst

If AI is as good as valuations - it crashes. If AI isn’t as good, it crashes. all eggs in one basket economy.

Every future leads to a massive financial shitstorm

AI is priced in as a technology to end all markets. The last bull market you will ever see.

It’s a miracle markets didn’t notice this “damned if you succeed damned if you don’t” type of inevitable checkmate

I have been building a bunker

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> It’s a miracle markets didn’t notice this “damned if you succeed damned if you don’t” type of inevitable checkmate

They learned from 2008 that Too Big Too Fail(tm) means the government bails you out.

This was the problem with not OBLITERATING the banks in 2008. Had the US government taken over the banks and wiped the investors, there would be more pushback right now.

It's possible. If goog's AI overview is accurate, it seems somewhat similar to speculative euphoria seen in the past (eg companies involved in electricity prior to the great depression). It's larger (currently 35% for AI versus 25% for electric/related cos), I'm guessing because of more credit. At the same time, the housing component of the market prior to the GFC was about 23%, and it wasn't as economically damaging as the GD, so hopefully the AI bubble unwinding won't be as bad.

> so hopefully the AI bubble unwinding won't be as bad

It's currently larger than the 1880s railroad boom.

"Overbuilding and speculative debt ultimately culminated in the Panic of 1893, plunging the nation into a severe economic depression."

Not according to Goog's. The railroad bubble of the 1880s was supposedly 60+% of the market. It may not be accurate though.

"During the 1880s, private railroad enterprises represented over 60% of the total capitalization of the entire U.S. stock market, peaking at 63% in 1881 and 1885."

AI spending is significant more in inflation adjusted dollars. (Roughly 550 Bn in modern dollars). We're projecting trillions in AI spend.

But as a % of total GDP, you are correct.

I asked Goog's for enterprise value of the sector as a percentage of total market in all 4 situations, so it's not exact because enterprise value isn't available back to the 1800s, but it should be ballpark assuming the overall picture is accurate.

In terms of infra spending as a percent of GDP, 1880s railroads were at 5-6% at peak while AI is estimated to reach 3+% in a year or two.

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