Don't worry, once the Wall Street tap runs dry, the U.S. government will be more than happy to step in and bail out the AI corps. at the taxpayer's expense.
> Don't worry, once the Wall Street tap runs dry, the U.S. government will be more than happy to step in and bail out the AI corps. at the taxpayer's expense.
I have a brilliant idea. Why not start this now?
The US government will give every child born $1000 in money in order to hand it to the small number of families who own 70% of equities in order to purchase equities the child can't touch for 18 years. That is US Government -> child -> rich person who currently owns the equity, although the rich person gets the cash in hand the child has to wait 18 years to sell the equity.
Where does the US Government get this $1000 per child from? Borrow it, adding to the $38,000,000,000,000 in national debt.
Here is the interesting part of my brilliant plan. That child will inherit, calculated per capita, $111,000 in debt the moment she is born. That child will be responsible, calculated per capita, for ~$3,000 a year in interest on that debt.
In order to sell the idea, every time the US Government gives $1000 to a child to purchase stocks I own, I will give $250 to another child to purchase stocks I own. Let's do the math: $1000 profit - $250 loss + $250 profit = $1000 profit. Best part is the media will run this as the leading news story for 3 days making me look like God.
Subtract GDP growth and it’s slightly negative, meaning simply borrowing more money and the at current rates the debt to GDP ratio decreases over time. Massive spending sprees are why it’s gotten so huge, kicking it down the road turns it into a smaller problem soon as politicians stop actively making the issue worse it goes away.
We could argue about the risk if things start to fail, but in an emergency the US could change its constitution and abandon its debt.
The new AI data center I build to do what ever it is that AI Clippy does over at Microsoft will run on coal energy and those dirty chimneys are not going to clean themselves.
Not to disagree with the overall point, but because this comes up a lot I'll nitpick it: issuing debt is not the same as printing money
With debt, along with the proverbial "cash" comes an opposing "IOU" -- any change* is thus only temporary, in the time dimension (essentially that's what's being exchanged: time)
Printing money out of nowhere is different, because it's missing that other half
* at the risk of stating the obvious: "change" meaning "difference" and not "cents"
A lot of debt also arises because of savings needs. If everyone is saving for retirement, for example, that savings has to be debt marked somewhere else. Examples:
* Social security used to have a huge surplus, that was savings that had to go somewhere (even if it was just a savings account in a bank, the bank would then be able to lend it out). They instead buy treasuries and that savings becomes debt to the USG.
* China likewise needs to save dollars because it doesn't want them sloshing around in their economy leading to inflation, so instead of using it to buy things they buy treasuries, and their savings becomes debt to the USG (not always a great deal for China if interest rates are below inflation).
The dollar has been so useful in the past as a currency of trade because you could save large amounts of it easily by buying US treasuries. One reason China doesn't want the RMB to be used so heavily for trade is that they don't want to do the same yet.
Actually it kind of is, in as much as it expands the money supply.
When a bank issues debt, the money is created 'out of thin air'. When the debt is paid off, that money is destroyed. However usually more debt is being created than redeemed as things go on, so the total money supply increases (this is a good thing, as it allows the economy to expand).
Various regulations and central bank market interventions (quantitative tightening/easing) control this process, which thus can be induced to 'print money' if the government wishes - assuming they have a sovereign currency.
I said the same thing on a different post and people downvoted it. The current administration believes that the US can't fall behind China in this AI arms race. So don't expect anything too drastic to happen to the large players in the game.
Does anybody know how much an ML model is actually worth to build a new model? Like when they start making a new model, do they modify the old or do they start from scratch?
I'm asking to know how much owning a model is actually worth, not in how much it could make money by selling use, but in how much it deprecates and keeps value to make a new one. If say one side of China/US lacks out on a model generation, do they only need to follow progress on the science behind it and when they own the data, the algorithm and the hardware all they need is "just" time and energy or is it important, that they actually have their on instance of a large model from every generation continuously?
Maybe, but a clear Republican bailout of AI might wipe them out for several election cycles / foreseeable future. Big tech isn’t popular, AI isn’t popular and bail outs aren’t popular
What evidence do you have that that's going to be the case? I ask because my entire life, I've seen terrible things done by the Republican Party. And regular people get really hurt. For example, the great financial crisis. Yet, a little bit of time passes, and that 30-some-odd percent goes right back to voting for them.
China is focusing heavily on AI applications. They have basically decided already to deal with their coming demographic bust with robuts/AI rather than immigration. Its not even about military applications, the US is just afraid that China will shoot so far ahead of us economically that they won't have any leverage over it in the future at all.
There's a lot of nonsense that comes out on both sides of the aisle. I wish there was a solid single source of truth to figure out what's really going on in China and what's really going on behind the scenes in the U.S.
Some talk about how China has some strategic issues, such as do they have a reliable supply of food and energy? (Zeihan etc.)
I guess the energy portion is being solved with renewables. And I guess if they solve the issue of demographic collapse with robots and AI, that's something.
But really, if there's less people and they're getting older, what's the point? What are they really working towards?
This question is also becoming a problem post-Trump immigration ban in the U.S.
Who knows what the U.S.'s demographics are going to look like now?
Trump inherited a U.S. with some of the best demographics of all nations on the planet, especially in the West. And he managed to throw that in the garbage.
> I wish there was a solid single source of truth to figure out what's really going on in China
What kind of sources are you looking for? The Five Year Plans are the best source of truth for what they are planning on doing nationwide. The annual Statistical Communiqué on National Economic and Social Development and China Statistical Yearbook from the NBS contain statistics on how that implementation is going. Then every year the NDRC delivers the Report on the Implementation of the Plan for National Economic and Social Development and on the Draft Plan to the National People’s Congress which packages up the statistics on how the plan is progressing.
They’re the most reliable source we’re going to get without being party insiders. There’s still Soviet-style inflation of figures to meet quotas but China has been cracking down on that for the last few decades because they want accurate data for the five year plans. I think it’s more of a problem with outer provinces, less so for the major manufacturing hubs.
Alternative sources to verify are a bit harder to find without knowing the languages (lots of the NRDC and NBS stats are available in English).
Yes, people also compare some of these statistics with export/import data and with data from other countries on the other side of these transactions, and the numbers match.
You could just go over there and live for a few years, you can be your own source. But yes, they have energy, no they don't have oil, yes they have lots of agriculture land, no they messed up some of their environment and that will take time to heal, yes they are working on it.
> But really, if there's less people and they're getting older, what's the point? What are they really working towards?
China wants to be a rich country even if their population stabilizes at only 900 million people or so. Mostly they want to avoid the middle income trap, which would have been a problem regardless of their demographics falling off a cliff. Automation is the best way to get around it, and they have enough tech, production know how and capacity, and smart people to pull that off.
China is going to continue doing what is best for it, and they haven't gone stupid like the USA has. Embracing AI for productive uses rather than just fixating on the slop produced is one place where they are racing past the west.
There's a lot of nonsense that comes out on both sides of the aisle. I wish there was a solid single source of truth to figure out what's really going on in China and what's really going on behind the scenes in the U.S.
I've always assumed that there is such a source of truth, but that I had never heard of it, wouldn't have access to it, and couldn't afford it if I did.
Reading a few tweets from Musk was all it took to correct that misapprehension. It's increasingly clear that nobody at any level of play knows jack shit about anything.
> There's a lot of nonsense that comes out on both sides of the aisle. I wish there was a solid single source of truth to figure out what's really going on in China and what's really going on behind the scenes in the U.S.
Isn't this simply the answer?
That what's going on is gaslighting of the public and that there are people behind the scenes and they don't want hoi polloi to know what they're up to?
This geo-politics (or politics) talk is 'intellectual' men's astrology.
When a woman asks me my astrological sign, I know she's a deeply unserious person. When a man says 'do they have a reliable supply of food and energy'...
The difference now is instead of banks holding the risk, they are now the safest portion of the loans. The risk is now moved to private credit, so if this bubble bursts, they will panic sell other assets to cover the AI losses, which will crash unrelated sectors as well.
Since the now bad AI loans can't be sold, they need liquidity form elsewhere to cover. AI bursting means other S&P 500 stocks, treasuries, gold, crypto, commercial real estate will all go down with it.
I wonder how much other bad private credit there is. If you want liquid funds, rolling it all over time and time again might stop working... Maybe it is really time to clean it all up.
In the meantime, people who are actually working with it only become more bullish, and see a world where most people are first willing, and later basically required to pay 20-200 per month
With OpenAI, the most bullish analysts calculate that 40% of the world's population will be users in three years time, and they would still lose money on every sale. That's a bold bet.
Someone "actually working with it" checking in, if that matters at all to this conversation. I'm very bearish on the industry even if I think the tech is going to stick around.
If we separate the tech from the industry, it's clear one has some value (albeit very hard to say just how much) and the other is a lot of smoke and mirrors. This is not a healthy space.
One might point out that this is the story of AI since at least the 1930's. Impressive technology demo's ... wild investment, crash, bankruptcy ... but the tech remains and in fact has useful applications all around.
AI Winters. I finished school in 2008 and have seen it happen twice.
> who are actually working with it only become more bullish
I have a feeling the word "actually" is doing a lot of work with this. I shipped AI facing user products a few years ago, then worked in more research focused AI work for awhile (spending a lot of time working with internals of these models). Then seeing where this was all headed (hype was more important than real work) decided to go back to good ol' statistical modeling.
Needless to say, while I think AI is absolutely useful, I'm bearish on the industry because current promises and expectations are completely out of touch with reality.
But I have a feeling because I'm not currently deploying a fleet of what people are calling "agents" (real agents are still quite cool imho), you would describe me as not "actually" using AI.
would you bet $10,000 that the super majority (80% or greater) of current users of free APIs will be using a paid (20-200) one per month? if so let's set something up. we can set the time limit at January 1st, 2028.
Well the problem is that even at $200 a month they're bleeding MONEY. FYI for every well intentioned skilled engineer using llms you have 100 lazy code monkeys shipping mountains of tech debt faster than ever before, 1000 people generating bullshit emails/tickets that could have been summed up in 5 bullet points, 1000 people role-playing with virtual friends/partners, &c.
You're in your own little bubble and completely oblivious to the thousands of man hour wasted every day to unfuck AI slop
And as it turns out 80% of users aren't willing to pay a cent and will abandon ship as soon as there is an alternative
Imagine throwing orders of magnitude more of compute at things - we may have things like a monte carlo tree search for LLM outputs using an LLMJudge that prunes the tree.
+ we can continuously let a LLM monitor our log files and alert/propose/fix issues 24/7. If intelligence becomes cheap enough this would be an enormous market.
Having a LLM run as "fact checker" /coach for everything that you write also would be a great addition.
This really doesn't make sense to me. I see no world where Ai is so useful that the common man is willing to pay 100+ a month for it, but it's also a world where the common man has a job. There's too many people for everyone to have some niche job the Ai can't do.
Then they would be paid for 5-10 hours and have to ask the government for benefits.
In what world would a corporation pay a full yearly salary for 1/8th to 1/4 the labor hours? The current world already looks to labor as the juiciest place to cut cost for the profit margin.
That's not really how it worked out so far, the productivity is simply pocketed by the elite and never translates to shorter work week, salary increase or earlier retirement
Someone is working 20 hours a month and paying for a 100$ subscription on top of bills? And this isn't a isolated case, this is the expectation for the normal person? Is the job supposed to be real or is the government just giving out universal basic income while being petulant about people not working at all
Banks hedge investments-it's pretty standard and lowers their risk-weighted assets. If their investments are big, their hedges are big. If banks have a net negative view towards their AI investments, this article fails to articulate that (regardless of how many exciting adjectives they choose to use).
> Banks are lending unprecedented sums to technology giants building artificial intelligence infrastructure while quietly using derivatives to shield themselves from potential losses.
And who is their counterparty? Aliens? What a dumb click-bait article.
> where the one who are supposed to refund banks will get the money?
Liquidating other assets. The point of the banks using SRTs is to push the default risk off of the bank and onto investors.
So now, instead of banks failing, private credit gets to bear the risk of the bubble popping. Since they can't sell the (now bad) AI debt, they will need to liquidate all of their other assets to pay the banks.
That's why a potential AI bubble burst can cause the markets to enter a death spiral and bring down a bunch of other, unrelated markets.
If private credit can't cover the losses by liquidating everything else, well, then they fail, and we either let it all crumble or do bailouts again.
You forget the single greatest source of money for investors: loans. Sorry "margin". With the banks. And margin is nonnegotiable because the whole point of the stock market is to massively increased loaned money because that is the real advantage to the economy they provide.
Plus the problem of 2008. You cannot offload risk if everything is synchronized, the math still works but doesn't take "either everything crashes or nothing does" into account.
Looks like we might be witnessing a textbook cycle of self-fulfilling prophecy in the making. As the article suggests, once large investors and institutions start calling this an “AI bubble,” the narrative alone can drive more capital, inflating valuations further just because everyone expects growth. When price → expectation → price becomes the dominant feedback loop, fundamentals matter less.
That kind of reflexivity has powered past bubbles. George Soros’ reflexivity thesis applies: rising prices attract more investment, which inflates prices further, until reality forces a reset. If many AI-related companies can’t quickly deliver expected growth, the eventual correction could be sharp.
In short: hype begets cash, cash begets price, price begets more hype, and at that point, we’re no longer betting on value, we’re betting on the belief itself.
- Most participants in the economy are creating very little real value. They're shifting things around or temporarily solving problems that are highly localized to the organization they're in.
- There's a lot of unrealized value stored in the corpus of knowledge that AI companies have ingested— the millions of webpages, the scanned books, wikipedia, the blogs and Q&A sites. So even if AI companies are not creating new insights, just the act of locating, filtering, and summarizing knowledge that was already present somewhere in the world is valuable. Indeed, one could use this same argument to declare that Google in 1999 was creating no value, which is of course obviously untrue.
Google created two kinds of value: content discovery via connection (value to the consumer), and market reachability for advertisers. Oh, and also the world's most inconvenient spell check.
AI proposes to solve: a content supply side problem which does not exist, and an analysis problem which also only maybe exists. Really what it does in the best of cases (assuming everything actually works) is drive the cost to produce content to zero, make discovery less trustworthy, make the discovery problem worse, and launder IP. In the best case it is a net negative economic force.
All that said, I believe the original comment is about the fact that the economy exists to serve market participants and AI is not a market participant. It can act as a proxy, but it doesn't buy or sell things in the economic sense. Through that lens, also in the best case the technology erodes demand by reducing economic power of the consumer.
That said, I'm stoked to hear about the next AI web site generator or spam email campaign manager. Lets setup an SPV to get it backed off-balance sheet.
Don't worry, once the Wall Street tap runs dry, the U.S. government will be more than happy to step in and bail out the AI corps. at the taxpayer's expense.
> Don't worry, once the Wall Street tap runs dry, the U.S. government will be more than happy to step in and bail out the AI corps. at the taxpayer's expense.
I have a brilliant idea. Why not start this now?
The US government will give every child born $1000 in money in order to hand it to the small number of families who own 70% of equities in order to purchase equities the child can't touch for 18 years. That is US Government -> child -> rich person who currently owns the equity, although the rich person gets the cash in hand the child has to wait 18 years to sell the equity.
Where does the US Government get this $1000 per child from? Borrow it, adding to the $38,000,000,000,000 in national debt.
Here is the interesting part of my brilliant plan. That child will inherit, calculated per capita, $111,000 in debt the moment she is born. That child will be responsible, calculated per capita, for ~$3,000 a year in interest on that debt.
In order to sell the idea, every time the US Government gives $1000 to a child to purchase stocks I own, I will give $250 to another child to purchase stocks I own. Let's do the math: $1000 profit - $250 loss + $250 profit = $1000 profit. Best part is the media will run this as the leading news story for 3 days making me look like God.
It is a brilliant idea.
Subtract GDP growth and it’s slightly negative, meaning simply borrowing more money and the at current rates the debt to GDP ratio decreases over time. Massive spending sprees are why it’s gotten so huge, kicking it down the road turns it into a smaller problem soon as politicians stop actively making the issue worse it goes away.
We could argue about the risk if things start to fail, but in an emergency the US could change its constitution and abandon its debt.
https://www.cnbc.com/2025/06/09/trump-accounts-uber-dell-ceo...
https://nypost.com/2025/06/09/us-news/uber-goldman-sachs-and...
https://www.smh.com.au/business/banking-and-finance/wall-str...
I love it, except there's no point in providing debt to a party with no ability to pay for ~18 years.
due to ever-increasing income inequality the legal age for being able to have a job will be reduced to 6 in the coming years :)
The new AI data center I build to do what ever it is that AI Clippy does over at Microsoft will run on coal energy and those dirty chimneys are not going to clean themselves.
With what money? US debt is owned by mostly US residents. US defecit is already absurdly high. Not to mention the looming social security failure
You print more money. The only limit is the inflation you create.
Not to disagree with the overall point, but because this comes up a lot I'll nitpick it: issuing debt is not the same as printing money
With debt, along with the proverbial "cash" comes an opposing "IOU" -- any change* is thus only temporary, in the time dimension (essentially that's what's being exchanged: time)
Printing money out of nowhere is different, because it's missing that other half
* at the risk of stating the obvious: "change" meaning "difference" and not "cents"
A lot of debt also arises because of savings needs. If everyone is saving for retirement, for example, that savings has to be debt marked somewhere else. Examples:
* Social security used to have a huge surplus, that was savings that had to go somewhere (even if it was just a savings account in a bank, the bank would then be able to lend it out). They instead buy treasuries and that savings becomes debt to the USG.
* China likewise needs to save dollars because it doesn't want them sloshing around in their economy leading to inflation, so instead of using it to buy things they buy treasuries, and their savings becomes debt to the USG (not always a great deal for China if interest rates are below inflation).
The dollar has been so useful in the past as a currency of trade because you could save large amounts of it easily by buying US treasuries. One reason China doesn't want the RMB to be used so heavily for trade is that they don't want to do the same yet.
Actually it kind of is, in as much as it expands the money supply.
When a bank issues debt, the money is created 'out of thin air'. When the debt is paid off, that money is destroyed. However usually more debt is being created than redeemed as things go on, so the total money supply increases (this is a good thing, as it allows the economy to expand).
Various regulations and central bank market interventions (quantitative tightening/easing) control this process, which thus can be induced to 'print money' if the government wishes - assuming they have a sovereign currency.
See: the Genesis Mission https://www.whitehouse.gov/presidential-actions/2025/11/laun...
I complained about it already https://tickerfeed.net/articles/whitehouse-genesis-mission-b...
That's why they're hedging. US government regulation has liquidity requirements so it doesn't occur.
Make America Bankrupt Again!?
I said the same thing on a different post and people downvoted it. The current administration believes that the US can't fall behind China in this AI arms race. So don't expect anything too drastic to happen to the large players in the game.
China made the us fall in kinda the same trap that the us madeade ussr fall into with the moon race.
Does anybody know how much an ML model is actually worth to build a new model? Like when they start making a new model, do they modify the old or do they start from scratch?
I'm asking to know how much owning a model is actually worth, not in how much it could make money by selling use, but in how much it deprecates and keeps value to make a new one. If say one side of China/US lacks out on a model generation, do they only need to follow progress on the science behind it and when they own the data, the algorithm and the hardware all they need is "just" time and energy or is it important, that they actually have their on instance of a large model from every generation continuously?
Maybe, but a clear Republican bailout of AI might wipe them out for several election cycles / foreseeable future. Big tech isn’t popular, AI isn’t popular and bail outs aren’t popular
What evidence do you have that that's going to be the case? I ask because my entire life, I've seen terrible things done by the Republican Party. And regular people get really hurt. For example, the great financial crisis. Yet, a little bit of time passes, and that 30-some-odd percent goes right back to voting for them.
[dead]
It's national defense! Imagine if China had more slop than us!
China is focusing heavily on AI applications. They have basically decided already to deal with their coming demographic bust with robuts/AI rather than immigration. Its not even about military applications, the US is just afraid that China will shoot so far ahead of us economically that they won't have any leverage over it in the future at all.
There's a lot of nonsense that comes out on both sides of the aisle. I wish there was a solid single source of truth to figure out what's really going on in China and what's really going on behind the scenes in the U.S.
Some talk about how China has some strategic issues, such as do they have a reliable supply of food and energy? (Zeihan etc.)
I guess the energy portion is being solved with renewables. And I guess if they solve the issue of demographic collapse with robots and AI, that's something.
But really, if there's less people and they're getting older, what's the point? What are they really working towards?
This question is also becoming a problem post-Trump immigration ban in the U.S.
Who knows what the U.S.'s demographics are going to look like now?
Trump inherited a U.S. with some of the best demographics of all nations on the planet, especially in the West. And he managed to throw that in the garbage.
> I wish there was a solid single source of truth to figure out what's really going on in China
What kind of sources are you looking for? The Five Year Plans are the best source of truth for what they are planning on doing nationwide. The annual Statistical Communiqué on National Economic and Social Development and China Statistical Yearbook from the NBS contain statistics on how that implementation is going. Then every year the NDRC delivers the Report on the Implementation of the Plan for National Economic and Social Development and on the Draft Plan to the National People’s Congress which packages up the statistics on how the plan is progressing.
> contain statistics on how that implementation is going
Are those statistics reliable?
In the US there are often good alternative sources for data: the discussions about unemployment numbers have been interesting (e.g. after private ADP numbers released). https://seekingalpha.com/article/4850656-jobs-data-from-alte...
The lies in the Soviet 5 year production stats were relentlessly mocked in 1984.
They’re the most reliable source we’re going to get without being party insiders. There’s still Soviet-style inflation of figures to meet quotas but China has been cracking down on that for the last few decades because they want accurate data for the five year plans. I think it’s more of a problem with outer provinces, less so for the major manufacturing hubs.
Alternative sources to verify are a bit harder to find without knowing the languages (lots of the NRDC and NBS stats are available in English).
> Are those statistics reliable?
Yes, people also compare some of these statistics with export/import data and with data from other countries on the other side of these transactions, and the numbers match.
You could just go over there and live for a few years, you can be your own source. But yes, they have energy, no they don't have oil, yes they have lots of agriculture land, no they messed up some of their environment and that will take time to heal, yes they are working on it.
> But really, if there's less people and they're getting older, what's the point? What are they really working towards?
China wants to be a rich country even if their population stabilizes at only 900 million people or so. Mostly they want to avoid the middle income trap, which would have been a problem regardless of their demographics falling off a cliff. Automation is the best way to get around it, and they have enough tech, production know how and capacity, and smart people to pull that off.
China is going to continue doing what is best for it, and they haven't gone stupid like the USA has. Embracing AI for productive uses rather than just fixating on the slop produced is one place where they are racing past the west.
There's a lot of nonsense that comes out on both sides of the aisle. I wish there was a solid single source of truth to figure out what's really going on in China and what's really going on behind the scenes in the U.S.
I've always assumed that there is such a source of truth, but that I had never heard of it, wouldn't have access to it, and couldn't afford it if I did.
Reading a few tweets from Musk was all it took to correct that misapprehension. It's increasingly clear that nobody at any level of play knows jack shit about anything.
> There's a lot of nonsense that comes out on both sides of the aisle. I wish there was a solid single source of truth to figure out what's really going on in China and what's really going on behind the scenes in the U.S.
Isn't this simply the answer?
That what's going on is gaslighting of the public and that there are people behind the scenes and they don't want hoi polloi to know what they're up to?
This geo-politics (or politics) talk is 'intellectual' men's astrology.
When a woman asks me my astrological sign, I know she's a deeply unserious person. When a man says 'do they have a reliable supply of food and energy'...
We cannot allow a slop gap!
Thank you General Turgidson.
You're being downvoted, but a number of AI actors certainly taking actions to become "too big to fail".
This makes the hair rise up on the back of my neck; it reminds me the sub-prime crisis - "they can't all default at once!"
Yes. And they always start trying to diversify only after they work years forcing everything to be correlated to it...
The .com bubble wasn't like this, but it was a minority between bubbles.
It does look and feel very similar - particularly the risk shedding and assumptions made there
> "they can't all default at once!"
Narrator: As it turns out, they can.
The difference now is instead of banks holding the risk, they are now the safest portion of the loans. The risk is now moved to private credit, so if this bubble bursts, they will panic sell other assets to cover the AI losses, which will crash unrelated sectors as well.
Since the now bad AI loans can't be sold, they need liquidity form elsewhere to cover. AI bursting means other S&P 500 stocks, treasuries, gold, crypto, commercial real estate will all go down with it.
I wonder how much other bad private credit there is. If you want liquid funds, rolling it all over time and time again might stop working... Maybe it is really time to clean it all up.
What bubble? Where is it? I haven't seen it! Here, try my SOTA AI toothbrush.
presumably it data mines plaque locations while providing no actual hygiene benefit whatsoever
In the meantime, people who are actually working with it only become more bullish, and see a world where most people are first willing, and later basically required to pay 20-200 per month
With OpenAI, the most bullish analysts calculate that 40% of the world's population will be users in three years time, and they would still lose money on every sale. That's a bold bet.
Someone "actually working with it" checking in, if that matters at all to this conversation. I'm very bearish on the industry even if I think the tech is going to stick around.
If we separate the tech from the industry, it's clear one has some value (albeit very hard to say just how much) and the other is a lot of smoke and mirrors. This is not a healthy space.
One might point out that this is the story of AI since at least the 1930's. Impressive technology demo's ... wild investment, crash, bankruptcy ... but the tech remains and in fact has useful applications all around.
AI Winters. I finished school in 2008 and have seen it happen twice.
Convnets. LSTM (and various RNNs).
Both are in wide use today.
The difference is that every single one of those previous AI winters didn’t show up in the stock market valuations — not even a little bit.
> who are actually working with it only become more bullish
I have a feeling the word "actually" is doing a lot of work with this. I shipped AI facing user products a few years ago, then worked in more research focused AI work for awhile (spending a lot of time working with internals of these models). Then seeing where this was all headed (hype was more important than real work) decided to go back to good ol' statistical modeling.
Needless to say, while I think AI is absolutely useful, I'm bearish on the industry because current promises and expectations are completely out of touch with reality.
But I have a feeling because I'm not currently deploying a fleet of what people are calling "agents" (real agents are still quite cool imho), you would describe me as not "actually" using AI.
would you bet $10,000 that the super majority (80% or greater) of current users of free APIs will be using a paid (20-200) one per month? if so let's set something up. we can set the time limit at January 1st, 2028.
Well the problem is that even at $200 a month they're bleeding MONEY. FYI for every well intentioned skilled engineer using llms you have 100 lazy code monkeys shipping mountains of tech debt faster than ever before, 1000 people generating bullshit emails/tickets that could have been summed up in 5 bullet points, 1000 people role-playing with virtual friends/partners, &c.
You're in your own little bubble and completely oblivious to the thousands of man hour wasted every day to unfuck AI slop
And as it turns out 80% of users aren't willing to pay a cent and will abandon ship as soon as there is an alternative
Imagine throwing orders of magnitude more of compute at things - we may have things like a monte carlo tree search for LLM outputs using an LLMJudge that prunes the tree.
+ we can continuously let a LLM monitor our log files and alert/propose/fix issues 24/7. If intelligence becomes cheap enough this would be an enormous market.
Having a LLM run as "fact checker" /coach for everything that you write also would be a great addition.
Can I ask what you do? I suspect there is a type of job that AI excels at, and it makes everyone in that job unreasonably bullish on AI.
This really doesn't make sense to me. I see no world where Ai is so useful that the common man is willing to pay 100+ a month for it, but it's also a world where the common man has a job. There's too many people for everyone to have some niche job the Ai can't do.
And if such a job would carry a work week of, say, 5 or 10 hours?
Then they would be paid for 5-10 hours and have to ask the government for benefits.
In what world would a corporation pay a full yearly salary for 1/8th to 1/4 the labor hours? The current world already looks to labor as the juiciest place to cut cost for the profit margin.
That's not really how it worked out so far, the productivity is simply pocketed by the elite and never translates to shorter work week, salary increase or earlier retirement
https://files.epi.org/charts/img/235212-28502-body.png
That's not enough time to maintain skill. Experience would build very slowly in people working so intermittently.
Someone is working 20 hours a month and paying for a 100$ subscription on top of bills? And this isn't a isolated case, this is the expectation for the normal person? Is the job supposed to be real or is the government just giving out universal basic income while being petulant about people not working at all
Banks hedge investments-it's pretty standard and lowers their risk-weighted assets. If their investments are big, their hedges are big. If banks have a net negative view towards their AI investments, this article fails to articulate that (regardless of how many exciting adjectives they choose to use).
$5 trillion dollars in loans? Pretty standard?
https://archive.ph/kwD1t
> Banks are lending unprecedented sums to technology giants building artificial intelligence infrastructure while quietly using derivatives to shield themselves from potential losses.
And who is their counterparty? Aliens? What a dumb click-bait article.
Is there a web that calculates implicit credit ratings of the hyperscaler companies?
One thing it's not clear to me: the amount of money is colossal, where the one who are supposed to refund banks will get the money?
> where the one who are supposed to refund banks will get the money?
Liquidating other assets. The point of the banks using SRTs is to push the default risk off of the bank and onto investors.
So now, instead of banks failing, private credit gets to bear the risk of the bubble popping. Since they can't sell the (now bad) AI debt, they will need to liquidate all of their other assets to pay the banks.
That's why a potential AI bubble burst can cause the markets to enter a death spiral and bring down a bunch of other, unrelated markets.
If private credit can't cover the losses by liquidating everything else, well, then they fail, and we either let it all crumble or do bailouts again.
You forget the single greatest source of money for investors: loans. Sorry "margin". With the banks. And margin is nonnegotiable because the whole point of the stock market is to massively increased loaned money because that is the real advantage to the economy they provide.
Plus the problem of 2008. You cannot offload risk if everything is synchronized, the math still works but doesn't take "either everything crashes or nothing does" into account.
Looks like we might be witnessing a textbook cycle of self-fulfilling prophecy in the making. As the article suggests, once large investors and institutions start calling this an “AI bubble,” the narrative alone can drive more capital, inflating valuations further just because everyone expects growth. When price → expectation → price becomes the dominant feedback loop, fundamentals matter less.
That kind of reflexivity has powered past bubbles. George Soros’ reflexivity thesis applies: rising prices attract more investment, which inflates prices further, until reality forces a reset. If many AI-related companies can’t quickly deliver expected growth, the eventual correction could be sharp.
In short: hype begets cash, cash begets price, price begets more hype, and at that point, we’re no longer betting on value, we’re betting on the belief itself.
profits have not materialized, nor can they: machines can only transfer value, they cannot create it
Two responses to this:
- Most participants in the economy are creating very little real value. They're shifting things around or temporarily solving problems that are highly localized to the organization they're in.
- There's a lot of unrealized value stored in the corpus of knowledge that AI companies have ingested— the millions of webpages, the scanned books, wikipedia, the blogs and Q&A sites. So even if AI companies are not creating new insights, just the act of locating, filtering, and summarizing knowledge that was already present somewhere in the world is valuable. Indeed, one could use this same argument to declare that Google in 1999 was creating no value, which is of course obviously untrue.
Google created two kinds of value: content discovery via connection (value to the consumer), and market reachability for advertisers. Oh, and also the world's most inconvenient spell check.
AI proposes to solve: a content supply side problem which does not exist, and an analysis problem which also only maybe exists. Really what it does in the best of cases (assuming everything actually works) is drive the cost to produce content to zero, make discovery less trustworthy, make the discovery problem worse, and launder IP. In the best case it is a net negative economic force.
All that said, I believe the original comment is about the fact that the economy exists to serve market participants and AI is not a market participant. It can act as a proxy, but it doesn't buy or sell things in the economic sense. Through that lens, also in the best case the technology erodes demand by reducing economic power of the consumer.
That said, I'm stoked to hear about the next AI web site generator or spam email campaign manager. Lets setup an SPV to get it backed off-balance sheet.
What?
it turns out capitalists do not understand economics