This comes to the conclusion that AI is not a bubble and will not collapse. It argues instead that it’s growth is speculative and has inflated well beyond the ability for infrastructure construction to meet that speculation, but that this will correct itself in the market and continue growing after correction rather than collapse like you’d expect a bubble to.
I don’t think that’s true. It’s not including the need for the AI companies to demonstrate profits. OpenAI can’t exist on investor money forever, it needs to be generating $285bn annual revenue by 2030. And that’s just one company.
These AI companies are going to collapse underneath their own lack of ability to monetise because nobody wants it. The investment money to build new AI shit will collapse when others demonstrate it can’t monetise. Then the power infrastructure growth will collapse behind it. What remains will be a shell of the AI industry we see today.
Yeah, it’s very obviously a bubble, and I think the very fact that they can’t deliver on infrastructure investments might be what causes the VCs to start pulling money.
It’s a very obvious hard limit. Growth can’t be delivered above that hard limit so the entire market needs to correct to at least that limit. That’s the guaranteed minimum correction point, the rest of the issues will make it bigger.
Something we don’t talk about much is that all of this investment money doesn’t magically disappear when they sell these shares. They pull their investment out of AI and they put it into something else. What’s the next likely thing that they put it all into? What is the second largest growth industry that isn’t AI? Or do they cook up a whole new thing?
The last couple decades has been a series of techbro investment fads. Cryptocoin, NFTs, Metaverse, AI – it’s quite possible that a whole new fad takes its place.
Yeah that’s certainly a possibility, but the elephant in the room is that material conditions continue to deteriorate, and that’s translating into increasingly volatile situation. Something is gonna have to give eventually, and it’s not gonna be pretty when that happens.
the need for the AI companies to demonstrate profits.
This is according to capitalist theory but now that we’re in fascist space it’s possible that AI companies are propped up by subsidies (that might “guarantee profits” to dress the operation in capitalist garb and keep the fantasy going) while just being tools for data collection and surveillance to aid in repression and consolidation of power by the aristocrats, or whatever the small ruling class will be called in post-capitalist America.
Hopefully I’m wrong, and wouldn’t it be ironic if capitalism, or at least a need to generate profit, is what actually saves us?
See the problem here is that you are sane and rational.
After the bankers’ gigantic, compounded fraud blew up in their faces in 2008-2009, Obama came on TV and said that the government will not step in to bail out people who were underwater on their mortgages, no matter how fancy and ridiculous the loan terms were. This would have cost approximately $1.3 trillion, and the reasoning was that bailing them out would set a bad precedent; that one could take out a loan (or be the victim of fraud and deceptive practices) and not pay it back.* Instead, it was decided that the banks would be bailed out, and the cost for that has been estimated at between 12 & 16 trillion dollars. I know you know this but a trillion dollars is a thousand billion dollars. Just an insane amount of money, not to mention it’s been 10x the amount it would have cost to put millions of Americans into the security and stability of home ownership. In the spirit of American style central planning, the extremely wealthy were made even more wealthy as a result of their abysmal performance at… central planning (designing an economy that not only allowed but rewarded the actions that led to 2008). Between the policy of “we (the fed) buy your (private bank) trash (debt) for 100 cents on the dollar at whatever face value you (private bank) decide” QE and the fact that the US has a sovereign currency which is the global reserve currency it means that the US can “afford” literally whatever it wants, and “the US” now means Trump and his cronies.
I’m not saying this makes sense (what you are saying is what makes sense), I’m saying that I don’t think it has to make sense anymore… as if the past 20 years have “made sense” financially.
the PPP loans during Covid were literally “here’s a ‘loan’, you don’t have to pay it back”, and you know who those went to.
This comes to the conclusion that AI is not a bubble and will not collapse. It argues instead that it’s growth is speculative and has inflated well beyond the ability for infrastructure construction to meet that speculation, but that this will correct itself in the market and continue growing after correction rather than collapse like you’d expect a bubble to.
I don’t think that’s true. It’s not including the need for the AI companies to demonstrate profits. OpenAI can’t exist on investor money forever, it needs to be generating $285bn annual revenue by 2030. And that’s just one company.
These AI companies are going to collapse underneath their own lack of ability to monetise because nobody wants it. The investment money to build new AI shit will collapse when others demonstrate it can’t monetise. Then the power infrastructure growth will collapse behind it. What remains will be a shell of the AI industry we see today.
Yeah, it’s very obviously a bubble, and I think the very fact that they can’t deliver on infrastructure investments might be what causes the VCs to start pulling money.
It’s a very obvious hard limit. Growth can’t be delivered above that hard limit so the entire market needs to correct to at least that limit. That’s the guaranteed minimum correction point, the rest of the issues will make it bigger.
Something we don’t talk about much is that all of this investment money doesn’t magically disappear when they sell these shares. They pull their investment out of AI and they put it into something else. What’s the next likely thing that they put it all into? What is the second largest growth industry that isn’t AI? Or do they cook up a whole new thing?
The last couple decades has been a series of techbro investment fads. Cryptocoin, NFTs, Metaverse, AI – it’s quite possible that a whole new fad takes its place.
Yeah that’s certainly a possibility, but the elephant in the room is that material conditions continue to deteriorate, and that’s translating into increasingly volatile situation. Something is gonna have to give eventually, and it’s not gonna be pretty when that happens.
God willing
This is according to capitalist theory but now that we’re in fascist space it’s possible that AI companies are propped up by subsidies (that might “guarantee profits” to dress the operation in capitalist garb and keep the fantasy going) while just being tools for data collection and surveillance to aid in repression and consolidation of power by the aristocrats, or whatever the small ruling class will be called in post-capitalist America.
Hopefully I’m wrong, and wouldn’t it be ironic if capitalism, or at least a need to generate profit, is what actually saves us?
I don’t see how they can guarantee profits of a company that needs revenue of $285 billion. Google’s revenue last year was $350 billion, total.
There is absolutely no way that they achieve this and the government can not afford to subsidise the industry to that kind of amount.
See the problem here is that you are sane and rational.
After the bankers’ gigantic, compounded fraud blew up in their faces in 2008-2009, Obama came on TV and said that the government will not step in to bail out people who were underwater on their mortgages, no matter how fancy and ridiculous the loan terms were. This would have cost approximately $1.3 trillion, and the reasoning was that bailing them out would set a bad precedent; that one could take out a loan (or be the victim of fraud and deceptive practices) and not pay it back.* Instead, it was decided that the banks would be bailed out, and the cost for that has been estimated at between 12 & 16 trillion dollars. I know you know this but a trillion dollars is a thousand billion dollars. Just an insane amount of money, not to mention it’s been 10x the amount it would have cost to put millions of Americans into the security and stability of home ownership. In the spirit of American style central planning, the extremely wealthy were made even more wealthy as a result of their abysmal performance at… central planning (designing an economy that not only allowed but rewarded the actions that led to 2008). Between the policy of “we (the fed) buy your (private bank) trash (debt) for 100 cents on the dollar at whatever face value you (private bank) decide” QE and the fact that the US has a sovereign currency which is the global reserve currency it means that the US can “afford” literally whatever it wants, and “the US” now means Trump and his cronies.
I’m not saying this makes sense (what you are saying is what makes sense), I’m saying that I don’t think it has to make sense anymore… as if the past 20 years have “made sense” financially.