When analysts warn the AI bubble is about to burst, what exactly would pop? The answer has everything to do with stock prices and very little to do with whether AI works.
Hello, I just found your site and love the content. I am former librarian too, but now I work for a corporation as an reference and info researcher. my company is pushing AI enormously, even in areas when it does not make any sense. my team is trying to point out the dangers and pitfalls (check your original sources, for god's sake), but it often feels like fighting against windmills.
You’re 100% spot on that technology can have merit and utility while stock market and startup valuations are at absurd levels. There are always potentially disruptive technologies in development, but the reason AI turned into a bubble whereas previous technology waves have not is due to historic amounts of liquidity, pumped into the economic and financial systems coming out of COVID. Money will always seek the best possible yield and so it flooded into the most speculative assets imaginable, and there was so much liquidity bad actors had to create new, never before seen high risk vehicle vehicles (NFTs, crypto, startup with only a white paper backing them). Journalist and analysts always look for a narrative to explain price action. They create an explanation, then look Hey for a cause, if you will. But they rarely understand the macro and financial plumbing well enough to really discern what the root cause was.
We’re in the final stage of this excess liquidity cycle. If you want to know when this final stage ends, you only need to look to Japan. Don’t look at the reverse repo market, don’t look at the real economy, don’t even watch what the federal reserve is doing.
Japan has been the world‘s ATM machine (or you could even say the world‘s payday lender) and one the largest driver of liquidity. If you want to know when the music stops and “dumb money” is left holding this bag, study pure Japanese price action.
Hello, I just found your site and love the content. I am former librarian too, but now I work for a corporation as an reference and info researcher. my company is pushing AI enormously, even in areas when it does not make any sense. my team is trying to point out the dangers and pitfalls (check your original sources, for god's sake), but it often feels like fighting against windmills.
thanks for posting this, very valuable!
Really important to keep this distinction between market and technology in mind when thinking and talking about this
Excellent content and writing as always.
You’re 100% spot on that technology can have merit and utility while stock market and startup valuations are at absurd levels. There are always potentially disruptive technologies in development, but the reason AI turned into a bubble whereas previous technology waves have not is due to historic amounts of liquidity, pumped into the economic and financial systems coming out of COVID. Money will always seek the best possible yield and so it flooded into the most speculative assets imaginable, and there was so much liquidity bad actors had to create new, never before seen high risk vehicle vehicles (NFTs, crypto, startup with only a white paper backing them). Journalist and analysts always look for a narrative to explain price action. They create an explanation, then look Hey for a cause, if you will. But they rarely understand the macro and financial plumbing well enough to really discern what the root cause was.
We’re in the final stage of this excess liquidity cycle. If you want to know when this final stage ends, you only need to look to Japan. Don’t look at the reverse repo market, don’t look at the real economy, don’t even watch what the federal reserve is doing.
Japan has been the world‘s ATM machine (or you could even say the world‘s payday lender) and one the largest driver of liquidity. If you want to know when the music stops and “dumb money” is left holding this bag, study pure Japanese price action.
You cannot scale stupidity and call it intelligence.
Right now, the industry is burning billions hiring armies of 'Agents' to hallucinate at the speed of light.
The bubble isn't AI. The bubble is Wrong AI.
The only asset that survives is the one that knows how to pause and think deeper.
“One slow thought is worth billion fast guesses”