Fuck AI

Don't worry guys. Sure the economy is kinda sucking ass but we got wars on the horizon. Look at russia, their economy has been growing since the war. Look at Israel, their economy is doing great since they started leveling gaza. So big ol' Trump has already made up a plan of bringing "peace" to drug cartell infested places. You just wait, some war here and there and we are back to the golden ages without redistributing anything (at least not an home).

I am so grateful for Trump to also remind us europeans that we need to get ready for war. This has inspired a great sense of urgency in my country, essentially killing our peace movement. Sure the genocide in gaza sparked some anti-war sentiment but labeling them as terrorists seems like a strategy that works on most.

(of course i hate everything about all of this)

Pop it.

To play the devils advocate. Someone some where every day has been calling for a massive crash since the last massive crash. Their thesis is based whatever current events are at the time.

That aside. I think the so called AI bubble is distracting from something worse. The west has not been inventing or producing anything in a long time. The prevailing zeitgeist had shifted to a greater-fool pyramid-scheme type mindset. It happened a long time ago. Long before AI.

Everyone believes they're smart for thinking they can park their money in the right investments and live passively off others doing the hard work. Nobody wants to work anymore.

Sorry (not sorry) if that last sentence makes Lemmy users irate like it does on other social media. I don't know if it does or doesn't. But I think it's true.

It's not just billionaires scooping up all the wealth. People have been fighting each other for the scraps too.

If the so called AI bubble bursts. I think a bigger domino falls. The one where everyone has to face a sobering reality. They all thought they were smarter than each other by trying to get rich off the other person doing all the work. Which has led us to a point where nobody has been doing anything. Not inventing new things. Not producing good product. Not manufacturing anything. Doing nothing but watching imaginary lines go up. This is not just AI but the whole of society has come to be built on this mindset.

Everything has been hyper-capitalized. The kid with a lemonade stand has been trying to figuring out how he can minmax his investment by giving you a tiniest pinch of lemonade powder per cup of water. It's crazy times. Not just the AI industry.

P.T. Barnum saw this coming.

Everyone saying this is different than the dot com bubble: Yes, I know LLMs aren't 100 percent hot air and there are legitimate use cases for them, but the internet also wasn't useless and it didn't go away. It was just overhyped. It's still an apt comparison

The rich have failed to use AI to pivot their wealth into global automated fascism.

Doesn't mean they will stop trying.

It only stops when we redistribute their wealth or they die.

No bailouts this time.

Ed Zitron has a pretty good analysis of this, pointing out that Nvidia is “investing” in AI cloud providers who then go and buy Nvidia chips. So they’re essentially inventing their own biggest customers.

And then these providers take out big loans using the chips as collateral. So there’s really nothing to go back to Nvidia if they fail.

And none of these are even close to profitable. So they will probably fail.

And Nvidia makes up 7% of the S&P 500 at this point. So if they lose their biggest customers, and their investments, and the marketing hype they’re capitalizing on by propping up these zero-sum chip sales… there’s a potentially large fallout.

That’s not even counting all the other big tech companies that have placed huge bets on AI, and therefore Nvidia. The magnificent 7 all together are more than 30% of the S&P 500. And if Nvidia falls, they probably all fall too.

There is a huge difference between this bubble and the 2008 mortgage crash. In 2008 they made capital products out of debt. When that debt was worthless, so were the derivative products which caused a sudden cascading crash that wiped out trillions of dollars. This time, everything was paid for in cash and results in tangible assets. Even if AI suddenly became worthless, the money spent was real, the resulting goods were paid for with real money that doesn't evaporate, the goods exist and can be sold or repurposed (granted those ai chips are bespoke and expeeeeensive and worthless for literally any other application than an LLM).

So sure - its a bubble. AI is not going to magically become useful or ever really turn a profit for the companies that invested many billions. It wont replace people. It will crash. But the crash won't be a catastrophic destruction of capital. It'll be a slower realization that assets are overvalued and it will unwind over the course of years. And yes, companies will go bankrupt and people will lose their jobs. But not nearly on the same scale as 2008.

I reject with the premise.

For good reason, it feels that the only major discussion in markets is whether AI is in a bubble or whether it’s actually the early innings of a revolutionary phrase.

I think everyone knows that AI is over-hyped, and you can call that a bubble if you will.

The question which is unanswerable is how over hyped is it and when will the hype train stop or when will the bubble burst.

Everyone's pension fund is balls-deep in shares of the magnificent 7. It's the only game in town and you kinda can't afford not to be.

Suppose you decide the bubble is going to burst tomorrow, so you dispose of all your mag-7 shares and buy into renewables. Then maybe the bubble doesn't burst tomorrow, but in 2 years time, by which time everyone else who still has their mag-7 shares has doubled their value.