It's like when you see a rabid frothing fascist do a decent analysis of capitalism and class society only to fuck up the landing by going "and the people behind it all are the jews"

Hank: It feels like the greatest trick the devil ever pulled was tying everything to the stock market. Let's have everyone's retirements and the entire economy be based on 10% of wealthy people feeling like they can spend. If asset prices drop substantially, people get conservative, and that becomes a reinforcing loop.

"The antithesis, use-value and value; the contradictions that private labour is bound to manifest itself as direct social labour... all these antitheses and contradictions, which are immanent in commodities, assert themselves, and develop their modes of motion, in the antithetical phases of the metamorphosis of a commodity. These modes therefore imply the possibility, and no more than the possibility, of crises. The conversion of this mere possibility into a reality is the result of a long series of relations, that, from our present standpoint of simple circulation, have as yet no existence." (Capital, Vol. I, p. 77)

Kyla: That's a big worry. A lot of people's wealth doesn't come from labor income anymore; it comes from owning stocks or a home. The Federal Reserve's wealth breakdown shows that for the top 10%, most of their wealth is from things they own, not from a job. The "wealth effect" is important for maintaining the economy. If the stock market corrects, there's a concern people would stop spending, causing a big contraction.

"The circulation of the commodity-capital includes the circulation of surplus-value, hence also the purchases and sales by which the capitalist effect their individual consumption, the consumption of surplus-value." (Capital, Vol. II, p. 216)

If the "wealth" (the money-form of surplus-value) disappears, the capitalist's ability to consume, and thus the demand for articles of consumption, contracts.

The thing that they miss, for those playing along at home, is that they confuse "real wealth" with "Fictitious Capital". The "wealth" bound by the stock market is not real, material wealth (factories, food, machinery). It is what Marx would call "fictitious capital", claims on future surplus value.

"Of what is called accumulated wealth, by far the greater part is only nominal, consisting not of any real things, ships, houses, cottons, improvements on land, but of mere demands on the future annual productive powers of society..." (Capital, Vol. II, p. 198, quoting William Thompson)

For only a moment in his rant does Hank mention that maybe some things shouldn't be handled by a market, and that is almost an admission that markets are not a well functioning device for all things. Yet, even though he can acknowledge this reality, he can't seem to see the greater disorder within the mode of production. Production itself is not organized to meet social needs, but, it must be organized around something!

"The entire process of reproduction may be in a flourishing condition, and yet a large part of the commodities may have entered into consumption only apparently, while in reality they may still remain unsold in the hands of dealers... Now one stream of commodities follows another, and finally it is discovered that the previous streams had been absorbed only apparently by consumption... Then a crisis breaks out. It becomes visible not in the direct decrease of consumer demand, the demand for individual consumption, but in the decrease of exchanges of capital for capital, of the reproductive process of capital." (Capital, Vol. II, p. 43)

Like everything with Marx, things are standing on their head. It is not primarily a crisis of consumer demand, but a crisis of capital exchanging with capital. It begins when the reproduction process is interrupted, which then affects everything else, including the "feelings" of the wealthy.

Hank says the loop happens because "people get conservative." Kyla mentions the "concern people would stop spending." Marx would argue this is backwards. It is not collective psychology that drives the crisis, but the objective laws of capital that impose themselves on people's consciousness. The "conservative" feeling is the subjective reflection of the objective impossibility to sell. The capitalist doesn't feel like not spending; they cannot spend because the money has not returned. As Marx explains, the basic circuit:

"M-C ... P ... C'-M'... The realisation of the commodity's price, or of its ideal value-form, is therefore at the same time the realisation of the ideal use-value of money; the conversion of a commodity into money, is the simultaneous conversion of money into a commodity." (Capital, Vol. I, p. 74)

If the final sale (C'-M') fails, the capitalist cannot convert money into a new commodity (M-C) to continue production. The "feeling" of being conservative is just the surface manifestation of this objective rupture in the metabolic process of capital.

And we should remember here. AI is at the end of this process, not the beginning of this process. AI is the product, the commodity being sold. The data centers, racks, cooling systems, power plants, microchips, transistors, you name it, every little detail that goes into spinning up new data centers is where the M-C P C'-M' is. M-C is building the components for the Datacenters, P is the production process of building the data centers C'-M' is the production of the AI systems, the training, and the web services and tools provided to consumers, and the rents they charge for you to use it.

There is a second wave of this crisis though, which they have not even broached, which is, what happens when you finally build all these data centers? What happens when you've spent all this money and converted it in to fixed capital, displaced all this variable capital, and created nothing in return? We know that these models are not as useful as their makers claim they are, that they are not as useful or create the kind of productivity gains they say they do. This situation isn't like having a lot full of cars you didn't sell. Cars, at least, have some kind of function as they exist, even if they sit in the lot. Data centers though? These are highly specialized number crunching warehouses.

"A machine which does not serve the purposes of labour, is useless. In addition, it falls a prey to the destructive influence of natural forces. Iron rusts and wood rots. Yarn with which we neither weave nor knit, is cotton wasted." (Capital, Vol. I, p. 130)

So who can say. We might be able to pick their rotting bloated carcass clean of memory chips in the near future.