I don't know finance too much, but you can't really bailout a company that has no pathway to profitability, can you? Like, the banks failed because of bad loans, but they were still banks. The AI companies literally have no way to produce profit.

At least canals, railroads, and highways facilitated travel and commerce.

AI... What? Writes fake articles, and shitty images of anime waifus with huge tits?

railroads are good for trains, canals are good for boats, and highways are good for trucks ... but AI can do anything a marketing director or middle manager can imagine would be good for their career.

As far as the size of the bailout: for comparison, Moodys put the size of the fiscal stimulus in response to the Great Recession at 7% of GDP. For comparison, the current GDP is $32.56 trillion, so assuming a comparable response to the AI Depression, that’s about $2.27 trillion.

Now where this gets interesting (in the way a bizarre accident is interesting) is that deficit spending is already at ~5.7% of GDP; it was sitting at 1.1% right before the Great Recession. Add in that bailout, we’d be looking somewhere in the neighborhood of deficit spending being 12-13% of GDP, which in the last century has only been hit during WWII and the COVID shock. Note I’m not playing deficit hawk here; the deficit would be an indication of the economic collapse, not a cause.

However, I think it could be worse this time around. The Great Recession had a lot of knock-on effects due to the way the debt was secured, but there were sectors that had pathways to growth (ironically, tech). This time around, everything that isn’t AI has been anemic, we really are in an all eggs in one basket scenario. The collapse of that GDP juicer means GDP falls extensively which makes the deficit spending as a percentage of GDP even greater. On top of that, the rise of BRICS and some internationally clearings done with yuan has brought up the specter of the end of the dollar as the international reserve currency. If the AI collapse plus the fallout from the Iran War accelerates that, that’s going to make the bonds needed for that deficit spending way more fraught as the US won’t have that monopoly over international trade anymore.

TL;DR buckle up.

It’s different this time because the whole thing is controlled by like three people who keep propping up GDP by just handing each other a huge sack of cash every once in awhile.

(2025-2032)

optimistic

not slop

The ones who landed big government contracts get the bailout

On the bright side, we might get some really badass abandoned buildings for adventurous people to visit in the future

Not slop

I wonder about the bailout side of this. Does the govt prop up the AI labs like openAI and Anthropic? It would protect a lot of their core supporters and largely allow the buildout to continue. That said this feels too big to properly bailout. I’d love to hear the perspective of someone who has more details around the financial side of this problem.

Hmm yes one of these is not like the other

Can’t quite put my finger on it