This AI stuff may not work out very well...

Let's see... I have lived through the 1973 oil crisis, the 1980 crisis in the BC forest industry, Black Monday in 1987, the dot com bubble of 2000, the mortgage crash of 2008, the COVID pandemic supply chain disruption of 2020, and those are just the ones I remember. It seems to me that many of these rapid decompression events happened when American and/or Canadian financial and investment gurus started to think they were smarter than the economy writ large, so the "old" economic rules no longer applied to them. 

They were wrong. Ordinary people paid the price.

Now I'm afraid its happening again, with unrealistic hype and ultra-massive investments in AI. The AI bubble has been credited with keeping world stock markets high even in spite of Trump's tariff  shenanigans. 

But I'm reading more about how this AI bubble could pop, and sooner rather than later.

The press probably should have made a bigger deal of the president promising to take the U.S. economy back to the 1800s.

— Sam Youngman (@samyoungman.bsky.social) November 7, 2025 at 2:56 PM

Short answer? Malfeasance! “Harvard economist Jason Furman recently said that AI investments accounted for nearly 92% of U.S. GDP growth in the first half of 2025. Basically, the entire American economy put its eggs in one algorithmic basket.”

— Waylon Jennings-Yutani (@ontopic.bsky.social) November 7, 2025 at 7:02 PM

For one thing, the AI investments that everyone is excited about seem to be too circular - memories of ponzi schemes that pretend new money is profit when it actually is not:

if not Ponzi, why Ponzi-shaped? www.theatlantic.com/technology/2...

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— Soraya Nadia McDonald (@sorayanadiamcdonald.com) November 3, 2025 at 2:14 PM

For another thing, AI is turning out to be incredibly costly.
I am reading that one of the key elements of AI is "Inference" - the stage where AI models become useful tools, and start using real-world applications like recognition of images, processing of language and detecting issues. For example, a self-driving car would use "inference" to recognize a stop sign on a new road.
But developing AI inference apparently is much more expensive than had been anticipated - like billions more:

Based on my analysis, OpenAI burned $19 billion of their $28.6 billion in cash from 2023 through 1H2025, meaning there's at least $4.1 billion in cash unaccounted for, as my analysis includes *ALL* reported costs that OpenAI has incurred. Where is the money? www.wheresyoured.at/where-is-ope...

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— Ed Zitron (@edzitron.com) November 7, 2025 at 11:35 AM

My theory is that OpenAI's inference costs are much higher than expected. Every new GPU is marketed for inference, Stargate Abilene is full of inference-focused Blackwell GPUs, and OpenAI's latest releases have all been very, very inference intensive. www.wheresyoured.at/where-is-ope...

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— Ed Zitron (@edzitron.com) November 7, 2025 at 11:35 AM

There is also this problem, I believe:

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Now the AI companies are starting to try to get Trump to approve government backstopping their investments. I guess "socialism" is only bad when its giving poor people food and healthcare, but its great when its keeping millionaires from losing their shirts:

the collapse is coming. the infinite tech money loop might be ending soon

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— onion person (@junlper.beer) November 6, 2025 at 3:39 PM

This is why OpenAI is asking the trump admin to federally guarantee all their investment promises

— Fro the Texas Comrade (@frobeus.bsky.social) November 6, 2025 at 3:40 PM

It won't be just Nvidia. It will be them and OpenAI and Alphabet and Microsoft and Meta and Oracle and AMD and Amazon all asking for tax dollars to keep their stocks at current levels

— Fro the Texas Comrade (@frobeus.bsky.social) November 6, 2025 at 4:19 PM

Legendary graft

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— T. Greg Doucette (@gregdoucette.bsky.social) November 6, 2025 at 7:35 AM

Sam Altman saw Trump give taxpayer $$$ to Intel and Nvidia, and realized he can get a turn at the teat too

— T. Greg Doucette (@gregdoucette.bsky.social) November 6, 2025 at 7:38 AM

What the hell is this statement from NVIDIA? What am I meant to do with this info?

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— Ed Zitron (@edzitron.com) November 5, 2025 at 11:35 PM

Honestly if this is coordinated with OpenAI it is the most goofy, awkward one I’ve ever seen. I’ll believe it is if we get an op-ed. Honestly this feels like NVIDIA desperately trying to seize a moment and not realizing everybody’s reaction to this is revulsion bsky.app/profile/kevi...

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— Ed Zitron (@edzitron.com) November 5, 2025 at 11:48 PM

The guy who got famous betting against the housing market in 2007 just before that bubble burst - played by Christian Bale jn “The Big Short” - just wagered $1 billion on the collapse of the AI boom. www.wsj.com/livecoverage...

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— Helen Kennedy (@helenkennedy.bsky.social) November 4, 2025 at 3:35 PM

Paul Krugman said in mid-October that the US economy was in trouble, though at least there hadn't yet been mass layoffs:

...There are some objective, measurable reasons to say that the US economy, which appears OK by the most commonly used measures, is definitely not OK once you look under the hood. One essential aspect of this weirdness is the economy is strongly bifurcated: AI is booming, but the rest of the economy isn’t. Another aspect is that in many ways the economy feels “frozen”: while there have been no mass layoffs so far, people who have lost their jobs or are just entering the work force are finding it very hard to get new jobs. Third, while the economy is growing thanks to AI spending, it’s a K-shaped expansion: People who were already affluent are becoming more so, but the less well-off are under severe pressure. For example, there are clear signs that middle-to-low income consumers are struggling: car loan and credit card delinquencies are rising, and grocers report that shoppers are buying cheaper varieties of food. At the same time, the affluent are spending freely: the top 10% of the income distribution now accounts for nearly half of all consumer spending.
What’s going on? I would argue that Trump’s wildly erratic policies are creating huge uncertainty which is deterring many companies – essentially those that are not in the AI sector or a sector catering to the affluent – from making investments. And those forgone investments include hiring new workers. The result is that much of the economy is frozen — companies aren’t hiring or investing. This freeze, in turn, explains both worker anxiety and rising inequality. Without the AI boom/bubble spending, we might very well have fallen into a recession, as some economists like Mark Zandi have claimed. And despite the AI boom, times for many workers are tough...

Well, its November now, and thar she blows!

Recent Layoffs: 48,000 at UPS 30,000 at Amazon 24,000 at Intel 16,000 at Nestle 11,000 at Accenture 11,000 at Ford 9,000 at Norvo Nordisk 7,000 at Microsoft 5,600 at PwC 4,000 at Salesforce 2,000 at Paramount 1,800 at Target 1,444 at Applied Materials 1,000 at Kroger 600 at Meta That's negative

— godsammitdam (@godsammitdam.bsky.social) November 6, 2025 at 11:20 AM

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TODAY's job losses match the job losses that happened as a result of the massive global economic crash in 2008. That's how terrible Trump/GOP economic policies are today. A massive, self-imposed wound.

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— AnneC (@annecw.bsky.social) November 7, 2025 at 5:45 AM

Per independent experts, layoffs last month were over 153K — the worst October in 22 years. Over 1 million workers have been laid off this year, partially because of AI and chaotic mismanagement of the economy. Welcome to Trump's "New Golden Age."

— Robert Reich (@rbreich.bsky.social) November 6, 2025 at 4:01 PM

The big difference between Trump's first term and second is that he didn't burn down a strong economy with tariffs last time around. It's a lot easier for voters to overlook his bigoted nonsense and authoritarian bluster when they feel good about material conditions.

— Aaron Rupar (@atrupar.com) November 7, 2025 at 2:46 PM

So which is worse - that Trump lies all the time, or that he actually believes his own lies?

This is pretty much his plan for everything, not just the economy.

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— Khashoggi's Ghost (@urocklive1.bsky.social) November 7, 2025 at 3:15 PM

And on a side note, there is a "lighter side" to AI too:

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