doomer

This is an interesting angle. China is moving away from its exposure by backing away from US bonds, and it has been doing that steadily over quite a while now, but also isn't Japan suddenly dumping its US bonds and isn't one of the henchmen of the Trump administration threatening countries if they dump US bonds or something?

I have to be honest, finance is far from my strong suit and I've been aware of some shifts in the market but I haven't been watching closely enough to remember all the details. But it seems like there's some serious instability in the once-dependable US bond market. I guess this would really signal something significant if countries were dumping US bonds en masse in favor of a more stable commodity... what's that? The price of gold and silver has been absolutely skyrocketing? Oh. Oh my...

That's a fair take. I'm less worried about an AI monopolization per se than I am about Alphabet swooping in and expanding their monopoly while gobbling up everything and sustaining AI demand by more or less forcibly and permanently embedding itself into government functions as a way of deepening neoliberalization to a lower level of hell. (Along with the wealth transfer stuff.) Maybe this is a tinfoil hat take but I feel like Elon Musk's real interest in his DOGE fiasco wasn't just to protect his own business interests with Tesla etc. but, if he wasn't so apt to stepping on his own dick, perhaps he was planning to strip back the functions of government so much that it would have become necessary to implement Grok or a sanitized, government-friendly Grok, into government functions so he could corner a market there.

I think nearly every tech-minded person is waiting with baited breath for the AI bubble to pop that will bring about a return to rationality but, in a bad case scenario, it feels like the bubble will pop and the aftermath will not be a return to normal but a readjustment that forces AI on everyone in a completely different, unavoidable, mandatory way while still trashing the market and bringing about bailouts that will only benefit the biggest players.

I'm getting HP Lovecraft's The Sorcerer vibes here, where the warlock issues a warning that the economy is now cursed and if anyone [does something the warlock specifically prohibits, like the release of the Eldritchstein Files] that it will bring about untold economic ruin but, in reality, the warlock's economic pact is structured in such a way that he can personally make the bubble pop at any point by a means that it makes it appear as though the bubble popped due to the curse and not because the warlock pressed the big red button to make it pop, so to speak.

Like if the warlock controls a supply of energy or food or something critical to the function of the economy then he can do something like appoint a fool whose management strategy would bring about disastrous effects in that one keystone industry, which the warlock is completely aware of, that would have ripple effects across the whole economy and the warlock can be like "Behold my powers!! (And don't peek behind the curtain because the power of the 'curse' was just me intentionally crashing the gold market at the right moment so that the central bank would no longer be able to issue currency and now the economy has gone to shit.)"

what if the someone is China?

It seems like the crash itself directly harms the capitalist class, which they then try to pass on to the other classes over the following years, recouping their losses.

Is there a contradiction there though?

I'm not that finance minded but the current bubble is keeping the economy afloat yet it's inflationary and so if it pops, the economy is seriously fucked especially because you have Tesla exposed (itself its own bubble that apparently cannot build cars anymore) and Tesla is a big domino to fall in terms of the US economy, but to pull out of a bubble pop like this would basically require bailouts (because the only thing the US economy does during these cyclical crises is bailouts, eat hot chip and lie) except that the US debt is becoming unserviceable even under the current circumstances of relative stability. Feels like it's a choice between letting it pop and watching as so much comes tumbling down, which is gonna be catastrophic for whichever party is left holding the bag, or to bailout hard and fast to kick the can down the road especially in terms of debt servicing so that the next administration has to deal with it all blowing up in their faces. (Call me a cynic but it feels like if this shit doesn't pop very soon then whoever gets elected to the White House is gonna be handed a poisoned chalice, and maybe in pure political terms this would be the best outcome for the more extreme reactionary wing of the two right wings of the two party duopoly.)

There's a lot of moving parts so I get that it's a bit of a crystal ball case but also I don't understand all the moving parts nearly enough. Feels like bailouts would be a slightly delayed economic disaster and no bailouts would be a more immediate economic disaster yet I'm unsure if there's any viable off-ramp that the US government would be willing to take (obviously it's not gonna nationalize any industries so the more sensible and long-term responsible options seem off the table due to the prevailing economic orthodoxy.)

The current spending by private sector with AI is inflationary and excessive, that's how you have overpriced RAM, GPUs etc. Complete waste of resources for future demand that won't be realized, but keeps current demand afloat via spending. When that pops, it'll be gone (though existing stock of AI infra will remain)

The problem, as I understand it, is that the infrastructure isn't being built (either because it's politically unpopular or because they don't have the physical materials to actually make them worth building), and, unlike the dot-com bust that everyone is drawing analogies to, the infrastructure that is being built isn't durable. GPUs have a 3-5 year useful working life and are constantly being superseded because there's still low-hanging fruit to harvest on the efficiency side of things. If the bust happens soon, I can't imagine there being a lot of "dark fiber" that can get turned into whatever the AI equivalent of high speed internet is.