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AI Is Too Big to Fail

AI Is Too Big to Fail

88 comments

·October 13, 2025
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nick__m

   Where does all this leave us? For one, you better hope and pray that AI delivers a magical transformation, because if it doesn't, the whole economy will collapse into brutal serfdom. When I say magic here, I mean it; because of the ~38T national debt bomb, a big boost is not enough. If AI doesn't completely transform our economy, the massive capital misallocation combined with the national debt is going to cause our economy to implode.
My summary: it's too big big to fail so let's transfer the risk on the taxpayer and if it fails anyway, let them eat cake. And by the way, that cake is a lie !

anon84873628

What can we even imagine that would be so transformative? Cold fusion? Wagyu synthesis from GMO yeast? Healthcare nanobots?

Whatever it invents needs costumers who haven't been driven into poverty already.

If we could replace the human serfs with robots, we're not even socially configured to yield the benefits. Seems like revolution or dystopian surveillance state are the only realistic options.

chadhutchins10

that's been going on for decades, rinse and repeat

candiddevmike

IMO, the backdrop to all of this is global warming. We're seeing so many warning signs and growth stagnating that governments need something, ANYTHING, to prop up their debt fueled economies and keep the music playing. In the face of impending GDP/population contraction due to global warming and the upcoming breadbasket collapses, GenAI isn't going to do shit for us. All of the money and effort being spent on it is money that could be spent on figuring out how to give our kids a glimmer of hope.

mrbungie

Yep, but instead of that we're wasting land, energy and resources in data centers that run "you are not the father" memes based on Sora 2.

gtowey

It's the American Way(tm)! We've been this way for a long time. Just look at the glut of holiday decorations made of plastic that will be bought, then end up in landfills in a few months. We have literally fought wars, killed millions, just for control of the oil from which they're made.

OptionOfT

What I really find really weird here is that when I buy stock in Apple, I do so because I think Apple will create new value.

But with AI the hope is that the value created will be proportional to wages being removed.

I.e. if AI creates more value, it means that the large majority of people will actually have less money, bar a few lucky ones. You have to remember that AI is being touted as the final solution to basically do all your administrative work for you, and all your software engineering.

So if it fails we all lose a lot of money because the stock market will drastically go down.

But I don't think humanity overall will be better off if it succeeds.

igleria

UBI never "mathed" to me. It always smelled like a pseudo solution to distract the soon-to-be-replaced long enough until they are replaced.

poisonborz

It's not AI that is losing trust, it's the US. It was always the US, the "West". They may invent fusion reactors tomorrow, if they can shut access to my assets on a whim, take direct hostile actions against their allies / my home, or I see they are at a brink of a deep societal chasm / civil war, if I see another economy outpacing them in industrial output, I will just not put my money there.

mcv

I think this is mostly about the US, right? Most countries haven't invested all that much in AI. Even if all this new AI would completely vanish overnight, I'm pretty sure most of the world wouldn't care one bit. Of course many AI companies and investors would be bankrupt; they'd be the real losers here. Many other companies and organisations would have wasted a lot of money on nothing, but they'll write it off and move on. If it bankrupts Microsoft, that would have a tremendous impact on many companies using Microsoft products of course (maybe MS should hurry up with that EU-US cloud split, so the EU branch would survive the crash).

But on the whole, I'm not too worried.

Yoric

Well, last few times the US had a big recession, they took down the whole world with them. The biggest recession led almost directly to WWII, and that was before the US centralized that much power or money.

I don't live in the US, but I'm rather worried.

jhallenworld

On the Oct 10 drop, I made a list of a bunch country specific ETFs to see who is and who isn't so correlated with the US.

                         oct 10 drop    yield           ytd total return
    mchi    china       -5.73           2.19            28.48  
    ewh     hong kong   -4.22           3.54            23.05  
    qqq     nasdaq 100  -3.47           0.46            12.4  
    argt    argentina   -3.34           1.39           -16.04 currency problems
    ech     chile       -3.2            2.18            24.8  
    ewz     brazil      -2.98           5.42            26.49  
    spy USA: s&p 500    -2.69           1.08             9.15  
    epu     peru        -2.62           3.5             52.16 metals
    norw    norway      -2.44           4.06            22.77  
    ews     singapore   -2.38           3.59            28.19  
    ewn     netherlands -2.31           1.91            25.28  
    ewx s&p emerging    -2.08           2.81             8.58  
    ewa     australia   -1.75           3.02             9.26  
    enzl    new zealand -1.65           2.25            -0.59  
    eww     mexico      -1.65           4.07            35.96  
    ewi     italy       -1.6            2.7             38.21  
    tur     turkey      -1.59           1.83            -9.71 currency problems
    ewq     france      -1.44           2.79            19.85  
    ewc     canada      -1.32           1.69            20.96  
    divo    usa cc      -1.07           4.58             8.43  
    ewp     spain       -0.68           2.68            52.85  
    ewd     sweden      -0.59           4.28            24.82  
    eden    denmark     -0.52           1.83             1.93  
    ewl     switzerland -0.275          3.63            20.78  
    efnl    finland     -0.21           3.97            31.54  
    pin     india        0              2.09            -4.03
They are all correlated- even if the countries are different, it's the same set of investors. But if you have to pick one... Finland? Switzerland, Sweden and Norway have low debt / gdp.

mcv

That's true. But thanks to Trump's tariffs, much of the world is working to make itself less dependent on the US. There's talk that the Euro could become the new reserve currency. Maybe the Renmibi.

It's quite possible that the American Century will end with a massive crash, and outside of the US, Europe will probably suffer quite a bit of damage too if we don't detach ourselves more from the US, but I still think most of the world will be fine. Though I will admit that could be partially wishful thinking.

igleria

I really feel like a leaf being blown over reading this stuff while planning on getting a Mortgage. Well, at least I have a rented roof over my head and eat every day. A lot of people can't afford that right now.

jhallenworld

>~75–80% of S&P 500 gains

Dot com bust was 50% of S&P / 80% on Nasdaq... we survived it..

For Nvidia: all it will take is for one smart grad student to find a better training algorithm to destroy 75% of their value.

Why I think a better algorithm is out there:

Total installed GPU Tflops = 4 billion. Tflops of human brain = 1 million

quantumspandex

Computation on human brain is on a totally different substrate than silicon. It's in memory and highly error prone.

It's questionable a mere algorithm would get us there without a fundamental change in computer architecture. (in terms of Intelligence / W)

Yoric

> For Nvidia: all it will take is for one smart grad student to find a better training algorithm to destroy 75% of their value.

I don't think so. We've already seen several generations of better training algorithms, but they all rely on CUDA, hence on NVidia.

jhallenworld

For inference they already face competition: that deal OpenAI announced with AMD .. at a certain point it will be worth broadening away from CUDA.

adidoit

Is that true? I was under the impression that one reason NVIDIA is so entrenched is that their GPUs are highly flexible. Versus the ASIC offerings of other specialized players are more focused on transformers remaining the dominant architecture.

jhallenworld

Maybe the better algorithm will be able to run on GPUs.

cantor_S_drug

But the flip side is excess capacity will be used for other fields which are not getting a chance.

Yoric

On the other hand, GPUs die down fairly quickly, so this excess capacity had better prove useful rather quickly.

baq

the 1 million is debatable, but you can't argue with the power consumption of 20W.

that said, if all the current infrastructure could run brain-equivalent models at 20W each, I'd wager we would have much more demand than currently.

Windchaser

There's speed, efficiency, and determinism. Pick 2

lm28469

Those who don't learn from... whatever, these clowns have it coming

Yoric

I think that the sentence is "Those who don't learn from history are condemned to send everyone else to the bread lines while they retire on their private luxury islands."

mcv

Or maybe that's exactly what they learned from history.

Maybe we should learn from some revolutionary history, then.

philipov

"... but those who do learn from history are doomed to watch everyone else repeat it."

LikeBeans

I'm skeptical too however I think AI can add value by increasing knowledge worker productivity. Maybe save some money by needing less staff for some tasks. Maybe to mine vast amounts of data looking for a pattern. So I think it is useful however my skepticism is about the cost vs reward. Is it really worth the amount of money pumped into it, not sure. Time will tell.

baggachipz

The table of contents on the right blocks a good chunk of text. Safari on MacOS Sequoia

CuriouslyC

Thanks for the note, I'll look into how I can make it flow better with the document.

mcv

Also on Firefox. But making my screen narrower made that menu collapse.

robertheadley

AI isn't going anywhere. It won't magically disappear, but that businesses are trying to use AI in situations that are unsustainable and unneeded.

blitzar

> AI is Too Big to Fail

Now invest in my Ai company, 100mil at 10bn valuation, can't fail, too big.

CuriouslyC

You can't invest in me currently (except by retaining me as a consultant/architect), and if I was in a position to be invested in, the article would have had a different structure. My position is integrity first, you can stalk my LinkedIn to see that if you need proof -- I've never worked in adtech or other predatory industries, most of my work has been in the interest of public good and the protection of democracy.