America is now one big bet on AI

That is the tragic part. This administration ran on a platform of bringing back the real economy and manufacturing. Now they fuel the Bitcoin and "AI" bubbles, which are nonessential and non-tangibles.

The GDP increases are fake. Mining Bitcoin produces nothing, in fact the money supply should not be increased to match the fake GDP increase. The same is true for "AI".

> Without these investments on AI and their second-order economic effects, would the US economy be growing?

It's only 40% of the growth so.. yes.

The 40% investment could presumably go into jobs and infrastructure that might be more durable.

is this real? by first look USA only spent like 4% of GDP on space stuff at the peak of space race. 40% is insane.

Bad news sells, especially about leading people/companies/countries.

"${rich_guy} is doomed" will get more clicks than "poor people can now afford 5% more daily protein than last year".

Why is this sloppy. The author is not saying that AI is bad but that the current capital being invested in the UD is mostly betting on AI.

If you remove AI then what is left?

Stock market increases are bad if they are being put to something unprofitable, whuch AI seems to be. Lagging behind Europe is bad because the US loses its competitive advantage, which can become a vicious cycle and kill the sector entirely. Low immigration causing a labor force squeeze is bad because critical industries like farming have crops rot on the field, causing food waste. Reduced demand because of AI is bad because it lowers employment, causing people to become destitute, desperate, and/or dead.

None of this is contradictory.

I have the exact same opinion. And I should add that all these companies "firing people to replace them by AI" are in reality just firing people because the economy isn't great, of course that sounds way worse for investors if they told the truth.

Option 3, nothing changes: people (and institutions) still have income they need to put /somewhere/, and continue putting it in 401ks and index funds because that's the system. Stonks continue to go up, completely unmoored from any behavior in the actual world.

> That leaves us with only 2 possibilities - AI either replaces a significant part of the workforce or it does not. If it does not, the bubble bursts and the economy crashes. If it does, the economy still crashes because consumer spending is 70% of GDP and if the majority of the population becomes unemployed

close, but you see, part of the plan is also that immigration is basically shut off. so the majority of the population laid off from their office jobs will have plenty of work to do in the fields and food processing plants if they want to eat.

Couldn't agree more. I've been voicing this for the past decade. Its crazy how the system is setup for eventual failure. Its a race to the top, or bottom, depending on who's looking, but for most, the bottom. Companies have to either consolidate by buying all their competitors, and customers, or find a way to deliver the same goods/services for less. Its always less. At some point, not everything can be made with love and good intentions... You can't cut all corners without destroying the integrity of the original product. You can't outsource all the manufacturing without affecting job markets. Manufacturing is already mostly outsourced, now they're going to outsource a lot of the cognitive labor to AI. The never ending chase for consistent quarterly growth numbers has really messed us up and they're not really planning for whats to come. Not that they could plan for AI progressing as quick as it is and replacing jobs as quick as they are, but they're not ready.

We're already seeing governments shaming and gaslighting their citizens as they try to find ways to pay for programs to support as many as possible, saying they don't want to work anymore, they're lazy and have to be given everything, pre-chewed.... When you make it nearly impossible for humans to find worth and purpose by exchanging labor for pay, you devalue any contributions they could have and are racing to a future where most of what humans have to give, outside of original creative thought, and art, which AI can do too so it depend on others willing to find value in it, then you're not left with a whole lot. Most of the population aren't self starting entrepreneurs with an infinite drive for wealth and who want to sacrifice everything for a job. Many just seek stability and want to find something they can be at least ok at and can repeat and provide for themselves and their family. By making jobs that much harder to get, you're adding barriers for most to find work. Many countries have been spoiled by stability for so long, their populations don't view survival as a "fight", maybe a struggle, but not a fight for life. Soon it'll be a fight, if not all out war, and almost no one will be ready for that. IF the economy and government (under whatever system and name you want to call it) was setup to provide for all, knowing all the wealth was centralized and they had a mandate to redistribute resources so all could be comfortable, it would be a different story, and even then, but its not the case. A time is coming soon where companies will start losing customers because customer's spending power will disappear. Companies will have optimized themselves out of a path for future growth by destroying their customer base.

Younger generations are already looking at a future vastly different from the one we saw or thought we'd see. Most things older generations took for granted are literally out of reach. Some older people literally expect younger people to just toughen up and just work hard and make it happen, since they did. Easy to say when their education cost them a couple summers worth of income + maybe a side job. The next generation paid their student loans over years, then decades, some pretty much for life. Now its not just education, owning a home is now out of reach of a lot of people. So now if you have the guts to take on an education, you're dealing with potentially decades of student loans, average homes in the US have gone from around $140,000 to $500,000 over the past 20 years, while incomes adjusted for inflation has grown roughly 12.7% between 2003 and 2023, or roughly 0.6% a year. Add on to that the extra cost of other new necessities the picture is looking very different. Life is more and more equating to financial slavery. Used to be any job enabled you to provide necessities for a family, now unless you live in the middle of nowhere, its harder and harder to even get started. AI is already causing cuts to entry level lobs, thinning out the pipeline for future senior employees..

Its going to be fun they said... Its going to be glorious they said...

One thing for sure, its the people who will pay the price during the adjustment period.

> 1) the average American is heavily dependent on equities in their 401k for retirement,

> 2) so the stock market has to go up

This is why I've come to despise 401k's replacing old-school pensions. Yes, pensions had their problems but with 401k's workers must fleece themselves to have any sort of retirement opportunity.

Want a shot at retirement? Now we all have to run ourselves into the ground to make number go up. It's insane.

The fact that LLMs are somewhat useful isn't really the subject here. The problem is that to be worth what they're evaluated at they'd need to be thousands of times more useful than they are. They can be useful, and extremely overvaluated at the same time, which still ends up in a crash. All the actors are bleeding money right now, would you spend $500 a month on an llm ? $1000 ? how many people would ?

You also don't account for the infinite flow of slop being generated 100x faster than any productive work: "Deloitte to pay money back to Albanese government after using AI in $440,000 report", https://news.ycombinator.com/item?id=45500485

How much money, resource and time is spent on generating/hosting/discussing/cleaning up this slop ? How much of social distrust is created by LLM generated sociopolitcal discussions online ? &c.

Did you pay for that AI to work for you? How much would you be willing to pay for it?

Tractors undoubtedly increase farmer efficiency, the evidence is clear to see, even when accounting for all costs necessary to design and produce tractors. There’s even room for farmers and tractor manufacturers to generate economic profit.

That remains to be seen of AI.

I am still a bit so-so on stuff like Codex and Cursor, but ChatGPT has undeniably helped me get more work done, if for no other reason than unblocking me with stuff.

I’ve mentioned this before, but it’s relevant. Most of my adult life has followed a pattern: I work on a personal project until I get blocked on some bullshit detail (e.g. some arcane Linux server error), get annoyed because I am not making money and the project is no longer fun, and give up on the project about halfway through.

Being able to paste server logs and weird error messages and having ChatGPT generate recovery scripts has been extremely valuable to me. I am not even sure it’s necessarily reducing my workload, but it has absolutely allowed me to focus much more interesting and fun parts, and I finish a much larger percentage of my projects.

I am probably not learning as much as I would if I had powered through the issue, but I am definitely learning more than if I had abandoned it.

I agree until the end - won’t replace people - it will replace people. There are tons of people who a) can’t or won’t learn how to maximize their value with the fools, b) some jobs will outright be automated and they’re jobs that require little executive intelligence and judgement. Not everyone is smart - the median IQ is 100. I expect a hollowing out of non manual labor work under 115 IQ. Further, world models and robotics will start hollowing all but the most poorly paid manual labor or the highest skill, which most people are incapable of. There will be a large hollowing out of labor across the low end.

The fact we haven’t fully automated everything in ~3 years seems to be the proof this isn’t really happening. It takes at least a decade to iron out how a new technology fits into things how to exploit it efficiently, and this specific technology requires a lot of subtle research and building tooling and infrastructural code, processes, and techniques we’ve never built before. It also has a large physical infrastructure requirement.

However for those manual tasks above (effectively any sort of coding, classification, labeling, task oriented data work) my experience is LLMs have much higher precision and recall at any scale of work without labor issues around hiring and ramp up/idle time, let alone cost. I’m not saying this is good - but it is absolutely true and in my last two jobs we’ve eliminated massive numbers of roles for people and we are just beginning in the cycle and not very mature. By the end I expect as many as 20k+ reduced, maybe much much more, from my current company in these sorts of roles.

This is something I don’t get. The general cost of living is sky rocketing, largely due to this push and some of the population thinks there is prosperity for all on the otherside of the meat processing machine we’re pushing everyone toward.

Groceries are going to get more expensive. Every dollar we spend on over building AI infrastructure is a dollar we never get back.

We could use this money for other things such as healthcare and fixing our broken parts of our education system. Instead people are getting ancy to chat with a summarized version of all the garbage on the internet.

China's also betting on AI. There's massive domestic effort towards model parity and custom ICs.

> all the signs point to AI being accerelated

Feels like a feedback loop. It's exciting that we're all in on AI because we're all in on AI!

What signs point to any sort of acceleration besides in spending?

Most major companies have released new versions in the past year, but if people were asked to blindly determine whether they were using the newer or older version, I suspect the results would be close to random. It seems to me that the difference between versions is sharply decreasing in a way that seems to be asymptotic, similar to what happens in literally every other domain with neural networks.

I also think it's clear that the difference between the various choices is also diminishing. Aside from certain manually designed idiosyncrasies (like ChatGPT's obsequiousness), I think people assessing which model they're using would also be mostly random. Somewhat surprisingly, even in the 'LLM arena' [1], where you get to compare output side by side, the difference between models is approaching statistical 0!

[1] - https://huggingface.co/spaces/lmarena-ai/lmarena-leaderboard

You're literally going to compete with the whole United States government, and you call this a recovery plan?

What if the power gained by AI models is less than expected?

This would be true if the bubble pops and the gov't spend money propping up OpenAI or something.

But those big companies going out of business won't be how the bubble pops. It'll be the 95% of projects / startups that don't have any ROI.

Let's just say this point needs further exposition.

Your argument appears to be that the stock market won't drop because stocks are held by members of the public whose opinions are controlled by technology? Or... that robots are holding the stock?

It doesn't have the rhetorical punch, but my boring traditional economics opinion is that it's probably a bubble because realized profit from these overvalued stocks is too far out in the future to buffer the inevitable liquidity shocks inherent in modern economies. Eventually someone will come up short and have to dump, and we'll get a feedback loop.

But admittedly robots are more fun.

Something like 70-80%+ of US stock market ownership is institutional, which ultimately means overwhelmingly pension and insurance funds. I'd imagine much of the rest is individual investors' pension savings.

Bubbles can grow fine so long as no one wants their money back. But eventually they will, and then valuations will be real. When all these boomers draw their savings and buy themselves annuities, what's going to happen?

One pet theory of mine is that the US market goes up so much because of it's population growth. DM in Europe for example don't see this net inflow of people saving for retirement, instead the pressure is rather pensioners pulling money out.

Eventually though even the US stock market will have a reality check, and who knows what happens then.

The narrative around AI taking all the jobs, causing layoffs, etc. is certainly about power. The stock prices are about sentiment. When that sentiment evaporates because AI cannot in fact replace the workforce, the stock prices will fall, maybe precipitously. Ironically, if AI fulfills its promise, I suspect the same will happen due to a lack of confidence in the consumer economy from mass unemployment.

This bubble will pop either way, but it could continue like this for years.

In the 1900s we called "control over technology" something else, I believe it was "seizing the means of production".

How can I exit this society? Preferably without a shotgun, but man the way things are looking…

OK Foucault

this is not a convincing argument. anything that is useful also grants you power. AI is useful primarily (which is why investments are poured into it) and then it grants power thereby.

it is just simpler to claim that AI is useful hence the investment instead of a roundabout explanation with power.

It's still a bubble if it happens that investors' expectations are unreasonably inflated. Most expect return on their invested capital.

Then it isn't the economy, since the economy is how people allocate scarce resources -- that is and always will be normalizable by the time a person has in a day. Abstract AI utilization of data centers don't impact my garden directly, so at least in partial equilibria I can ignore what David Brin in Existence calls the Message Flood, or otherwise known as the Fermi-Paradox Arms Race.

In Existence, Brin explores a speculative solution to the Fermi Paradox — the question of why we see no signs of extraterrestrial intelligence. The novel suggests that advanced civilizations create memetic or AI-based “message entities” — self-replicating digital ambassadors designed to spread across the galaxy to preserve their creators’ legacy or recruit new species.

This notion applies to other activities -- but basically, when a society puts all its resources to something other than its preservation then it expires in short order.

Someone has to pay interest on that debt still however.

> Do people actually buy into the absurdity of humanoid robots and robotaxis?

Have you ever taken a Waymo? You see them on every street in SF now.

Why don't you short everything, if you are so sure the bubble is about to burst?

Bears always sound smarter, but making money in the markets is a whole different game.

Musk's greatest achievements are in the field of financial engineering. I wish he could write a book about it, because it's the only part about his life that's remained invisible.

> "Be fearful when everyone is greedy." I’ve cashed out of U.S. stocks, and I think it's wise thing to do when craze is at its peak.

The man who said the thing you are quoting also repeatedly advised never to bet against America, and to never try to time the market...

There aren't enough jobs because we are stuck in a money-printing loop thanks to the baby boomers. The dynamics and debasement floor prevent new entrants from entering the market while regulation cripples those trying to keep things going. Concentrating and sieving the money-supply into non-productive companies on a moonshot bet to eliminate capital formation and one party that forms the basis for the economic cycle.

Demographics are destiny. Its pretty clear that we'll be taking the accelerated japan route, and the worst of that with japan is the fact that we bailed it out, no ones around to bail us out.

We basically have a generation of children who are now the old, who spurned and wasted the resources given to them in poor stewardship, and who failed to pass them and the advantaged environment on to their children, instead choosing tyrannical to disadvantage their children through control and clutching power to the last of their days and all the destruction that comes thereafter. A fall of empire.

They clutched at the resources so heavily and disadvantaged their own children to the point where significantly less people were in a position to actually be having children themselves, both because of the intolerable and torturous acts which have become so commonplace today but also the resources required to keep the old alive significantly outweighed the resources to foster children. There is an opportunity cost for everything. A Deflationary depopulation is almost inevitable.

Trump's stated goal is to deport 4M people (by deporting 3k people per day). They count border crossing apprehensions in this number, so this isn't 4M current residents. The government currently claims [1] 9,740 border crossing "encounters" per month. I'm unsure if it is correct to count these as deportations - but assuming so - then these account for ~480,000 of the 4M target. Leaving ~3.5M current residents to be deported.

Or roughly 1% of the current US population.

https://www.cbp.gov/newsroom/stats/southwest-land-border-enc...

I also suspect using 2020 as a baseline will inflate how large the increases appear. Cursory google, but this dataset suggests pretty steady number apart from the covid downturn and now the recent crackdown:

https://www.macrotrends.net/global-metrics/countries/usa/uni...

Using 2020 as a comparison basis for anything should be illegal. “Hey look after immigration dropped a lot because all work dried up, immigration increased a lot relative to that!”

"Just one more year bro, I promise, this is different, just one more year and it'll change everything bro"

Have we gotten major advancements in the last ~year? Not being facetious, genuinely asking. I don't see it from my end but then again I don't really use much more than ChatGPT a couple times a week.

> It is a little frustrating how we as a society have just decided that corporations don’t need to make money

Making money was already a problem, what we should strive for is creating value. You can make big bucks selling cigarettes, leaded gas or PFAS riddled products... the money is made but you're still a net negative for society

> people realize its not the magic they think it is

2023