When the bubble pops - How AI will destroy the economy

AI is hyped. It is hyped to be able to do all of our tasks much more efficiently than most humans could, thus very rapidly erasing the need for human labor. And spike unemployment to 10 to 20 percent. The collateral damage? The entirety of the working class. AI could replace nearly 100 million jobs in America over the next decade. The mass layoffs across the tech sector serve to prove this point. In January, Microsoft reduced its headcount by 1 percent. In May, it was 2.5 percent more. And throughout this year, they'll continue laying off additional 4 percent, totaling about 18,000 employees. Meta is looking to cut its staff of 72,000 by 5 percent. Intel has let go 15 percent of their employees. And some smaller companies, like Fiverr, reduced their workforce by 30 percent. If this is truly a systemic trend, then a mass increase in unemployment is irreversible. AI will wipe out the working class as a whole. If that happens, tens of millions of people will be left without any income. Income, they need to buy goods and services and assets. And the prices of these goods, services and assets will fall because the retail won't have the money to spend on them. Profits will fall, leading to the stock market crash, pulverizing incomes and net worth of millions. The economy as we've known it for decades will be destroyed. This argument isn't coming from overzealous regulators. It's coming directly from AI makers themselves. CNN is quoting Dario Amodi, the CEO of Anthropic, one of the world's most powerful creators of artificial intelligence. 20 percent unemployment would be great depression levels of bad. Extreme poverty, starvation and famine, social unrest. Amodi isn't the only one thinking this. That's OpenAI CEO Sam Altman, the superstar behind Chad GPT. Elon Musk is also banking on AI and automation to replace workers in his own factories. As is Amazon, which is speedrunning this trajectory. When Jimmy Falun asked Bill Gates if we'll still need humans, Freeplied And it seems like they're selling it as a good thing, that this will somehow unlock new potential for all 8 billion people on the planet. But these AI makers obviously have their own skin in the game. They've committed trillions into this, so it's in their best interest to convince everyone else that this is the next big thing that is totally going to be good for everybody. Should you believe this? And if not, what should you believe? Is this all just a marketing hype to boost the stock prices and nothing else? In this analysis, I won't be selling you any product whatsoever. There is no sponsorship here. I need you to appreciate that this is truly financially unbiased content, which means what I'm telling you here is what I believe to be true and it is not tainted by any sponsor interest. But YouTube is punishing me for refusing to kowtow to the advertiser pressure. Case in point, here is my last month's ad revenue. I can't do this without your support, so if you appreciate my principles and my work, join my Patreon to fight corporate censorship. Unlock unlimited access to my podcast where I dive deeper into these topics in hundreds of long-form episodes. Join the fight against the big money media. This is the most recent report on the impact of artificial intelligence on the job market, and it's terrifying. It says 97 million US jobs could be replaced by AI and automation in just the next 10 years. That means 89% of fast food and counter workers, 83% of customer service reps, 81% of laborers and stock movers, 80% of administrative works, and so on and so on. 97 million workers is just about the entire working class of the United States, which this report says won't exist in just a decade from now. This would be beyond catastrophic. If this report is true, it's very bad. It was published by the US Congress HELP Committee, and that is a big deal. But this report has a big problem. It is not being taken seriously. Why? The HELP Committee used serious data to compile the report, like investor transcripts, corporate financial filings, and US economic data. But then they asked Chad GPT to analyze job descriptions for the whole US economy and then predict which tasks could be performed by AI and automation. Then Chad GPT told the committee about all the jobs that are going to be lost to AI. See the problem? If Chad GPT had a PhD, it would never equate tasks with jobs, because jobs are comprised of many tasks. If an AI can automate some tasks, it doesn't automatically mean you'll lose your job. And this report proves why you shouldn't delegate some tasks to AI to automate your job, because real academic studies do not support Chad GPT's conclusions. This is a study by Yale, where they conclude that the fact that people are getting fired left and right has actually nothing to do with AI nor automation, but it has probably more to do with cost-cutting and boosting quarterly earnings. This study also says that the current trends of changes in the workforce predate the introduction of AI, which was roughly from the first release of Chad GPT in late 2022. But I'm not going to pretend jobs aren't being replaced by AI, at least to some extent. So to what extent is this really happening? And is your job really at risk of being automated by AI? This study from Stanford is trying to answer those questions. It looks at the impacts of generative AI on employment. They take young workers aged 22 to 25, and they only find a 6% overall decline in their employment. That's not nothing, but it's not the whole picture. Because for older workers, their employment actually increased by 9%, and it was specifically in those jobs most exposed to AI. So clearly, not all jobs are equally exposed to being replaced by AI. So what makes the difference? The difference is between jobs that AI automates and jobs that it augments. Because for jobs that AI augments, you know the tasks versus jobs distinction, those jobs actually see an increase in employment. The difference between augmentation and automation is where delegating tasks either substitutes human labor or complements it. So automated tasks are directly executed by an AI with minimal human involvement, whereas AI augmented tasks require active human collaboration. As an illustrative example, an automated task would be something like, format this technical documentation in Markdown. While augmented tasks would be, let's draft a marketing strategy for a new product. Then you get something out of it, and then you say, good start, but we can add some concrete metrics. So which jobs are most exposed to automation and which ones are the least? By various metrics, most manual labor will still be performed by humans. Anything from cooks through repair workers, including drivers, nurses, or housekeeping. Jobs that will be most exposed to automation will be customer service reps, admin workers, programmers. Going back to the Help Committee report by ChatGPT, what did the most powerful chatbot get wrong? 89% of fast food and counter workers? No. 83% of customer service reps? Maybe, but probably not 83%. 81% of laborers and material movers? Nope, not by any chance. 80% of secretaries and administrative assistants? Yeah, they're going to have it a little bit rough. 76% of bookkeeping, auditing, and accounting workers? Possibly. 76% of stockers and order fillers? Maybe exposed to automation, but not by AI. 66% of office clerks? Seems unlikely. Augmentation for sure, but not necessarily full automation of office work. 65% of teaching assistants? Please, let's not do this. 64% of auditors and accountants? I don't know why this is a separate category, but we're talking about AI that can't do basic math right. If you're filing your tax returns with a chatbot, the IRS would like to know your location. And where are all these percentages even coming from? Nobody knows. ChatGPT was told to come up with numbers, so it came up with numbers. Does it cite a benchmark methodology like the Stanford study did? Nope. Does it feel like ChatGPT wants to peddle whatever its user wants to hear? Looks like it. But a report like this is adding to the hype. Because it is adding to the sensational headlines that predict a doomsday scenario, but somehow the only action taken to prevent it is that stock prices of AI companies go up. Is this a coincidence? The myth of all-powerful AI that will replace us within a decade is the biggest driver behind this hype. But the truth is, AI is not ready to replace humans while keeping the same output and success rate. Look at this example. This September, Salesforce slashed 4,000 customer support roles and replaced them with degenerative AI agents. You know, AIs that can perform various tasks on your device automatically without having you do them yourself. So glorify chatbots with the ability to hack your phone. The irony is, Salesforce's own study found that these agentic LMAI agents performed tasks below their very own benchmarks. Their single-term performance had only 58% success rate. Sounds high, right? But most tasks are just not single-term. Completing anything more complex than that collapses the success rate to 35%. Analysts now predict that over 40% of these agentic AI projects will be cancelled by 2027. So sounds like a galactic brain business strategy by Salesforce here. Another study benchmarked a bunch of these LMAI agents and they found that the best of them all could only complete 30% of tasks autonomously. Anything that required a longer horizon focus, AI would completely fall apart. So wherever humans are being replaced by AI, the results are worse than human labor. So companies that are replacing their workers with AI must be comfortable with the fact that their product is going to be worse and probably even cost more. And they somehow don't care. The training and development of chat GPT-3 cost $15 million. GPT-4 cost $500 million. GPT-5, $5 billion. And its release had to be delayed because it wasn't significantly better than the previous versions. Do you want to take a wild guess at how much GPT-6 will cost? If you guessed $500 billion, you're wrong. Sam Altman is already securing $1 trillion in investment. How much better do you think GPT-6 will be compared to GPT-5 or even GPT-4? Just to give you a perspective of what this money could have been doing instead. Every 10 months, the big tech is spending money equivalent of an Apollo space mission. That's right. We could have gone to the moon about once every year for the money that the big tech spends on bots that tell you to add glue to thicken your pizza dough. And going back to the $1 trillion that OpenAI is securing to finance their whole operation. Why $1 trillion? Well, because OpenAI needs 20 gigawatts of computing capacity to train their new models. And 1 gigawatt sells for about $50 billion on a discount. How much is 20 gigawatts? It's about a full output of 20 nuclear reactors. So, a lot. It sounds like these costs just keep ballooning over and over. It's like they are bubbling up. It's almost as if... Hey, there's a bubble! To say AI is a bubble is an understatement. It doesn't really make you grasp how much of a problem this gold rush fever really is. To compare to the two previous biggest market bubbles, the AI hype is 17 times the size of the dot-com bubble of 2000. And it's 4 times bigger than the 2008 bubble that led to the global financial collapse. The 2008 crisis was the biggest recession since the Great Depression. You know, the big one. With 30% unemployment, mass starvation, unrest, and eventually, a world war. So, if you were complaining... Welp, now might be your time. But, it's even worse than this. According to a Harvard economist, AI investments are responsible for 92% of U.S. GDP growth in the first half of 2025. But they only count for 4% of the U.S. total GDP. Which means that without the AI hype, economic growth of the country would have been 0.1%. All these jobs that the big tech, backed by the government, promised to create while building these giant water-guzzling data centers, they are standing on the shoulders of the giant historic bubble. Even the AI tech lords realize this. At the center of this bubble are circular deals between AI companies. NVIDIA lends money to OpenAI, and OpenAI uses that money to buy chips from NVIDIA. NVIDIA also gives money to data center and cloud computing companies, who are themselves NVIDIA customers. They buy chips from NVIDIA to build their data centers. And what do they do with those data centers? They lend their computing power and data center space to OpenAI, who is again, NVIDIA's customer. The circle is complete. NVIDIA gives money to their customers to buy products from NVIDIA. In the AI industry, everybody is NVIDIA's customer, and NVIDIA is everybody's investor. No surprise, then, that NVIDIA's stock market price has soared by 1000% since ChatGPT was first released publicly in late 2022. It's the world's first $4 trillion company, and all they do is sell shovels in the gold rush. If someone can't afford their shovels, they'll give them the money to buy their own shovels. This is bad. In S&P 500, the index of the world's richest companies listed in US stock exchanges, the AI industry has consumed all of it. It's responsible for 75% of all gains, 80% of all profits, and 90% of all capital expenditure. In other words, if the AI industry goes bust, the whole economy goes bust. So when the music stops, when the bubble bursts, when the mania hits a brick wall, what will it look like? Well, if history is any good teacher, then three things will happen simultaneously. Tens of millions of workers and retail investors will lose their jobs and savings. The value of their incomes and net worth will be pulverized into a fraction of what it was before. Companies that engage in the circular financing schemes will receive massive bailouts from the tax money of the regular people and from the central banks inflating the currency to protect the too-big-to-fail corporate sector. And then, they will all blame immigrants and poor people for all of this. And so, the tech bros and the stinky fear-mongering regulators will both be proven right. AI will cost tens if not hundreds of millions of jobs, and AI will erase the need for human labor, just in different ways they expected. What's the solution for all of this? Another solution might be the Butlerian Jihad, an uprising against the thinking machines, but before they enslave us rather than after. In the adaptations of Dune, Butlerian Jihad is depicted as a resistance against thinking machines. But in the books, it was more about who controlled those machines. That was the problem. The core issue is ownership, not necessarily automation itself. If automated workflows are collectively or democratically owned by the working class, then they can all benefit from the productivity more equitably. That requires, though, profound systemic changes that no serious political debate is willing to even remotely entertain under the current climate. But it could prevent the biggest harms of the current industrial transformation. Naturally, this isn't anything the AI tech lords would do of their own accord. They are betting that they will all be bailed out from their own failures, and that minorities will be blamed for it. And they are probably right. The best way to immunize yourself against automation is to be able to work jobs with complex tasks with long focus or complicated manual labor. Automation is a legitimate threat to job safety, but it's not coming in the form of chatbots and LLMs. Automating workflows in factories has been done for decades, and it's not going to stop anytime soon. But again, this is much less of an issue if you have a stake in that automation. So, if you made it till the end, you are a legend. Spread the word, join my Patreon, and don't be enslaved by the machines or those who own them.