I've seen other reports that suggest the level of investment for eclipses the internet buid out in 2000 and the railroad boom more than a century earlier. I wonder if they use different ways of landing on these wildly different assessments
Financing the AI boom: from cash flows to debt [pdf]
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Re: Financing the AI boom: from cash flows to debt [pdf]
#12High growth scenario and medium growth scenario (Graph 2). I feel like an idiot asking - aren't we missing some, or at least one, scenario? Is "medium growth" for the next 4 years really the worst people can think of?
> Is "medium growth" for the next 4 years really the worst people can think of? At this point anything less than "medium growth" will crash the economy. We'll have bigger problems if that happens (think 2000 or 2008)
Right... So since it's a big problem, shouldn't we at least be considering it as a possibility so that we can minimize the impact?
Re: Financing the AI boom: from cash flows to debt [pdf]
#13I've seen other reports that suggest the level of investment for eclipses the internet buid out in 2000 and the railroad boom more than a century earlier. I wonder if they use different ways of landing on these wildly different assessments
Yes. In inflation adjusted dollars spending on AI dwarfs previous "megaprojects". But as a fraction of GDP it's fairly modest -- comparable to the Apollo Project.
It's a sign of how much the economy has grown that under "1% of GDP for a few years" now is far bigger than "over 10% of GDP for a few decades" was in the late 1800s.
Re: Financing the AI boom: from cash flows to debt [pdf]
#14High growth scenario and medium growth scenario (Graph 2). I feel like an idiot asking - aren't we missing some, or at least one, scenario? Is "medium growth" for the next 4 years really the worst people can think of?
if growth doesn't materialize, then the infrastructure build out plays out exactly like the dot com bubble. the biggest difference this time around is the earnings. if those fall, the rest crubmles.
Re: Financing the AI boom: from cash flows to debt [pdf]
#15BIS released a larger report in June that identified AI financing/sustainability as one of the biggest risks for the global economy: https://www.bis.org/publ/arpdf/ar2026e.htm
pre-echos of "too big to fail"
Re: Financing the AI boom: from cash flows to debt [pdf]
#16[flagged]
Re: Financing the AI boom: from cash flows to debt [pdf]
#17Earlier quoted context omitted.
> Is "medium growth" for the next 4 years really the worst people can think of? At this point anything less than "medium growth" will crash the economy. We'll have bigger problems if that happens (think 2000 or 2008)
Right... So since it's a big problem, shouldn't we at least be considering it as a possibility so that we can minimize the impact?
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Re: Financing the AI boom: from cash flows to debt [pdf]
#18Thinking out loud, is productivity the ultimate macro benefit of AI? Should we expect macro AI investment to be a leading indicator of macro productivity gains?
For example, did macro investment in factory automation predict future productivity gains?
Re: Financing the AI boom: from cash flows to debt [pdf]
#19At least if the datacenters usage crashes, we'll have cheap power from all the infra that got built.
Re: Financing the AI boom: from cash flows to debt [pdf]
#20Usefulness aside, I see little evidence AI is making money (profit, not revenue) for any firm whose profit doesn't come from the AI itself or the infrastructure, including supply chain. I'd love to hear a counterexample. One such example would be of a hypothetical company that does translations for payment, and with AI they now are making more profit because they use AI to do the translation rather than pay a translator.
Duolingo is such a company you would expect AI to help a lot. Surely AI could allow it to cut costs substantially. And yet, in the past year its stock is down 70% and in Q1 2026 profit has not seemed to increase compared to Q4 2025. In fact, other than Q3 of last year which had some tax shenanigans, their profit is relatively flat. Not a great look given that AI is highly disruptive to their product.
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AI is actually insidious. Suppose you're in a competitive industry like Costco making 3% (net profit) margin. Suppose the average costco employee makes 60K. Then you come in and think it would be great to have an AI agent lets every employee ask questions of inventory to help customers. Surely if employees could use AI that could somehow make more money for Costco. Hypothetically let's say this ends up costing about the same as the basic subscription in terms of tokens. $20/employee/month Can't be that bad right?
$240 ÷ 0.03 = $8,000 (in other words, generate over 10% of their own salary in marginal additional net profit every year). Is Costco really going to generate 8K more per employee? Nope. And yet, firms like Costco who choose AI effectively just lower their own profit margins.