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AI's debt binge can't last, hidden borrowing reaches $1.65T

fortune.com

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Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#41

Post by infecto »

echelon wrote: post #38
scarlehoff wrote: post #22

Earlier quoted context omitted.

Internet didn't disappear after the dotcom crash, but a lot of money did. This is what could happen here I think.

The internet remains the biggest singular development of my entire life. The most valuable companies in the world are internet companies. Journalists have been eager to call AI "over" since 2022, and yet: - Models just got good at writing code this year - Models just got good at editing images last year - Models just got good at cinematic video this year This hasn't even played out. It hasn't even started. Why on ear…

People enjoy the narrative that AI is doomed. I am in the same mindset as you. I cannot see compute demand changing anytime soon.

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#44

Post by functionmouse »

WarmWash wrote: post #36
bix6 wrote: post #12

Has anyone seen a definitive mathematical proof of this? I have seen countless articles and exposes about the hidden debt. These are incredibly sophisticated companies so presumably they wouldn’t let themselves get into a company ending bind. But what are the chances this is actually an MBS type situation where the system is truly overloaded and a few sacrificial lambs are needed?

A lot of people want to see AI fail/collapse. A lot of publications pay attention to that. A lot of people love reading things (often only reading things) that make then feel right/correct/justified. A lot of publications live or die on ad views. And just like that we have a viable media business model!

Also, the most popular bear case being invalid helps the bulls, who largely control the discourse.

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#45

Post by dan_sbl »

WarmWash wrote: post #32
goatlover wrote: post #25

Earlier quoted context omitted.

That doesn't preclude something like a dot-com crash. It also doesn't mean everything in the current hype cycle will come true either. Plenty of people still shop at physical stores, read printed materials, and actually don't like being stuck at home if they can help it. Similarly, majority of people still don't 3D-print stuff they can get cheaply at Walmart or from Amazon. Or use VR/AR as their primary form of inter…

>Plenty of people still shop at physical stores, read printed materials, and actually don't like being stuck at home if they can help it. I too would use "plenty" rather than look at the horribly depressing stats.

https://capitaloneshopping.com/research/online-vs-in-store-s...

Basically, 80% of sales are still brick-and-mortar. That doesn't seem very depressing?

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#46

Post by iAMkenough »

kube-system wrote: post #18
iAMkenough wrote: post #11

Earlier quoted context omitted.

pretty sure they’re literally printing useable currency with Trump’s face on it, cause printing money is cool again

Not only is that not happening, it is currently illegal for the mint to do so. You may have seen the headline recently where Sec. Bessent held up a mockup of a bill printed out on a regular sheet of letter paper[0], and there's bill circulating to change the law, but it will not pass[1]. 0: https://ichef.bbci.co.uk/news/1536/cpsprodpb/97ed/live/f6126... 1: https://www.congress.gov/bill/119th-congress/house-bill/1761

Where my recollection came from:

https://www.pbs.org/newshour/politics/u-s-mint-produces-a-1-...

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#47

Post by axus »

rybosworld wrote: post #37
kube-system wrote: post #30

Earlier quoted context omitted.

Not every crash is due to a black-swan event. Many crashes are due to causes with predictable reasons, but unpredictable timing.

You have any examples? Because all of the biggest and most famous crashes were events that only a very small minority of people ever saw coming. Tulips, 1929, Dotcom, Great Recession, 2010's Flash Crash - none of these were in the public discussion before they happened.

2008 financial crisis, after years of "mortgage bros" inflating that bubble.

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#48

Post by goatlover »

infecto wrote: post #41
echelon wrote: post #38

Earlier quoted context omitted.

The internet remains the biggest singular development of my entire life. The most valuable companies in the world are internet companies. Journalists have been eager to call AI "over" since 2022, and yet: - Models just got good at writing code this year - Models just got good at editing images last year - Models just got good at cinematic video this year This hasn't even played out. It hasn't even started. Why on ear…

People enjoy the narrative that AI is doomed. I am in the same mindset as you. I cannot see compute demand changing anytime soon.

This is a straw man position. Who is saying AI is doomed? There were previous winters but the technology kept improving. What people are doubting is all the current hype around it. Stuff like AGI and the singularity being right around the corner with fully automated societies and robots dong all your chores for you.

Rather than it being presented as productivity tool for enhancing human labor and activity, it's presented as an eventual god that will radically transform the rules of economics and everything else, and thus it needs to be forced into everything. That's absurd hype and with it all the absurd VC funding and valuation. Thus it's seen as a huge financial bubble.

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#49

Post by kube-system »

rybosworld wrote: post #37
kube-system wrote: post #30

Earlier quoted context omitted.

Not every crash is due to a black-swan event. Many crashes are due to causes with predictable reasons, but unpredictable timing.

You have any examples? Because all of the biggest and most famous crashes were events that only a very small minority of people ever saw coming. Tulips, 1929, Dotcom, Great Recession, 2010's Flash Crash - none of these were in the public discussion before they happened.

> 1929, Dotcom, Great Recession, 2010's Flash Crash - none of these were in the public discussion before they happened.

The "public discussion" is a whole different thing. They weren't in the public discussion because macroeconomic theory isn't something mom and pop like to chat about on the weekend. They only become dinner-table discussion topics when the impacts hit main street, after they happen. But bubbles in recent history have been pretty reliably identified beforehand:

https://web.archive.org/web/20180330001927/https://www.barro...

https://www.economist.com/special-report/2005/06/16/in-come-...

It isn't hard for economists to find bubbles, where the market is taking on high levels of risk. What is downright near impossible to do is predict what specific event will cause the dominos to begin dropping, or when it will happen.

Re: AI's debt binge can't last, hidden borrowing reaches $1.65T

#50

Post by margalabargala »

goatlover wrote: post #48
infecto wrote: post #41

Earlier quoted context omitted.

People enjoy the narrative that AI is doomed. I am in the same mindset as you. I cannot see compute demand changing anytime soon.

This is a straw man position. Who is saying AI is doomed? There were previous winters but the technology kept improving. What people are doubting is all the current hype around it. Stuff like AGI and the singularity being right around the corner with fully automated societies and robots dong all your chores for you. Rather than it being presented as productivity tool for enhancing human labor and activity, it's prese…

> robots dong all your chores for you

This could happen this year or next, assuming you're willing to pay $30k for the hardware.

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