The AI Doom Loop is Here

What if what's happening with AI right now does not lead to a dystopian society with overlords, mass surveillance, and no way to make money other than government handouts? What would be the alternative to that? And how would we actually get there? People are freaking out right now. I mean, you have AI CEOs telling everyone that their job is at stake and that there's only a few years left to do something about it. >> One of the things that annoys me most about people who work on AI is when they stand up and with a straight face say, "Oh, this will never cause any job elimination." Like, this is going to eliminate a lot of current jobs. >> Some creative jobs maybe will go away. Um, but maybe they shouldn't have been there in the first place. you have this long-term concern that maybe you don't need developers at all at some point. >> It's kind of deeply unfair that, you know, group of people can build AI and just like take everyone's jobs away. And in some sense, there's nothing you could do to stop them. Right now, >> I've tried to do a few different back of the envelopes about how much this could be. I think this is something on the order of 70 to 80% of existing human jobs. So let's talk about the elephant or agent in the room which is that that's going to affect human work. You just described a lot of jobs that we have people doing. >> Yes. Um I I feel very strongly that I don't know exactly when it'll come. I don't know if it'll be 2027. I think it's plausible it could be longer than that. I don't think it will be a whole bunch longer than that for humans to produce economic labor. And this is where they feel their their sense of selfworth. Once that idea gets invalidated, we're we're all gonna have to sit down and and and figure it out and and you know, I'm I'm I'm I'm not going to lie. I I my true belief is that is that that is coming. >> In a benign scenario, uh we probably none of us will have a job. And in the negative scenario, we'll we'll vets roll off. We're we're in deep trouble. >> And yet, they aren't offering too many solutions for how this is actually going to play out. um just a dystopian vision of universal basic income rebranded to universal high income to make it sound a little bit better. But handing out money because there's no work for people to do is not necessarily a dream scenario. So the biggest fear right now is that everyone is about to lose their job or if they don't have a job that they will never find one and that people who are stuck on the outside of the AI cabal will simply be doomed to become a member of the underclass that has no way of making it out. Over the past weekend, a man named Alip Sha from his company Citrini released an article looking forward to 2028 outlining a potential economic doomsday scenario called the 2028 global intelligence crisis. And the idea is that AI investment and AI capability will improve. So companies will need fewer workers, which will lead to white collar layoffs and displaced workers spending less. And that will then lead to companies investing into AI to protect their margins as the economy weakens, which would feed into this loop. Now, as white collar workers get laid off, they flood the service and gig economy labor market. an average hourly wages would fall precipitously as they contribute to an overupp of gig workers. But that gig work is also at the mercy of the potential of being automated away. How many Ubers will there be in the world of robotics? It's also worth noting that the white collar workers were the ones who were keeping the economy afloat with their spending, right? And that's how it is in real life today. right now. If they were to lose their jobs and cut back on spending, then the entire economy would go with them and you would enter the classic deflationary spiral. The point here is that AI is actually hitting the white collar jobs even faster than the blue collar jobs and therefore a big part of the actual uh GDP, right? These higher income earners would actually be getting hit first potentially. It's also worth noting that these higher income earners are also responsible for a large portion of government revenues. Right? When you look at tax receipts, uh the majority of them are coming from individuals, not from corporations. So in this scenario where you have higherend income earners actually losing their jobs, then the government would have significantly lower tax receipts which causes another slew of problems. governments go deeper into debt as their incomes fall from having lower tax receipts and also as they probably need to use monetary easing of some sort as a way to actually keep the economy afloat in the first place. So you would see a lot of money printing and therefore an acceleration of government debt. In this article, Catrini points out the concept of ghost GDP. They're highlighting that productivity gains that come from technology would only lead to the rich getting richer with higher corporate profits but not necessarily higher wages for people who work at these companies. In the article, it read in quotes here, "For the entirety of modern economic history, human intelligence has been the scarce input. Capital was abundant or at least replicable. Natural resources were finite but substitutable. Technology improved slowly enough that humans could adapt. Intelligence, the ability to analyze, decide, create, persuade, and coordinate, was a thing that could not be replicated at scale. Human intelligence derived its inherent premium from its scarcity. Every institution in our economy from the labor market to the mortgage market to the tax code was designed for a world in which that assumption held. We are now experiencing the unwind of that premium. Machine intelligence is now a competent and rapidly improving substitute for human intelligence across a growing range of tasks. The financial system optimized over decades for a world of scarce human minds is repricing. that repricing is painful, disorderly, and far from complete." End quote. Now, they make it clear that this is a scenario and not a prediction. On Monday, though, tech stocks continued their slide, and people were questioning whether or not this article was actually responsible for that slide. But I found something that might have been my favorite counterargument to the Catrini article. And it came from the Cobes letter. They break down how what the Citrini article doesn't take into account is how productivity gains can also lead to lower prices. You don't need wages to go up if prices come down. And what really matters is whether or not the average quality of life is going to increase. Also, lower prices can lead to higher demand. They point to the falling price of PCs from 1980 to 2015 where prices came down but demand for computers exploded. cloud computing became a thing and in general this new demand for computers created entirely new categories of consumption and economic activity. They use the term abundance GDP to describe a world that you would have economic growth with falling costs of living and this would be combatant to that idea of ghost GDP. Now this would have the chance to end wars and may result in some of the most peaceful times in human history. Wars have always been fought over scarcity, energy, food, trade routes, industrial capacity, labor, and technology, but abundance, GDP would change that dynamic. Now, I'm not a financial adviser, and none of this is financial advice. I'm also not a fortune teller or a wise sage, and I would highly recommend that you do not take financial advice from a random guy walking around a park talking to a stick. But I do see how either of these scenarios could play out. I mostly see how right now what's happening in the markets could be a time where uh massive uncertainty leads to overreactions that then create massive opportunities to come out with more than before. And I can admit that I have certainly subscribed to the more doom and gloom side of this AI talk. But the truth is that it's really hard to actually know what's going to happen next. But I don't know, maybe I've completely lost the plot here. What do you think? What did I miss? What did I get wrong? Or how could I be looking at this all differently? Let me know in the comments down below. If you haven't already, you got to subscribe to my live show that I do with Ben Levit. It's called Memes and Markets. We go live every Tuesday and Thursday at 12:00 p.m. Eastern, and we talk about things like this and much more. I'm also going live on this channel on Saturday to break down what's happened throughout the week, and that's going to be at 2 p.m. Eastern. So, be sure to join me there. If you want access to deeper insights on what I'm doing with this kind of information, feel free to consider joining my Patreon, where I drop a weekly macroeconomic newsletter. And if you want exclusive videos and community, you can join my channel memberships. Macro analyst tier members get access to exclusive videos. You can find all of that in the description of this video down below. I'm Keith D here to talk everything money and markets. And until next time, peace.

📹 Become a Channel Member (Exclusive Videos): https://www.youtube.com/channel/UCAFqzhDwJd12pBDgdk-2GqA/join 📖 Or Join My Patreon (Weekly Newsletter): https://www.patreon.com/c/theinneroperator/ 🎙️Subscribe to Memes and Markets: https://www.youtube.com/@MemesandMarketsPod For a 1:1 conversation, book your paid consultation here: https://calendly.com/keithsmithspeaks All Sponsorship & Business Enquiries: keithdenterprise@gmail.com Is AI about to trigger a global intelligence crisis — or are we on the verge of an era of unprecedented abundance? Right now, the dominant narrative around artificial intelligence is dystopian: mass job losses, collapsing tax revenues, universal basic income rebranded as “Universal High Income,” and a permanent underclass locked out of opportunity. Some estimates suggest that 70–80% of existing human jobs could eventually be automated. White-collar workers may be hit first. If high-income earners lose their jobs, what happens to consumer spending, tax receipts, government debt, and the broader economy? In this video, we break down the “2028 Global Intelligence Crisis” scenario outlined by Alip Shah of Citrini — a potential deflationary spiral driven by AI-driven layoffs, collapsing wages, and accelerating automation. But that’s only one side of the story. We also explore the counterargument: what if productivity gains from AI don’t just concentrate wealth — what if they drive prices down? What if we enter a world of “Abundance GDP,” where lower costs of living, higher productivity, and expanding demand create entirely new industries and economic opportunities? History shows that falling prices (like PCs from 1980–2015) didn’t destroy demand — they expanded it. Could AI follow a similar path? Or is this time different? This video dives into: • The AI job displacement debate • White-collar layoffs and economic ripple effects • Ghost GDP vs. Abundance GDP • Government debt and money printing risks • Deflationary spirals and market overreactions • Massive uncertainty = massive opportunity? The truth is, nobody really knows how this plays out. But understanding both the doom loop and the abundance thesis may be the edge investors need right now. What do you think — dystopia or abundance?