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The AI boom is more overhyped than the 1990s dot-com bubble, says top economist (www.techspot.com)
submitted 1 year ago by to c/economics@lemmy.world
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[–] 7 points 1 year ago (3 children)

And it's nothing compared to the housing bubble.

Mark my words, they're pumping billions into shitty tech to have an explanation of why housing prices crashed.

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  • [–] 1 point 1 year ago (2 children)

    What do you mean? Because the market is smaller over all?

    But I would think that the ratio of market value to true underlying value is much worse in this case, and because it's not linked to much real value (and even any real value might end up being disbelieved as hype) the collapse will be probably be a lot sharper when it starts. And I wouldn't be surprised if it takes a broader swathe of the US economy with it..

    This article has a pretty deep rundown of the bubbliness: https://www.wheresyoured.at/the-haters-gui/

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  • [–] 1 point 1 year ago (1 child)

    Well that's just it. People don't need AI to live, and only AI investors stand to lose anything (and anyone who had a retirement that got invested in it).

    But the real estate market, which has been growing exponentially faster since the 1990s (while median income has been linear) has created a bubble that will be broken by some market event, something where real estate investors sell. That's rare and it could only happen with something with a stupid sharp decline like you just described. I don't know if the AI bubble is big enough itself to do it.

    But I don't think it will be residential real estate to collapse first, it will be commercial real estate. Once that happens, it's going to be a free fall and bring everything else with it.

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  • [–] 1 point 1 year ago

    Oh I thought you meant the GFC subprime mortgage bubble.

    I'm not sure that I would think of the current housing crisis is a bubble.. It's based on undeniably real value.. It absolutely is an unethical hoarding of wealth by the wealthy, but it's not imaginary like a bubble.

    Well.. Unless you consider all of capitalism a bubble (in the sense that a massively inequal society is inherently unstable in the long run). Which I kinda do.

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