I feel like there's some credibility to 'this time it's different'
The US economy depends on the country's position of world hegemon - the US dollar is the world's main reserve currency, the US enforces international order and trade rules via its military strength, it dominates technology and culture through 'US defaultism'.
I dont think AI even factors in to this.
The US economy is priced for global reach - if it manages to lose that through a combination of credible competitors, and loss of goodwill - it's going to be in heaps of trouble.
The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
All said, I think if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be.
> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
Right now this is much more of a maybe, possibly, eventually, over a long enough time horizon.
As of the end of 2025, USD still made up 57% of foreign reserves vs 20% for the Euro and 3% for the Chinese renminbi. Nearly all commodities are still priced in USD and about 50% of trade invoicing is done in dollars, closer to 60% if you exclude the Eurozone. USD also makes up about 60% of SWIFT transactions.
So the demand is still there today and de-dollarization is not really a thing in aggregate as of January 2026, despite all of the events of the past year or so.
So if this time is different, I’m not seeing it yet.
The international "rules-based order" is a good idea when most nations play by the rules most of the time, and when the most powerful at least pretend to follow the same rules as everyone else.
A world order based on rules makes it possible to live at a much higher level of abstraction.
Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly just figments of collective belief. But these wispy and unreal ideas that everyone believes in make it possible for most people to live longer, healthier and less difficult lives.
The "rules-based order" was always partly mythical, but as long as everyone kept pretending, it mostly continued to function.
But when we devolve from the rules-based order to the old order of pure power and might-makes-right, kings and dictators, when there's no more collective belief that the rules apply to the rich and powerful, then the tower of abstractions collapses, and we're back to the cold, hard, brutal and difficult real world.
People will find out that life in the real world is a lot poorer and more miserable than life at the top of the tower of abstractions, even if your brokerage account appears to double.
Not all demand the same. There are broadly 2 types of USD buyers
1. price insensitive: sovereign banks, who buys for liquidity/storage
2. price sensitive: hedge funds, private buyer who buys returns
Type 1 buyers are bailing out of treasury. Type 1 are marginal buyers, the close auction regardless or rate, this keeps rates low -> debt servicing low. They artificially depress yield to non market rates, without them rate go up because you have more price sensitive buyers who buy for returns. This increases borrowing costs, hence US debt repayment rising massively.
Type 1 buyers, i.e. US allies (and historically even adversaries) soaked up treasuries are now de-dollarizing / buying gold in lieu of _more_ USD. Type 1s underpin the "privilege" part of exorbitant privilege. The more they de-dollarize the more dollars become exorbitant, aka debt like everyone else. Type1, sovereign held 60% of USD to 40% in last 5 years. This large part of why interest tripled and debt servicing went from 350B to 1T in 5 years. Type1s exit to 20% in another 5 years and maybe interest goes to 5%, debt servicing 2T+. It's the difference between 10%/20%/30% debt servicing as % of federal revenue.
This not to mention USD reserve ticking down at 1% per year means meaningful changes in our lifetimes, and velocity may increase with developments like Saudi no longer locking oil to dollar. Less USD as % of global reserve = more network effects of alternate payment = increased potential velocity of USD reserve drop. This doesn't mean other currencies pickup all slack, i.e. central banks seem to be going in gold / commodities with no counter party risk for new storage. The net result is USD will still be around, in large volumes, but the cost/debt to sustain the system will be "normalized" while US budget is historically is built around USD debt being privileged. AKA difference between borrowing money from family vs payday loans.
>Nearly all commodities are still priced in USD
PRICED as in benchmarked in USD, but =/= USD is being spent to settle them. There's a fuckload of commodities where PRC alone buys 30/40/50%+ of global production, and while quoted in USD, increasingly settled in rmb/CIPS, bilateral currencies, BRI infra or other swaps mechanisms that bypasses USD. This one of the largest source of dedollarization - PRC went from single digit % to plurality of cross-border settlements in RMB/non USD. Though this is just very recent leading indicator that USD is functionally circumventable.
The end of 2026 was remarkably different to the world of today, and it that's logical it is - checks calendar - already 31 days ago. Now imagine another year of this.
This time is not different in the sense that at some point crazy valuations get a reality check. But that's not "the crash of the US economy", that's a stock market crash, and those will happen (tell me when - I'd also like to know) and they also tend to crash all around the world.
The US economy has had ups and downs and I'm sure will still have but despite the wishful thinking of Marxists it's still the least worst economy around in perhaps the least worst country. It still attracts talent and money. It still leads in many areas. It's still very productive. There are huge ecosystems and a cultural base. It's still the world's largest economy. Where will the balance tilt? China? India?
Anyways, be careful of what you wish for, if the power shifts to China we are going to have a very different world, and not in a good way. I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
> I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
Yeah aren’t they just Leninist but using us as a signal of what to make? I thought rough shape of the scheme was you get to build a factory using free loans in bullshit money that buys rice and apartments but can’t leave the country, then use that to get real money you can take elsewhere by making shit Americans want to buy. You can’t trade the bullshit money for real money without the factory step.
The dollar is going down in value right now. Thats the plan. It makes foreign goods more expensive and exports more affordable to other countries. Meanwhile it should have less inflationary pressure on domestically produced stuff like housing.
I dont know if this is going to work or collapse. If it does work IMO they still need to reduce the debt - current actions are because we are backed into a corner, so that needs to be corrected.
It also increases profits for multi-national US companies since they get paid in other currencies, which they then convert to dollars locally. Basically, they have favorable FX tailwinds.
It's a flimsy back-filled rationale thrown on top the mercurial (and often sadistic) whims of an American Caligula, so the elite enablers can pretend there's something rational - or even good - about the chaos and destruction they are supporting.
> The US economy depends on the country's position of world hegemon
Citation needed? This feels like a retcon. Remember that the U.S. became the biggest economy in the world in 1890: https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&.... That was half a century before World War II and the military empire that followed.
The trillion dollars a year pumped into the military support the stock prices of quite a few highly-valued companies. A sudden collapse of hegemony would be bad for "the market", but that seems unlikely unless WW3 actually kicks off instead of a few more rounds of opportunistic snatching and bullying by the big countries, and in that case few people would care about the stock market.
I remember reading this a lot in 2000-2001 and 2007-2008
That said, overall I sort of agree with your assessment except for having any optimism that the US changes course.
The current looming problems with the US economy are almost entirely unforced errors of the Trump administration (they could have done basically nothing and taken credit for the Biden soft landing and economic growth) but they aren't going to course correct.
Trump has no ability to admit mistakes even to himself and he's now surrounded by lots of people who stand to enrich themselves from the chaos even as the average American is harmed greatly.
Get in power, enrich themselves, kick the can down the road to Democrats, then blame the Democrats for poor economy.
This is why ironically Trump cancelling elections and installing himself as a 3d term president would actually be good. People need to see that no matter how bad they think things were under Democrats, it can get much much worse. Say goodbye to your house value and 401k plans for retirement, you gonna be a wage slave well into your 60s, but hey, at least we fixed "wokeness"
I think another way to look at the expansion of the capitalist economy is the onboarding of people into entry day jobs and transitions of economies upward..
AI may have relatively little to do with the US' tantrums yet I think it has a lot to do with the end of expansion and a fast contraction of the availability of top jobs as the last economies enter the middle of the funnel can't be good.
Simple solution; raise taxes. Been saying that will be the outcome eventually as the olds continue to die and the youth feel zero obligation to senile pants shitters and corpses. GenZ fucking hates Boomers and a whole lot of GenX (that insurance CEO? GenX. Epipen price hiking CEO? GenX. Whole lot of tech CEOs of note? Yup, GenX) Generations beyond Z will never experience Boomers and 1900s American life. They won't care about an arbitrary line in the sand. GenX ain't getting any younger, won't have Boomer support.
A reasonable scenario right now; rest of the world intentionally collaborates to isolate US, destabilize US, act as a forcing function for US to reassert internal control by swiftly deflating buying power of useless rich[1]. The world is sick of US CEOs who do little but jiggle values in spreadsheets. Sundar and many others have said CEOs are likely a very easy job to automate away; useless pageantry. There is rapidly growing domestic and overseas will to depose those non-contributors.
Fastest way to stem the collapse of reality for 10s of millions of Americans with a lot of guns too.
[1] Americans buying power has been deflated by 300% since 1980... I am sure it is purely coincidence Boomers have run the world for most of it.
"Soak the rich" laws were passed around a hundred years ago in the US in response to obscene wealth; worked out pretty well for a long time before they got rolled back and we got a new round of oligarchs.
Not shown on the chart (and which couldn't have been predicted at the time of writing) is today's crash of almost 30% in that price.
Speculative bubbles happen. The narrative of people losing faith in currency made no sense, because that should pump the prices of durable commodities as well, if not instead of precious metals.
1 Online shopping market in the range of 5 trillions
2 Electricity and energy price raise
3 Impossibility to lower interest rates
4 Tech market also in the range of multi Trillions
5 Global education and power expansion ...
Meaning that a % of all this money flow goes private pockets destroying medium class, which gets poorer.
It is like a memory leak that keeps sucking resources while growing exponentially until the system crashes.
The real question for an economist is how much ram has the system and how much the memory has leaked?
You don't have to eat them. You just have to erect significant barriers to hoarding wealth, particularly in off shore devices, and you have to create constant pressure to ensure that stored wealth is best re-invested in the economy at large.
These aren't even hard problems. Until you meet someone in Congress. Then it suddenly seems hopeless.
Big problems are solved by years of investment and good decision making.
Unfortunately, going after causes or correcting symptom in any kind of hurry acts as a massive destabilizer at exactly the moment systemic destabilization provides the motive/momentum for taking action.
Hard course corrections at critical pressure, in a complex system, is a value destroying reset.
Companies can do this. Mass layoffs, capitalization sell off, etc. And then recover over time, because the rest of the economy around them is mores stable and the pain gets diluted. Entire countries doing this doesn't work out so well.
But it would appear, that may be the path we are most likely to take.
I know the question is tongue-in-cheek, but I think it’s a fascinating question, so I’ll take it seriously. If you predict the crash and it happens two years later, i think you basically cannot profit off that guess, so I’d say no. Although i haven’t provided data for the two-year claim, there certainly exists some period N for which the prediction no longer pays off, given a fixed drop. But if you can predict it 6 months in advance, you probably could profit! I think a certain amount of annoying repetition is fine for profitability.
I don't understand why people expect the Chinese economy to crash - they can basically make everything, a lot of which is internationally competitive, they can trade for the resources they don't have with the goods that they do - with basically the whole world dependent on them. They have a huge internal base of poor people, and lifting them to a middle class level will alone fuel domestic demand for years to come.
Their biggest problem seems to be they're too good at building stuff, whenever a new category of product pops up, they quickly build up both volume and drive down prices through competition so that they saturate their internal markets (see: housing, EVs)
There were worries that they'd issued a lot of debt to build real estate that wasn't needed resulting in ghost towns and people thought prices would fall and the banks lending would collapse but they seem to have managed ok. The Chinese actually seem quite smart at managing their system.
The Chinese economy is indisputably strong and real, but rumor has it that its reported growth numbers have been inflated in the last couple of years. And why wouldn't they be - there is an autocratic government whose justification is that what they are doing is increasing economic success. No success is not an option.
Real estate prices dropped 30% blowing up most people’s savings. The debt overhang is slowly bankrupting various companies. Growth is an anemic 5% (should be double for a country with China’s per capita income) and means it will never enter middle income status. Unemployment, especially for grads is very high and the lack of babies or immigration means the worker base will shrink while the demand for social services will skyrocket.
The question is there is no other place for money to go. Liquidity is still in abundance and no other market can capture that liquidity. Eurozone is a total mess, ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point. Japan market is a joke, Asia and emerging market has huge governance issues. Bond market has penalized the investors and only more pain is in sight. All in all, there is a lot of doom and gloom out there. But I don't see a viable alternative.
Sure, Mark Carney gave his little speech in Davos. The same Mark Carney, that led Brookfield while its finance arms operating out of US.
But realistically, how is opening up to China more even considered as the alternative? When has any deal with China worked at a strategic advantage for the other side? Is not the whole reason the so called globalization project failed was because players like China did not play by the same rule or did not even have to play by the same rule? What gives they will when you open up the market more to them? All it takes is for them to take your product, copy it and sell it 20x cheaper and flood the market everywhere else.
> The question is there is no other place for money to go.
Whenever I've heard people speculate on the US bond market losing its footing, the suggestion isn't that "Japan will be the new US" (eg) - it's that investor will spread assets across multiple places (US, Japan, EU, etc) to hedge against risk, rather than just the US.
ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point.
I'm not even sure what you're trying to say with the rest of it but this is nonsense. The ECB policy IS German, and has been for 3 decades. All of germany's economy is organized around the existence of the eurozone with Germany controlling a unified monetary policy.
> What is a mess about the Eurozone and reckless about the ECB?
Without opening the article someone gave has a link I can name a few...
Not respecting the promises to go down hard on countries not respecting a yearly public deficit of more than 3% of their GDP (France is nearly at 6% since two years and going down the drain).
Having a common currency created by ideologues, not economists, and having that common currency shared between countries that do not have the same fiscal policies.
Having a shitload of ultra indebted countries in the eurozone.
Having one of the country of the eurozone, even though the Euro is one of the youngest currency of the world (only 27 years old or so) who already frigging (partially) defaulted on its public debt.
(not I just read TFA)
Ah yup: the ECB heavily manipulating the various countries' public bond rates.
My bet is that the euro shall be one of the shortest lived currency ever. It was made by ideologues and is only loved by ideologues. Economically it makes zero sense to have a common currency between country that have both different fiscal policies and different levels of public debt.
Now of course the ideologues are going to argue that the EU should have a unique fiscal policy (with of course ultra high taxes for everybody, except EU public servants who pay the lowest tax rates in the entire EU btw) and a common public debt.
We have so many problems. So many savaged construction sites that we knew for decades were important. The problem is not, where all this fiat money could go, there are plenty of places. The problem is, where it can go and make a profit. That was a hint to broaden your perspective.
> Liquidity is still in abundance and no other market can capture that liquidity.
I don't know what that means? Market crashes are changes in speculative value, they don't care about counting literal amounts of currency. Selling US securities doesn't require that the resulting "liquidity" move anywhere else, just that the owner prefers to see a cash balance to a stock certificate or whatever.
Basically this point seems like a big "confused money with value" mistake.
Stocks might go down if AI doesn't bring in enough revenue. The real risk seems to be currency depreciation though. The USD is already down 15% this year compared to the Euro. I'm worried about what the next FED chair appointee will do. JPow has stuck to his principles so far.
> The USD is already down 15% this year compared to the Euro.
False in every sense possible. For starters, the year is only a month old. Second, it’s been pretty stable for the past 6-7 months, and is only down 12% from a year ago - not 15%.
> The USD is already down 15% this year compared to the Euro.
It's down 12% since a year ago, but that's largely a reaction to the tariffs. It's been fairly stable since July or so and has only seen a small dip (and partial recovery) in the last couple of weeks.
The admin wants to cut rates drastically. But the FED policymakers just voted 10-2 to not cut rates. So I worry the admin will try something crazy to force a cut.
A lot of us don't have time for all the long reads, podcasts, or in-depth videos posted in the discussion here. Able to provide a summary for us that expresses your general point? Those interested can then use your link to learn more.
The article’s core argument is that the U.S. dollar isn’t going to lose global dominance in some dramatic, headline-friendly collapse; instead, like every reserve currency before it, it will slowly erode at the margins as users quietly reduce reliance on it. Historical transitions (sterling to dollar) didn’t happen because of declarations or crises, but because the world gradually found alternatives that were good enough for specific needs. What’s changing now isn’t that the dollar has “failed,” but that the global financial system has evolved past some of the assumptions that made dollar dominance frictionless. The freezing of Russia’s reserves in 2022 shattered the idea that reserve assets are politically neutral, prompting central banks to hedge geopolitical risk via gold, bilateral trade arrangements, and non-dollar settlement systems. The result isn’t de-dollarization as revolution, but de-dollarization as creep: a long, largely invisible process that only looks obvious once it’s mostly done.
I do really hope the AI bubble will collapse soon. The sooner it blows the less damage it will do. And hopefully we can go back to doing real work without all these leadership guys breathing down our necks to see if we are doing enough of this AI all their shareholders want us to be involved in.
It will suck even for us in europe due to shortsighted pension funds having invested in AI as well. But we'll just have to deal with it. I'm sure it will happen sooner rather than later.
PS: I'm not an AI hater as such. It definitely has its usecases where it shines. The problem is like with all hypes; it's not good at everything and it won't be all golden mountains tomorrow like the investors expect. This overhyped investor circlejerk is what screws up technology. It happened to blockchain, it happened to metaverse. All things that have their merits but somehow investors thought it would change the world overnight and make them insta-rich. Obviously didn't happen and it won't happen now.
> It happened to blockchain, it happened to metaverse.
I don't think AI is comparable to these technologies.
AI had a real impact on certain daily activities, such as search, coding, etc. While the metaverse was just a fantasy with no tangible benefit other than Zuck trying to create his own platform to take on Apple and Google.
Blockchain had some potential in certain fields, but it wasn't user-friendly or usable by many people.
> AI had a real impact on certain daily activities, such as search, coding, etc.
You aren't addressing the issue at hand, the problem isn't a total lack of impact, it's the cost of that impact, both the actual and the opportunity cost of it.
Currently, the AI "revolution" is running on pure credit - as every other bubble - even the operating costs of the AI supply chain exceed its income and economic impact. Their capital expenses are orders of magnitude higher and constitute a severe drag on the rest of the economy.
There's no indication that anything would change in the future, more AI leads to less employment, less disposable income and less income for the AI providers - it's a race to the bottom.
If this isn't reversed, it will soon end in bank bailouts, more inflation and income degradation for those bellow the top tier.
Not really, there are good applications for metaverse tech, they just need time to mature. However I don't really see it in the realm of social media. It's not something that's for everyone, at least not yet. I don't understand what meta was thinking there.
It's amazing for gaming though, and for architecture, 3D product design collaboration. I use it a lot daily and I have 5 headsets (plus two AR ones) but I also know it's not for everyone. It's also really good for porn which somehow in America isn't seen as a real industry but in my view it's a good usecase for the tech too. Anything that relies on immersion benefits from it.
AI has its niches too where it's genuinely useful (and coding really is a niche, it's not a mainstream activity) but just like metaverse they're trying to cram it in situations where it doesn't really add any value.
> It will suck even for us in europe due to shortsighted pension funds having invested in AI as well.
Only to a very small degree and systems like Germany THANK GOD do not have any AI exposure at all.
The real problem is that when the US sniffs, Europe gets a full blown cough. We are way too dependent on the US, we have seen that 2007ff, and we haven't changed a single darn thing.
I think the government is laser focused on reducing regulations, reducing energy costs, reducing interest rates, a weaker dollar that makes exports better, minimizing taxes. Technological innovation is increasing overall productivity. There are definite headwinds like upward pressure on labor by reducing the worker population, stagnating population growth, undertainty, tarriffs, a weaker dollar increasing inflation.
There’s the looming threat of geopolitical world war that has been overhanging the world since the combination of the pandemic isolating different countries and Russia’s invasion of Ukraine.
It’s really a mixed bag, but it’s not clear to me that we are headed into a total economic crash as the government is definitely focused on doing a lot of good things for the economy, but also is creating lots of different headwinds.
Hold on there, they have been very explicitly doing the opposite of reducing energy costs. The administration has been aggressively trying to cancel all sorts of energy projects, even projects that have almost been completed. At the same time they've been encouraging as much data center build out as possible. Lowering supply and increasing demand is hardly going to reduce energy costs.
They have managed to significantly lower expectations for global economic growth which brings down energy costs, but that's hardly a sane way to accomplish that goal.
I think it's a little bit more nuanced than what you say and that they generally are trying to increase energy supply while withdrawing from using heavy government subsidies or extensive regulations to pick the winners and losers.
From a demand side, they aren't looking to restrict demand, but want to have ample supply to meet the demand.
The thing I don’t get is that IMO Americans have a higher standard of living due to demand for the dollar. Being a net importer means they make less and the countries they’re importing from make more. Money = labor = people working, so people in other countries are working harder than Americans to benefit Americans with a higher standard of living.
It’s like a roofer working for a contractor that’s a millionaire and the contractor is upset because he’s paying the roofer while having a higher standard of living because of the profit made off the roofer’s labor.
No one is working for that rich contractor if his money is worthless. Isn’t a weaker dollar for America a disaster? The world works to serve America right now because of the dollar. Life’s going to be tough when America has to “get a job” and start earning their keep with real productivity contributions, isn’t it?
Maybe I’m just dumb, but all I can see is a massive drop in the average standard of living if the US maintains their current trajectory. It might even be too late already.
You assume that these economic policies are dictated by some sort of common good. The reality is that most policies are dictated by corporations and are designed to benefit their shareholders and not the average american. In addition, the US is now pivoting towards authoritarianism which implies future policies will be determined mainly by a tight group of people who are going to use them as a means of enriching themselves.
>massive drop in the average standard of living if the US maintains their current trajectory.
Very rich people control the narrative in the US and get poor people to repeat their claims. Hence where we get statements like this from.
>“John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
The thing is the billionaires/trillionaires don't care as long as they get more power. They'll eat the goose that lays the golden eggs.
You see a ton of this with Trump voters like my grandma that are getting screwed over with medicare changes and live in some kind of grand delusion that Trump is doing exactly what he said he was going to do in cutting benefits, and yet somehow it's all the democrats fault (???).
I'd rather say it's hell-bent.
It doesn't look like a laser focus to me... or maybe it's just all disco ball reflections dizzying me, and there is indeed a laser focus somewhere I just can't quite pinpoint.
Painfully I’ve learnt that you want to work in an industry that is largely recession proof.
Focus on industries that sell things that people need and will try to keep buying right down to their last buck.
Food, utilities, insurance. People don’t like sitting in the dark. People need water. People need to eat. People really don’t like living without insurance cover or to let cover lapse.
They don’t need Netflix, Disney+ or Prime. They don’t need Spotify. They don’t need training or e-learning. They don’t need luxury goods. They don’t need new motor vehicles. They don’t need holidays. They don’t need new iPhones or new computers.
Try and move now to an industry that has some security.
Investment wise diversification is key. Just pray that it doesn’t get so bad that banks start to fail.
2008/2009 I was working in healthcare and just got to sit back and watch the drama. People get sick and need their medicine no matter how bad the economy is collapsing.
Live like you're already poor, reduce all unnecessary spending, adopt an ascetic mindset to support this lifestyle. That way, when a collapse comes you'll be accustomed to living frugally already and you'll have all the money you saved by getting a head start already saved up to get you through rough patches with relative ease.
Now, when I say live like you're poor, I mean do it smart. Don't grocery shop at a gas station, do your necessary purchases in bulk (actually poor people can't or won't, but would be better off if they could.). Don't but the cheapest boots, but rather the best value. But when choosing how many vacations to take, maybe pick camping locally more often than exotic vacations. Eat simple foods, don't order out fancy stuff and get accustomed to such luxuries. Don't automatically buy the latest consumer toy just because it looks fun. Don't move into a nicer apartment just because you got a raise. You get the idea.
I (like I'm sure many others) predicted it in 2007 and hedged against it by getting a 10 year fixed mortgage at then-current rates on the basis that rates would go sky high as they had in earlier recessions in the UK.
They plummeted to next-to-zero, and in addition to the injury I had to endure the insult of the people who hadn't seen it coming gloating about their low standard variable rates.
Ofc I clearly didn't have much real economic understanding but I guess I am saying that beyond normal common financial sense (the lack of which at scale leads to these situations) which you should be using anyway, we don't really know which way the wind is blowing, and what the exact consequences will be.
I remember the opposite, just before we left the ERM (European Exchange Rate Mechanism). Interest rates hit 15% and one of my colleagues was gloating about how he had just taken on a fixed rate mortgage. A few days later we left and interest rates plummeted.
Skill. Knowledge. At your age, your biggest assert is your future earnings potential. The more employable you are, the better you will make iduring and after a downturn. In fact, the highest skill folks tend to even profit from hiccups in the economy.
Are the ones newer to the workforce just screwed or is there a way out? Kinda sucks that all this went down around 6-7 years into my tenure and it's just been a few years of scraping together freelance + portfolio projects to try and climb out of tbis rut.
(This might sadly be rhetorical given what I hear of '08, but perhaps there are new channels open to take advantage of. Or at least old channels to raise awareness of).
None of that is true. Not one word of this applies anymore. Being highly skilled means you're highly paid, which puts you first in line for cuts. Talent doesn't get you hired, networks do. "Future earning potential" is just nonsense words, you can't eat "future earning potential".
This advice is from half a century ago. The times have moved on.
Your life should have a plan beyond tomorrow or the next hype cycle so that you progress towards your goals independently of the flow of society. This will allow you to navigate those flows instead.
Nothing provides complete protection, but diversification can help reduce the impact.
The person saying gold and mining stocks may or may not be correct - it's still a risky position. Precious metals could be in a commodity bubble right now (or not). It's had to predict anything with perfect accuracy, which is why diversification matters.
You probably shouldn't be jumping completely in or out of anything because that requires timing, which is also not easy to do. What you can do is change he weights withing your portfolio. For example, reducing your US equity exposure to increase your bond exposure. Or reducing your US growth exposure to increase your US value and Eurozone dividend exposure. It's best to listen to several financial companies reports to weigh what to do.
Yes, you either marry into extreme wealth or hope that luck doesn't strike you into generational poverty. Anyone saying anything different is lying too you.
Maximize income and cash flow, when things start to crash, you want to have fresh new money coming in to start buying undervalued oversold assets.
In the meantime, keep investing to avoid eroding the value of your money as the dollar drops in value. It also prepares you for the possibility the crash doesn’t occur for a very long time, long enough to grow your net worth substantially to be better insulated.
Yeah, as a SWE I just got sufficient money to pay my expenses AND have some to invest quite recently (about 2/1 months ago), but I basically froze the money instead of investing because everything seems overvalued and about to fall (even silver and gold).
Prices of investments will also go down - stocks certainly, although precious metals were traditionally recession proof, we've never had such a bull run on gold/silver in anticipation of recession. My guess is that it won't hold - I've heard that jewelers already refuse to take precious metals at anything near market value.
It's difficult to draw many lessons from 2008. The people who suffered most then were over extended home owners. It's still not a good idea to be one of those people but there aren't so many of them now anyway.
A lot of people _need_ the S&P to stay where it is to keep their standard of living stable. If it drops to a rational valuation (say, 2500-3000), there will be a lot of pain.
There's a common consensus in economics that bubbles are really hard to predict, and even some argument that they don't actually really exist. Great paper came out recently called "Bubbled for Farma"[0] which looks at predictability for bubbles and finds some indicators but no sure fire thing.
That sort of rules out an easy or known way to predict and avoid bubbles. That said, it's worth noting our current historic period marked by being post financialisation (taking out a bunch of investment regulation) of markets in the 80s exhibits a lot more economic crashes (the real reason we should car about bubbles) than most of history (although most of history also does not exhibit any economic growth, so be careful what you wish for).
In particular, the period between around 1930-1975 showed extremely high growth with almost no bubbles or market crashes[1].
So my semi-knowledgeable but definitely not expert view is that:
- Bubbles and crashes are not easy to predict, and therefore avoid
- That said, our existing market rules have effects on the number of crashes/bubbles we see (but there's debate around whether you actually would want an economy with less crashes/bubbles if that meant left growth)
[1] You can find this discussed a bunch of places but Ha-Joon Chang's Economics: The User's Guide talks about this very fluently.
Edit: I think your question might actually have just been about personal protection again bubbles, rather than protecting the economy as a whole. In which case, having margin in your spending so you'd be able to live if things were some portion more expensive against your earnings is probably the only sane suggestion.
Was thinking the same, but why would everyone be more interested in gold an silver in a couple of months than they are right now? Sure it beats holding dollars of stocks.
But, keeping both feet on the ground, I'm tempted to think that if the economy collapses I'd not be very interested in buying precious metals. I'd be looking for food, a roof to live under and safety.
Software sector basically got cut in half just on Claude Code. You have to wonder what is next. I don’t think loss in economics is 1:1 with replacement so it’s not zero sum. Production doesn’t necessarily go up. In fact, net output is going to go down if you think about all the B2B lost too.
Whoever comes into power next better start thinking about universal income fast. We are gonna get there sooner than expected.
Why do people keep espousing such bullshit. Anthropic has terrible subscriber numbers, they are absolutely no where near profitability, a 100k people buying a product that struggles to sell itself is NOT the win you think it is.
If any of these tools did 10% of what their proponents claim they would become trillion dollar companies overnight and not you know... struggle so hard selling the amazing elixirs and perpetual labor machines.
If all companies fire 50% of their engineers, how will anybody find similar new jobs? In an ideal world software productivity doubling WOULD be a huge boon for the economy IF companies used the increased productivity of their engineers as a way to manage tech debt, R&D and other issues that were put in the backlog because historically there were no resources for this. In reality all companies look at increased productivity as a source for layoffs which does not translate in higher output but the same output done by less people. Which is a net negative because now you have 50% of all engineers without a job and no discernible increase in quality of deliverables.
I hope that after the Big Reveal, nationalism will immediately begin to fade away and we can start tackling species-level problems, like the plastic everywhere and in all of us, or dying ecosystems, or ... literally anything other than commerce.
The Typical language of believers is to say no that wont happen and how? I learned and studied enough history and the usual narrative is to not accept something that is possibly so catastrophic that it will change their way of life.
The tech bubble is another story and to be study on it's own, but it was summarized well that is < its a cycle of delusional capital invested over and over. Along with the numerous indicators of "what ifs">
The housing market is simply stupid, im sorry i don't have another word for it that better describes the current take on this matter. Home prices are outrageous because of market driven assumptions. A house is technically worth $150 is now on the market for $350 and why is that. from 2 years ago. People truly think that home prices are expected to keep rising and to what extent and why? They couldn't tell you<< " my zip code is the place to live at the moment, the person living in the next zip code is saying the same thing about hiss home,
Homes in silicon valley were above and beyond the national average and it was the only thing on the headlines during 2021 - 2022 but for good reasons that cant be argued too much/ Today it is the rest of US in the same mindset.
All of the US economy seems to be in protection mode right now. As to say it's the mother that doesn't want you to go out again after falling of your bike and scuffing your knee on the pavement.
tariffs were used the wrong way this time around, inevitably the very purpose of them was not so effective, it backfired, Damage is done and reputation is broken in a lot of ways. Britain is renegotiation relationships with china, Canada is renegotiation relationship with China, EU is renegotiation relationships with India and China. All with successful results.
There is a lot of stake here the US has a lot to offer to the world and to use that as weapon is tends to not have a good outcome. The market is large, yes it is resilient to some factors but not all/ When collapse takes place there will be tremendous momentum and its going to be hard to stop.
No one will ever get the timing right, but if you see the fundamental flaws of the economy, you know a crash is going to come. There were a lot of people who predicted the housing crash, not the timing but the crash. There are several signs that this is happening and the one no one is talking about is gold and silver prices. Don’t worry about the timing, you’ll never get the timing right, just worry about the fundamental economics and the flaws and protect yourself.
I happen to agree just because of golden silver prices that it’s going to happen sooner than later, regardless if war breaks out with Iran.
At any given moment there is always someone predicting that the economy will crash. So someone will always have predicted it. The question is do they actually have some insight or were they just lucky.
This not a prediction. The crash is currently happening. You just do not want to see it. Can you explain gold and silver prices? can you explain why bitcoin has been flat now dropping? The falling dollar? The US Treasury yields rising since 2020? CAn you explain why consumers feel at ease even though economicsts are stying everything is great?
I mean why do you think the FED and Trump are all over each other? Because there is no way out. If they lower rates, inflation. If they raise them, assets collapse.
People have been warning about this exact secnario since 2008 and no one is listening. Back then it was a prediction, but now it is happening.
Keep in mind that not only did people predict the housing crash, some were certain houses would be sold for pennies on the dollar.
I bought a short sale distressed town house in 2009 for 40% lower than its peak price, and many people told me it was a terrible decision because if I just waited long enough, I'd buy it for a fraction of the price.
I think prices went a bit lower in 2010, but then I gained about 400k in equity over the next 10 years and sold it.
China seems to be the only candidate. But whatever happens it won’t be in the same way as before.
As for whether it is better for everyone, that question became a lot harder in just the last year. Who is «everyone»? And what do we mean by «better»?
With the US wanting to annex territory from its NATO allies, and engaging in extortionate tariffs, it is harder to argue that the US is good for Europe. Which is why Europe has already started to look eastward. Starting with a comprehensive trade deal with India.
What’s happening is good for Russia and China. Not so much for the rest of the world.
I disagree that something good for China is necessarily bad for the rest of the world, which you seem to imply here includes only Europe.
China alone has a higher population than Europe and the USA combined. I'd say that even if things got worse for Europe, to humanity it still constitutes a net benefit. Lives aren't of less value just because they're in a (gasp) communist country.
The US is resigning the position intentionally. It's not as if someone is gearing up to replace it.
But as a trade partner? China, markets love reliability and stability. Not every 4 years wondering if there will be another trade war for reasons unknown.
You'd be very surprised the amount of malicious behavior countries will ignore to allow trade. Look at Saudi Arabia.
The single superpower thing was an anomaly which was mostly a result of one specific country being largely untouched by WW2; we're more likely heading back towards multiple regional powers with varying levels of cooperation, e.g. EU+Mercosur+India agreements that just happened.
The lines are still being drawn, but its doubtful one single power will emerge.
Seems like the rest of the world is just signing new trade deals and continuing on as normal. I hope America returns to normalcy in the next election and everything settles down. Else it seems like back to the old multipolar world.
I don't see any way we're not heading back to the multipolar world. They've managed to burn almost all of the goodwill and soft power that took 80 years to accumulate in 373 days.
Even with a "return to normalcy", the trade and military agreements being forged are permanently diminishing America's influence. Especially given that we're never more than 4 years away from this happening again.
We have that. What has broken down is cooperation. The kind that has ensured relative peace for 80’ish years. That order is breaking down and creates instability. Instability means more conflict and less productive use of resources.
The EU just signed large deals with Latin America and India, binding a sizable chunk of the world to its rules. ASEAN is on the docket, Japan, Canada and South Korea have been signed for a while now.
Make of that what you will. Power isn't always tanks and soldiers. Sometimes its bureaucracy and contracts.
Even the evil adjective starts to look debatable in contrast to what current hegemony is doing on its way down.
Apparently their worst offence so far was calmly outgrowing and out competing their peers while benefiting global consumers with he fruits of organized labor of their own society.
China wants but China won't. They lack the military capability of force projection that is the basis of the US dollar dominance, their currency cannot be used as a reserve/trading currency due to capital transfer controls (that have no sign of ever going away because otherwise everyone who has money in China will move it immediately out of the reach of the CCP), foreign investors have gotten very skeptical over the years regarding IP theft on one side and supply chain law issues (e.g. underage labor, 996 and modern slavery, environmental concerns) on the other, and on top of that China is getting rocked hard by the inevitable consequences of the one-child policy that is driving up labor costs, further reducing the attractivity for foreign investors.
> This is the 11th time that tariffs have happened, and it just isn’t surprising anymore.
There are tariffs everywhere, all the time. Canada just dramatically cut its 90% (or something) tariff on Chinese cars. Tariffs haven't just started happening because someone you don't like did them.
This neglects the scale, cost, and unpredictability. His tariffs are far from being the usual seen elsewhere. Of course, you should already understand this.
I feel like one of the following is true (and I don't know yet which is the case):
- I'm genuinely a lot more pessimistic than is accurate around what is and isn't a bubble
- Bubbles are just slower to burst than I expect
Possibly some combination of both. But even ignoring AI which is relatively new, it seems "obvious" to me, that whatever value Bitcoin has, investment in the asset is detached completely from that value. I'd have expected to see Bitcoin crash a long, long time ago, and have been thinking it's "just around the corner" for years and year.
And yet, the bitcoin price as a whole, although it's dipped recently, and is clearly volatile, still remains something like 10x what it's value was 5 years ago[0].
Something I think people forget when it comes to the valuation of bitcoin is just how much of it is used to fund illegal activities (Betting, Drugs, anything on the darkweb,...). I honestly believe much of the valuation is linked to that, but I have no source or proof.
I like how the last image based on "C'mon, Do something" with all the AI symbols, has hard to recognize body part shape, with Claude being right in the middle of it. Hank Green talked about it last year - https://www.youtube.com/watch?v=fIbQTIL1oCo
I don't think this proves/suggests a crash will happen, but its worth considering most of what you've said would have been true right up until both the 2008 financial crash and the dotcom bubble.
The person declaring "trillions in new investments" is Donald Trump. He doesn't understand how tariffs work, he doesn't understand how trade works, and he doesn't understand how the truth works.
So many of the stats you mention are based on potentially-untruthful statements from the Trump administration. When the facts and figures aren't favorable to Trump, his strategy is to shoot the messenger and install his cronies. Works great, right up until it doesn't.
And the person you're replying to is someone who thinks "The case where Canada must be annexed is if Greenland somehow remains part of Denmark"! The veneer of civility on this site lets some really incredible people slip under the radar.
Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down. Margin calls happen and increase seller volume, prices go down further. And so on.
I'm not saying all this will happen. Just that capital doesn't have to "go" anywhere for a crash to occur.
Could you clarify the question? When everything's going up, it's definitionally not a crash; do you mean something like "where are people going to flee to now/soon, in anticipation of a crash, given how buoyant everything is"?
You know that the reason things bubble and burst is because speculation outpaces reality at too high a rate, ie : too much "capital" is make up of hopes and dreams.
When reality hits and the numbers make sense, all that hope and dreams go pop.
There is no reality in the market. All prices are speculation, always. If there was any reality involved things like Tesla would crash 3 times already. My question is where the spekulants are going to escape to. I don't think it can be even dollar this time because in this crash dollar most likely will go away as the global currency and the inflation will be devastating.
This is really obscured by the K-shaped growth, dual economy now. We've reached a stable pattern of a deep underclass serving the wealthy. We won't have a crash or "correction" because the entrenched top 5% has figured out a way extract value from everyone else indefinitely.
> This is really obscured by the K-shaped growth, dual economy now. We've reached a stable pattern of a deep underclass serving the wealthy. We won't have a crash or "correction" because the entrenched top 5% has figured out a way extract value from everyone else indefinitely.
Apologies for quoting all 3 sentences of parent, but the poorly-drawn conclusion depends on the full sequence of seemingly rational statements.
The context this sequence is missing is that approximately 70% of the US economy depends on consumer spending. [0][1] If the lower stroke of the K-economy diverges too much from the upper, the economy is going to grind to halt.
Consumer spending of the bottom 90% cannot (easily?) be replaced by the top 10%.
If every idiot (I'm including myself in this) on HN/Reddit/Youtube/Tiktok/mainstream news/etc. thinks we're in a bubble and is crazy pessimistic and thinks economic collapse is near...it means we're not actually in a bubble.
When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying. Because that will mean the general public must be reaching 1999 levels of euphoria for a hint of optimism to show up here.
>When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying.
That seems to have happened around 2023 or so as people chose to laud over AI instead of understanding the underpinnings of society coming undone in real time.
No, because your pessimistic feelings only serve to strengthen my claim.
I find it amusing that, even when directly calling attention to the overwhelming pessimism that is the default-state on HN, I'm met with a pessimistic comment with zero self awareness.
There's quite a few factors here that delayed what should have logically already happened.
1. All the tarriff reactions cause US companies to import a huge amount of stuff for 2025. From what I understand, we're about to exhaust all of those imports.
2. The unemployment reports (especially the U3 numbers) hide quite a bit of turmoil going on under the hood of the job market.
- If you lost your job and switched to Uber/Doordash, you're not unemployed.
- If you are riding on severance pay instead of filikg for unemployment, you're not unemployed.
- If you got tired of throwing out hundreds of apps only to get automated rejections and take a break a month, you're not unemployed.
- If you just graduated into this hellscape and can't qualify for any unemployment, you're not unemployed (you're technically not part of the workforce yet).
There's a lot of these small shifts in how jobs work that make U3 less reliable in reflecting reality. And I only touched the surface of these issues.
3. Continuing on the U3 with a point worthy of its own bullet: the unemployment appears flat, but the makeup of what's happening per industry really lays down the reality. The only industries growing are hospitality (aka food service and similar sorts of duties) and health care. And to top it off these "growing" industries shift more and more to fractional work. Pretty much every other industry is down. So people are getting laid off/fired and moving to part time work to get by. "Stable" by unemployment numbers, but very unstable on the day-to-day. Add in the recent congressional bills for healthcare subsidies and we're throwing more gas on rhe fire.
4. I'm sure it's been said so much by now, but AI in the US is the only thing holding up the GDP. Without that massive investment, the GDP would be at best, dead flat. The US isn't growing in a way that reflects actual yields to anyone outside of a select few shareholders. We're not building more houses, mining more materials (on the contrary, we've resumed ransacking others'), manufacturing more machinery, nor even producing more service value for customers and businesses. We're putting all hedges on one thing with an uncertain outcome. If that industry declines, so does the rest of the US.
5. The K shaped economy. I have to check these numbers again, but I believe that spending is indeed up, but the makeup of spending per income band is more stark than ever. The too 10% income households makes up half of US's spending. But there are signs that even many high income houses add also starting to hunker down on spending.
----
That was a lot and it still only scratches the surface. But the TLDR version is that there's a lot of statistics massaging over the real struggles of life and many industries reaching a breaking point they did a good job putting off. But by this point it will only take a needle to break this camel.
I can't time the market worth shit - I got my first investments out before the 2008 collapse in earnest, and got into the job market at its peak. I waited through the 2010s to accumulate money to invest, only to start doing so amidst rampant speculation in crypto, then NFTs, then meme stocks, then AI.
So yeah. I am not getting a job at a financial firm anytime soon.
That said, the societal gestalt seems primed for something to go horribly wrong. AI boosters are positing their models as solving all of society's ills, which first requires acknowledgement that these are in fact problems facing society requiring solutions. Everyone is broadly on the same side - wealth inequality is a problem, climate change is a problem, energy dependence is a problem, job security is a problem, housing is a problem, etc - but we're all varied on the approach to solving these problems based on personal biases and perspectives. YouTube is infested with AI slop, social media is filled with doomers and preppers, and subcultures are simultaneously splitting off from larger groups (like those leaving Twitter/X for BlueSky or Mastodon) while also forming newer alliances and communities around shared goals or ideologies. Even those in positions of power acknowledge the polycrisis before us, while exacerbating it further by firing swaths of workers to fund their own bunkers, yachts, and contingency plans via share price bumps.
It's in the air, this horrid pit in the stomach that doom lingers just around the corner. It's been there for a decade, long before COVID, festering beneath the surface. Hell, for many of us pre-9/11 Americans, it's been a gradual decline since the heydays of the maximum-employment 1990s. So many of us feel it that it just cannot be ignored, and thus it becomes a sort of self-fulfilling prophecy: enough of us believe something bad is coming, therefore something bad must happen to quell those feelings.
There's two things that give me (and my OCD) solace of a sort:
* We'll all find out together, regardless of status or strata
* Most of us - statistically, generally, based on prior events and barring any explosive escalation - will likely be relatively fine
Yeah, the shifting of geopolitics is likely to result in more violent conflicts with the potential to kill billions if things go NBC. If we don't address climate change, millions will die from wholly preventable causes and tens of trillions of dollars of property will be destroyed over the next century. Misuse of AI could result in doomsday scenarios that Sci-Fi has warned us about for decades. Wealth inequality appears poised to create a modern version of the Coal Wars, if current events are any indication.
Technology alone won't save our asses. Neither will some mythical billionaire genius, or AGI deity. It'll have to be us, regular humans, rejecting the present and choosing to build a better future together.
This isn't a crash, it is something else comming, perhaps the "jackpot", where society/civilisation unravells, climate disaster kicks in with real persistant challenges everywhere, and some third, fourth, fifth effects that break our millenial run to the top of our planets ecosystem as the ultimate apex species.
It has been a good run, but useing the same tacticts as our stone age ancestors, is, I think, about to bite, hard.
And it is literaly this, our strategy is to keep useing the same tacticts.Jackpot.
I know HN always has its fair share of doomers, and generally the HN communities track record anecdotally regarding finance and the market is frankly terrible. Tesla (stock price wrong), Bitcoin (wrong), AI a huge dot com like bubble (wrong in my opinion - TBD though).
I’m optimistic on the US. We could realistically print a 5 handle GDP, oil at rock bottom prices, lower federal income taxes this year. As far as Gold and Silver I just see it being propped up by speculators. Silver spot is down 15% this mornings and gold down 8%.
I predict double digit gains in the S&P by end of year and strong financial conditions with mag 7 continuing their lead. Tesla also will be a big winner.
> We could realistically print a 5 handle GDP, oil at rock bottom prices, lower federal income taxes this year.
Ignoring everything else in terms of oredictions: the US simply doesn't have that spending buffer anymore to really outspend yet another crash. Its at what, 37 trillion right now? And it's only rising more and more by the month.
The only thing worse than a crash would be the US defaulting on that. And then we'd be screwed in ways that we don't recover from in any of our lifetimes. Nearly a century of trust and soft power completely down the drain.
Even if they don't default. How long there is willing investors? Even if FED drops rates. It is an auction. So rates should be set there. But maybe printing will happen via bigger and bigger market operations. Leading higher and higher rates. With probably inflation... So I suppose valuations could go even higher...
I do not understand economics and from engineer perspective whole thing doesn't make much sense.
> Which is to say that no individual decision make want’s to be the first mover, so the market does not move.
Uh, that's not accurate. Hathaway is sitting all cash because of it and so far they have been the one losing. Even if you assume (and correctly I think) that the market is overvalued, their stock pile of cash is eroding: https://newzsquare.com/warren-buffett-warns-of-fiat-currency...
> A year ago there were a few signs. Right now, it feels like everything is primed to blow. Is that new?
The market is unhealthy. Too unhealthy that I think it can no longer self-heal the usual ways (recession/crash/etc.) and we'll instead move to more advanced stage of hyperinflation, global war, etc.
> In Europe, people hold cash at negative interest rates because they have so few new ideas and so little innovation to invest in. Where exactly do you think the money will go?
That's a bit reductive, in Europe there's a much bigger culture of saving, most people I know here are very averse on taking debt if unnecessary, only going into debt for large purchases like a house or a car. Even for cars I see many outright purchasing a used one in cash instead of going into financing/leasing.
People hold cash but also invest, it's savings in general that are high, varying between 10-25% of yearly income saved (compared to the US's ~5%).
I think this narrative of "so little innovation" is peddled very much in the software-adjacent circles but it forgets that innovation is not only from software, if you really think Europe has no innovation you are either ignorant or purposefully fostering a bad narrative. No, Europe doesn't have the VC industry, and the software companies' culture of the USA, it does innovate with a different model.
> If you insist on believing the US economy will crash without a well thought out thesis, I think that’s a beautiful thing. When you sell your positions on US companies, I’ll gladly be on the BUY side of that order.
Please do, as I've been cashing out throughout this year anything that has any direct exposure to the USA stock market I need people like you on the other side, thank you very much.
> In Europe, people hold cash at negative interest rates because they have so few new ideas and so little innovation to invest in. Where exactly do you think the money will go?
You comically self contradict yourself. If it was lack of ideas to invest in that drove holding of cash at negative interest rates, then what stops the european from just buying us stocks? US collapse is inevitable, until its NOT…
Some sort of an AI crash / bubble bursting is expected to be honest - now if that will take the rest of the US economy as well.... debatable. Any strong opinions on this?
I'm not an expert, my knowledge is just from reading around a lot, but I think there's some stats that would suggest the US is particularly exposed:
- At points, AI investment has actually seen more spending that US consumer spending[0], there's some debate on this[1] but if true, that leads to a narrative of the US being 'propped up' by AI investment.
- US GDP growth was strong last year, but behind quite a lot of other similar countries like the UK, Germany and Japan, which doesn't suggest a comparatively strong economy.
- The US is actively increasing it's borrowing substantially (Big Beautiful Bill) while lowering it's currencies value through trade wars and unpredictability (see bond market). That reduces its ability to use its wealth to borrow its way out of a financial crash (like with the 2008 crash, or Covid).
This could be a little overblown and is hard to tell, the US is definitely an extremely wealthy country, even if its less wealthy comparatively that a few years prior.
On (1):
Might be useful to separate investment flows from the rest of US's economic activity.
AI investment is propping up capital flows, the GDP statistic, and responsible for most of the gains on SPX, but its still a small fraction of the economy.
What else does the economy consist of these days? It's pretty much already in a recession if you exclude the big AI companies.
Besides, basically every company had been desperately shoving AI into all their products. Throwing all of that out when the bubble pops won't be pretty.
I imagine depreciated AI features will be like the soft varnish surfaces of some 90s cars after 10 years - disgustingly sticky, shedding flakes left and right, and in hindsight an obviously stupid idea that wasn't tested sufficiently before pushing it on consumers
> now if that will take the rest of the US economy as well.... debatable.
In the grand scheme of GDP, the US hasn't done much growth in anhtjjg else this decade, all while massively increasing spending to prevent post COVID recessions.
It certainly doesn't look good. But this was being setup for 30 years as we outsourced our strong manufacturing wing to make the top brass richer in the short run. So I do think the house of cards falls if AI does.
The sad part is that we may have been able to whether the storm under the right leadership. But that sure isn't the leadership in the White House right now.
Most of the activity is with the same old big tech stocks, and the largest investment by far is not even market driven. Stargate is defense spending.
AI doesn't have to sway consumers, and it doesn't even have to work that well now or ever for governments to keep pumping money into it. The whole point of Stargate is to de-risk with reduced need for security clearances to handle big data (whistleblowing) and eventually get away from foreign tech. Also, there are a ton of businesses who have always done things on-premises for compliance and they can now cut costs by migrating to these government vetted data centers.
It genuinely shocks me how rarely anyone brings this up. It's been very loudly said by Trump and OpenAI since he took office, and it was going to happen regardless of who was elected.
Yes, the concentration of wealth led to the AI boom and it’s going to lead to the crash for sure. The AI boom was nothing but a crypto bubble. And since it’s making up a large majority of the investment right now I would say that’s the only reason that we didn’t have a crash last year.
If Russia's economy is kept afloat after 4 years of full-scale war... Why would one year of Trump 2.0 do us in? Don't get me wrong, a whole lot of problematic actions have been taken in that time-frame but that pales in comparison to 1.25 million casualties and about the same number having left the country (and our population is almost triple theirs) on top of infrastructure destruction.
Entirely different cases. Russia never relied on the strong rouble for its economy to function. Or having unfettered access to most of the world's markets. So it had some know-how on weathering the storm.
But OTOH, if Trump is erratic enough to trigger a world-wide de-dollarization trend, and close down markets that were traditionaly open (e.g. Europe), then US would be facing an unprecedented storm that would be much harder to navigate.
A have a bad feeling for the US economy. A decline comes soon, then prepare for impact with a financial crisis and in the end of the tunnel the IMF. I know it's super crazy but that was also for my country 16 years ago.
Yes. Until 2019 we stagnated. Since then we have the best Prime M of the last 100 years, Kyriakos Mitsotakis. He has made some incredible stuff and some mistakes, too, but they are nothing relatively to the Balkan traitors of the past. The country has rebooted and from an IMF victim it has become an exception in the current European/world shity situation. He decided to remain a third term, going to have almost a double score from the leftists in the 2027 elections, so I advise you to invest in Athens stock exchange.
I feel like there's some credibility to 'this time it's different'
The US economy depends on the country's position of world hegemon - the US dollar is the world's main reserve currency, the US enforces international order and trade rules via its military strength, it dominates technology and culture through 'US defaultism'.
I dont think AI even factors in to this.
The US economy is priced for global reach - if it manages to lose that through a combination of credible competitors, and loss of goodwill - it's going to be in heaps of trouble.
The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
All said, I think if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be.
> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
Right now this is much more of a maybe, possibly, eventually, over a long enough time horizon.
As of the end of 2025, USD still made up 57% of foreign reserves vs 20% for the Euro and 3% for the Chinese renminbi. Nearly all commodities are still priced in USD and about 50% of trade invoicing is done in dollars, closer to 60% if you exclude the Eurozone. USD also makes up about 60% of SWIFT transactions.
So the demand is still there today and de-dollarization is not really a thing in aggregate as of January 2026, despite all of the events of the past year or so.
So if this time is different, I’m not seeing it yet.
The international "rules-based order" is a good idea when most nations play by the rules most of the time, and when the most powerful at least pretend to follow the same rules as everyone else.
A world order based on rules makes it possible to live at a much higher level of abstraction.
Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly just figments of collective belief. But these wispy and unreal ideas that everyone believes in make it possible for most people to live longer, healthier and less difficult lives.
The "rules-based order" was always partly mythical, but as long as everyone kept pretending, it mostly continued to function.
But when we devolve from the rules-based order to the old order of pure power and might-makes-right, kings and dictators, when there's no more collective belief that the rules apply to the rich and powerful, then the tower of abstractions collapses, and we're back to the cold, hard, brutal and difficult real world.
People will find out that life in the real world is a lot poorer and more miserable than life at the top of the tower of abstractions, even if your brokerage account appears to double.
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>demand is still there today
Not all demand the same. There are broadly 2 types of USD buyers
1. price insensitive: sovereign banks, who buys for liquidity/storage
2. price sensitive: hedge funds, private buyer who buys returns
Type 1 buyers are bailing out of treasury. Type 1 are marginal buyers, the close auction regardless or rate, this keeps rates low -> debt servicing low. They artificially depress yield to non market rates, without them rate go up because you have more price sensitive buyers who buy for returns. This increases borrowing costs, hence US debt repayment rising massively.
Type 1 buyers, i.e. US allies (and historically even adversaries) soaked up treasuries are now de-dollarizing / buying gold in lieu of _more_ USD. Type 1s underpin the "privilege" part of exorbitant privilege. The more they de-dollarize the more dollars become exorbitant, aka debt like everyone else. Type1, sovereign held 60% of USD to 40% in last 5 years. This large part of why interest tripled and debt servicing went from 350B to 1T in 5 years. Type1s exit to 20% in another 5 years and maybe interest goes to 5%, debt servicing 2T+. It's the difference between 10%/20%/30% debt servicing as % of federal revenue.
This not to mention USD reserve ticking down at 1% per year means meaningful changes in our lifetimes, and velocity may increase with developments like Saudi no longer locking oil to dollar. Less USD as % of global reserve = more network effects of alternate payment = increased potential velocity of USD reserve drop. This doesn't mean other currencies pickup all slack, i.e. central banks seem to be going in gold / commodities with no counter party risk for new storage. The net result is USD will still be around, in large volumes, but the cost/debt to sustain the system will be "normalized" while US budget is historically is built around USD debt being privileged. AKA difference between borrowing money from family vs payday loans.
>Nearly all commodities are still priced in USD
PRICED as in benchmarked in USD, but =/= USD is being spent to settle them. There's a fuckload of commodities where PRC alone buys 30/40/50%+ of global production, and while quoted in USD, increasingly settled in rmb/CIPS, bilateral currencies, BRI infra or other swaps mechanisms that bypasses USD. This one of the largest source of dedollarization - PRC went from single digit % to plurality of cross-border settlements in RMB/non USD. Though this is just very recent leading indicator that USD is functionally circumventable.
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The end of 2026 was remarkably different to the world of today, and it that's logical it is - checks calendar - already 31 days ago. Now imagine another year of this.
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That number has been dropping by a percent every year for USD over the last 10 years. It used to be 65% USD in 2015
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This is one thing I've heard repeated - that USD needs to be spent in America - seems like other countries could just transact with it directly.
This time is not different in the sense that at some point crazy valuations get a reality check. But that's not "the crash of the US economy", that's a stock market crash, and those will happen (tell me when - I'd also like to know) and they also tend to crash all around the world.
The US economy has had ups and downs and I'm sure will still have but despite the wishful thinking of Marxists it's still the least worst economy around in perhaps the least worst country. It still attracts talent and money. It still leads in many areas. It's still very productive. There are huge ecosystems and a cultural base. It's still the world's largest economy. Where will the balance tilt? China? India?
Anyways, be careful of what you wish for, if the power shifts to China we are going to have a very different world, and not in a good way. I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
> I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
Yeah aren’t they just Leninist but using us as a signal of what to make? I thought rough shape of the scheme was you get to build a factory using free loans in bullshit money that buys rice and apartments but can’t leave the country, then use that to get real money you can take elsewhere by making shit Americans want to buy. You can’t trade the bullshit money for real money without the factory step.
The dollar is going down in value right now. Thats the plan. It makes foreign goods more expensive and exports more affordable to other countries. Meanwhile it should have less inflationary pressure on domestically produced stuff like housing.
I dont know if this is going to work or collapse. If it does work IMO they still need to reduce the debt - current actions are because we are backed into a corner, so that needs to be corrected.
There is no plan. There is just chaos.
It also increases profits for multi-national US companies since they get paid in other currencies, which they then convert to dollars locally. Basically, they have favorable FX tailwinds.
The "Mar a Lago Accord" plan [1], for those curious. The US debt is one major rationale behind the strategy.
It's a dangerous plan that relies on keeping allies happy and re-establishing hegemony via a Plaza Accords / Bretton Woods 2.0 type system.
It's not going to work if you simultaneously piss all of the allies off.
[1] https://www.youtube.com/watch?v=1ts5wJ6OfzA by Money & Macro, which is a fantastic economics YouTube channel. Patrick Boyle has also spoken about this in pieces.
Eh, it's not a plan, it's make believe.
It's a flimsy back-filled rationale thrown on top the mercurial (and often sadistic) whims of an American Caligula, so the elite enablers can pretend there's something rational - or even good - about the chaos and destruction they are supporting.
There isn't. It's just chaos and destruction.
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> The US economy depends on the country's position of world hegemon
Citation needed? This feels like a retcon. Remember that the U.S. became the biggest economy in the world in 1890: https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&.... That was half a century before World War II and the military empire that followed.
The trillion dollars a year pumped into the military support the stock prices of quite a few highly-valued companies. A sudden collapse of hegemony would be bad for "the market", but that seems unlikely unless WW3 actually kicks off instead of a few more rounds of opportunistic snatching and bullying by the big countries, and in that case few people would care about the stock market.
> 'this time it's different'
I remember reading this a lot in 2000-2001 and 2007-2008
That said, overall I sort of agree with your assessment except for having any optimism that the US changes course.
The current looming problems with the US economy are almost entirely unforced errors of the Trump administration (they could have done basically nothing and taken credit for the Biden soft landing and economic growth) but they aren't going to course correct.
Trump has no ability to admit mistakes even to himself and he's now surrounded by lots of people who stand to enrich themselves from the chaos even as the average American is harmed greatly.
Still, he'll be gone one day and I am going to be all in on that day. It'll all be hockey-sticks from that moment on.
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Its standard Republican playbook.
Get in power, enrich themselves, kick the can down the road to Democrats, then blame the Democrats for poor economy.
This is why ironically Trump cancelling elections and installing himself as a 3d term president would actually be good. People need to see that no matter how bad they think things were under Democrats, it can get much much worse. Say goodbye to your house value and 401k plans for retirement, you gonna be a wage slave well into your 60s, but hey, at least we fixed "wokeness"
> I dont think AI even factors in to this.
I think another way to look at the expansion of the capitalist economy is the onboarding of people into entry day jobs and transitions of economies upward..
AI may have relatively little to do with the US' tantrums yet I think it has a lot to do with the end of expansion and a fast contraction of the availability of top jobs as the last economies enter the middle of the funnel can't be good.
Simple solution; raise taxes. Been saying that will be the outcome eventually as the olds continue to die and the youth feel zero obligation to senile pants shitters and corpses. GenZ fucking hates Boomers and a whole lot of GenX (that insurance CEO? GenX. Epipen price hiking CEO? GenX. Whole lot of tech CEOs of note? Yup, GenX) Generations beyond Z will never experience Boomers and 1900s American life. They won't care about an arbitrary line in the sand. GenX ain't getting any younger, won't have Boomer support.
A reasonable scenario right now; rest of the world intentionally collaborates to isolate US, destabilize US, act as a forcing function for US to reassert internal control by swiftly deflating buying power of useless rich[1]. The world is sick of US CEOs who do little but jiggle values in spreadsheets. Sundar and many others have said CEOs are likely a very easy job to automate away; useless pageantry. There is rapidly growing domestic and overseas will to depose those non-contributors.
Fastest way to stem the collapse of reality for 10s of millions of Americans with a lot of guns too.
[1] Americans buying power has been deflated by 300% since 1980... I am sure it is purely coincidence Boomers have run the world for most of it.
"Soak the rich" laws were passed around a hundred years ago in the US in response to obscene wealth; worked out pretty well for a long time before they got rolled back and we got a new round of oligarchs.
Trump famously bankrupted 3 casinos. The US economy will be the 4th.
He bankrupted 4 casinos. 2 in one swoop.
> Here’s the current price of silver.
Not shown on the chart (and which couldn't have been predicted at the time of writing) is today's crash of almost 30% in that price.
Speculative bubbles happen. The narrative of people losing faith in currency made no sense, because that should pump the prices of durable commodities as well, if not instead of precious metals.
Once the supreme court decision about Trump went out, I took all of my investments and put into a savings account.
When a dip happens, I simply take 10% of the money, buy the dip, then sell when the price hits pre dip.
So far Ive netted significantly more than any of my peers that actually do investing.
I don't see 30%. Maybe 12% from the very recent top, back to wherever it was just a few weeks ago.
https://www.kitco.com/charts/silver
There has been significant recovery in after-hours trading, but check out that "day's range". The low point was around 1:40 PM EST.
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it was at 120 and now it's at 85. yes it's back to where it was a few weeks ago
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What is different this time? Maybe:
1 Online shopping market in the range of 5 trillions 2 Electricity and energy price raise 3 Impossibility to lower interest rates 4 Tech market also in the range of multi Trillions 5 Global education and power expansion ...
Meaning that a % of all this money flow goes private pockets destroying medium class, which gets poorer.
It is like a memory leak that keeps sucking resources while growing exponentially until the system crashes. The real question for an economist is how much ram has the system and how much the memory has leaked?
This Legendary site is interesting: https://usdebtclock.org/index.html Especially when combined it´s data with AI.
you can couch it in tech metaphors but there is a clear path forward and it involves eating a certain class of people
You don't have to eat them. You just have to erect significant barriers to hoarding wealth, particularly in off shore devices, and you have to create constant pressure to ensure that stored wealth is best re-invested in the economy at large.
These aren't even hard problems. Until you meet someone in Congress. Then it suddenly seems hopeless.
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Big problems are solved by years of investment and good decision making.
Unfortunately, going after causes or correcting symptom in any kind of hurry acts as a massive destabilizer at exactly the moment systemic destabilization provides the motive/momentum for taking action.
Hard course corrections at critical pressure, in a complex system, is a value destroying reset.
Companies can do this. Mass layoffs, capitalization sell off, etc. And then recover over time, because the rest of the economy around them is mores stable and the pain gets diluted. Entire countries doing this doesn't work out so well.
But it would appear, that may be the path we are most likely to take.
A declining dollar will look like a good economy for those who think the economy is the stock market.
Private equity and retirees with everything in a 401k.
If you predict a crash every month and it happens after 2 years... can we call you a visionary?
I know the question is tongue-in-cheek, but I think it’s a fascinating question, so I’ll take it seriously. If you predict the crash and it happens two years later, i think you basically cannot profit off that guess, so I’d say no. Although i haven’t provided data for the two-year claim, there certainly exists some period N for which the prediction no longer pays off, given a fixed drop. But if you can predict it 6 months in advance, you probably could profit! I think a certain amount of annoying repetition is fine for profitability.
Yes and thank you in advance
ZeroHedge has correctly predicted two hundred of the last two recessions ;-)
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Maybe simultaneous with the crash of the Chinese economy, which was predicted for 40 years now
I don't understand why people expect the Chinese economy to crash - they can basically make everything, a lot of which is internationally competitive, they can trade for the resources they don't have with the goods that they do - with basically the whole world dependent on them. They have a huge internal base of poor people, and lifting them to a middle class level will alone fuel domestic demand for years to come.
Their biggest problem seems to be they're too good at building stuff, whenever a new category of product pops up, they quickly build up both volume and drive down prices through competition so that they saturate their internal markets (see: housing, EVs)
There were worries that they'd issued a lot of debt to build real estate that wasn't needed resulting in ghost towns and people thought prices would fall and the banks lending would collapse but they seem to have managed ok. The Chinese actually seem quite smart at managing their system.
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The Chinese economy is indisputably strong and real, but rumor has it that its reported growth numbers have been inflated in the last couple of years. And why wouldn't they be - there is an autocratic government whose justification is that what they are doing is increasing economic success. No success is not an option.
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> Their biggest problem[…]
is demographic in nature. https://www.populationpyramid.net/china/2024/
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Depends on your definition of crash?
Real estate prices dropped 30% blowing up most people’s savings. The debt overhang is slowly bankrupting various companies. Growth is an anemic 5% (should be double for a country with China’s per capita income) and means it will never enter middle income status. Unemployment, especially for grads is very high and the lack of babies or immigration means the worker base will shrink while the demand for social services will skyrocket.
Doesn’t seem great to be honest.
The question is there is no other place for money to go. Liquidity is still in abundance and no other market can capture that liquidity. Eurozone is a total mess, ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point. Japan market is a joke, Asia and emerging market has huge governance issues. Bond market has penalized the investors and only more pain is in sight. All in all, there is a lot of doom and gloom out there. But I don't see a viable alternative.
Sure, Mark Carney gave his little speech in Davos. The same Mark Carney, that led Brookfield while its finance arms operating out of US.
But realistically, how is opening up to China more even considered as the alternative? When has any deal with China worked at a strategic advantage for the other side? Is not the whole reason the so called globalization project failed was because players like China did not play by the same rule or did not even have to play by the same rule? What gives they will when you open up the market more to them? All it takes is for them to take your product, copy it and sell it 20x cheaper and flood the market everywhere else.
> The question is there is no other place for money to go.
Whenever I've heard people speculate on the US bond market losing its footing, the suggestion isn't that "Japan will be the new US" (eg) - it's that investor will spread assets across multiple places (US, Japan, EU, etc) to hedge against risk, rather than just the US.
That's not an answer. Japan and the EU can't handle those flows so again there is no other place to go.
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I'm not even sure what you're trying to say with the rest of it but this is nonsense. The ECB policy IS German, and has been for 3 decades. All of germany's economy is organized around the existence of the eurozone with Germany controlling a unified monetary policy.
What is a mess about the Eurozone and reckless about the ECB?
https://robinjbrooks.substack.com/p/the-principal-agent-prob...
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> What is a mess about the Eurozone and reckless about the ECB?
Without opening the article someone gave has a link I can name a few...
Not respecting the promises to go down hard on countries not respecting a yearly public deficit of more than 3% of their GDP (France is nearly at 6% since two years and going down the drain).
Having a common currency created by ideologues, not economists, and having that common currency shared between countries that do not have the same fiscal policies.
Having a shitload of ultra indebted countries in the eurozone.
Having one of the country of the eurozone, even though the Euro is one of the youngest currency of the world (only 27 years old or so) who already frigging (partially) defaulted on its public debt.
(not I just read TFA)
Ah yup: the ECB heavily manipulating the various countries' public bond rates.
My bet is that the euro shall be one of the shortest lived currency ever. It was made by ideologues and is only loved by ideologues. Economically it makes zero sense to have a common currency between country that have both different fiscal policies and different levels of public debt.
Now of course the ideologues are going to argue that the EU should have a unique fiscal policy (with of course ultra high taxes for everybody, except EU public servants who pay the lowest tax rates in the entire EU btw) and a common public debt.
Not gonna work, komrade.
We have so many problems. So many savaged construction sites that we knew for decades were important. The problem is not, where all this fiat money could go, there are plenty of places. The problem is, where it can go and make a profit. That was a hint to broaden your perspective.
> Liquidity is still in abundance and no other market can capture that liquidity.
I don't know what that means? Market crashes are changes in speculative value, they don't care about counting literal amounts of currency. Selling US securities doesn't require that the resulting "liquidity" move anywhere else, just that the owner prefers to see a cash balance to a stock certificate or whatever.
Basically this point seems like a big "confused money with value" mistake.
Free market, but not like that (china).
Stocks might go down if AI doesn't bring in enough revenue. The real risk seems to be currency depreciation though. The USD is already down 15% this year compared to the Euro. I'm worried about what the next FED chair appointee will do. JPow has stuck to his principles so far.
> The USD is already down 15% this year compared to the Euro.
False in every sense possible. For starters, the year is only a month old. Second, it’s been pretty stable for the past 6-7 months, and is only down 12% from a year ago - not 15%.
> The USD is already down 15% this year compared to the Euro.
It's down 12% since a year ago, but that's largely a reaction to the tariffs. It's been fairly stable since July or so and has only seen a small dip (and partial recovery) in the last couple of weeks.
https://finance.yahoo.com/quote/USDEUR=X/
>what the next FED chair appointee will do
What do you think he will do, given he's one of 12 votes?
The admin wants to cut rates drastically. But the FED policymakers just voted 10-2 to not cut rates. So I worry the admin will try something crazy to force a cut.
This long read by Grant Williams really helped put everything into context. https://www.epsilontheory.com/there-can-be-only-two/
A lot of us don't have time for all the long reads, podcasts, or in-depth videos posted in the discussion here. Able to provide a summary for us that expresses your general point? Those interested can then use your link to learn more.
LLM summary, for discussion only:
The article’s core argument is that the U.S. dollar isn’t going to lose global dominance in some dramatic, headline-friendly collapse; instead, like every reserve currency before it, it will slowly erode at the margins as users quietly reduce reliance on it. Historical transitions (sterling to dollar) didn’t happen because of declarations or crises, but because the world gradually found alternatives that were good enough for specific needs. What’s changing now isn’t that the dollar has “failed,” but that the global financial system has evolved past some of the assumptions that made dollar dominance frictionless. The freezing of Russia’s reserves in 2022 shattered the idea that reserve assets are politically neutral, prompting central banks to hedge geopolitical risk via gold, bilateral trade arrangements, and non-dollar settlement systems. The result isn’t de-dollarization as revolution, but de-dollarization as creep: a long, largely invisible process that only looks obvious once it’s mostly done.
I do really hope the AI bubble will collapse soon. The sooner it blows the less damage it will do. And hopefully we can go back to doing real work without all these leadership guys breathing down our necks to see if we are doing enough of this AI all their shareholders want us to be involved in.
It will suck even for us in europe due to shortsighted pension funds having invested in AI as well. But we'll just have to deal with it. I'm sure it will happen sooner rather than later.
PS: I'm not an AI hater as such. It definitely has its usecases where it shines. The problem is like with all hypes; it's not good at everything and it won't be all golden mountains tomorrow like the investors expect. This overhyped investor circlejerk is what screws up technology. It happened to blockchain, it happened to metaverse. All things that have their merits but somehow investors thought it would change the world overnight and make them insta-rich. Obviously didn't happen and it won't happen now.
> It happened to blockchain, it happened to metaverse.
I don't think AI is comparable to these technologies.
AI had a real impact on certain daily activities, such as search, coding, etc. While the metaverse was just a fantasy with no tangible benefit other than Zuck trying to create his own platform to take on Apple and Google.
Blockchain had some potential in certain fields, but it wasn't user-friendly or usable by many people.
> AI had a real impact on certain daily activities, such as search, coding, etc.
You aren't addressing the issue at hand, the problem isn't a total lack of impact, it's the cost of that impact, both the actual and the opportunity cost of it.
Currently, the AI "revolution" is running on pure credit - as every other bubble - even the operating costs of the AI supply chain exceed its income and economic impact. Their capital expenses are orders of magnitude higher and constitute a severe drag on the rest of the economy.
There's no indication that anything would change in the future, more AI leads to less employment, less disposable income and less income for the AI providers - it's a race to the bottom.
If this isn't reversed, it will soon end in bank bailouts, more inflation and income degradation for those bellow the top tier.
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Not really, there are good applications for metaverse tech, they just need time to mature. However I don't really see it in the realm of social media. It's not something that's for everyone, at least not yet. I don't understand what meta was thinking there.
It's amazing for gaming though, and for architecture, 3D product design collaboration. I use it a lot daily and I have 5 headsets (plus two AR ones) but I also know it's not for everyone. It's also really good for porn which somehow in America isn't seen as a real industry but in my view it's a good usecase for the tech too. Anything that relies on immersion benefits from it.
AI has its niches too where it's genuinely useful (and coding really is a niche, it's not a mainstream activity) but just like metaverse they're trying to cram it in situations where it doesn't really add any value.
> It will suck even for us in europe due to shortsighted pension funds having invested in AI as well.
Only to a very small degree and systems like Germany THANK GOD do not have any AI exposure at all.
The real problem is that when the US sniffs, Europe gets a full blown cough. We are way too dependent on the US, we have seen that 2007ff, and we haven't changed a single darn thing.
>Only to a very small degree and systems like Germany THANK GOD do not have any AI exposure at all.
Well put, and it makes sobering reading to see the impact of what happened the last time Germany was deeply reliant on money from the US.
I think the government is laser focused on reducing regulations, reducing energy costs, reducing interest rates, a weaker dollar that makes exports better, minimizing taxes. Technological innovation is increasing overall productivity. There are definite headwinds like upward pressure on labor by reducing the worker population, stagnating population growth, undertainty, tarriffs, a weaker dollar increasing inflation.
There’s the looming threat of geopolitical world war that has been overhanging the world since the combination of the pandemic isolating different countries and Russia’s invasion of Ukraine.
It’s really a mixed bag, but it’s not clear to me that we are headed into a total economic crash as the government is definitely focused on doing a lot of good things for the economy, but also is creating lots of different headwinds.
Hold on there, they have been very explicitly doing the opposite of reducing energy costs. The administration has been aggressively trying to cancel all sorts of energy projects, even projects that have almost been completed. At the same time they've been encouraging as much data center build out as possible. Lowering supply and increasing demand is hardly going to reduce energy costs.
They have managed to significantly lower expectations for global economic growth which brings down energy costs, but that's hardly a sane way to accomplish that goal.
I think it's a little bit more nuanced than what you say and that they generally are trying to increase energy supply while withdrawing from using heavy government subsidies or extensive regulations to pick the winners and losers.
From a demand side, they aren't looking to restrict demand, but want to have ample supply to meet the demand.
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Oil prices are VERY reasonable right now.
The thing I don’t get is that IMO Americans have a higher standard of living due to demand for the dollar. Being a net importer means they make less and the countries they’re importing from make more. Money = labor = people working, so people in other countries are working harder than Americans to benefit Americans with a higher standard of living.
It’s like a roofer working for a contractor that’s a millionaire and the contractor is upset because he’s paying the roofer while having a higher standard of living because of the profit made off the roofer’s labor.
No one is working for that rich contractor if his money is worthless. Isn’t a weaker dollar for America a disaster? The world works to serve America right now because of the dollar. Life’s going to be tough when America has to “get a job” and start earning their keep with real productivity contributions, isn’t it?
Maybe I’m just dumb, but all I can see is a massive drop in the average standard of living if the US maintains their current trajectory. It might even be too late already.
> Isn’t a weaker dollar for America a disaster?
For the majority of average Americans trying to scrape by and save enough for a dignified retirement, yes.
For the ultra wealthy, no. A weak dollar leads to an asset firesale to prop up their wealth even further.
The ultra wealthy have captured the US government completely.
You assume that these economic policies are dictated by some sort of common good. The reality is that most policies are dictated by corporations and are designed to benefit their shareholders and not the average american. In addition, the US is now pivoting towards authoritarianism which implies future policies will be determined mainly by a tight group of people who are going to use them as a means of enriching themselves.
>massive drop in the average standard of living if the US maintains their current trajectory.
Very rich people control the narrative in the US and get poor people to repeat their claims. Hence where we get statements like this from.
>“John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
The thing is the billionaires/trillionaires don't care as long as they get more power. They'll eat the goose that lays the golden eggs.
You see a ton of this with Trump voters like my grandma that are getting screwed over with medicare changes and live in some kind of grand delusion that Trump is doing exactly what he said he was going to do in cutting benefits, and yet somehow it's all the democrats fault (???).
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I'd be interested to hear your idea in more detail (e.g., policy statements, metrics, etc.)
My read of the last year is that the current government's goals and outcomes are somewhat different, but I could be wrong.
>I think the government is laser focused
I'd rather say it's hell-bent. It doesn't look like a laser focus to me... or maybe it's just all disco ball reflections dizzying me, and there is indeed a laser focus somewhere I just can't quite pinpoint.
The username daft is appropriate
I'm kinda new into economy crashes, was a kid in 2008, is there a way to protect of it?
I’ve been through several recessions.
Painfully I’ve learnt that you want to work in an industry that is largely recession proof.
Focus on industries that sell things that people need and will try to keep buying right down to their last buck.
Food, utilities, insurance. People don’t like sitting in the dark. People need water. People need to eat. People really don’t like living without insurance cover or to let cover lapse.
They don’t need Netflix, Disney+ or Prime. They don’t need Spotify. They don’t need training or e-learning. They don’t need luxury goods. They don’t need new motor vehicles. They don’t need holidays. They don’t need new iPhones or new computers.
Try and move now to an industry that has some security.
Investment wise diversification is key. Just pray that it doesn’t get so bad that banks start to fail.
2008/2009 I was working in healthcare and just got to sit back and watch the drama. People get sick and need their medicine no matter how bad the economy is collapsing.
Live like you're already poor, reduce all unnecessary spending, adopt an ascetic mindset to support this lifestyle. That way, when a collapse comes you'll be accustomed to living frugally already and you'll have all the money you saved by getting a head start already saved up to get you through rough patches with relative ease.
Now, when I say live like you're poor, I mean do it smart. Don't grocery shop at a gas station, do your necessary purchases in bulk (actually poor people can't or won't, but would be better off if they could.). Don't but the cheapest boots, but rather the best value. But when choosing how many vacations to take, maybe pick camping locally more often than exotic vacations. Eat simple foods, don't order out fancy stuff and get accustomed to such luxuries. Don't automatically buy the latest consumer toy just because it looks fun. Don't move into a nicer apartment just because you got a raise. You get the idea.
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
I (like I'm sure many others) predicted it in 2007 and hedged against it by getting a 10 year fixed mortgage at then-current rates on the basis that rates would go sky high as they had in earlier recessions in the UK.
They plummeted to next-to-zero, and in addition to the injury I had to endure the insult of the people who hadn't seen it coming gloating about their low standard variable rates.
Ofc I clearly didn't have much real economic understanding but I guess I am saying that beyond normal common financial sense (the lack of which at scale leads to these situations) which you should be using anyway, we don't really know which way the wind is blowing, and what the exact consequences will be.
Why you could not refinance when the rates went to 0%? In the US a lot of people did that in 2009/2010 and then again during COVID
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I remember the opposite, just before we left the ERM (European Exchange Rate Mechanism). Interest rates hit 15% and one of my colleagues was gloating about how he had just taken on a fixed rate mortgage. A few days later we left and interest rates plummeted.
Skill. Knowledge. At your age, your biggest assert is your future earnings potential. The more employable you are, the better you will make iduring and after a downturn. In fact, the highest skill folks tend to even profit from hiccups in the economy.
Are the ones newer to the workforce just screwed or is there a way out? Kinda sucks that all this went down around 6-7 years into my tenure and it's just been a few years of scraping together freelance + portfolio projects to try and climb out of tbis rut.
(This might sadly be rhetorical given what I hear of '08, but perhaps there are new channels open to take advantage of. Or at least old channels to raise awareness of).
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None of that is true. Not one word of this applies anymore. Being highly skilled means you're highly paid, which puts you first in line for cuts. Talent doesn't get you hired, networks do. "Future earning potential" is just nonsense words, you can't eat "future earning potential".
This advice is from half a century ago. The times have moved on.
Your life should have a plan beyond tomorrow or the next hype cycle so that you progress towards your goals independently of the flow of society. This will allow you to navigate those flows instead.
Nothing provides complete protection, but diversification can help reduce the impact.
The person saying gold and mining stocks may or may not be correct - it's still a risky position. Precious metals could be in a commodity bubble right now (or not). It's had to predict anything with perfect accuracy, which is why diversification matters.
You probably shouldn't be jumping completely in or out of anything because that requires timing, which is also not easy to do. What you can do is change he weights withing your portfolio. For example, reducing your US equity exposure to increase your bond exposure. Or reducing your US growth exposure to increase your US value and Eurozone dividend exposure. It's best to listen to several financial companies reports to weigh what to do.
Yes, you either marry into extreme wealth or hope that luck doesn't strike you into generational poverty. Anyone saying anything different is lying too you.
Maximize income and cash flow, when things start to crash, you want to have fresh new money coming in to start buying undervalued oversold assets.
In the meantime, keep investing to avoid eroding the value of your money as the dollar drops in value. It also prepares you for the possibility the crash doesn’t occur for a very long time, long enough to grow your net worth substantially to be better insulated.
Assets traditionally used for such hedge are already massively inflated (look gold an silver price charts), so I'm not sure it's worth it.
This all depends on what timelines you work on, how many assets you are trying to protect.
Alternatively you protect yourself by lowering your dependence on steady income.
Yeah, as a SWE I just got sufficient money to pay my expenses AND have some to invest quite recently (about 2/1 months ago), but I basically froze the money instead of investing because everything seems overvalued and about to fall (even silver and gold).
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Prices of investments will also go down - stocks certainly, although precious metals were traditionally recession proof, we've never had such a bull run on gold/silver in anticipation of recession. My guess is that it won't hold - I've heard that jewelers already refuse to take precious metals at anything near market value.
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It's difficult to draw many lessons from 2008. The people who suffered most then were over extended home owners. It's still not a good idea to be one of those people but there aren't so many of them now anyway.
A lot of people _need_ the S&P to stay where it is to keep their standard of living stable. If it drops to a rational valuation (say, 2500-3000), there will be a lot of pain.
There's a common consensus in economics that bubbles are really hard to predict, and even some argument that they don't actually really exist. Great paper came out recently called "Bubbled for Farma"[0] which looks at predictability for bubbles and finds some indicators but no sure fire thing.
That sort of rules out an easy or known way to predict and avoid bubbles. That said, it's worth noting our current historic period marked by being post financialisation (taking out a bunch of investment regulation) of markets in the 80s exhibits a lot more economic crashes (the real reason we should car about bubbles) than most of history (although most of history also does not exhibit any economic growth, so be careful what you wish for).
In particular, the period between around 1930-1975 showed extremely high growth with almost no bubbles or market crashes[1].
So my semi-knowledgeable but definitely not expert view is that: - Bubbles and crashes are not easy to predict, and therefore avoid - That said, our existing market rules have effects on the number of crashes/bubbles we see (but there's debate around whether you actually would want an economy with less crashes/bubbles if that meant left growth)
[0] https://www.hbs.edu/ris/Publication%20Files/Bubbles%20for%20...
[1] You can find this discussed a bunch of places but Ha-Joon Chang's Economics: The User's Guide talks about this very fluently.
Edit: I think your question might actually have just been about personal protection again bubbles, rather than protecting the economy as a whole. In which case, having margin in your spending so you'd be able to live if things were some portion more expensive against your earnings is probably the only sane suggestion.
Gold and silver mining stocks. And International ETF funds. It looks like the United States will be going through the depression alone.
Buy high, sell low. Excellent result when you follow the masses, especially when being a little late.
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Was thinking the same, but why would everyone be more interested in gold an silver in a couple of months than they are right now? Sure it beats holding dollars of stocks.
But, keeping both feet on the ground, I'm tempted to think that if the economy collapses I'd not be very interested in buying precious metals. I'd be looking for food, a roof to live under and safety.
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I saw the graphs of some silver mining stocks and it seems to just follow silver price, why don't just buy silver then?
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> To be honest I’m glad we are the ones getting out of that market first.
Who is "we" in that sentence?
Software sector basically got cut in half just on Claude Code. You have to wonder what is next. I don’t think loss in economics is 1:1 with replacement so it’s not zero sum. Production doesn’t necessarily go up. In fact, net output is going to go down if you think about all the B2B lost too.
Whoever comes into power next better start thinking about universal income fast. We are gonna get there sooner than expected.
Why do people keep espousing such bullshit. Anthropic has terrible subscriber numbers, they are absolutely no where near profitability, a 100k people buying a product that struggles to sell itself is NOT the win you think it is.
If any of these tools did 10% of what their proponents claim they would become trillion dollar companies overnight and not you know... struggle so hard selling the amazing elixirs and perpetual labor machines.
Software productivity doubling would be a huge boon for the economy, not a drag.
Of course it's very disruptive for people that lose their jobs, but many of them will get similar new jobs, and the overall impact is higher output.
> Of course it's very disruptive for people that lose their jobs,
Why would the Jevons Paradox not apply here?
If all companies fire 50% of their engineers, how will anybody find similar new jobs? In an ideal world software productivity doubling WOULD be a huge boon for the economy IF companies used the increased productivity of their engineers as a way to manage tech debt, R&D and other issues that were put in the backlog because historically there were no resources for this. In reality all companies look at increased productivity as a source for layoffs which does not translate in higher output but the same output done by less people. Which is a net negative because now you have 50% of all engineers without a job and no discernible increase in quality of deliverables.
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my bet is: "new" tech, emphasis on "new", will keep US on top or whatever US become after the big reveal.
I hope that after the Big Reveal, nationalism will immediately begin to fade away and we can start tackling species-level problems, like the plastic everywhere and in all of us, or dying ecosystems, or ... literally anything other than commerce.
The Typical language of believers is to say no that wont happen and how? I learned and studied enough history and the usual narrative is to not accept something that is possibly so catastrophic that it will change their way of life.
The tech bubble is another story and to be study on it's own, but it was summarized well that is < its a cycle of delusional capital invested over and over. Along with the numerous indicators of "what ifs"> The housing market is simply stupid, im sorry i don't have another word for it that better describes the current take on this matter. Home prices are outrageous because of market driven assumptions. A house is technically worth $150 is now on the market for $350 and why is that. from 2 years ago. People truly think that home prices are expected to keep rising and to what extent and why? They couldn't tell you<< " my zip code is the place to live at the moment, the person living in the next zip code is saying the same thing about hiss home, Homes in silicon valley were above and beyond the national average and it was the only thing on the headlines during 2021 - 2022 but for good reasons that cant be argued too much/ Today it is the rest of US in the same mindset.
All of the US economy seems to be in protection mode right now. As to say it's the mother that doesn't want you to go out again after falling of your bike and scuffing your knee on the pavement.
tariffs were used the wrong way this time around, inevitably the very purpose of them was not so effective, it backfired, Damage is done and reputation is broken in a lot of ways. Britain is renegotiation relationships with china, Canada is renegotiation relationship with China, EU is renegotiation relationships with India and China. All with successful results.
There is a lot of stake here the US has a lot to offer to the world and to use that as weapon is tends to not have a good outcome. The market is large, yes it is resilient to some factors but not all/ When collapse takes place there will be tremendous momentum and its going to be hard to stop.
> People truly think that home prices are expected to keep rising and to what extent and why?
Home prices aren't rising, the value of dollar keeps, and is expected to keep, falling.
https://fred.stlouisfed.org/series/CSUSHPINSA I was taking this as an example.
No one will ever get the timing right, but if you see the fundamental flaws of the economy, you know a crash is going to come. There were a lot of people who predicted the housing crash, not the timing but the crash. There are several signs that this is happening and the one no one is talking about is gold and silver prices. Don’t worry about the timing, you’ll never get the timing right, just worry about the fundamental economics and the flaws and protect yourself.
I happen to agree just because of golden silver prices that it’s going to happen sooner than later, regardless if war breaks out with Iran.
At any given moment there is always someone predicting that the economy will crash. So someone will always have predicted it. The question is do they actually have some insight or were they just lucky.
This not a prediction. The crash is currently happening. You just do not want to see it. Can you explain gold and silver prices? can you explain why bitcoin has been flat now dropping? The falling dollar? The US Treasury yields rising since 2020? CAn you explain why consumers feel at ease even though economicsts are stying everything is great?
I mean why do you think the FED and Trump are all over each other? Because there is no way out. If they lower rates, inflation. If they raise them, assets collapse.
People have been warning about this exact secnario since 2008 and no one is listening. Back then it was a prediction, but now it is happening.
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> No one will ever get the timing right, but if you see the fundamental flaws of the economy, you know a crash is going to come.
If you know it's coming but don't know when then you don't know anything. Certainly not enough to bet on.
The Economist front page illustration of the 90s .com stock market, with the heading "CRASH DAMMIT!"
Everyone knew there was a bubble. People began to get impatient for what obviously was going to happen, as you say.
Keep in mind that not only did people predict the housing crash, some were certain houses would be sold for pennies on the dollar.
I bought a short sale distressed town house in 2009 for 40% lower than its peak price, and many people told me it was a terrible decision because if I just waited long enough, I'd buy it for a fraction of the price.
I think prices went a bit lower in 2010, but then I gained about 400k in equity over the next 10 years and sold it.
Gold and silver are likely to crash. I don't think they are big enough to cause a crash of the overall economy, though.
Who do we expect will replace Americas global leadership and will they really be better for everyone?
China seems to be the only candidate. But whatever happens it won’t be in the same way as before.
As for whether it is better for everyone, that question became a lot harder in just the last year. Who is «everyone»? And what do we mean by «better»?
With the US wanting to annex territory from its NATO allies, and engaging in extortionate tariffs, it is harder to argue that the US is good for Europe. Which is why Europe has already started to look eastward. Starting with a comprehensive trade deal with India.
What’s happening is good for Russia and China. Not so much for the rest of the world.
I disagree that something good for China is necessarily bad for the rest of the world, which you seem to imply here includes only Europe.
China alone has a higher population than Europe and the USA combined. I'd say that even if things got worse for Europe, to humanity it still constitutes a net benefit. Lives aren't of less value just because they're in a (gasp) communist country.
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The US is resigning the position intentionally. It's not as if someone is gearing up to replace it.
But as a trade partner? China, markets love reliability and stability. Not every 4 years wondering if there will be another trade war for reasons unknown.
You'd be very surprised the amount of malicious behavior countries will ignore to allow trade. Look at Saudi Arabia.
The single superpower thing was an anomaly which was mostly a result of one specific country being largely untouched by WW2; we're more likely heading back towards multiple regional powers with varying levels of cooperation, e.g. EU+Mercosur+India agreements that just happened.
The lines are still being drawn, but its doubtful one single power will emerge.
Seems like the rest of the world is just signing new trade deals and continuing on as normal. I hope America returns to normalcy in the next election and everything settles down. Else it seems like back to the old multipolar world.
I don't see any way we're not heading back to the multipolar world. They've managed to burn almost all of the goodwill and soft power that took 80 years to accumulate in 373 days.
Even with a "return to normalcy", the trade and military agreements being forged are permanently diminishing America's influence. Especially given that we're never more than 4 years away from this happening again.
No one, we don't need a leader. We need decentralised governance.
We have that. What has broken down is cooperation. The kind that has ensured relative peace for 80’ish years. That order is breaking down and creates instability. Instability means more conflict and less productive use of resources.
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That's not how it works though, is it? What you're really saying there is global governance.
Which faction that emerges as a dominant ever says "Oh no! We better stop using our advantage to improve our condition".
The EU just signed large deals with Latin America and India, binding a sizable chunk of the world to its rules. ASEAN is on the docket, Japan, Canada and South Korea have been signed for a while now.
Make of that what you will. Power isn't always tanks and soldiers. Sometimes its bureaucracy and contracts.
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China probably. No I don't think it is better but at least their leadership is actually sane. Evil, but sane and predictable.
Even the evil adjective starts to look debatable in contrast to what current hegemony is doing on its way down.
Apparently their worst offence so far was calmly outgrowing and out competing their peers while benefiting global consumers with he fruits of organized labor of their own society.
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China wants but China won't. They lack the military capability of force projection that is the basis of the US dollar dominance, their currency cannot be used as a reserve/trading currency due to capital transfer controls (that have no sign of ever going away because otherwise everyone who has money in China will move it immediately out of the reach of the CCP), foreign investors have gotten very skeptical over the years regarding IP theft on one side and supply chain law issues (e.g. underage labor, 996 and modern slavery, environmental concerns) on the other, and on top of that China is getting rocked hard by the inevitable consequences of the one-child policy that is driving up labor costs, further reducing the attractivity for foreign investors.
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> This is the 11th time that tariffs have happened, and it just isn’t surprising anymore.
There are tariffs everywhere, all the time. Canada just dramatically cut its 90% (or something) tariff on Chinese cars. Tariffs haven't just started happening because someone you don't like did them.
Yes but tariffs were a long-term strategic tool. Not a bullying tactic for someone who woke up the wrong way.
> There are tariffs everywhere, all the time.
This neglects the scale, cost, and unpredictability. His tariffs are far from being the usual seen elsewhere. Of course, you should already understand this.
Knife: Surgeon. Slasher.
Results are not the same.
Nominated for the most powerful two line comment of the month.
Blanket tariffs used as blackmail is obviously different.
This is incredibly disingenuous.
> Tariffs haven't just started happening because someone you don't like did them
Nobody said they have, throwing ridiculously high ones with your allies and trading partners is new though.
Otoh, tarrifs as a foreign policy / coercion method disconnected from trade and local economy impacts definitely is a new thing.
Sure, it might have been used as a delicate lever previously but in its current brazen form is just bad diplomacy.
I feel like one of the following is true (and I don't know yet which is the case):
- I'm genuinely a lot more pessimistic than is accurate around what is and isn't a bubble - Bubbles are just slower to burst than I expect
Possibly some combination of both. But even ignoring AI which is relatively new, it seems "obvious" to me, that whatever value Bitcoin has, investment in the asset is detached completely from that value. I'd have expected to see Bitcoin crash a long, long time ago, and have been thinking it's "just around the corner" for years and year.
And yet, the bitcoin price as a whole, although it's dipped recently, and is clearly volatile, still remains something like 10x what it's value was 5 years ago[0].
[0] https://charts.bitbo.io/price/
Something I think people forget when it comes to the valuation of bitcoin is just how much of it is used to fund illegal activities (Betting, Drugs, anything on the darkweb,...). I honestly believe much of the valuation is linked to that, but I have no source or proof.
Ok, now that silver fell, are you going to write another article with the opposing view?
That’s how the news does it.
I like how the last image based on "C'mon, Do something" with all the AI symbols, has hard to recognize body part shape, with Claude being right in the middle of it. Hank Green talked about it last year - https://www.youtube.com/watch?v=fIbQTIL1oCo
Last 2 reported quarters have 3.8% and 4.4% gdp growth.
Next report is end of february. So it's minimum 4 months away at earliest.
Stock markets are at 10 year peaks.
Unemployment is a little bit high at 4.5%.
Inflation is a little bit high at 2.7%
US government debt is very high at 125%
PMIs are strong across the board.
Also in context, trillions in declared new investments in the usa. Probably trillions more in undeclared new investment trying to avoid tariffs.
No competitor possible on reserve currency status, Euro in about 2013 was looking like hot stuff but they regulated themselves out of it.
So I consider, the crash probability of the US economy is certainly not going to be happening.
> Stock markets are at 10 year peaks.
Put the value of gold on the X axis instead of the USD.
Is this the case with all bubbles? Might be a naive question
I don't think this proves/suggests a crash will happen, but its worth considering most of what you've said would have been true right up until both the 2008 financial crash and the dotcom bubble.
The person declaring "trillions in new investments" is Donald Trump. He doesn't understand how tariffs work, he doesn't understand how trade works, and he doesn't understand how the truth works.
So many of the stats you mention are based on potentially-untruthful statements from the Trump administration. When the facts and figures aren't favorable to Trump, his strategy is to shoot the messenger and install his cronies. Works great, right up until it doesn't.
And the person you're replying to is someone who thinks "The case where Canada must be annexed is if Greenland somehow remains part of Denmark"! The veneer of civility on this site lets some really incredible people slip under the radar.
I keep seeing soon, sliding into, moving towards.
USD Currency futures have already collapsed.
World trade will move to (not a good idea) RMB or (mistakenly) crypto.
Euro is the only real option left and it’s beautifully positioned in the center. Great leadership too.
[flagged]
https://en.wikipedia.org/wiki/Religion_in_Sweden
Not even the right order of magnitude
Where it's gonna crash to? Where is going the capital move to when everythings going up? (except crypto apparently)
Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down. Margin calls happen and increase seller volume, prices go down further. And so on.
I'm not saying all this will happen. Just that capital doesn't have to "go" anywhere for a crash to occur.
> Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down.
So the law of supply and demand just magically reverses itself?
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Could you clarify the question? When everything's going up, it's definitionally not a crash; do you mean something like "where are people going to flee to now/soon, in anticipation of a crash, given how buoyant everything is"?
That exodus is what crash is. Yes. My question is where "they" are going flee to in anticipation of the crash to actually make the crash happen.
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> Where it's gonna crash to?
You know that the reason things bubble and burst is because speculation outpaces reality at too high a rate, ie : too much "capital" is make up of hopes and dreams.
When reality hits and the numbers make sense, all that hope and dreams go pop.
Scotty doesn't know!
There is no reality in the market. All prices are speculation, always. If there was any reality involved things like Tesla would crash 3 times already. My question is where the spekulants are going to escape to. I don't think it can be even dollar this time because in this crash dollar most likely will go away as the global currency and the inflation will be devastating.
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This is really obscured by the K-shaped growth, dual economy now. We've reached a stable pattern of a deep underclass serving the wealthy. We won't have a crash or "correction" because the entrenched top 5% has figured out a way extract value from everyone else indefinitely.
> This is really obscured by the K-shaped growth, dual economy now. We've reached a stable pattern of a deep underclass serving the wealthy. We won't have a crash or "correction" because the entrenched top 5% has figured out a way extract value from everyone else indefinitely.
Apologies for quoting all 3 sentences of parent, but the poorly-drawn conclusion depends on the full sequence of seemingly rational statements.
The context this sequence is missing is that approximately 70% of the US economy depends on consumer spending. [0][1] If the lower stroke of the K-economy diverges too much from the upper, the economy is going to grind to halt.
Consumer spending of the bottom 90% cannot (easily?) be replaced by the top 10%.
[0] https://govfacts.org/money/broader-economy/economic-indicato...
[1] https://www.npr.org/2025/11/23/nx-s1-5615222/consumer-spendi...
Surely the surge of predictions of an incoming crash will never end though.
Some advice for those who are young:
If every idiot (I'm including myself in this) on HN/Reddit/Youtube/Tiktok/mainstream news/etc. thinks we're in a bubble and is crazy pessimistic and thinks economic collapse is near...it means we're not actually in a bubble.
When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying. Because that will mean the general public must be reaching 1999 levels of euphoria for a hint of optimism to show up here.
I think its like being in a horror movie - you know the axe guy is in there with you, but you don't know when he's going to get you.
>When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying.
That seems to have happened around 2023 or so as people chose to laud over AI instead of understanding the underpinnings of society coming undone in real time.
So, should I be worried?
No, because your pessimistic feelings only serve to strengthen my claim.
I find it amusing that, even when directly calling attention to the overwhelming pessimism that is the default-state on HN, I'm met with a pessimistic comment with zero self awareness.
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The hourly "AI is a bubble" threads doesn't scream optimistic to me.
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There's quite a few factors here that delayed what should have logically already happened.
1. All the tarriff reactions cause US companies to import a huge amount of stuff for 2025. From what I understand, we're about to exhaust all of those imports.
2. The unemployment reports (especially the U3 numbers) hide quite a bit of turmoil going on under the hood of the job market.
- If you lost your job and switched to Uber/Doordash, you're not unemployed.
- If you are riding on severance pay instead of filikg for unemployment, you're not unemployed.
- If you got tired of throwing out hundreds of apps only to get automated rejections and take a break a month, you're not unemployed.
- If you just graduated into this hellscape and can't qualify for any unemployment, you're not unemployed (you're technically not part of the workforce yet).
There's a lot of these small shifts in how jobs work that make U3 less reliable in reflecting reality. And I only touched the surface of these issues.
3. Continuing on the U3 with a point worthy of its own bullet: the unemployment appears flat, but the makeup of what's happening per industry really lays down the reality. The only industries growing are hospitality (aka food service and similar sorts of duties) and health care. And to top it off these "growing" industries shift more and more to fractional work. Pretty much every other industry is down. So people are getting laid off/fired and moving to part time work to get by. "Stable" by unemployment numbers, but very unstable on the day-to-day. Add in the recent congressional bills for healthcare subsidies and we're throwing more gas on rhe fire.
4. I'm sure it's been said so much by now, but AI in the US is the only thing holding up the GDP. Without that massive investment, the GDP would be at best, dead flat. The US isn't growing in a way that reflects actual yields to anyone outside of a select few shareholders. We're not building more houses, mining more materials (on the contrary, we've resumed ransacking others'), manufacturing more machinery, nor even producing more service value for customers and businesses. We're putting all hedges on one thing with an uncertain outcome. If that industry declines, so does the rest of the US.
5. The K shaped economy. I have to check these numbers again, but I believe that spending is indeed up, but the makeup of spending per income band is more stark than ever. The too 10% income households makes up half of US's spending. But there are signs that even many high income houses add also starting to hunker down on spending.
----
That was a lot and it still only scratches the surface. But the TLDR version is that there's a lot of statistics massaging over the real struggles of life and many industries reaching a breaking point they did a good job putting off. But by this point it will only take a needle to break this camel.
I can't time the market worth shit - I got my first investments out before the 2008 collapse in earnest, and got into the job market at its peak. I waited through the 2010s to accumulate money to invest, only to start doing so amidst rampant speculation in crypto, then NFTs, then meme stocks, then AI.
So yeah. I am not getting a job at a financial firm anytime soon.
That said, the societal gestalt seems primed for something to go horribly wrong. AI boosters are positing their models as solving all of society's ills, which first requires acknowledgement that these are in fact problems facing society requiring solutions. Everyone is broadly on the same side - wealth inequality is a problem, climate change is a problem, energy dependence is a problem, job security is a problem, housing is a problem, etc - but we're all varied on the approach to solving these problems based on personal biases and perspectives. YouTube is infested with AI slop, social media is filled with doomers and preppers, and subcultures are simultaneously splitting off from larger groups (like those leaving Twitter/X for BlueSky or Mastodon) while also forming newer alliances and communities around shared goals or ideologies. Even those in positions of power acknowledge the polycrisis before us, while exacerbating it further by firing swaths of workers to fund their own bunkers, yachts, and contingency plans via share price bumps.
It's in the air, this horrid pit in the stomach that doom lingers just around the corner. It's been there for a decade, long before COVID, festering beneath the surface. Hell, for many of us pre-9/11 Americans, it's been a gradual decline since the heydays of the maximum-employment 1990s. So many of us feel it that it just cannot be ignored, and thus it becomes a sort of self-fulfilling prophecy: enough of us believe something bad is coming, therefore something bad must happen to quell those feelings.
There's two things that give me (and my OCD) solace of a sort:
* We'll all find out together, regardless of status or strata
* Most of us - statistically, generally, based on prior events and barring any explosive escalation - will likely be relatively fine
Yeah, the shifting of geopolitics is likely to result in more violent conflicts with the potential to kill billions if things go NBC. If we don't address climate change, millions will die from wholly preventable causes and tens of trillions of dollars of property will be destroyed over the next century. Misuse of AI could result in doomsday scenarios that Sci-Fi has warned us about for decades. Wealth inequality appears poised to create a modern version of the Coal Wars, if current events are any indication.
Technology alone won't save our asses. Neither will some mythical billionaire genius, or AGI deity. It'll have to be us, regular humans, rejecting the present and choosing to build a better future together.
And I think we can do that.
Any time now:
1. Market crash
2. AI bubble bursting
3. Year of the linux desktop
Have I missed something?
Half life 3
This will probably be better than duke nukem forever because they were always working in DNF but nobody has been working on hf3 in 20 years.
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Year of linux gaming being good (it isn't)
GTA VI
Beyond Good and Evil 2
This isn't a crash, it is something else comming, perhaps the "jackpot", where society/civilisation unravells, climate disaster kicks in with real persistant challenges everywhere, and some third, fourth, fifth effects that break our millenial run to the top of our planets ecosystem as the ultimate apex species. It has been a good run, but useing the same tacticts as our stone age ancestors, is, I think, about to bite, hard. And it is literaly this, our strategy is to keep useing the same tacticts.Jackpot.
I know HN always has its fair share of doomers, and generally the HN communities track record anecdotally regarding finance and the market is frankly terrible. Tesla (stock price wrong), Bitcoin (wrong), AI a huge dot com like bubble (wrong in my opinion - TBD though).
I’m optimistic on the US. We could realistically print a 5 handle GDP, oil at rock bottom prices, lower federal income taxes this year. As far as Gold and Silver I just see it being propped up by speculators. Silver spot is down 15% this mornings and gold down 8%.
I predict double digit gains in the S&P by end of year and strong financial conditions with mag 7 continuing their lead. Tesla also will be a big winner.
At this point I think Tesla could sell zero cars this year and their stock price would still be astronomical.
> We could realistically print a 5 handle GDP, oil at rock bottom prices, lower federal income taxes this year.
Ignoring everything else in terms of oredictions: the US simply doesn't have that spending buffer anymore to really outspend yet another crash. Its at what, 37 trillion right now? And it's only rising more and more by the month.
The only thing worse than a crash would be the US defaulting on that. And then we'd be screwed in ways that we don't recover from in any of our lifetimes. Nearly a century of trust and soft power completely down the drain.
Even if they don't default. How long there is willing investors? Even if FED drops rates. It is an auction. So rates should be set there. But maybe printing will happen via bigger and bigger market operations. Leading higher and higher rates. With probably inflation... So I suppose valuations could go even higher...
I do not understand economics and from engineer perspective whole thing doesn't make much sense.
> Which is to say that no individual decision make want’s to be the first mover, so the market does not move.
Uh, that's not accurate. Hathaway is sitting all cash because of it and so far they have been the one losing. Even if you assume (and correctly I think) that the market is overvalued, their stock pile of cash is eroding: https://newzsquare.com/warren-buffett-warns-of-fiat-currency...
> A year ago there were a few signs. Right now, it feels like everything is primed to blow. Is that new?
The market is unhealthy. Too unhealthy that I think it can no longer self-heal the usual ways (recession/crash/etc.) and we'll instead move to more advanced stage of hyperinflation, global war, etc.
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> In Europe, people hold cash at negative interest rates because they have so few new ideas and so little innovation to invest in. Where exactly do you think the money will go?
That's a bit reductive, in Europe there's a much bigger culture of saving, most people I know here are very averse on taking debt if unnecessary, only going into debt for large purchases like a house or a car. Even for cars I see many outright purchasing a used one in cash instead of going into financing/leasing.
People hold cash but also invest, it's savings in general that are high, varying between 10-25% of yearly income saved (compared to the US's ~5%).
I think this narrative of "so little innovation" is peddled very much in the software-adjacent circles but it forgets that innovation is not only from software, if you really think Europe has no innovation you are either ignorant or purposefully fostering a bad narrative. No, Europe doesn't have the VC industry, and the software companies' culture of the USA, it does innovate with a different model.
> If you insist on believing the US economy will crash without a well thought out thesis, I think that’s a beautiful thing. When you sell your positions on US companies, I’ll gladly be on the BUY side of that order.
Please do, as I've been cashing out throughout this year anything that has any direct exposure to the USA stock market I need people like you on the other side, thank you very much.
> In Europe, people hold cash at negative interest rates because they have so few new ideas and so little innovation to invest in. Where exactly do you think the money will go?
BRICS, apparently
You comically self contradict yourself. If it was lack of ideas to invest in that drove holding of cash at negative interest rates, then what stops the european from just buying us stocks? US collapse is inevitable, until its NOT…
It is a giant Ponzi scheme and those tend to collapse at some point.
Some sort of an AI crash / bubble bursting is expected to be honest - now if that will take the rest of the US economy as well.... debatable. Any strong opinions on this?
I'm not an expert, my knowledge is just from reading around a lot, but I think there's some stats that would suggest the US is particularly exposed:
- At points, AI investment has actually seen more spending that US consumer spending[0], there's some debate on this[1] but if true, that leads to a narrative of the US being 'propped up' by AI investment.
- US GDP growth was strong last year, but behind quite a lot of other similar countries like the UK, Germany and Japan, which doesn't suggest a comparatively strong economy.
- The US is actively increasing it's borrowing substantially (Big Beautiful Bill) while lowering it's currencies value through trade wars and unpredictability (see bond market). That reduces its ability to use its wealth to borrow its way out of a financial crash (like with the 2008 crash, or Covid).
This could be a little overblown and is hard to tell, the US is definitely an extremely wealthy country, even if its less wealthy comparatively that a few years prior.
[0] https://fortune.com/2025/08/06/data-center-artificial-intell...
[1] https://www.cnbc.com/2026/01/26/ai-wasnt-the-biggest-engine-...
On (1): Might be useful to separate investment flows from the rest of US's economic activity.
AI investment is propping up capital flows, the GDP statistic, and responsible for most of the gains on SPX, but its still a small fraction of the economy.
What else does the economy consist of these days? It's pretty much already in a recession if you exclude the big AI companies.
Besides, basically every company had been desperately shoving AI into all their products. Throwing all of that out when the bubble pops won't be pretty.
I imagine depreciated AI features will be like the soft varnish surfaces of some 90s cars after 10 years - disgustingly sticky, shedding flakes left and right, and in hindsight an obviously stupid idea that wasn't tested sufficiently before pushing it on consumers
> now if that will take the rest of the US economy as well.... debatable.
In the grand scheme of GDP, the US hasn't done much growth in anhtjjg else this decade, all while massively increasing spending to prevent post COVID recessions.
It certainly doesn't look good. But this was being setup for 30 years as we outsourced our strong manufacturing wing to make the top brass richer in the short run. So I do think the house of cards falls if AI does.
The sad part is that we may have been able to whether the storm under the right leadership. But that sure isn't the leadership in the White House right now.
Is there really a bubble though?
Most of the activity is with the same old big tech stocks, and the largest investment by far is not even market driven. Stargate is defense spending.
AI doesn't have to sway consumers, and it doesn't even have to work that well now or ever for governments to keep pumping money into it. The whole point of Stargate is to de-risk with reduced need for security clearances to handle big data (whistleblowing) and eventually get away from foreign tech. Also, there are a ton of businesses who have always done things on-premises for compliance and they can now cut costs by migrating to these government vetted data centers.
It genuinely shocks me how rarely anyone brings this up. It's been very loudly said by Trump and OpenAI since he took office, and it was going to happen regardless of who was elected.
Yes, the concentration of wealth led to the AI boom and it’s going to lead to the crash for sure. The AI boom was nothing but a crypto bubble. And since it’s making up a large majority of the investment right now I would say that’s the only reason that we didn’t have a crash last year.
If Russia's economy is kept afloat after 4 years of full-scale war... Why would one year of Trump 2.0 do us in? Don't get me wrong, a whole lot of problematic actions have been taken in that time-frame but that pales in comparison to 1.25 million casualties and about the same number having left the country (and our population is almost triple theirs) on top of infrastructure destruction.
Entirely different cases. Russia never relied on the strong rouble for its economy to function. Or having unfettered access to most of the world's markets. So it had some know-how on weathering the storm.
But OTOH, if Trump is erratic enough to trigger a world-wide de-dollarization trend, and close down markets that were traditionaly open (e.g. Europe), then US would be facing an unprecedented storm that would be much harder to navigate.
Have we seen any signs of any limits to erratic behaviour?
A have a bad feeling for the US economy. A decline comes soon, then prepare for impact with a financial crisis and in the end of the tunnel the IMF. I know it's super crazy but that was also for my country 16 years ago.
Greece? How did it go after the crisis?
Yes. Until 2019 we stagnated. Since then we have the best Prime M of the last 100 years, Kyriakos Mitsotakis. He has made some incredible stuff and some mistakes, too, but they are nothing relatively to the Balkan traitors of the past. The country has rebooted and from an IMF victim it has become an exception in the current European/world shity situation. He decided to remain a third term, going to have almost a double score from the leftists in the 2027 elections, so I advise you to invest in Athens stock exchange.