AI’s $518 Billion Gamble: Is the Next Financial Crash Already Here? | Tom Bilyeu Reacts

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Tom Bilyeu (0:59)

Let's ask one question.

Has the AI bubble popped? Jeff, take it away.

Jeff Snider (1:05)

This time is different, they said. They say it every time. But this time is different. This is not going to be the dot coms. Because the dot coms, they had a bunch of money losing companies all over the marketplace. And this time we've got these massive businesses that are entirely profitable. It's not going to be like the dot coms.

Tom Bilyeu (1:20)

Let me tell you why it's the idea that this time it's going to be different sticks around. Because things change just enough that it will be a slightly different flavor. It's going to come at you from a slightly different angle. But the reason that that always sort of ends up being a joke is that there are physics to the economy. They're very complicated. It's very hard for us to track all of them because it interfaces with humans and how they feel and how they act individually and as a collective. And so it becomes a very complicated system. But the reality is it is mechanistic. This is the part that people lose sight of. You lose sight of the mechanisms of the economy at your peril. This is why you can look at something like the eternal accumulation of debt and know that it's just going to be a problem because you can not pay it back, but there's really only two ways to not pay it back. You can just not pay it back. A hard default, that's going to break the system massively. And then you've got a soft default, which is inflation. They both have very knowable consequences that you can strategically prepare for. So anyway, understanding how we end up with people just not being able to escape the temptation of I can feel that something is different. And so I can't just use the old playbook. They're right about that.

The entire way that we invest is changing.

We're moving into a new regime, I think. And so you do have to go, okay, there's something new here. There's something different. But at the same time, the fail states are mechanistic. And so you got to watch out for them.

Jeff Snider (2:39)

Yeah, right. Honestly, given what we know today, I mean, we kind of had a kind of had an idea. But what we know now today, I really hope that the AI bust happens sooner. I mean, tomorrow, I hope this thing starts tomorrow, because the longer this goes, the more devastating it's gonna get down the road.

Tom Bilyeu (2:56)

This is the second person that we're now hearing say this.

Is Jeff the like biggest voice in finance? No, absolutely not. He's definitely a niche guy, but he's pretty smart, man. He understands the economy. I've had him on the show. I've watched a ton of his videos. So this is not some crackpot in some random corner of the internet. This is somebody who's looking at the math and they're saying, uh-oh, if you share his base assumptions, I'm going to challenge one or two of them as we go. But if you share his base assumptions, you can actually build the mental model of why he is so worried about this. AI is hoovering up all the capital in the world and it's subjecting itself to the mechanisms of debt. And so historically speaking, people that take on this kind of debt, which this really is unprecedented, but people that take on an extraordinary amount of debt for a revolutionary new technology, meaning it's not been propagated through everything yet.

History is brutal and you're going to get hammered. So what he's looking at is, bro, if this just grows and grows and grows, it's just going to get worse because, and this is where Michael Burry agrees with him, the amount of capital from investors that will get destroyed is biblical.