October 16, 2025 • 31 mins
With the IMF warning that we’re in an AI bubble that could be worse than the dot-com crash if it bursts — and even OpenAI’s Sam Altman admitting the market is “kind of bubbly” — what happens to the global economy if the AI boom implodes?
Are we witnessing the next dot-com bust, or just the growing pains of a genuine technological revolution?
To discuss it all on the latest episode of The Fourcast, Matt Frei is joined from Silicon Valley by entrepreneur, author and futurist Jerry Kaplan, and from the World Bank Group annual meeting in Washington by our Economics Correspondent Helia Ebrahimi.
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Transcript
Episode Transcript
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(00:00):
Is there going to be an AI bubble burst?
Yes or no? F Yes, there's no question that
we're in a significant bubble. If you've got a pension, if
you've got savings anywhere in the world, you will not be left
standing. If there is a reckoning in this
market, everyone keeps talking about the risks and the
(00:20):
possibilities, but they keep piling in and buying, buying,
buying. When the retail investors are no
longer willing to be at the end of this chain of people passing
off the investment to one another, that's when the whole
thing bursts. And who gets stuck for the bill?
The answer is the mom and pops. When is this crash that you've
predicted very confidently on this podcast going to happen?
(00:41):
And if anything can be done to stop it, what would that be?
Hello, and welcome to the forecast.
Is the AI tech sector about to crash and burn, scorching the
world economy as it implodes? A growing chorus of analysts say
it is. So I thought I'd better quickly
ask AI to write me an introduction to this episode
(01:04):
while it still can. Here goes.
In my voice, but not my words. Listen, has the world's AI boom
turned into a bubble? Even open air eyes, Talismanic
CEO Sam Altman admits that partsof the sector are kind of
bubbly. And now economists, banks and
investors are warning the crash could drag down the global
(01:24):
economy. So are we looking at thenext.com
bust or just the growing pains of a genuine technological
revolution? Thanks, ChatGPT.
You're welcome to my day job. Now, to discuss this, I'm joined
from Silicon Valley by the entrepreneur, author and
futurist Jerry Kaplan. Perfect to have a futurist on
the forecast. And from the World Bank Group
(01:46):
annual meeting in Washington, our very own economics
correspondent, Helia Ibrahimi. Jerry, first to you, is there
going to be an AI bubble burst, Yes or no?
Well, since I was just warned not to swear on on camera, I'll
just say F yes, OK, There's no questions.
Please elaborate. There's no question that we're
(02:08):
in a significant bubble. I've now been through this will
be my fourth major bubble and they all have exactly the same
structure and I I see all the same signs today that I've
experienced in the the previous four bubbles.
But this AI bubble, if indeed itis a bubble and it's going to
(02:28):
burst, is it big? Is it ugly?
And my understanding is that if you look at the total numbers
involved in this, it's quite a bit bigger than the last major
bubble, which was very destructive, of course, which
was the so called.com or Internet bubble.
So I do think there's considerable danger.
My understanding is that about 80% of the gains in the US stock
(02:51):
market have been attributable toa very small handful of
companies, all of which are big in AI.
So I think I, I think that that speaks to a lot of risk both in
the stock market and the collateral damage that would
occur in the wider economy. And we're in a financially
precarious position. I fully expect that this bubble
(03:13):
is going to burst at some point and when it does it, it's going
to have some very negative effects.
It's actually having negative effects.
Now. The problem is that they're
masked by the the appearance of so much activity and deals, deal
making and, you know, capital flowing around.
So that's a pretty dim view. Let's go to Helia at the IMF in
(03:35):
Washington. DCI mean Elliot.
One of the reasons why we're doing this podcast, this
forecast today on the AI bubble bursting, if it's going to
burst, is because the IMF has been warning about it, although
it's not been using any F words or any anything nearly as
dramatic the language as the language that Jerry is not.
Quite as colourful as Jerry's? Not quite.
As colourful but. What?
What are they, what are they saying, and why are they saying
(03:57):
it? Listen, everyone is talking
about this. It's policy makers, it's
politicians, it's bankers, it's investors.
Everybody's worried because the valuations we're talking about
are massive. You know, NVIDIA, the chip maker
is now bigger than the UK economy by a stretch.
You know, this is not just a little bit bigger, but almost
(04:18):
20% bigger than the whole of theUK economy.
The valuations of these companies are huge.
And so if you own a ISA in the UK, if you've got a pension, if
you've got savings anywhere in the world, you will not be left
standing if there is a reckoningin this market.
(04:38):
So the question is, you ask, youknow, is this a bubble?
And I think there's two ways of answering that.
In the IMF, they were talking about the chief economist was
talking about similarities with the.com bubble.
And if you look at that, there's2 perspectives, 1 is on a
valuation perspective. And yes, there are similarities,
but I have to say the valuationsare still far away from what we
(05:02):
saw in the.com bubble. And for viewers at home, that
was another era in which the World Wide Web had been created.
And there's there was lots of Alan Greenspan, the former chair
of the Federal Reserve, called it irrational exuberance, where
the market was so excited by thepossibilities of the World Wide
Web that they just thought, Oh my God, these companies are
(05:23):
going to make more and more, more and more, more and more
profits. And we're going to give them the
kind of valuations that have nothing to do with the money
they're making right now. And then when it burst, it all
kind of crashed down. So are you saying that just
remind me the the valuations in the.com era when that crashed or
(05:43):
just before the crash were much higher than now?
Yahoo, Cisco was, they were talking about 100 times forward
earnings. It makes kind of Nvidias 29 * 30
* 26 earnings look sort of modest, sort of sensible.
Now, that doesn't mean that there isn't going to be some
kind of reckoning with AI stocksbecause the kind of money and
(06:07):
capital you're seeing invested. And as you said, everyone is
talking about it now. Jamie Dimon, the boss of JP
Morgan, was talking about it. The Bank of England warned about
the asset prices and how frothy it is.
But I just want to make clear that both from the regulator
perspective and what we were hearing out of the IMF, yes,
(06:28):
it's similar to the.com bubble, but they're talking about it not
having systemic risk, like, for example, the financial crisis.
And why is that? Well, because it's not in
lending, you know, the that's the Jeff Bezos line.
Now, obviously these people all have skin in the game and they
want to talk up their companies.But his point is that, yes,
(06:48):
there's a lot of froth in the market because there's a lot of
potential in lots of possibility.
And even if that bubble burst, there's something happening
underneath that is useful innovation, invention that is
useful for society. I mean, like if you invested in
Amazon in 1999, you were at the peak, but you were beforethe.com
(07:09):
bubble burst. If you invested $1000 and like
you, I went to DeepSeek and ChatGPT to get my calculation,
you would now be sitting even adjusted for inflation, on
$33,000. So even though Amazon lost 90%
of its stock market value, they were one of the winners.
(07:30):
And a couple of weeks ago I was interviewing the NVIDIA boss,
Jensen Huang, and he was, they had the same vibe basically that
we, there will be losers, there will be people who fall at the
edges, but there will be winnersin this.
And backing those winners and making sure they can build out
this, you know, if we build it, they will come data, you know,
(07:52):
countries and countries of GPU'sis going to have a huge impact
on the society. Jerry, let me bring you in
again. I mean, you, you know, you, you
experienced the.com crash and you've been working in tech in
Silicon Valley for decades, if Imay.
So you, you know, you know what you're talking about and you
know what these things look like.
Tell me, intrinsically, is thereanything more valuable in
(08:16):
aithantherewasin.com or are theyboth, you know, do they both
have the same ability to change our society to to, to come up
with new products, but the valuations are just different?
Well, I I want to make sure we can keep 2 seemingly contrary
things in mind at the same time.The new wave of AI is a
(08:39):
wonderful step forward in the inthe future of automation.
It's another major advance and it's going to have very broad
societal effects. The same thing was true about
the Internet back in 9899 when my company on sale got signed
behind me. You know, we went public.
We had a multibillion dollar valuation at one point.
(09:01):
Now your colleague is talking about, well, if you'd invested
in Amazon and you just held it, you would have been fine.
Here's the problem. There were dozens of other
companies that looked just as good.
Take that same $1000 and put it into Yahoo.
Where would you be today? The point is that you, you know,
you can't pick the winners. You don't know who the winners
are going to be. People sometimes ask me, well,
(09:22):
who are going to be the winners in this?
Is it going to be open AI? Is it going to be NVIDIA?
And my answer is I think the winners are are going to be
Yahoo and Netscape. So with with with that in mind
that you can't pick those winners.
And so many companies are going to waste or lose all of the
invested capital. They've been put in hundreds of
(09:43):
billions of dollars we're talking about that's going to be
a problem. Let me take you back to 1999, if
I can go on for one more second on this.
One of the major areas of investment that happened at that
time, the Internet, everybody knew that was going to be great
and it was absolutely true. But in addition to that, there
was, as a result of that, I should say there was a
(10:04):
tremendous amount of investment in laying fiber optic cable
because Oh my God, what are we going to do?
There isn't going to be enough bandwidth to be able to handle
all of this Internet traffic if it continues to grow at the rate
at which it's growing, which it did not.
Well, what happened was they laid in all of this fiber optic
cable and several companies thatI will not mention, there were
(10:25):
huge high Flyers with huge valuations.
They're all gone. They're all out of business.
Yeah, the fiber optic cable's still there, and we still
benefited from it. But those companies are gone,
and that investment money simplyburned up and went up in smoke.
Today, we're seeing exactly the same thing.
It's a bit like the railway bubble though, isn't it?
It's a bit, you know, like therewas a bubble in railways, you
(10:47):
know, but the railways ultimately, once the bubble was
burst, the railways, you know, underpin in this country, it
created a federal system. It created a superpower,
ultimately helped create a superpower.
So I, I, I think the, the technooptimist would say, yes, there
might be a bubble, yes, it mightburst.
(11:08):
There might be losers. As Jerry, you quite rightly
point out, there might be many losers, but the systems in place
are, are going to be so important or going to usher in
this new revolution, this new AIrevolution that it, that it's
worth fighting for. But the question is, there's
another risk there. And it's nothing to do with
(11:29):
valuations, Matt. It's that macro view of does
this even work? Do we have the energy
infrastructure to build all of this out?
Does the technology work well enough?
And and also, you know, the, the, the kind of feedback that
we're getting about the implementation of this
technology within society, it shows that's there were still
(11:52):
some missteps happening. So it's not quite as glorious as
people in Silicon Valley will necessarily have you believe.
Just Jerry just briefly cast us back to, you know, the beginning
of the noughties. I mean, there's so much talk now
about how AI is the most fundamental revolution, you
know, you know, in since the industrial revolution will do
more to change our lives than anything since the invention of
(12:15):
the steam engine or maybe even, you know, the, the printing
machine or whatever the printingpress.
I mean, is it fair to say that AI will expand our human
capabilities morethanthe.com eradid or not?
Well, that's a very difficult question to answer.
This is like asking is the invention of the, let's see, the
(12:38):
electric motor, What kind of economic effect does that have?
And was that bigger than the invention of the electric bulb?
Well, you know, they're both very important and obviously
they changed society. They changed the way we live and
the way we each work. But I'd like to respond to
something that was just said, ifI may, because it's important to
understand there is not going tobe a need for anywhere near the
(13:00):
kind of capacity that's being built out in these data Centers
for a very long time. And if you were going to invest,
nobody ever made money betting that computing was going to be
more expensive in the future. That's just that's always been a
non starter. So you're investing here in
these NVIDIA chips that are veryhigh-priced right now.
(13:21):
And when you look at that and and think about what are they
going to be worth in three years, the lifetime of those
chips is maybe three years. Now you go buy 10 billion of
those and you stuff them into some kind of giant warehouse out
in the middle of some remote desert.
And what do you think that's going to be worth in three
years? And is this going to pay back in
that kind of timeframe? The answer is obviously not.
(13:43):
So it's very clear to me that we're in a bubble and that whole
thing has to collapse. We're going to wind up with a
new kind of ecological hazard. We're going to have these
enormous acres and acres of datacenters out in the middle of
nowhere and with the lights out,and it isn't even worth the
electricity to keep them running.
And they're going to be rusting away and they're full of all
(14:05):
kinds of toxic materials. There could be, there could be
bowling alleys or indoor golf orwhatever, you know, think of it
like that. There aren't many.
People out there, maybe the coyotes, I.
Just want to OK, so, so, so there's obviously, so some
people, as you say, are going tolose a ton of money.
What about ordinary consumers? Are the people who've got, you
know, money invested in the stock market, people who've got,
(14:27):
you know, money in savings or jobs for that matter?
Those are different kinds of questions.
Let me start with that. Let me tell you what my
experience was. I can always speak to my own
experience. Really.
I'm not an economist. Talk about all the the specifics
of the numbers. That's what they do at the IMF.
That's their job. But let me tell you what my
experiencewasthe.com bubble burst when something very simple
(14:48):
happened, when the retail investors, the mom and pop
investors were no longer willingto eat any more of the risk that
the major private investors and venture capitalists could shove
down their throats through the investment banking process.
I watched while the investment banks kept putting out more and
more risky product to their customers, to their retail
(15:10):
customers. And eventually it was there was
so much money to be made by the bankers that everybody got
involved. When when the retail investors
are no longer willing to be at the end of this, this chain of
people passing off the investment to one another,
that's when the whole thing bursts.
And who gets stuck for the bill?The answer is the mom and pops,
the four O 1 KS, the people who put their money in the stock
(15:33):
market, and their faith in thosepeople on TV on those TV shows
were pumping up allthese.com companies, and those are the
ones who wound up holding the bag when the whole thing
deflated. Before that, all the other
people in the chain still have an incentive to keep pumping up
the valuations and passing the investments slow.
(15:54):
And presumably, Heller, that is exactly what the IMF is worried
about. Yeah.
And I mean, I think there's an interesting dynamic as well.
When you look at the US economy,40% of U.S. economic growth at
the moment is entirely AI. So it's, it's doing something
that's quite political too. It's really giving the White
(16:15):
House a huge boost, not just because of, you know, what's
happening in the stock market with these record high
valuations. And, you know, here there is a
real connection between, you know, the, the, the tenant in
the White House and what's happening on Wall Street.
There is a real if that's happening, if that's going well,
then I'm doing my job well, but it's also boosting the entire
(16:36):
the US economy. If you take out AI from the US
economy at the moment and look at business investment, then
it's actually a downward trend, which means all of the other
Trump economic policies, including, for example, tariffs
or somehow being shielded by this huge capital investment.
(16:57):
You know, Jerry was talking about all these warehouses, AI
warehouses. I think that they're thinking
about three, $4 trillion worth of investment into these endless
warehouses. And as Jerry rightly says,
there's a whole debate about whether those chips will be
obsolete. So I think, yes, it has an
(17:19):
impact on both lifting. Yes, there's a risk, but it also
has a political benefit of lifting the US country and
economy at the moment, which hasa very political impact on
policy. And Jerry, Donald Trump, you
know, has fallen in love with the AI.
He's had all the AI Bros over inthe White House for, you know,
(17:39):
for lunch, breakfast and dinner and all the rest of it.
What can he do to make sure, if anything at all, that this
bubble doesn't burst? What can he do to make sure that
this bubble doesn't burst? I don't think he has any control
over this whatsoever. Are there federal funds that he
can unleash? It would make a difference.
Or would that just make it worse?
Well, the problem is that's a forward-looking thing, which is,
(18:01):
let's just say, not in his wheelhouse.
What he's concerned about is what's happening today and what
he can get away with today, and he's not really worried about
tomorrow. Now, I got to say that has
worked for this man for a very long time, which is a rather
disturbing prospect, I'm sorry to say.
But what is what's what's being covered up by this massive
investment is a very interestingfact, which is when all that
(18:23):
money's going into something which is very unlikely to have
an economic return in a time frame that's relevant to
investors, that money is not going into other valuable
investments that could be made. Money's being pulled from a
clean energy projects and electric vehicles.
And you know, for God's sake, health research.
(18:44):
You know, I mean, this is covering up the fact that we're
giving up on, you know, this is your and my health we're talking
about. It's going to suffer because
we're not doing research and vaccines and other important
things that have been fundamental to improving the
health welfare of Americans. Investing for the future is it's
not with this current U.S. government, it's about, it's
(19:07):
about exploiting what we've got right now to get as much as you
can for a very small group of very wealthy people.
And of course, AI has been sort of covered in this Halo of, you
know, of being awestruck and people think it's going to
replace human brains, etcetera, etcetera.
But actually, increasingly we'regetting reports, aren't we helly
of AI getting stuff wrong, of just not being particularly
(19:28):
good. I wonder if that is the thing, a
kind of collective realisation that AI is not quite what it's
cracked up to be, that might eventually burst the bubble.
I think there's one discussion, very excited discussion
happening in San Francisco and in Silicon Valley about the
frontier of this technology, about artificial general
(19:48):
intelligence. How fast can this kind of
agentic revolution go? And then how fast can we get to
artificial general intelligence where it has consciousness,
where it has? Kind of superhuman.
It becomes its own God. And then there's the kind of
more pragmatic argument about how is the real economy able to
(20:09):
utilise this technology and whatis the application of that
technology? Because sometimes technology can
race ahead of how companies on the ground can use them.
And some of the survey results by leading universities suggest
that at the moment, AI is still failing.
Now you're in my my wheelhouse on on this kind of thing.
(20:32):
Artificial intelligence is a fabulous innovation and it's
going to be a tremendous advantage in automation.
But it is not what you see on TV.
It's not what you see in the movies.
It's got very specific limitations which are are quite
real and they're fundamental to the current wave of technology.
And we don't have time to get into this in a lot of detail,
(20:53):
but let me just say this at a very high level.
These systems are very good at certain kinds of prediction, a
short term prediction of new words and pictures and things
like that. But there's a myth that they can
reason and that they think. And the truth is that these
systems cannot reason and cannotthink at all.
(21:14):
They are not logically based on,they give you the most plausible
answer, not the most accurate answer.
And that's a very important distinction.
Now people are going to get get wind of this when they start to
really work with them and go, well, I couldn't make a mistake.
That seems that stupid. Well, that was the most
plausible answer to give you. It wasn't the right answer to
(21:34):
give you. Now, that doesn't mean the
technology's bad. It just means like every
technology before it, it has certain strengths and certain
weaknesses. And I will tell you, since I
live here in the Silicon Valley,most of the people working in
this field, even right here in the Silicon Valley, do not
understand the fundamental limitations of this new wave of
technology. This other thing that's worth
saying is every time there's an advance like this, it takes
(21:57):
5101520 years for businesses to figure out how to make
productive use of this new technology, how to reorganize
their processes to make it to get value out of it.
So that's why you're seeing people going, well, I don't see,
it's not helping me in my business right now.
There's a there's a process thatwe need to go through and it's
going to take 10 to 20 years forthat to work out.
(22:19):
So basically, Jerry, are you saying that if it's overvalued,
it's because it's over? Hyped.
I sure I'll I'll give you a yes to that.
It's overvalued because it's over hyped.
This is not suddenly going to breakthrough some this
artificial general intelligence AGI ceiling, and now it can do
anything and everybody will be out of work.
That's not going to be the case.I would give people a little bit
(22:41):
of comfort about this bubble though, in terms of the
employment picture, which is this, every advance in
automation has had exactly the same effects.
Short term, it puts some people out of work.
It makes us wealthier and that wealth creates new kinds of
jobs. And So what it really does in
the end is it changes the natureof work, what we how we will do
(23:04):
our jobs and what jobs we will get paid to do.
Those are the things that are going to be shifting in the
future. Here's my point of comfort.
If you've been around since, if you're over the age of 30 or so,
you'll remember the Internet bubble.
Well, the same thing was said about the Internet, and it was
true. All kinds of professions,
including yours, if I might point out, was devastated by the
(23:27):
Internet. Now, does that mean everybody's
out of work? Of course not.
Here we are at full employment. But the nature of what we do is
very different today than what we did in 1995, and that's
what's going to change. But just looking at unemployment
numbers, who's more likely to lose their job first, the
computer programmer working for the AI industry that's
(23:48):
overheated, or Someone Like You and me doing a white collar job
in a studio? Well, the answer is the the, the
computer programmer because the nature of program is is in the
process of changing. Now, I have to tell you how
surprising this is to me. I've been telling people for
years, I mean, everybody's parents say to me, hey, what,
what, what should my kids study in school?
I say, well, if you want to always be sure they have a job,
(24:10):
go get a degree in computer science.
Well, now for the first time at Stanford University, one of the
top universities, the graduates that were so sure they were
going to get out and get that big ticket job, they they're not
getting getting job offers. Well, the nature of programming
is changing, which is a fascinating story.
But the people who are involved in face to face interactions,
(24:34):
who are in professions where theauthentic expression of human
emotions such as empathy or concern are very important.
They're the fundamental to this,the, the success of you and your
job. Those are the people we're not
going to have a problem because you really can't get that out of
the computer. Computers are never going to
substitute for that, and I don'tthink that they need to worry
(24:57):
about the the the skills that are going to be important in the
future are your ability to thinkclearly, to express yourself
clearly, and to properly apply new kinds of ideas.
Going back to your central premise of is, is, is this a, is
this a bubble and is it about toburst?
One of the things that doesn't help that and one of the
(25:18):
anxieties that I'm picking up here in Washington and around
with thinkers is this circular financing that's been happening
with all of these companies. This is when you know, NVIDIA is
investing $100 billion into openAI.
So you're you're investing in the company who's buying your
(25:40):
chips, who's your customer, who's then pumping the share
price higher. And it's the circular motion
that makes people wonder about, hang on is, is some of the froth
that we're seeing all about these same companies going in a
cycle and just investing and reinvesting and pumping and
(26:02):
again, getting that excitement, the market excitement.
And I think we haven't touched on this, but Jerry was talking
about all the investment that has come out of other fields,
drug discovery or green technology, and is all being
pummelled to AI at the moment. And it's that fear of missing
out by investors. You know, the amount of money
(26:24):
that is going into some of thesedeals to build out this
infrastructure for chips that may or may not be obsolete, to
build this new AI revolution is,is reflective of how people get
in bubbles, which is, Oh my God,Oh my God, Oh my God.
There's so much money being madeand I'm looking at the share
price and I don't want to miss out.
And that kind of all these companies Open AI and Oracle
(26:48):
call and Microsoft and NVIDIA and AMD and all the deals that
we've seen in the past few months I think make people feel
even more nervous that it's the same players at the top that are
feeding this frenzy. OK, and I guess like all bubbles
and but you know, like like so much of the economy, it's about
greed and it's about fear and when to call time on one or the
(27:12):
other, you know, whether it's fear of missing out or you're
just too greedy and you're putting your money where you
shouldn't be putting it. So finally, to wrap it up,
Jerry, what are the, I mean, when is this crash that you
predicted very confidently on this podcast going to happen?
And if anything can be done to stop it, what would that be?
Other than people suddenly drinking lots of green tea and
being very. Reasonable.
(27:32):
Well, look, this is of course the question that every
interview like this always ends up in.
When's it going to happen? Well, I remember was around in
1999. You're a.
Futurist, you should know the answer.
OK, well, you know, the answer is tomorrow something I'm old,
I'll be gone before I have to answer for what I had to say.
So, you know, let me be, be careful about this.
(27:52):
The I think the honest answer iswhen the retail investors, when
there's nobody at the end of theline who's going to pick up the,
the, the investment at a markup for the people who hold it.
Now, that's when the whole thingwill collapse.
And unfortunately, that's usually when it comes down to
the retail investors. So that's when I would would
what I'd really look out for is when there's all of a sudden
(28:15):
there's a way for mom and pop in, you know, Topeka, KS to be
able to invest in AI and you know, something AI fund or
whatever it is. That's that's when I think we're
going to, we're going to really see, see the end of this bubble.
And that's not going to be a pretty process.
And the answer to your other question, what are we going to
do about it? You got to pop, pop it now.
You got to pop it now. The sooner you take the pain,
(28:38):
the sooner people wake up and understand that this is over
investment in the area. That the fact that these
companies are investing in each other is a big problem is if
there was real demand for their product, why would they have to
put their money at work proppingup their customers?
That's the real question that people have to ask.
I saw exactly this happen and it's everybody passing the money
(29:00):
back and forth with each other. And if you just look at 1 little
slice of that, it looks like it's up, up up until it's down,
down, down. Right, Helia, you're with the
custodians of the world economy.They don't want to see anything
go pop. What they might want to see is
sort of gradual deflation of theballoon, right?
Is it possible to deflate a balloon like the AI1 gradually,
(29:23):
carefully, without too much collateral damage?
By saying the right things, you know the right the right words
coming out of the right mouths. I think there there's no bubble
in history, economic bubble thathas slowly deflated.
I think that just doesn't exist,Matt.
The truth is that you could, it's the momentum and to the
point about fear of missing out,people can still make a lot of
(29:46):
money on AI trades today, even though everyone is discussing
this bubble imminently bursting.And therefore there there could
be still can some considerable time to go before you see this
first. And by the way, there's an
average of, you know, about 6 to9 months before bubbles burst.
(30:06):
Even when you call it even in the credit crunch, you know,
that came so close to when therewas a credit peak.
Actually, people think the history books seem to write it
as you know, one day everything's great and then the
next day it all goes to toast. That's not true.
In reality. The truth is that everyone keeps
talking about the risks and the possibilities, but as you have
(30:29):
seen in recent weeks and recent months, they keep piling in and
buying, buying, buying. What are you doing?
Are you piling out into cash? Are you being careful?
I do not even try to market time.
As you probably know, I, I was tempted.
I went to my financial person. I said, hey, you know what, we
got to get out of this before the, you know, the party's over.
(30:50):
Let's stop drinking and go home and you know, go, go into cash.
And they reminded me and they were right.
You can't tell when it's going to burst and you don't know the
best long term strategy is very simple.
I just, I just hold on. I hold on.
I've been through this four times.
Each time I just held on and it gets ugly.
(31:10):
It rains for a while and then the sun comes back out and
everything's fine. Very wise advice, Jerry Kaplan,
I hope you're all right. I hope your financial guy is
right, and I wish you all the best.
Let's hope the bubble doesn't burst in the next few days.
That's it for this episode of The Forecast.
Thank you so much for watching. Until next time, goodbye.
Is there going to be an AI bubble burst?
Yes or no? F Yes, there's no question that
we're in a significant bubble. If you've got a pension, if
you've got savings anywhere in the world, you will not be left
standing. If there is a reckoning in this
market, everyone keeps talking about the risks and the
(00:20):
possibilities, but they keep piling in and buying, buying,
buying. When the retail investors are no
longer willing to be at the end of this chain of people passing
off the investment to one another, that's when the whole
thing bursts. And who gets stuck for the bill?
The answer is the mom and pops. When is this crash that you've
predicted very confidently on this podcast going to happen?
(00:41):
And if anything can be done to stop it, what would that be?
Hello, and welcome to the forecast.
Is the AI tech sector about to crash and burn, scorching the
world economy as it implodes? A growing chorus of analysts say
it is. So I thought I'd better quickly
ask AI to write me an introduction to this episode
(01:04):
while it still can. Here goes.
In my voice, but not my words. Listen, has the world's AI boom
turned into a bubble? Even open air eyes, Talismanic
CEO Sam Altman admits that partsof the sector are kind of
bubbly. And now economists, banks and
investors are warning the crash could drag down the global
(01:24):
economy. So are we looking at thenext.com
bust or just the growing pains of a genuine technological
revolution? Thanks, ChatGPT.
You're welcome to my day job. Now, to discuss this, I'm joined
from Silicon Valley by the entrepreneur, author and
futurist Jerry Kaplan. Perfect to have a futurist on
the forecast. And from the World Bank Group
(01:46):
annual meeting in Washington, our very own economics
correspondent, Helia Ibrahimi. Jerry, first to you, is there
going to be an AI bubble burst, Yes or no?
Well, since I was just warned not to swear on on camera, I'll
just say F yes, OK, There's no questions.
Please elaborate. There's no question that we're
(02:08):
in a significant bubble. I've now been through this will
be my fourth major bubble and they all have exactly the same
structure and I I see all the same signs today that I've
experienced in the the previous four bubbles.
But this AI bubble, if indeed itis a bubble and it's going to
(02:28):
burst, is it big? Is it ugly?
And my understanding is that if you look at the total numbers
involved in this, it's quite a bit bigger than the last major
bubble, which was very destructive, of course, which
was the so called.com or Internet bubble.
So I do think there's considerable danger.
My understanding is that about 80% of the gains in the US stock
(02:51):
market have been attributable toa very small handful of
companies, all of which are big in AI.
So I think I, I think that that speaks to a lot of risk both in
the stock market and the collateral damage that would
occur in the wider economy. And we're in a financially
precarious position. I fully expect that this bubble
(03:13):
is going to burst at some point and when it does it, it's going
to have some very negative effects.
It's actually having negative effects.
Now. The problem is that they're
masked by the the appearance of so much activity and deals, deal
making and, you know, capital flowing around.
So that's a pretty dim view. Let's go to Helia at the IMF in
(03:35):
Washington. DCI mean Elliot.
One of the reasons why we're doing this podcast, this
forecast today on the AI bubble bursting, if it's going to
burst, is because the IMF has been warning about it, although
it's not been using any F words or any anything nearly as
dramatic the language as the language that Jerry is not.
Quite as colourful as Jerry's? Not quite.
As colourful but. What?
What are they, what are they saying, and why are they saying
(03:57):
it? Listen, everyone is talking
about this. It's policy makers, it's
politicians, it's bankers, it's investors.
Everybody's worried because the valuations we're talking about
are massive. You know, NVIDIA, the chip maker
is now bigger than the UK economy by a stretch.
You know, this is not just a little bit bigger, but almost
(04:18):
20% bigger than the whole of theUK economy.
The valuations of these companies are huge.
And so if you own a ISA in the UK, if you've got a pension, if
you've got savings anywhere in the world, you will not be left
standing if there is a reckoningin this market.
(04:38):
So the question is, you ask, youknow, is this a bubble?
And I think there's two ways of answering that.
In the IMF, they were talking about the chief economist was
talking about similarities with the.com bubble.
And if you look at that, there's2 perspectives, 1 is on a
valuation perspective. And yes, there are similarities,
but I have to say the valuationsare still far away from what we
(05:02):
saw in the.com bubble. And for viewers at home, that
was another era in which the World Wide Web had been created.
And there's there was lots of Alan Greenspan, the former chair
of the Federal Reserve, called it irrational exuberance, where
the market was so excited by thepossibilities of the World Wide
Web that they just thought, Oh my God, these companies are
(05:23):
going to make more and more, more and more, more and more
profits. And we're going to give them the
kind of valuations that have nothing to do with the money
they're making right now. And then when it burst, it all
kind of crashed down. So are you saying that just
remind me the the valuations in the.com era when that crashed or
(05:43):
just before the crash were much higher than now?
Yahoo, Cisco was, they were talking about 100 times forward
earnings. It makes kind of Nvidias 29 * 30
* 26 earnings look sort of modest, sort of sensible.
Now, that doesn't mean that there isn't going to be some
kind of reckoning with AI stocksbecause the kind of money and
(06:07):
capital you're seeing invested. And as you said, everyone is
talking about it now. Jamie Dimon, the boss of JP
Morgan, was talking about it. The Bank of England warned about
the asset prices and how frothy it is.
But I just want to make clear that both from the regulator
perspective and what we were hearing out of the IMF, yes,
(06:28):
it's similar to the.com bubble, but they're talking about it not
having systemic risk, like, for example, the financial crisis.
And why is that? Well, because it's not in
lending, you know, the that's the Jeff Bezos line.
Now, obviously these people all have skin in the game and they
want to talk up their companies.But his point is that, yes,
(06:48):
there's a lot of froth in the market because there's a lot of
potential in lots of possibility.
And even if that bubble burst, there's something happening
underneath that is useful innovation, invention that is
useful for society. I mean, like if you invested in
Amazon in 1999, you were at the peak, but you were beforethe.com
(07:09):
bubble burst. If you invested $1000 and like
you, I went to DeepSeek and ChatGPT to get my calculation,
you would now be sitting even adjusted for inflation, on
$33,000. So even though Amazon lost 90%
of its stock market value, they were one of the winners.
(07:30):
And a couple of weeks ago I was interviewing the NVIDIA boss,
Jensen Huang, and he was, they had the same vibe basically that
we, there will be losers, there will be people who fall at the
edges, but there will be winnersin this.
And backing those winners and making sure they can build out
this, you know, if we build it, they will come data, you know,
(07:52):
countries and countries of GPU'sis going to have a huge impact
on the society. Jerry, let me bring you in
again. I mean, you, you know, you, you
experienced the.com crash and you've been working in tech in
Silicon Valley for decades, if Imay.
So you, you know, you know what you're talking about and you
know what these things look like.
Tell me, intrinsically, is thereanything more valuable in
(08:16):
aithantherewasin.com or are theyboth, you know, do they both
have the same ability to change our society to to, to come up
with new products, but the valuations are just different?
Well, I I want to make sure we can keep 2 seemingly contrary
things in mind at the same time.The new wave of AI is a
(08:39):
wonderful step forward in the inthe future of automation.
It's another major advance and it's going to have very broad
societal effects. The same thing was true about
the Internet back in 9899 when my company on sale got signed
behind me. You know, we went public.
We had a multibillion dollar valuation at one point.
(09:01):
Now your colleague is talking about, well, if you'd invested
in Amazon and you just held it, you would have been fine.
Here's the problem. There were dozens of other
companies that looked just as good.
Take that same $1000 and put it into Yahoo.
Where would you be today? The point is that you, you know,
you can't pick the winners. You don't know who the winners
are going to be. People sometimes ask me, well,
(09:22):
who are going to be the winners in this?
Is it going to be open AI? Is it going to be NVIDIA?
And my answer is I think the winners are are going to be
Yahoo and Netscape. So with with with that in mind
that you can't pick those winners.
And so many companies are going to waste or lose all of the
invested capital. They've been put in hundreds of
(09:43):
billions of dollars we're talking about that's going to be
a problem. Let me take you back to 1999, if
I can go on for one more second on this.
One of the major areas of investment that happened at that
time, the Internet, everybody knew that was going to be great
and it was absolutely true. But in addition to that, there
was, as a result of that, I should say there was a
(10:04):
tremendous amount of investment in laying fiber optic cable
because Oh my God, what are we going to do?
There isn't going to be enough bandwidth to be able to handle
all of this Internet traffic if it continues to grow at the rate
at which it's growing, which it did not.
Well, what happened was they laid in all of this fiber optic
cable and several companies thatI will not mention, there were
(10:25):
huge high Flyers with huge valuations.
They're all gone. They're all out of business.
Yeah, the fiber optic cable's still there, and we still
benefited from it. But those companies are gone,
and that investment money simplyburned up and went up in smoke.
Today, we're seeing exactly the same thing.
It's a bit like the railway bubble though, isn't it?
It's a bit, you know, like therewas a bubble in railways, you
(10:47):
know, but the railways ultimately, once the bubble was
burst, the railways, you know, underpin in this country, it
created a federal system. It created a superpower,
ultimately helped create a superpower.
So I, I, I think the, the technooptimist would say, yes, there
might be a bubble, yes, it mightburst.
(11:08):
There might be losers. As Jerry, you quite rightly
point out, there might be many losers, but the systems in place
are, are going to be so important or going to usher in
this new revolution, this new AIrevolution that it, that it's
worth fighting for. But the question is, there's
another risk there. And it's nothing to do with
(11:29):
valuations, Matt. It's that macro view of does
this even work? Do we have the energy
infrastructure to build all of this out?
Does the technology work well enough?
And and also, you know, the, the, the kind of feedback that
we're getting about the implementation of this
technology within society, it shows that's there were still
(11:52):
some missteps happening. So it's not quite as glorious as
people in Silicon Valley will necessarily have you believe.
Just Jerry just briefly cast us back to, you know, the beginning
of the noughties. I mean, there's so much talk now
about how AI is the most fundamental revolution, you
know, you know, in since the industrial revolution will do
more to change our lives than anything since the invention of
(12:15):
the steam engine or maybe even, you know, the, the printing
machine or whatever the printingpress.
I mean, is it fair to say that AI will expand our human
capabilities morethanthe.com eradid or not?
Well, that's a very difficult question to answer.
This is like asking is the invention of the, let's see, the
(12:38):
electric motor, What kind of economic effect does that have?
And was that bigger than the invention of the electric bulb?
Well, you know, they're both very important and obviously
they changed society. They changed the way we live and
the way we each work. But I'd like to respond to
something that was just said, ifI may, because it's important to
understand there is not going tobe a need for anywhere near the
(13:00):
kind of capacity that's being built out in these data Centers
for a very long time. And if you were going to invest,
nobody ever made money betting that computing was going to be
more expensive in the future. That's just that's always been a
non starter. So you're investing here in
these NVIDIA chips that are veryhigh-priced right now.
(13:21):
And when you look at that and and think about what are they
going to be worth in three years, the lifetime of those
chips is maybe three years. Now you go buy 10 billion of
those and you stuff them into some kind of giant warehouse out
in the middle of some remote desert.
And what do you think that's going to be worth in three
years? And is this going to pay back in
that kind of timeframe? The answer is obviously not.
(13:43):
So it's very clear to me that we're in a bubble and that whole
thing has to collapse. We're going to wind up with a
new kind of ecological hazard. We're going to have these
enormous acres and acres of datacenters out in the middle of
nowhere and with the lights out,and it isn't even worth the
electricity to keep them running.
And they're going to be rusting away and they're full of all
(14:05):
kinds of toxic materials. There could be, there could be
bowling alleys or indoor golf orwhatever, you know, think of it
like that. There aren't many.
People out there, maybe the coyotes, I.
Just want to OK, so, so, so there's obviously, so some
people, as you say, are going tolose a ton of money.
What about ordinary consumers? Are the people who've got, you
know, money invested in the stock market, people who've got,
(14:27):
you know, money in savings or jobs for that matter?
Those are different kinds of questions.
Let me start with that. Let me tell you what my
experience was. I can always speak to my own
experience. Really.
I'm not an economist. Talk about all the the specifics
of the numbers. That's what they do at the IMF.
That's their job. But let me tell you what my
experiencewasthe.com bubble burst when something very simple
(14:48):
happened, when the retail investors, the mom and pop
investors were no longer willingto eat any more of the risk that
the major private investors and venture capitalists could shove
down their throats through the investment banking process.
I watched while the investment banks kept putting out more and
more risky product to their customers, to their retail
(15:10):
customers. And eventually it was there was
so much money to be made by the bankers that everybody got
involved. When when the retail investors
are no longer willing to be at the end of this, this chain of
people passing off the investment to one another,
that's when the whole thing bursts.
And who gets stuck for the bill?The answer is the mom and pops,
the four O 1 KS, the people who put their money in the stock
(15:33):
market, and their faith in thosepeople on TV on those TV shows
were pumping up allthese.com companies, and those are the
ones who wound up holding the bag when the whole thing
deflated. Before that, all the other
people in the chain still have an incentive to keep pumping up
the valuations and passing the investments slow.
(15:54):
And presumably, Heller, that is exactly what the IMF is worried
about. Yeah.
And I mean, I think there's an interesting dynamic as well.
When you look at the US economy,40% of U.S. economic growth at
the moment is entirely AI. So it's, it's doing something
that's quite political too. It's really giving the White
(16:15):
House a huge boost, not just because of, you know, what's
happening in the stock market with these record high
valuations. And, you know, here there is a
real connection between, you know, the, the, the tenant in
the White House and what's happening on Wall Street.
There is a real if that's happening, if that's going well,
then I'm doing my job well, but it's also boosting the entire
(16:36):
the US economy. If you take out AI from the US
economy at the moment and look at business investment, then
it's actually a downward trend, which means all of the other
Trump economic policies, including, for example, tariffs
or somehow being shielded by this huge capital investment.
(16:57):
You know, Jerry was talking about all these warehouses, AI
warehouses. I think that they're thinking
about three, $4 trillion worth of investment into these endless
warehouses. And as Jerry rightly says,
there's a whole debate about whether those chips will be
obsolete. So I think, yes, it has an
(17:19):
impact on both lifting. Yes, there's a risk, but it also
has a political benefit of lifting the US country and
economy at the moment, which hasa very political impact on
policy. And Jerry, Donald Trump, you
know, has fallen in love with the AI.
He's had all the AI Bros over inthe White House for, you know,
(17:39):
for lunch, breakfast and dinner and all the rest of it.
What can he do to make sure, if anything at all, that this
bubble doesn't burst? What can he do to make sure that
this bubble doesn't burst? I don't think he has any control
over this whatsoever. Are there federal funds that he
can unleash? It would make a difference.
Or would that just make it worse?
Well, the problem is that's a forward-looking thing, which is,
(18:01):
let's just say, not in his wheelhouse.
What he's concerned about is what's happening today and what
he can get away with today, and he's not really worried about
tomorrow. Now, I got to say that has
worked for this man for a very long time, which is a rather
disturbing prospect, I'm sorry to say.
But what is what's what's being covered up by this massive
investment is a very interestingfact, which is when all that
(18:23):
money's going into something which is very unlikely to have
an economic return in a time frame that's relevant to
investors, that money is not going into other valuable
investments that could be made. Money's being pulled from a
clean energy projects and electric vehicles.
And you know, for God's sake, health research.
(18:44):
You know, I mean, this is covering up the fact that we're
giving up on, you know, this is your and my health we're talking
about. It's going to suffer because
we're not doing research and vaccines and other important
things that have been fundamental to improving the
health welfare of Americans. Investing for the future is it's
not with this current U.S. government, it's about, it's
(19:07):
about exploiting what we've got right now to get as much as you
can for a very small group of very wealthy people.
And of course, AI has been sort of covered in this Halo of, you
know, of being awestruck and people think it's going to
replace human brains, etcetera, etcetera.
But actually, increasingly we'regetting reports, aren't we helly
of AI getting stuff wrong, of just not being particularly
(19:28):
good. I wonder if that is the thing, a
kind of collective realisation that AI is not quite what it's
cracked up to be, that might eventually burst the bubble.
I think there's one discussion, very excited discussion
happening in San Francisco and in Silicon Valley about the
frontier of this technology, about artificial general
(19:48):
intelligence. How fast can this kind of
agentic revolution go? And then how fast can we get to
artificial general intelligence where it has consciousness,
where it has? Kind of superhuman.
It becomes its own God. And then there's the kind of
more pragmatic argument about how is the real economy able to
(20:09):
utilise this technology and whatis the application of that
technology? Because sometimes technology can
race ahead of how companies on the ground can use them.
And some of the survey results by leading universities suggest
that at the moment, AI is still failing.
Now you're in my my wheelhouse on on this kind of thing.
(20:32):
Artificial intelligence is a fabulous innovation and it's
going to be a tremendous advantage in automation.
But it is not what you see on TV.
It's not what you see in the movies.
It's got very specific limitations which are are quite
real and they're fundamental to the current wave of technology.
And we don't have time to get into this in a lot of detail,
(20:53):
but let me just say this at a very high level.
These systems are very good at certain kinds of prediction, a
short term prediction of new words and pictures and things
like that. But there's a myth that they can
reason and that they think. And the truth is that these
systems cannot reason and cannotthink at all.
(21:14):
They are not logically based on,they give you the most plausible
answer, not the most accurate answer.
And that's a very important distinction.
Now people are going to get get wind of this when they start to
really work with them and go, well, I couldn't make a mistake.
That seems that stupid. Well, that was the most
plausible answer to give you. It wasn't the right answer to
(21:34):
give you. Now, that doesn't mean the
technology's bad. It just means like every
technology before it, it has certain strengths and certain
weaknesses. And I will tell you, since I
live here in the Silicon Valley,most of the people working in
this field, even right here in the Silicon Valley, do not
understand the fundamental limitations of this new wave of
technology. This other thing that's worth
saying is every time there's an advance like this, it takes
(21:57):
5101520 years for businesses to figure out how to make
productive use of this new technology, how to reorganize
their processes to make it to get value out of it.
So that's why you're seeing people going, well, I don't see,
it's not helping me in my business right now.
There's a there's a process thatwe need to go through and it's
going to take 10 to 20 years forthat to work out.
(22:19):
So basically, Jerry, are you saying that if it's overvalued,
it's because it's over? Hyped.
I sure I'll I'll give you a yes to that.
It's overvalued because it's over hyped.
This is not suddenly going to breakthrough some this
artificial general intelligence AGI ceiling, and now it can do
anything and everybody will be out of work.
That's not going to be the case.I would give people a little bit
(22:41):
of comfort about this bubble though, in terms of the
employment picture, which is this, every advance in
automation has had exactly the same effects.
Short term, it puts some people out of work.
It makes us wealthier and that wealth creates new kinds of
jobs. And So what it really does in
the end is it changes the natureof work, what we how we will do
(23:04):
our jobs and what jobs we will get paid to do.
Those are the things that are going to be shifting in the
future. Here's my point of comfort.
If you've been around since, if you're over the age of 30 or so,
you'll remember the Internet bubble.
Well, the same thing was said about the Internet, and it was
true. All kinds of professions,
including yours, if I might point out, was devastated by the
(23:27):
Internet. Now, does that mean everybody's
out of work? Of course not.
Here we are at full employment. But the nature of what we do is
very different today than what we did in 1995, and that's
what's going to change. But just looking at unemployment
numbers, who's more likely to lose their job first, the
computer programmer working for the AI industry that's
(23:48):
overheated, or Someone Like You and me doing a white collar job
in a studio? Well, the answer is the the, the
computer programmer because the nature of program is is in the
process of changing. Now, I have to tell you how
surprising this is to me. I've been telling people for
years, I mean, everybody's parents say to me, hey, what,
what, what should my kids study in school?
I say, well, if you want to always be sure they have a job,
(24:10):
go get a degree in computer science.
Well, now for the first time at Stanford University, one of the
top universities, the graduates that were so sure they were
going to get out and get that big ticket job, they they're not
getting getting job offers. Well, the nature of programming
is changing, which is a fascinating story.
But the people who are involved in face to face interactions,
(24:34):
who are in professions where theauthentic expression of human
emotions such as empathy or concern are very important.
They're the fundamental to this,the, the success of you and your
job. Those are the people we're not
going to have a problem because you really can't get that out of
the computer. Computers are never going to
substitute for that, and I don'tthink that they need to worry
(24:57):
about the the the skills that are going to be important in the
future are your ability to thinkclearly, to express yourself
clearly, and to properly apply new kinds of ideas.
Going back to your central premise of is, is, is this a, is
this a bubble and is it about toburst?
One of the things that doesn't help that and one of the
(25:18):
anxieties that I'm picking up here in Washington and around
with thinkers is this circular financing that's been happening
with all of these companies. This is when you know, NVIDIA is
investing $100 billion into openAI.
So you're you're investing in the company who's buying your
(25:40):
chips, who's your customer, who's then pumping the share
price higher. And it's the circular motion
that makes people wonder about, hang on is, is some of the froth
that we're seeing all about these same companies going in a
cycle and just investing and reinvesting and pumping and
(26:02):
again, getting that excitement, the market excitement.
And I think we haven't touched on this, but Jerry was talking
about all the investment that has come out of other fields,
drug discovery or green technology, and is all being
pummelled to AI at the moment. And it's that fear of missing
out by investors. You know, the amount of money
(26:24):
that is going into some of thesedeals to build out this
infrastructure for chips that may or may not be obsolete, to
build this new AI revolution is,is reflective of how people get
in bubbles, which is, Oh my God,Oh my God, Oh my God.
There's so much money being madeand I'm looking at the share
price and I don't want to miss out.
And that kind of all these companies Open AI and Oracle
(26:48):
call and Microsoft and NVIDIA and AMD and all the deals that
we've seen in the past few months I think make people feel
even more nervous that it's the same players at the top that are
feeding this frenzy. OK, and I guess like all bubbles
and but you know, like like so much of the economy, it's about
greed and it's about fear and when to call time on one or the
(27:12):
other, you know, whether it's fear of missing out or you're
just too greedy and you're putting your money where you
shouldn't be putting it. So finally, to wrap it up,
Jerry, what are the, I mean, when is this crash that you
predicted very confidently on this podcast going to happen?
And if anything can be done to stop it, what would that be?
Other than people suddenly drinking lots of green tea and
being very. Reasonable.
(27:32):
Well, look, this is of course the question that every
interview like this always ends up in.
When's it going to happen? Well, I remember was around in
1999. You're a.
Futurist, you should know the answer.
OK, well, you know, the answer is tomorrow something I'm old,
I'll be gone before I have to answer for what I had to say.
So, you know, let me be, be careful about this.
(27:52):
The I think the honest answer iswhen the retail investors, when
there's nobody at the end of theline who's going to pick up the,
the, the investment at a markup for the people who hold it.
Now, that's when the whole thingwill collapse.
And unfortunately, that's usually when it comes down to
the retail investors. So that's when I would would
what I'd really look out for is when there's all of a sudden
(28:15):
there's a way for mom and pop in, you know, Topeka, KS to be
able to invest in AI and you know, something AI fund or
whatever it is. That's that's when I think we're
going to, we're going to really see, see the end of this bubble.
And that's not going to be a pretty process.
And the answer to your other question, what are we going to
do about it? You got to pop, pop it now.
You got to pop it now. The sooner you take the pain,
(28:38):
the sooner people wake up and understand that this is over
investment in the area. That the fact that these
companies are investing in each other is a big problem is if
there was real demand for their product, why would they have to
put their money at work proppingup their customers?
That's the real question that people have to ask.
I saw exactly this happen and it's everybody passing the money
(29:00):
back and forth with each other. And if you just look at 1 little
slice of that, it looks like it's up, up up until it's down,
down, down. Right, Helia, you're with the
custodians of the world economy.They don't want to see anything
go pop. What they might want to see is
sort of gradual deflation of theballoon, right?
Is it possible to deflate a balloon like the AI1 gradually,
(29:23):
carefully, without too much collateral damage?
By saying the right things, you know the right the right words
coming out of the right mouths. I think there there's no bubble
in history, economic bubble thathas slowly deflated.
I think that just doesn't exist,Matt.
The truth is that you could, it's the momentum and to the
point about fear of missing out,people can still make a lot of
(29:46):
money on AI trades today, even though everyone is discussing
this bubble imminently bursting.And therefore there there could
be still can some considerable time to go before you see this
first. And by the way, there's an
average of, you know, about 6 to9 months before bubbles burst.
(30:06):
Even when you call it even in the credit crunch, you know,
that came so close to when therewas a credit peak.
Actually, people think the history books seem to write it
as you know, one day everything's great and then the
next day it all goes to toast. That's not true.
In reality. The truth is that everyone keeps
talking about the risks and the possibilities, but as you have
(30:29):
seen in recent weeks and recent months, they keep piling in and
buying, buying, buying. What are you doing?
Are you piling out into cash? Are you being careful?
I do not even try to market time.
As you probably know, I, I was tempted.
I went to my financial person. I said, hey, you know what, we
got to get out of this before the, you know, the party's over.
(30:50):
Let's stop drinking and go home and you know, go, go into cash.
And they reminded me and they were right.
You can't tell when it's going to burst and you don't know the
best long term strategy is very simple.
I just, I just hold on. I hold on.
I've been through this four times.
Each time I just held on and it gets ugly.
(31:10):
It rains for a while and then the sun comes back out and
everything's fine. Very wise advice, Jerry Kaplan,
I hope you're all right. I hope your financial guy is
right, and I wish you all the best.
Let's hope the bubble doesn't burst in the next few days.
That's it for this episode of The Forecast.
Thank you so much for watching. Until next time, goodbye.
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