Well, a case could be made that the AI bubble popping will always happen, it’s just a question of when, and that to get the economy back on track, whatever malinvestment is going on because of the AI bubble will have to be unwound whenever the bubble does burst.
That being so, there will always be pain, but the sooner the bubble bursts the less unwinding needs to happen so the less the pain will last and the most likely it is that the unwinding that does happen goes back enough to put the economy on the right track.
This is kinda similar to what happenned in the 2008 Crash and after it: the overindebtness needed to be rolled back to get the economy back in the track before the Finance bubble that caused the crash, but the choice was very explicitly done not to do that (as it would’ve been very painful to Financial institutions and Large Asset Owners, so instead it as “Temporary” Ultra Low or even Zero Interest Rates that ended up lasting for over a decade and were never fully reversed, Austerity and in general the Economy for the most people has ground to a halt and even gone back (average real incomes are low, Inflation on necessities is insane, social mobility is pretty much zero even in countries which before had high social mobility like the US). Even by the official economic figures (which are based on an Inflation value which understates reality) show only anemic growth compared to most of the XX century.
IMHO the problems we have now in pretty much all of the West which derive from how the 2008 Crash and its consequences were handled are a pretty good example of what happens if you don’t fully unwound the misallocation of resources that happens in an Economy during a bubble in order to save people from the short and sharp pain that the unwinding inflicts.
PS: On the other hand, the example of how the 2008 Crash was handled, does indicate that governments will be incredibly adverse to letting the unwinding that needs to happen actually happen fully and hence the Economy won’t get back on track and we’ll all end up in an even more fragile situation, with long terms prospects of an even worse collapse, more so because all that shit reflects in Politics and the “desperate avoidance of pain” following the 2008 Crash that created the fucked-up-for-the-many Economy we have now, has led to the growth of the Far Right because it created large numbers of desperate people who are easy prey for populism.
Well, a case could be made that the AI bubble popping will always happen, it’s just a question of when, and that to get the economy back on track, whatever malinvestment is going on because of the AI bubble will have to be unwound whenever the bubble does burst.
That being so, there will always be pain, but the sooner the bubble bursts the less unwinding needs to happen so the less the pain will last and the most likely it is that the unwinding that does happen goes back enough to put the economy on the right track.
This is kinda similar to what happenned in the 2008 Crash and after it: the overindebtness needed to be rolled back to get the economy back in the track before the Finance bubble that caused the crash, but the choice was very explicitly done not to do that (as it would’ve been very painful to Financial institutions and Large Asset Owners, so instead it as “Temporary” Ultra Low or even Zero Interest Rates that ended up lasting for over a decade and were never fully reversed, Austerity and in general the Economy for the most people has ground to a halt and even gone back (average real incomes are low, Inflation on necessities is insane, social mobility is pretty much zero even in countries which before had high social mobility like the US). Even by the official economic figures (which are based on an Inflation value which understates reality) show only anemic growth compared to most of the XX century.
IMHO the problems we have now in pretty much all of the West which derive from how the 2008 Crash and its consequences were handled are a pretty good example of what happens if you don’t fully unwound the misallocation of resources that happens in an Economy during a bubble in order to save people from the short and sharp pain that the unwinding inflicts.
PS: On the other hand, the example of how the 2008 Crash was handled, does indicate that governments will be incredibly adverse to letting the unwinding that needs to happen actually happen fully and hence the Economy won’t get back on track and we’ll all end up in an even more fragile situation, with long terms prospects of an even worse collapse, more so because all that shit reflects in Politics and the “desperate avoidance of pain” following the 2008 Crash that created the fucked-up-for-the-many Economy we have now, has led to the growth of the Far Right because it created large numbers of desperate people who are easy prey for populism.