Deutsche Bank has run the numbers and determined that, but for the profligate spending on so-called, "Artificial Intelligence," the United States is in a recession.
So basically the most empty bubble since Tulip Mania in the 17th century, sucking up something near a trillion dollars over the past few years.
So, you might be windering why this is a bad thing.
It's a bad thing because AI is exceeding the gross excesses we saw at the height of the dotcom bubble, and when it all collapses, there will be hell to pay.
Money seems to endlessly flow in the AI space, whether it’s Nvidia announcing a $100 billion investment in OpenAI or OpenAI planning to build more massive data centers before the first $500 billion project is even completed. Eventually, some of the folks who have poured money into these ventures are going to expect to see some return on investment. According to a research note from Deutsche Bank, it’s getting harder and harder to see how that is going to happen.
Fortune reports that a note written by George Saravelos of Deutsche Bank warned that spending in the AI sector is “parabolic.” In fact, it is so vast, the researcher said, that it might single-handedly be propping up the American economy. “AI machines—in quite a literal sense—appear to be saving the U.S. economy right now,” he wrote. “In the absence of tech-related spending, the U.S. would be close to, or in, recession this year.” That checks out: earlier this year, the Wall Street Journal reported capital expenditure spending for AI contributed more to growth in the US economy than all consumer spending combined has so far this year.
Obviously, the contribution of AI spending to GDP is real, but it not a productive activity. See John Maynard Keynes' mental exercise in General Theory:
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
AI is burying dollars in coal mines.






