Create God and Ask Him for Money

This is obviously a bubble

Jim Rickards, a former adviser to the CIA and Pentagon, warns that the United States is currently facing a tectonic economic crisis driven by an unprecedented bubble in Artificial Intelligence (AI). According to his analysis, this impending crisis has the potential to be more destructive than the dot-com crash, the 2008 financial crisis, and the pandemic-related market crashes combined. He is not alone in his dire outlook; veteran investor Jeremy Grantham has warned, "This is obviously a bubble. The probabilities it doesn't burst are slim to none. And when it does, it could be an economic catastrophe unprecedented in the last 97 years". Furthermore, former SEC Chairman Gary Gensler has stated that "the next financial crisis will come from AI".

Create God and ask him for money

The Unprecedented Scale of the AI Bubble The current market relies dangerously on a single sector, with the AI bubble estimated to be 17 times larger than the dot-com bubble of the late 1990s. Many AI companies are burning through cash at an alarming rate. For instance, OpenAI is reportedly losing more than a billion dollars a month; as it is noted in the source, "for every dollar they make, they have to spend at least three". This massive cash burn led a Deutsche Bank analyst to observe, "No startup in history has operated with losses on anything approaching this scale". Despite the astronomical costs and high valuations, OpenAI’s CEO was quoted as previously saying, "I have no idea how we're going to generate revenue". Former Goldman Sachs banker and Bloomberg columnist Matt Levine summarized this extreme speculative mindset, noting, "The business model they believe they need seems to be create God and ask him for money".

"Subprime AI" and Toxic Debt Just as the 2008 financial crisis was fueled by toxic subprime mortgages, the AI boom is being fueled by dangerous debt structures used to fund massive data centers. Private equity firms are financing data centers as real estate loans, which are then packaged into tranches of securities and sold off to pension funds and retirement accounts. David Dayen, executive editor at the American Prospect, warned of the consequences: "We have a 2000's housing bubble level of financial engineering on top of a 1920s level of private unregulated lending, on top of something bigger than a 1990s internet or 1870s railroad level of technology infrastructure buildout. We have sealed the deal on another financial crisis".

The Illusion of Demand and Circular Financing The AI bubble is further inflated by a financial sleight of hand known as circular financing, where major AI companies invest in startups that then use the funds to buy their products, creating the illusion of organic demand. Grace Blakeley, an author and former research fellow, highlighted this dangerous parallel: "The last time we saw anything like this level of circularity in the tech sector was the.com bubble... This artificial arrangement creates the illusion of stronger demand for both companies services".

Hitting the Physical Wall Despite the hype, AI is rapidly approaching strict physical and economic limits. Researchers note that graphical processing units (GPUs) are reaching the limits of physical improvement, and the massive energy required to run data centers is becoming unscalable. Neuroscientist and AI researcher Gary Marcus pointed out this reality: "LLMs have reached a point of diminishing returns. Scaling is running out and that truth is at last coming out". Furthermore, a recent survey found that 90% of firms report AI has had no impact on their employment or productivity yet.

Minsky moment

The AI market is rapidly approaching a "Minsky moment"—the critical tipping point in a financial bubble where heavily indebted, speculative companies can no longer sustain their growth, triggering a spectacular market collapse. Smart money is already moving out of the sector, with prominent investors like Stanley Druckenmiller, Peter Thiel, and Michael Burry selling off their AI shares or placing massive bets against the industry. The potential fallout is massive. As Bernstein Research analyst Stacy Rasgon warned, OpenAI's CEO "has the power to crash the global economy for a decade," and the CEO himself has admitted that "a lot of people are going to lose a phenomenal amount of money". When the illusion of infinite growth shatters, it threatens not just the tech industry, but the broader economy and the financial security of millions of Americans.

Sources

• VALUING AI - GMO, Jeremy Grantham's definitive 2026 analysis on the AI mania.
• How the AI Bubble Might Play Out - The American Prospect, David Dayen's critical comparison of Nvidia to Enron. AlphaProof, AlphaGeometry, ChatGPT, and why the future of AI is neurosymbolic, Gary Marcus outlines six reasons for the bubble's deflation.
• Circular Economy of AI Firms: An Analysis of Investment Loops, Key Players, and Emerging Risks, Stacy Rasgon's professional concerns regarding AI's circular financing.
• After the AI Crash - Vanderbilt University, Matt Levine's terminology and productivity paradox in market crashes. AI First: How the Federal Government is Prioritizing AI Over People and Planet, David Dayen's perspective on the massive scale of hype.
• Annual Report and Accounts - Thalassa Holdings Ltd, Grantham's 2024 report on the unprecedented 'bubble within bubble'.
• Tech Won't Save Us on Steno.fm , Grace Blakeley's analysis of 'Vulture Capitalism' and tech power.
• Valuing AI: Extreme Bubble, New Golden Era, or Both - GMO, GMO's historical comparison of AI to the 1929 crash.
• Why Is Broadcom Stock Falling Friday? - Benzinga , Stacy Rasgon's analysis of the semiconductor market's digestion phase.