The entire US economy is currently being propped up by growth in the AI/tech sector. And I am convinced that LLMs are fundamentally incapable of delivering on the promises being made by the AI CEOs. That means there is a massive bubble that will eventually burst, probably taking the whole US economy with it.
Let’s say, for sake of argument, that I am a typical American. I work a job for a wage, but I’m mostly living paycheck to paycheck. I have maybe a little savings, and a retirement account with a little bit in it, but certainly not enough that I can retire anytime in the near future.
To what extent is it possible for someone like me, who doesn’t buy into the AI hype, to insulate themselves from the negative impact of the eventual collapse?
It’s also funny how Lemmy is buying up this narrative.
The entire US economy is currently being propped up by growth in the AI/tech sector.
What’s happening is that Dementia Don is curb-stomping the US economy. AI investments, mainly in data centers, are the only thing that still seems promising. When you are on a trek and someone leads you through Death Valley, while pouring out all the water, you shouldn’t blame the last horse that still keeps going.
Putting the blame in the right place would certainly help, with a view toward the mid-terms.
Financially: Diversify. Make sure that you are not completely dependent on what happens in the US. But mind that Europe comes with its own imponderable risks (ie Putin). Same with China. Maybe some old leader dies and the new crew runs everything into the ground; they go to war with Taiwan, that sort of thing.
I don’t know that the OP or anyone else necessarily disagrees with you here. It’s one of the reasons that I believe we’re fucked when the bubble pops. Every other sector is shrinking otherwise, which is only making the mania more extreme.
Trump has fucked the economy, but I don’t expect the next administration to be able to pull off a miracle and fix the mess we’ve created within the next 10 years. Foreign relations and our status as the reserve currency are shot to hell. The US is going to have to answer for our behavior.
Those last two sentences are very alarming for anyone paying attention. The dollar bond market is currently collapsing, and we were THE defacto world power because of our soft power. Farmers around me are currently paying the price at China is buying up all the cheap land they can, and although I call them my friends,I can’t help but feel a certain schadenfreude as I told them trump was evil 8 years ago and the only comeback they have is “but other countries were scared of us then!”. Like their entire lives are nothing but a zero sum game, and now they can’t sell their soybeans. I may be a terrible person, but at least I can read the tea leaves.
Divest and buy labubu dolls.
There is a good reason why Warren Buffet is holding so much cash right now, he will be bargain shopping soon.
Still don’t get this take.
Buying low only works if you can sell high.
At the rate we are going. Yer gonna have King Ratfuck fighting King Shit over a an empire of dirt.
This is how Berkshire has invested over the years. They try to time it, and buy the recession basically. When you’re investing long term, you can either hold and ignore or sell early, losing a bit and buy again after the drop
You don’t think halliburton made bank off of Iraq? I’m talking outside of the government contracts. A failing economy is good business if you’re flush.
I would like to point out it’s only recent gdp growth being propped up by ai. It’s not like our entire economy relies on ai.
The seven primary companies that are trading around the same tens of billions of “investment” and “credits” are worth 34% of the S&P 500.
Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, Tesla.
All of them are betting HARD, because CEO types think they can be first to market with the singularity and win. (That may be oversimplifying a bit, but every one of these companies is run by Nazi collaborators. Make stupid calls, win shitty reputation.)
While true, those companies all have solid revenue streams that aren’t directly related to AI. If a bubble pops they’ll all suffer, but all of them were profitable before the AI boom and can survive without it. It’s very different from the dot bubble because that was driven by speculation and many companies weren’t making any profit back then.
I completely agree with most everything you said, but I will note that Apple is an outlier in that they are not investing deeply into ai. They are a shit company, and Tim Cook is most definitely a Nazi collaborator, but they are not a crutch of this current bullshit market.
That’s fair. They’re behind, but definitely playing. “Apple Intelligence” has been around for a year, just badly under-developed.
Apple plans to ‘significantly’ grow AI investments, Cook says | TechCrunch
“We see AI as one of the most profound technologies of our lifetime. We are embedding it across our devices and platforms and across the company. We are also significantly growing our investments,” CEO Tim Cook said on the Q3 2025 earnings call with investors.
invest into real world assets instead of stocks. think of the infrastructure you’ll need once everything stops working. food pantries, solar panels, ham radio, water purification, community self-defense, etc. basically solarpunk
This is all great stuff to have on hand, but not relevant for OP’s question. They’re wondering how to prepare for the equivalent of the dotcom burst or the 2008 recession, not a grid-down scenario.
why I mention prepping and mutual aid strategies is because you can’t pay for daily living expenses if there are no jobs and food becomes unaffordable. in 2008 millions of people became homeless so we need to learn from them how they survived
I don’t see the AI bubble burst affecting people to the same degree; I think it’ll wipe out a lot of investment portfolios, but non tech-sector jobs should be safe. I think it’s useful to have some essentials on hand, but I wouldn’t go on a buying spree if that means draining my savings; I’d rather have the flexibility of money. If it comes down to survival and you don’t have savings, you could preemptively apply for lines of credit, use those to cover living expenses, and declare bankruptcy once they’re wrung out. Not financial advice, but it’s an effective stopgap.
What did you do in 2020, when everything shut for COVID?
What did you do in 2008, when the arse fell out of the housing market?
What did you do in 2000, when the dotcom bubble popped?
Chances are the answer was “just shuffle on as normal, carry on living paycheck to paycheck, possibly get a new job if you work for somebody badly affected”. Odds are your pension pot will recover by the time you need it.
What do rich people do? They gamble. Watch The Big Short. You could try that, but chances are you’ll lose money. “The markets can remain irrational longer than you can remain solvent”, as the old saying goes.
Buy low when everything crashes and wait for it to recover in 3-5 yrs.
I haven’t seen a job with a pension in the last 18 years being in the workforce.
Unions and Government jobs have pensions. But if you have a 401k or any type of IRA, the same people who invest pensions are also doing that investing for you if you aren’t managing it ( IE: mutual fund and etfs) and the investments are pretty much the same for both, so if pensions tank, so will your 401k.
I had a pension at my last job about 11 years ago. Then not long after I left with it fully vested congress passed a law allowing companies to creatively value pensions far lower than they should have been able to and most companies “bought out” the pensions for a fraction of their value. My pension got turned to mush, then a few month later congress passed a law “fixing the glitch” after most large corps had done their dirty work. My pension would have paid out about $800/month on retirement (likely not great depending on inflation), but their reassessment made it more like $150/month which probably won’t cover a phone bill when I am retired.
That’s wild
Yeah, it sucks. I was not relying on that pension as it was never going to be huge, but it was a big part of why I stayed at that company for over a decade.
Gov jobs still have them
Sort of. I’m a gov worker (non fed) and mine is a joke. 1% of salary per year of service. Not very significant. The old scheme was 2.5, I think, and before that it was 30 years to full salary. I still work with people on that old one, and they’re about at the full 30. In a generation it’s gone from a nice retirement to being more like a supplement. We do pay into SS now though so I guess that’s meant to replace it.
Been to 3 jobs that offer pensions and they all tell the same story you’re giving.
It’s right in the handbook. Hired before X date and you get 25 years to full salary retirement. Before Y date and 30. Hired after 2008 and it’s all the same. 33 Years gets you 33% of your salary. Which ain’t gonna be worth much thanks to inflation.
I worked next to people who at 60 had a full pension coming in, and then collected a full second salary because they’re allowed to DROP - which means work and collect the pension. One mfer was working on retiring twice to collect 3 paychecks. That is no longer an option for my generation either.
alot of people are also working after retiring otherwise. pension aint enough anyways,.
Not necessarily. I had a relative who worked for the federal government back in the 70s/80s, and at the time they were trying to get everyone to switch (it was a voluntary choice for people who were in the ‘old’ system) to the new, non-pensioned options. I can’t imagine that the government suddenly decided to return to pensions.
My experience in small, local government was that everyone was on a matched % of paycheck being put into a retirement account. If you worked for a set number of years with the city/county/parish/state your investment would be matched at a specified rate when you retired. Basically just a glorified retelling of a 401(k).
Do you not have a pension saving scheme that gives a tax break when employers pay into it direct from your wages?
In the UK it’s pretty standard. I think it’s even a legal requirement for employers to offer it, even if the amount they put in is paltry.
In the US those’ve been almost universally replaced by 401k plans, which I assume is what they’re referring to.
I’m in the US, so nothing guaranteed. I have a 401 and a bunch of other pots around.
“The markets can remain irrational longer than you can remain solvent”, as the old saying goes.
Some made big money in 2008.
A lot more lost it.
Buy other stocks, not American ones. They will also be affected but not as much.
If you are living paycheck to paycheck, you cant do anything.
Follow the classic financial advice of setting aside enough emergency savings for a period of unemployment and diversifying the asset classes in your investment accounts (eg, retirement, health, education savings) to align with your risk tolerance & goals.
I keep 6 months of emergency savings in a high-yield savings account & let a robo-adviser passively invest my other savings on autopilot. While that means losses with market downturns, all the advice I’ve read & studies they refer to that run simulations over historic data (including shocks, downturns, bubbles) say that impassively holding that strategy has historically come out gaining & beating inflation.
Don’t have money invested in the stock market to prevent it from losing value during downturns
If you are already invested, you can be reasonably separated from the stocks that are inflating, when the bubble bursts, as long as you are diversified the overall dip will serve you.
The directly impacted industries, those AI companies, data centers, blackrock real estate which is currently heavily investing in local power generation, hardware. That kind of stuff will impact the market, but your money is in relation to units owned. That value will come back and you as a long term investor will make a multiplier on any money you lost, because you ownership, your shares continued to go up at the reduced cost.
If you need the money you have invested for living expenses, you are fucked, but long term investors come out of these recessions stronger every time.
That’s managed investment, retail investors who are highly leveraged in the affected industries will be fucked.
Also look at gold, precious metals are a ridiculously solid investment, just don’t buy them at the market highs put of panic.
The stocks that are inflating are a significant portion of the stock market.
When they crash everything will.
When that happens the only way to not lose is to not have money invested.
Right, they lose value, but you still retain ownership. As a part of the regular flow of things the money you make from those stocks gets reinvested into more ownership, something that keeps happening even when the value of those stocks fall.
As long as your ownership stays, the market will rebound and you will make a premium because the number of stocks you owned actually went up during the period of value loss.
When people talk about how much money rich people made during covid, they are largely talking about stock value, not just carpet bagging.
I’m sorry but I can only describe this mentality as cope.
The market rebounding requires diversified investors propping it up, which no longer exist.
If AI goes kaput the stock market is getting set back at least half a decade, it will rebound, over the course of a decade or so.
That’s not good for people who need a retirement, like the vast majority of people invested in the stock market
See 2008. Now, multiply it by 7. Jacked to the tits.
Yeah, no the market has plenty of diversification, there have been times in history where our investments as a country have been much less diverse. When the AI bubble pops, and it will, it’s gonna be just like all the other bubble pops we’ve experienced. People who didn’t sell made back those funds after every crash. The people who needed the money right then, the elderly especially, we’re totally fucked. They couldn’t wait out the dips.
I’ll grant you it’s possible this is end of the American expirement because of mixing this with Trump, but i would have to ignore every other historical example. In which case the money won’t matter at all because there will be no guaranter of American fiat currency, which means you’ll see Argentina levels of inflation, we aren’t even close to that yet.
No it’ll pop, the rich who are heavily invested will make a ton of money when investors move their funds to another bubble, we’re also in a real estate bubble! And the whole machine will keep moving.
If you’re planning for a catastrophic failure you should really be buying that gold tho, precious metals, bullets, guns, fresh water, seeds.
Non-US countries are buying gold, this seems to be a good way to go.
If you’re worried about any economic downturn, you can very well diversify into even larger economic areas if you’d so please. How you do so is of course up to your own discression, given you can look towards different sectors, vectors of investment, and even geographic areas.
It makes me rage that even though I’m in a country thousands of miles away, its economy would be dragged down should economic collapse ever happens again in the US given heavy reliance on remittances from workers who are paid mostly in greenbacks.
The only glimmers of a chance of surviving such a catastrophe equivalent to tulip abuse would be not only investment in tangible goods and technical skills/trades – short of becoming a prepper – but also counting on policymakers’ pragmatism to make my country more cooperative with its neighbors to cushion and weather the shock.
I’d be more concerned with insulating yourself against the AI bubble not popping if I were you.
The good news is the strategy works for both scenarios. Hyperlocal renaissance or bust.
I wouldn’t say the “entire US economy” is AI based.
Buy puts?
Weird question. Not clear anything you can do.
First, AI bubble means datacenter bubble. Nvidida, AMD, TSMC, Chinese equivalents will do fine, as they have options to make products for non datacenter use.
Scenarios:
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No mass corporate uptake for datacenters, or requirement to encrypt upload/download traffic to corporate owned models hosted by datacenters. Amazon/Google/MSFT can win relatively such a race if they allow private encrypted models instead of their own, and can buy distressed assets from failures. It just means slower than announced deployment rates, with only losers those datacenters who get married to losers.
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CPU enhanced AI (knowledge graphs) with/or smaller LLMs. Datacenters can still provide corporate users, but mix of regular and gpu datacenters, Datacenters can lose big if next big thing requires replacing hardware, and they were too early. Shift in winners and losers, but not an AI/datacenter bubble.
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Few of the announced datacenters are ever built, or 5 year+ delays. Public company investments will go down a little, but nothing catastrophic for big tech, who can make it up in other areas. Power company histeria is an associated bubble that does poorly. This is a very likely scenario.
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Datacenters are successful and aggressively built. No AI bubble, because government surveillance revenue is obtained, and heavy government use of LLMs to keep population pro Israel/oligarchy/militarism. A freedom and jobs bubble is not better than an AI bubble.
Meme stock mania means even the biggest losers can rebound strongly. An everyone else bubble happens whether or not AI datacenters are successful.
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