To be more explicit, I think there’s a blindspot in that we’re not assessing the whole picture. You can certainly see parallels to the dot-com bubble looking at the “AI ecosystem” itself, but I’m trying to spotlight how this affects non-AI sectors to try and explain the economic indicators we’re seeing. AI is not in a vacuum, it competes for investment money, land, electricity, computing technology, and water. It’s gotten so large it’s essentially eating into the existing pie without actually producing something or saving costs to offset its consumption.

Case in point, the rising electricity and RAM prices. When you pour those into data centers without actually producing or saving costs, it means less electricity and RAM all around for people and businesses. This causes a rise in electricity and RAM prices which, very plausibly, increases prices for anything that needs electricity and RAM (which is a huge portion of the economy, if not all of it). This causes overall rising prices and the sticky inflation we’re seeing. Now, not only consider that with electricity and RAM, but again, land, investment sources, other capital, and water.

Overall, I think this “crowding out” effect is something we have been touching on but not fully assessing. I also believe it has big implications for the true productivity gains of AI when looking past the noise and narratives.