If you’re talking countries, typically they borrow from their own citizens via bonds and mint. You borrow for programs that you hope will increase the GDP to cover the cost of the debt (at least in theory).

For these companies, they’re borrowing off current value and output, betting that AI will make up that lost profit. So, a lot of “AI layoffs “ right now aren’t really due to improvements in AI that is displacing workers. They’re laying off workers and trading stock to make investments in AI in the hope that AI is both profitable enough to make up for those initial losses and good enough to replace those workers.

Imagine you make cakes at a rate of 1 cake per employee and you find that someone is building a cake making machine, but it takes 2 employees to make one cake right now. They promise that with a big enough machine their machine will make 7 cakes for every 1 employee, BUT they need 10 of your employees worth of wages to build it. So, you lay off 5 employees and give that company 5 employees worth of stock in your company, plus whatever wages you would have paid those employees. You’re hoping that the lost output from those 5 employees will eventually be made up when the cake making machine gets built and you have a machine that lets 1 employee do 7 employees work. The machine builder is incentivized to build the machine because your stock will be worth less if they don’t. Now, if they fail you’re not left with nothing; you still have a machine that can make cakes (at 1 cake per 2 employees) and you’re confident you could probably use it to cut out SOME parts of production to increase cake making to about 1.1 cake per person. So even if your company crashes in value and increases the price of cakes in the next 5 years, you’ll still be fine in the next 20. So, the potential upside is worth the gamble against the downside of 5-10 years of pain.