The Economics of the AI Bubble

Economic bubbles are not deviations from equilibrium but inherent features of capitalist evolution, driven by credit creation and technological disruption. Mainstream economic models consistently fail to predict these crises because they treat money as a neutral medium and ignore the essential role of debt. The current AI boom mirrors historical precedents like the railway expansion, yet it poses a unique, existential threat by potentially rendering human labor obsolete. To prevent a "Hunger Games" scenario where a tiny elite captures all gains, governments must embrace deficit spending to fund a Universal Basic Income. This transition requires abandoning the flawed, static view of economics in favor of a dynamic, evolutionary approach that recognizes how banks create money and how technological shifts fundamentally reorganize social classes.