An economy cannot live by the “wealth effect” alone. From Charles Hugh Smith at oftwominds.com:
What nobody seems to notice is all the incentives for deploying AI are perverse.
The real story of the US economy isn’t about AI, it’s about an economy that’s run out of rope. AI is being hyped not just by promoters reaping billions of dollars in stock market gains, it’s being hyped by the entire status quo because it’s understood to be the last chance of saving an economy doomed by the consequences of decades of artifice.
The real story of the US economy is that decades of “financial innovations” finally caught up with us in 2008, when the subprime mortgage scam–a classic example of “financial innovations” being the cover story for greed and fraud running amok–pulled a block from the global financial Jenga Tower that nearly collapsed the entire rickety, rotten structure.
Our political leadership had a choice: clean house or save the scam. They chose to save the scam, and that required not just institutionalizing moral hazard (transferring the risks of fraud and leveraged speculation from the gamblers to the public / Federal Reserve) but pursuing policies–zero interest rate policy (ZIRP), quantitative easing, increasing the money supply, and so on–that had only one possible outcome:
An economy permanently dependent on inflating asset-bubbles that enriched the top 10% while the bottom 90% who depend on earned income fell behind.
The desired goal of permanent asset-bubbles is the “wealth effect,” the cover story for transferring all the gains into the hands of the top 10%, who can then go on a spending spree which ‘trickles down” to the bottom 90%, who are now a neofeudal class of workers serving the top 10% who account for 50% of all consumer spending and collect 90% of the unearned income and capital gains.
I was hoping that it was printing out High Speed Rail tickets and a UBI check for the workers utopia? (not really)
All the power plants for photochops of five breasted women?
Honk, if you’re horny.