Prof G Markets How The AI Economy Could Collapse
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Sep 29, 2025 Scott and Ed dive into the surge of AI spending, discussing circular deal theories and their antitrust implications. They draw parallels between the current AI hype and past market bubbles, highlighting risks of overinvestment. The duo reveals how traditional economic indicators mask struggles faced by lower-income Americans, emphasizing growing inequality's potential fallout. They also assess the looming risks of recession and predict major corporate shifts as the market shows signs of strain.
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Circular Deals Inflate AI Valuations
- AI spending deals are forming circular financial flows that inflate company metrics without creating real external demand.
- Such related-party transactions resemble late-stage bubble behavior and can mask weak organic revenue.
AOL-Era Shell Games Recalled
- Scott recounts late-1990s AOL-era related-party deals that created illusory revenue and later collapsed.
- He compares today's NVIDIA–OpenAI ties to those AOL-era maneuvers that misled shareholders.
Vertical Ties Raise Antitrust Risk
- Vertical coordination between dominant chip makers and leading LLMs creates a moat that risks crushing competition.
- That integration raises obvious antitrust concerns and could suppress rivals' ability to compete.