The Big View A financial historian’s warning about the AI boom
Nov 26, 2024
Andrew Odlyzko, a mathematics professor at the University of Minnesota and a financial markets expert, shares his insights on the current AI investment surge. He draws alarming parallels to the 1990s dotcom bubble and the 1840s railway mania, warning of the cyclical nature of market euphoria. Odlyzko discusses how historical financial manias often lead to both substantial economic losses and societal advancements. He also addresses the unpredictable landscape of innovation and the systemic risks posed by big tech investments in today's economy.
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Historical Parallels to AI Boom
- Some point to the internet bubble of the late 1990s, when investors lost heavily in telecoms and dot-coms.
- Others recall Britain's railway mania of the 1840s, with its excessive track-laying and disastrous investor outcomes.
Andrew Odlyzko's Background
- Andrew Odlyzko, a mathematician at the University of Minnesota, has researched technology and financial manias.
- He debunked the myth of internet traffic doubling every 100 days during the dot-com boom.
From Math to Bubbles
- Odlyzko's work in cryptography at Bell Labs led him to study how technology interacts with society.
- He observed that seemingly breakthrough tech solutions were often ignored, prompting his research into bubbles.