{"id":219319,"date":"2025-10-12T14:14:08","date_gmt":"2025-10-12T14:14:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/219319\/"},"modified":"2025-10-12T14:14:08","modified_gmt":"2025-10-12T14:14:08","slug":"technology-bubbles-causes-and-consequences","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/219319\/","title":{"rendered":"Technology Bubbles: Causes and Consequences"},"content":{"rendered":"

\"our-story<\/a><\/p>\n

It was a time of enormous optimism, based mainly on one specific technology that promised to have transformative effects on the economy. Businesses developing and implementing the new technology spent huge sums on construction and equipment. Individual investors piled into these businesses\u2019 stocks, sending their prices soaring.<\/p>\n

And enthusiasts were right about the technology\u2019s potential. It would eventually transform the economy, indeed society as a whole. But long-term transformation doesn\u2019t necessarily translate into profits for businesses at the cutting edge. As it became clear that the financial returns wouldn\u2019t live up to the hype, some companies went bust, while stocks tied to the technology lost most of their value. And plunging capital spending pushed the economy into a nasty recession.<\/p>\n

Yes, Britain\u2019s Railway Mania of the 1840s was quite a story.<\/p>\n

Over the past couple of months there has been a palpable change in the way people talk about the technology everyone calls AI. However, it isn\u2019t really artificial intelligence as people usually understand it. Some commentators are careful to say \u201cgenerative AI,\u201d where in practice the extra word serves the same purpose as calling some supermarket items \u201ccheese food\u201d or \u201cjuice beverage,\u201d indicating that they aren\u2019t quite what they look like.<\/p>\n

Whatever it is, few are denying that the technology is impressive. But warnings that there may be a huge AI bubble are getting louder. Worries about the financial underpinnings of all that capital spending are growing. And many people have noted that the AI boom is driving most, possibly all, of the economy\u2019s recent growth. So what will happen if the boom goes bust?<\/p>\n

By the way, some early subscribers to this newsletter may remember that I interviewed Jim Chanos<\/a>, the famous short-seller, back in February, and he made the case then for an AI bubble. But people weren\u2019t yet ready to hear it.<\/p>\n

Today\u2019s primer will not be about the long run economic and social implications of AI, which is an entirely different subject. I will write in a future primer about technology, growth and jobs in general, with some speculations about AI. For today, however, I\u2019m going to focus on what history \u2014 especially, but not only, the telecommunications boom of the 1990s \u2014 can tell us about the AI boom and its consequences.<\/p>\n

Beyond the paywall I will address the following:<\/p>\n

1. The AI boom in historical perspective<\/p>\n

2. The logic of technology manias and bubbless<\/p>\n

3. The \u201cWinner Take All\u201d nature of technology bubbles<\/p>\n

4. What will happen if the AI boom goes bust?<\/p>\n","protected":false},"excerpt":{"rendered":"It was a time of enormous optimism, based mainly on one specific technology that promised to have transformative…\n","protected":false},"author":2,"featured_media":219320,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45],"tags":[182,181,507,74],"class_list":{"0":"post-219319","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/219319","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=219319"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/219319\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/219320"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=219319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=219319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=219319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}