As we now enter the first week of the second quarter here in 2023, the United States stands on the brink of a total financial collapse.
There are many ways to view the current economic crisis we all face, and the economic factors that have brought us to this point today, such as the steps that were taken in 2008 during the last economic crisis which never solved the problem, but only kicked the can down the road until the crisis grew bigger, or the role that COVID policies played starting in 2020, or the myriad of other factors that have led us to the place where we all stand today.
But the view that I choose to write about and explain, since so few others are writing about it, is the Big Tech collapse that began in 2022, with the blowup of the FTX cryptocurrency exchange, and the massive layoffs that began in the world’s largest technology companies.
While it is hard to put a number on the total financial loss in the U.S. economy due to the FTX collapse, over $30 billion alone was lost just due to bankruptcies of some of the largest cryptocurrency exchanges.
And that does not include the two largest cryptocurrency exchanges, Binance and Coinbase, which today are in serious trouble and could also be facing failures and potential bankruptcy.
This crisis spread to the banking industry at the end of the first quarter this year, with banks heavily invested in the cryptocurrency market experiencing bank runs and collapse, including Silicon Valley Bank, which at the time was the 15th largest bank in the U.S.
And more banks face failure today, as the bank runs have not stopped.
But the markets haven’t crashed yet, partially because there is so much money in the system that the Fed has created since 2020. And not only has the U.S. stock market not crashed yet, the one sector that one logically would conclude is in the middle of massive correction, the technology sector, which investors should avoid like the plague, is the one sector that is actually increasing, even since the bank failures.
This sector, represented mostly on the NASDAQ, is holding up the entire financial system right now (at least as of the end of the last week in March), and I am not the only one questioning the logic of seeing Big Tech as a “safe haven” to park money into today.
So if Wall Street financial analysts are warning that Tech stocks are NOT a safe haven to put money into today, what is causing this faith in technology to continue drawing investors, which appears to be the only thing holding up the economy right now and stopping a complete financial collapse?
We don’t need to look far to see what is causing the latest feeding frenzy in technology these days, as it is in all of our news feeds on a daily basis: Artificial Intelligence Large Language Models (LLMs), such as ChatGPT.
LLM based Artificial Intelligence is believed to be a market that will grow to over $1.59 trillion by 2030.
However, as in all other technology financial bubbles in the past, all of this money is being bet (not “invested”) on the future, not the present, because all we have today are prototype models that don’t even work correctly.
In spite of all the hype you are reading on a daily basis regarding the latest “AI technology” with these chat bots, they are not actually producing any revenue yet.
They are simply sucking up much of the remaining capital in the U.S. market.
And now, the chat AI products are in position to be perhaps the biggest financial bubble of all time, and when it bursts, which could be tomorrow, next week, next month, or perhaps not until the end of 2023 or first quarter of 2024, it most definitely could bring down the entire financial system in the United States.
