The Potala Palace on the Tibetan Plateau
"A Permanently High Plateau"
There’s always some cause for a parade. In the 1990s it was the
internet and a new crop of tech geniuses. They were the young hustlers
who ‘got it.’ They understood how the internet would make us rich.
by Bill Bonner
"Happy New Year, ‘Cause We’re All Going to Get Really Rich."
- George Gilder and Richard Vigilante
Baltimore, Maryland - "Hope springs eternal...Oh bright flame of promise...Could it be that Gilder and Vigilante are right? Maybe AI will make us all ‘really rich?’ Eugene Doyle writes: "2025 is set to be the ‘break-out year’ for artificial intelligence. Mark Zuckerberg says we will see the arrival initially of thousands but soon billions of AI ‘agents’ who, via the major tech companies, will integrate themselves into our lives and perform an increasing number of tasks for us. An agent can be defined as “a software-based entity powered by artificial intelligence designed to perceive its environment, make decisions, and take actions autonomously or semi-autonomously to achieve specific goals”. Some are calling it the dawn of the Age of AI or the Agentic Age. "
Almost every day here at Bonner Private Research we look at how the US is headed for a debt crisis. It’s coming. And the Trump team won’t stop it. But what about AI? We posed the question to the AI souped-up Microsoft co-pilot in our computer: "Hey, AI... you’re so smart... how can the US avoid going over the fiscal cliff?" The answer: "Work on long-term economic solutions in collaboration with scholars and policymakers. Recognize that current statutory fiscal rules have failed to solve the debt crisis. Explore options to cut spending and raise revenues."
Well, that’s helpful! But wait... what about the tech breakthroughs themselves? We’ll ask again: "Will AI make us rich?" The answer: "AI has the potential to significantly impact wealth creation, but it's not a guaranteed path to riches for everyone. Here are a few ways AI can contribute to financial success:
Business Efficiency: AI can automate repetitive tasks, optimize operations, and improve decision-making, leading to cost savings and increased productivity.
Investment Opportunities: AI-driven tools can analyze vast amounts of data to identify investment opportunities and manage portfolios more effectively.
New Business Models: AI enables the creation of innovative products and services, opening up new markets and revenue streams."
Note that the world is a competitive place. Businesses compete to deliver new products and services. Consumers compete to get the most for their money. And since everyone, more or less, has access to the same AI tools, no one has an enduring advantage. Businesses will still compete with each other, keeping profit margins slim. Investors, by and large, will get the same hit-or-miss returns they’ve always gotten. And an AI-powered prestidigitation is unlikely to raise us up so we can ‘grow our way out’ of the debt hole.
Back in the 1920s, many people were convinced that new tech wonders - automobiles, airplanes, electrical appliances - would make us all rich. They would raise the value of stocks to a new ‘permanently high plateau,’ said the nation’s leading economist, Irving Fisher. It didn’t work out. Asset prices rose in the ‘20s. Then, they fell in the ‘30s. And meddling by Hoover and Roosevelt led to the Great Depression. The tech improvements kept coming.
The next great hope was the “Nifty Fifty’ stocks of the 1960s. Pfizer, Phillip Morris, IT&T, Xerox and Eastman Kodak represented the best in American technology and marketing. Investing was simple. You could buy these stocks and just forget about doing anything else. They were the best... they could hire the best talent... and borrow at the lowest rates to build the future. Alas, the future happened... and many of these ‘buy-it, forget-it’ companies weren’t in it. Overall, after hitting a high in 1966, stocks lost value to inflation over for the next 16 years
But there’s always some cause for a parade. And in the 1990s it was the internet and a new crop of tech geniuses. They were the young hustlers who ‘got it.’ They understood how the internet would make us all rich.
Michael Saylor - now famous for investing his whole wad, and more, on bitcoin - was then dead certain that these ‘information’ companies would soon reach some kind of ‘escape velocity’ that would allow them to create more and more wealth, without the need for more capital investment. But in 2000, came the rain. Saylor was forced to restate the last two years of his company’s financial results... his stock fell 60% in one day... and the dot.com bust was underway.
As we now know, most of the goofy dot.coms disappeared. Only a very few people got rich. And instead of speeding up, GDP growth limped along... even more slowly than before. Will the AI bubble be any different? We wouldn’t bet on it."
No comments:
Post a Comment