> There could be a crash that exceeds the dot com bust, at a time when the political situation through which such a crash would be navigated would be nightmarish.

If the general theme of this article is right (that it's a bubble soon to burst), I'm less concerned about the political environment and more concerned about the insane levels of debt.

If AI is indeed the thing propping up the economy, when that busts, unless there are some seriously unpopular moves made (Volcker level interest rates, another bailout leading to higher taxes, etc), then we're heading towards another depression. Likely one that makes the first look like a sideshow.

The only thing preventing that from coming true IMO is dollar hegemony (and keeping the world convinced that the world's super power having $37T of debt and growing is totally normal if you'd just accept MMT).

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margalabargala 7 days ago | parent | next [-]

> Likely one that makes the first look like a sideshow.

The first Great Depression was pretty darn bad, I'm not at all convinced that this hypothetical one would be worse.

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agent_turtle 7 days ago | parent [-]

Some of the variables that made the Great Depression what it was included very high tariff rates and lack of quality federal oversight.

Today, we have the highest tariffs since right before the Great Depression, with the added bonus of economic uncertainty because our current tariff rates change on a near daily basis.

Add in meme stocks, AI bubble, crypto, attacks on the Federal Reserve’s independence, and a decreasing trust in federal economic data, and you can make the case that things could get pretty ugly.

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margalabargala 7 days ago | parent [-]

Sure, you can make the case that things could get pretty ugly. You could even make the case that things could get about as bad as the Great Depression.

But for things to be much worse than the Great Depression, I think is an extraordinary claim. I see the ingredients for a Great Depression-scale event, but not for a much-worse-than-Great-Depression event.

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BLKNSLVR 7 days ago | parent | next [-]

How much worse could it be if the President was likely to fire the individual holding the position responsible for announcing "it's official, this is a recession"? And so on in that head-in-the-sand direction for as long as their loyalists are willing and able to defend the Presidents proclamations of fake news?

How long will the foot stay on the accelerator after (almost literally) everyone else knows we might be in a bit of strife here?

If the US can put off the depression for the next three years then it has a much better chance of working it's way out gracefully.

	▲	margalabargala 6 days ago \| parent [-]
		Certainly the current administration is taking actions that will worsen whatever happens. The Great Depression lasted a decade and caused a 30% reduction in US GDP. That's really really bad. I think people are just using "worse than the Great Depression" as a rhetorical device to mean "it would be bad", without out actually understanding what it would mean to be "worse than the Great Depression".

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ronald_raygun 7 days ago | parent | prev | next [-]

Throw some nukes and a war over Taiwan into the mix?

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rglover 6 days ago | parent | prev [-]

Federal debt before the great depression hovered around ~16%-17% of GDP and even in the throws of it got up to ~40% of GDP. Now it's at 120%.

If my claim of this all leading to a greater depression is extraordinary (to the point of being easily dismissed), then someone will have to walk me through the math.

I think that, just like in the 1920's, we've gorged ourselves on debt, speculation, and hubristic thinking and the humbling is coming at us like a freight train. Instead of producing value, we produced inordinate amounts of bullshit and now the bill is coming due.

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margalabargala 6 days ago | parent [-]

> Federal debt before the great depression hovered around ~16%-17% of GDP and even in the throws of it got up to ~40% of GDP. Now it's at 120%. > If my claim of this all leading to a greater depression is extraordinary (to the point of being easily dismissed), then someone will have to walk me through the math.

What I observe right now is that we are not, at this moment, in a depression despite federal debt being such a high percentage of GDP.

It is not at all clear to me that debt percent of GDP and badness of depression have a linear relationship.

The Great Depression lasted a decade and caused a 30% contraction of US GDP. You claim that this will be worse. Can you please walk me through the math?

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rglover 6 days ago | parent [-]

> What I observe right now is that we are not, at this moment, in a depression despite federal debt being such a high percentage of GDP.

Because the "experts" keep redefining what it means to be in a recession, depression, etc. Not to mention the fake job numbers/revisions and the delusion that the value of the stock market is anything near representative of the actual book value of the companies it trades.

So, to that end, you're right. If we continue to delude ourselves indefinitely while the wealth gap continues to expand (and nobody does anything about it), then we won't have a book-defined depression (i.e., no sudden GDP collapse or soaring unemployment per se).

Instead, we'll have a slow but sure move to a full blown oligarchy—implemented by hoovering up hard assets (like real estate) with cheap money—thanks to low interest rates—while the middle-to-lower class are struggling to survive (and media narratives often reinforce the idea that everything is fine, even when data on wages, asset ownership, and real inflation tell a different story). Frankly, I expect this to be far more likely than anything based on the people involved and recent evidence of this very thing taking place [1].

> It is not at all clear to me that debt percent of GDP and badness of depression have a linear relationship.

I didn't say it had a linear relationship, but it is a bellweather of a country that doesn't have its finances under control (and is rapidly approaching an inability to service its debt). Eventually, you run out of the capital (in this case, either monetary or geopolitical) to simultaneously service the debt—which we're on track to do by about ~2030—and stimulate growth.

Considering how embedded the USD is in global economics, if the above oligarchy scenario doesn't take place, the only thing that could happen is a global depression (because the thing propping up the whole system globally—dollar hegemony—has just collapsed/hyperinflated—imagine Venezuela, but globally).

Put simply: if debt outpaces revenue, interest spirals, and trust in the dollar fades, then whether we call it a "depression" (on paper) or not, the outcome is the same: widespread economic pain, asset consolidation, and long-term instability.

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[1] https://www.cnbc.com/2023/02/21/how-wall-street-bought-singl...

	▲	margalabargala 6 days ago \| parent [-]
		Sure, I'm willing to agree that high and expanding levels of national debt can lead to economic crisis. I still don't see why it would be worse than the Great Depression. The national debt being low during the Depression and high now doesn't seem relevant. The national debt was not a primary causative agent of the Great Depression, we're saying that it will be a primary causative agent of this one, so why would a Depression kicked off by national debt be worse than the one kicked off earlier by not-national-debt? That said: > > What I observe right now is that we are not, at this moment, in a depression despite federal debt being such a high percentage of GDP. > Because the "experts" keep redefining what it means to be in a recession, depression, etc. If you are claiming "actually we're totally in a depression right now but actually no because we're redefined our way out of it", now that is an extraordinary claim. "Depression" means something more than "bad economy vibes".

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7 days ago | parent | prev | next [-]

[deleted]

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BLKNSLVR 7 days ago | parent | prev | next [-]

I'm currently reading The Mandibles[0], which is feeling increasingly inevitably prophetic.

[0]: https://en.wikipedia.org/wiki/The_Mandibles

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Gabriel_Martin 7 days ago | parent | prev | next [-]

MMT is just a description of the monetary reality we're in. If everything changed, the new reality would be MMT.

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Hikikomori 7 days ago | parent | prev [-]

Ai bubble, economy in the trash already, inflation from tariffs. Dollar might get real cheap when big holders start selling stocks and exchanging it, nobody wants to be left holding their bag, and they have a lot of dollars.

Which is their (Thiel, project2025, etc) plan, federal land will be sold for cheap.

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decimalenough 7 days ago | parent [-]

Selling stocks for what? If the dollar is going down the toilet, the last thing you want to have is piles of rapidly evaporating cash.

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piva00 7 days ago | parent | next [-]

For other currencies, sell stocks, get USD, sell USD to buy currencies appreciating over the USD.

It's already happening, past 6 months USD has been losing value against EUR, CHF, GBP, even BRL and almost flat against the JPY which was losing a ton of value the past years.

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marcusestes 7 days ago | parent | prev [-]

Never totally discount _deflationary_ scenarios.

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heathrow83829 7 days ago | parent [-]

based on my understanding of what all the financial pros are saying: they'll never let that happen. they'll inflate away to the moon before they allow for a deflationary bust. that's why everyone's in equities in the first place. it's almost insured, at this point.

	▲	immibis 3 days ago \| parent [-]
		They've been trying. ZIRP was a whole decade of giving unlimited free money to the rich and it still didn't work. Free money to the poor would raise inflation but they'd never do that because the poor would have more money.