If you liked that, you'll enjoy his take on how, actually, bubbles are good: https://stratechery.com/2025/the-benefits-of-bubbles/

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matwood 14 hours ago | parent | next [-]

And he's right (and the sources he points out), that some bubbles are good. They end up being a way to pull in a large amount of capital to build out something completely new, but still unsure where the future will lead.

A speculative example could be AI ends up failing and crashing out, but not until we build out huge DCs and power generation that is used on the next valuable idea that wouldn't be possible w/o the DCs and power generation already existing.

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foogazi 13 hours ago | parent | next [-]

The bubble argument was hard to wrap my head around

It sounded vaguely like the broken window fallacy- a broken window creating “work”

Is the value of bubbles in the trying out new products/ideas and pulling funds from unsuspecting bag holders?

Otherwise it sounds like a huge destruction of stakeholder value - but that seems to be how venture funding works

	▲	tim333 9 hours ago \| parent [-]
		The usual argument is the investment creates value beyond that captured by the investors so society is better off. Like investors spend $10 bn building the internet and only get $9 bn back but things like Wikipedia have a value to society >$1 bn.

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20after4 13 hours ago | parent | prev [-]

Huge DCs and Power Generation might be useful, long-lasting infrastructure, however, the racks full of GPUs and TPUs will depreciate rather quickly.

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sdenton4 13 hours ago | parent [-]

I think this is a bit overblown.

In the event of a crash, the current generation of cards will still be just fine for a wide variety of ai/ml tasks. The main problem is that we'll have more than we know what to do with if someone has to sell of their million card mega cluster...

	▲	raw_anon_1111 13 hours ago \| parent [-]
		The problem is the failure rate of GPUs is extremely high

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RoddaWallPro 11 hours ago | parent | prev [-]

I _kind of_ understand this one. You can think of a bubble as a market exploring a bunch of different possibilities, a lot of which may not work out. But the ones that do work out, they may go on to be foundational. Sort of like startups: you bet that most of them will fail, but that's okay, you're making bets!

The difference of course is that when a startup goes out of business, it's fine (from my perspective) because it was probably all VC money anyway and so it doesn't cause much damage, whereas the entire economy bubble popping causes a lot of damage.

I don't know that he's arguing that they are good, but rather that _some_ kinds of bubbles can have a lot of positive effects.

Maybe he's doing the same thing here, I don't know. I see the words "advertising would make X Product better" and I stop reading. Perhaps I am blindly following my own ideology here :shrug:.

	▲	forrestpitz 3 hours ago \| parent [-]
		I also see the argument as a macro one not a micro one. Some bubbles in aggregate create breeding grounds for innovation (Hobart's point) and throw off externalities (like cheap freight rail in the US from the railroad bubble) ala Carlota Perez. That's not to say that there isn't individual suffering when the bubble pops but I read the argument as "it's not wholy defined by the individual suffering that happens"