Our economic system is designed as a tax on human activity. If AI replaces human activity, does that trigger a crisis?

Photo below - Harry Potter's vault at Gringotts bank. It's unclear whether his parents were early investors in AI, Bitcoin, or something else.

One of the greatest opening lines appears in the link below: “This is not a prediction”. How can a reader NOT immediately be hooked? (“It was the best of times, it was the worst of times", or “Happy families are all alike; every unhappy family is unhappy in its own way.”)

The Yahoo article of course then immediately goes on to make predictions. The primary one: AI should be seen as bearish, not bullish, for stocks and investments. After throwing vast numbers of people out of work, those unemployed people then default on their mortgages in record numbers. Banks which funded those mortgages then fail by the hundreds, requiring federal bailouts. Those bailouts are made with borrowed money, not higher taxes. Because the tax base is dwindling as a result of unemployment. The National Debt soars to unimaginable levels. Hyperinflation reduces the value the dollar as if America was pronounced "Armenia".

Are we having fun yet?

Up til now, the orthodox view (prediction) for AI is that if whoever comes in first gets an Olympic gold medal. Amazon, Meta, Apple, Alphabet . . . one or more of these companies could create unimageable profits. And make billionaires out of anyone who is savvy enough to "buy in now, at the start".

But if that was how capitalism actually worked, then Ford would cover the surface of planet Earth with its cars. They don't. Companies like Hyundai and Kia are eating Ford's lunch. Soon to be followed by even more affordable cars from “BYD” assembled in the Peoples Republic of China, based on the theft of US intellectual property.

The US government will collect no corporate income taxes from Kia or BYD. No individual income taxes from those assembly line workers and corner office executives. No income taxes from US workers who lose their jobs due to Agentic AI. Instead, the US government could be on the hook for massive bank and taxpayer bailouts.

As Yahoo says: none of this is actually a prediction. Just a “thought exercise”.

My column today is not intended to dissuade anyone from loading up on Alphabet or Meta stock. Or crypto. There are 9,000 active crypto currencies, even though only 2 of those are worth more than a dollar. Investment markets operate under the “perfect information” premise: all information guiding future results is already publicly available. Albeit sometimes contradictory . . .

I’m just sayin’ . . .

'Doomsday' report leaves experts rattled about increasing likelihood of US economy shake-up: 'The system wasn't designed for a crisis like this'