Preemptive Request: Zero Government Bailouts For AI Fails, Please

The U.S.’s Artificial Intelligence (AI) self-feeding frenzy is still … frenzy-ing.

Except everything about it seems fake.

The U.S.’s Large Language Model (LLM) version of AI seems to be (at least) years away from the promises being made to feed the frenzy.

Which can be seen as a partially good thing — since no one has any idea what to do with the hundreds of millions of humans they tell us U.S. AI will un-employ.

It also looks like China’s Open Source AI is kicking the U.S. version’s keister. It’s at least getting to even on effectiveness. And China AI is up-to-85% cheaper than U.S. AI.

China AI is open. Which means you can much more easily change and evolve it to meet your ongoing needs. It’s a much more symbiotic relationship between AI and your business.

U.S. AI’s LLM is a closed system. Your business must contort itself to the U.S. AI you choose.

We thus end up slaves to their system. Your business has, de facto, become a subsidiary of your U.S. AI.

And then there’s the prospective U.S. AI investment bubble.

Big Tech has committed to spending an additional $2.4 trillion in the coming years. That’s after spending $286 billion in 2025 (compared to China’s $12.4 billion). And an estimated $700-$900 billion this year (compared to China’s estimated $125 billion).

So that’s one area in which U.S. AI is definitely defeating China AI — spending money. But do these massive dollars spent make any actual sense? It doesn’t seem so.

And are these astronomical U.S. AI dollar amounts even real? It doesn’t seem so:

“Welcome to the AI money-go-round, where tech titans…are locked in a symbiotic tango of investments, contracts, and equity swaps. 

“Billions – no, trillions – flow in loops that boost market caps, dazzle investors, and mask a fundamental question: Is this sustainable growth or just a high-stakes game of hot potato with other people’s money?”

 My money is on the hot potato theory:

 “Nvidia is in talks to guarantee roughly $250 billion so OpenAI can lease a data center that does not yet exist, on land the company does not own, powered by a plant that is not yet built.”

 “A second Nvidia deal, worth up to $350 billion more, would finance the chips that go inside it. Put the two together and one company’s balance sheet stands behind $600 billion of someone else’s infrastructure.”

You have this multi-trillion-dollar dog-and-pony show. Put on by U.S. AI — that seems on the imminent verge of getting its keister kicked by China’s much cheaper, better-modeled, increasingly effective AI.

You should by now be having 2008 Big Bank Fail flashbacks.

Methinks we are rapidly approaching a 2008 collapse — only huger. Because the AI bubble is much huger than was the housing market bubble.

The 2008 collapse was predicated upon just the housing market — plus the global investments that plugged into the scam. AI has basically swallowed the entire U.S. economy —and much of the rest of the planet.

Nearly half of the U.S.’s S&P 500 — is comprised of AI stocks. And AI is globalizing many of the planet’s stock markets. But, again, on a much huger scale than in 2008.

Only 59% of the US stock market’s money come from the US. 41% is foreign-owned. (Which makes the “A rising US stock market lifts all Americans’ boats” argument look even stupider.)

And international stock ownership increases largely driven by AI — criss-cross the globe.  Markets in South Korea, Taiwan, China, Japan and the Netherlands have all become more international in their revenue sources.

Which means — like with the 2008 collapse? Eggs will get scrambled in the U.S. — and all over the planet. Only huger.

The companies that are about to wreck the planet? Will exert enormous pressure for government bailout money — upon all levels of government.

In November we received the sneakiest of peeks. Open AI’s Chief Financial Officer (CFO) Sarah Friar committed the classic D.C. error — she told the truth:

Friar: “And this is where we are looking for an ecosystem of banks, private equity, maybe even governmental — the way governments can come to bear. “

Wall Street Journal: “Meaning like a federal subsidy or something?”

Friar: “Meaning like, just, first of all, the backstop. The guarantee that allows the financing to happen.”

And then Open AI — and to a lesser extent the rest of AI World — went into overdrive pretending Friar didn’t say what she had just said.

But our federal, state and local governments know who butters their bread.

AI’s New Political Donor Class Is Already Outspending Big Tech’s Last One:

“Filings show AI employees donating faster, more heavily, and more in sync than three prior tech-IPO donor classes.”

AI’s Biggest Builders Are Now Its Biggest Lobbyists

How A.I. Money Is Flooding Into the Midterm Elections

So it looks like my request for zero bailouts — has lots of deaf ears upon which to fall. And it looks like my request for zero bailouts — may already be too late.

 The AI Bailout Could Be Baked Into the AI Bubble:

“Private credit companies are key owners of AI-related assets. Many of their parent private equity firms own life insurers that are dumping grounds for bad loans—and subject to state bailouts.”

And, of course, the state budgets ain’t exclusively state budgets.

Reverse Pyramid Scheme: Average Annual State Budget Is 37% Federal Money

Of course The Feds have the real money. And no pesky constitutional amendments requiring they balance their budget. Hence Team AI’s massive avalanche of DC lobby and campaign cash.

And Team AI knows it works. The 2008 federal housing bailout ended up being $16.8 trillion to the Big Banks.

(Which is $26.1 trillion in today’s hyper-inflated dollars. A 55.1% inflation increase – in just 18 years.)

And the coming crash is WAY huger than was the 2008 crash. So $26.1 trillion won’t even come close to representative of crash-to-bailout spending.

And I just checked:

We don’t have the money.

So let’s please not pretend we do and print it.

Because it will make the inflation increase since the last bailout seem tiny by way of comparison.

Let’s please — FINALLY — make the people making our lives miserable pay for making our lives miserable.

Rather than We the Suckers yet again paying for having our lives made miserable.

Seton Motley is a consultant and the founder and president of Less Government, an organization dedicated to, well, less government. This op-ed was originally posted on the author’s Substack page, and can be viewed here.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.