The entire US economy is currently being propped up by growth in the AI/tech sector. And I am convinced that LLMs are fundamentally incapable of delivering on the promises being made by the AI CEOs. That means there is a massive bubble that will eventually burst, probably taking the whole US economy with it.
Let’s say, for sake of argument, that I am a typical American. I work a job for a wage, but I’m mostly living paycheck to paycheck. I have maybe a little savings, and a retirement account with a little bit in it, but certainly not enough that I can retire anytime in the near future.
To what extent is it possible for someone like me, who doesn’t buy into the AI hype, to insulate themselves from the negative impact of the eventual collapse?
Buy other stocks, not American ones. They will also be affected but not as much.
If you are living paycheck to paycheck, you cant do anything.
I wouldn’t say the “entire US economy” is AI based.
Don’t have money invested in the stock market to prevent it from losing value during downturns
If you are already invested, you can be reasonably separated from the stocks that are inflating, when the bubble bursts, as long as you are diversified the overall dip will serve you.
The directly impacted industries, those AI companies, data centers, blackrock real estate which is currently heavily investing in local power generation, hardware. That kind of stuff will impact the market, but your money is in relation to units owned. That value will come back and you as a long term investor will make a multiplier on any money you lost, because you ownership, your shares continued to go up at the reduced cost.
If you need the money you have invested for living expenses, you are fucked, but long term investors come out of these recessions stronger every time.
That’s managed investment, retail investors who are highly leveraged in the affected industries will be fucked.
Also look at gold, precious metals are a ridiculously solid investment, just don’t buy them at the market highs put of panic.
What did you do in 2020, when everything shut for COVID?
What did you do in 2008, when the arse fell out of the housing market?
What did you do in 2000, when the dotcom bubble popped?
Chances are the answer was “just shuffle on as normal, carry on living paycheck to paycheck, possibly get a new job if you work for somebody badly affected”. Odds are your pension pot will recover by the time you need it.
What do rich people do? They gamble. Watch The Big Short. You could try that, but chances are you’ll lose money. “The markets can remain irrational longer than you can remain solvent”, as the old saying goes.
Buy low when everything crashes and wait for it to recover in 3-5 yrs.
I haven’t seen a job with a pension in the last 18 years being in the workforce.
Gov jobs still have them
Do you not have a pension saving scheme that gives a tax break when employers pay into it direct from your wages?
In the UK it’s pretty standard. I think it’s even a legal requirement for employers to offer it, even if the amount they put in is paltry.
In the US those’ve been almost universally replaced by 401k plans, which I assume is what they’re referring to.
I’d be more concerned with insulating yourself against the AI bubble not popping if I were you.
The good news is the strategy works for both scenarios. Hyperlocal renaissance or bust.
Follow the classic financial advice of setting aside enough emergency savings for a period of unemployment and diversifying the asset classes in your investment accounts (eg, retirement, health, education savings) to align with your risk tolerance & goals.
I keep 6 months of emergency savings in a high-yield savings account & let a robo-adviser passively invest my other savings on autopilot. While that means losses with market downturns, all the advice I’ve read & studies they refer to that run simulations over historic data (including shocks, downturns, bubbles) say that impassively holding that strategy has historically come out gaining & beating inflation.
Weird no one is saying this, but exchange dollars to Euros.
Had it been done back in November of last year, 1,000$ would now be worth about 1,200$.
Even if the Euro loses some value from the crash, it probably won’t be greater than 20% of the exchange difference there is now.
I think its too late. The dollar lost 15% of its value from beginning of year… It doesnt look like it will go much lower. Its been kind of stuck for the last month.
I dont think this is why no one is saying this. But the reason you shouldn’t do this is because of the Efficient Market Hypothesis. This is the same for basically any investment where you are trying to be “smart”, whether you are buying gold, low tech stocks, various currencies, crypto, etc. The fact is, sitting on your ass and clicking a few buttons on an investment website takes literally no effort - which is why there are trillions of dollars in investment funds trying to do it as profitably as possible. Every dollar in the market is competing to eak as much value out of every minute in the market as possible, and these dollars are very smart.
Like, if you graduated top of your class from MIT in financial analysis, you are still at an unimaginable disadvantage, because the evil capitalist hedge funds hired all your classmates, and also all the equivalent graduates for the past 40 years where they have all been competing against each other that whole time. And they have shit tons of money to spend on the best tech they can possibly afford in order to make tiny improvements in trade returns.
You can exchange dollars and euros on the open market, which means the banks and hedge funds can do that too, which means that the anticipated difference between the two is already priced in.
Great points, currency arbitrage is not something the average Joe can win at, the money they have access to is already stepped on.
What is hte least friction way of doing that?
Revolut
I do wonder…
With most economic crashes, the rich get even richer. This time it’s different, though.
Right now, the top 8 richest men in the world have as much wealth as the bottom 50%. Homelessness world wide is at an all time high, and a huge swath of people can’t afford all the basic necessities anymore.
If an economic crash happens now, will the 99% of the people finally wake up and just TAKE the resources from that 1%, like it or not?
What do billionaires think will happen to them once shit really hits the fan?
They all have been building bunkers.
They will always be safe in the US. Americans truly are not capable of revolution.
What do you think would happen to billionaires in that scenario? The richest people in the world, who all own their own islands and mega yachts and can easily pay anyone enough money to do whatever they want?
No one is “taking” what they want from them lol.
This time it’s different, though
How? How is this fantasised about economic crash different?
When you have 10000 people to 1, a lot can be accomplished with some organization. You don’t have to get to them on their islands if you take back the mainland. Cut them off. Eventually they’ll run out of supplies, and since they’re used to getting whatever they want whenever they want, they’ll run out of something they’re accustomed to getting within days.
You act like billionaires are some smooth brained Neanderthals who will lose their mind in a few days if they can’t get their favourite smoothy lol
Riding out economic ups and downs is really just about good personal finance. The good advice is the same in good times and bad, which is why it is good advice - in economics, you never really know when good or bad times are coming.
- Spend less
- Earn more
- Invest the difference
Your #3 is problematic.
The basis of the question is where to invest in order to avoid the coming AI crash. Your answer fails.
If you’re certain an “AI crash” is coming, then shorting AI companies is how you’d not only avoid the fallout but actually profit from it. That’s speculative investing though - basically gambling.
For everyone else without the ability to predict the future, the general advice stays the same: invest in low-cost, highly diversified index funds spread across sectors and regions. The markets are deeply interconnected, so it doesn’t really matter where you’re invested - when the market crashes, you’re getting hit. If you’re all in on tech, you’ll get hit hard; if you’re spread out, you’ll get hit less. But either way, you’ll feel it.
For someone in it for the long run, it doesn’t matter what the market’s doing. I just keep doing what I’ve always done - managing my finances carefully and investing my savings.
Right.
I will say also that if you want to hedge against AI, then you could invest in non-US based index funds.
Another option is to invest in something like real estate. Do the math and find something you can profit off of even with a down economy and you’ll be able to get your investment to ride out the hard times and earn in the good times. But similar to index investing, these investments should be made with an eye on long-term gains (on the order of decades).
A final option - possibly the best - is to invest in yourself. Put the money into good health (physical and mental), skills that pay dividends (like being able to cook or do your own repairs, or building a community around yourself of hard working, optimistic, and sensible individuals. Skills education can be a great investment - either going to a university (careful here with costs, but college graduates still do tend to have better lifetime earnings than non-graduates), a technical school (AI probably won’t replace plumbers for quite a while), informal self-teaching (you can learn a lot of skills just making personal projects at home or in a makerspace). And for the more ambitious, you can start your own business, which could be as simple as buying a ladder to clean people’s gutters or a snow plow attachment and truck to plow driveways and parking lots.
Hard times are coming - they always are. The people who do well in hard times are the ones with a diverse set of useful skills, a resiliant set of assets, a positive mindset, and a supportive community around them.
Shorting counts as income and you’ll be taxed on it as income. You also have a chance that no one will buy you out of the hole once it hits its mark.
Lots of risks in shorting.
While I agree with diversifying, the tariffs are fucking over the stock market hard in so many ways you cannot avoid it. Right now everyone sold their gold cuz they need money, And two days ago the tariff on China created a ripple on the precious metals. Tomorrow trump will fart some blithering assanine remark and suddenly for whatever reason lithium will take a dive for it.
Investing has become a stupid stress game.
I guess up your international market fraction (?)
If you’re certain there’s an AI crash coming then you could make a lot of money betting on it. Put your money where your mouth is and become one of the billionaires.
You could also just not invest money in AI companies.
If you have a retirement account, it’s probably in some sort of stocks. Be aware of what those are. Consider including some non-American index funds that are not particularly tech heavy. S&P index funds are significantly exposed to AI-related tech companies, and their usual safety is currently questionable.
I am not an expert per-say on AI, but I have survived economic collapses. Kinda.
Here’s what you can expect.
It will happen a lot faster and more sudden than you expect. It will be a few days of “uncertainty” and you will see reports on the market and spending and fear through investors, and then BAM everything goes deep red for a few days and then you suddenly get sent home from work.
Your job, no matter how skilled or stable or unrelated to finance or the stock market you may think it is- is NOT safe. In fact, service industry jobs are often the first to go, because when the market tanks and investors start pulling out money, one of the first, strongest effects we feel is that people with money immediately stop spending. If you install windows and doors, if you cut grass, if you clean or cook, expect people will suddenly start doing that themselves more and more. You may get laid off suddenly depending on how much reserve your company has.
There will be an immediate and overwhelming strain on state and city services. Unemployment offices, food banks, employment centers, and expect the media to create a LOT of hype around it to a destructive degree, there will be the same kinds of supermarket raiding like we saw with covid for no real good reason other than people feeling afraid.
What you should do now to prepare:
Have backup income plans. Even if modest, have some hustles ready to deploy. Get certified or see what you need to get certified ahead of time to do Uber and/or Lyft, people are going to be using ride sharing more because they won’t be able to afford to drive or make car payments. Think about other services people are going to need if they don’t have jobs - handyman work on the cheap, dog and pet care, unlicensed work you know you can do safely, etc. If you or your family can do art and crafts, set up an etsy market now before you’re strained, open it up to international customers.
SAVE MONEY, have cash savings as well as bank savings, have gold too if you can swing it. Expect any accounts that are tied to investments to be frozen or even wiped out, such as 401k’s and the like.
Whatever you can do to reduce debts and spending - pay down or pay off credit cards or cars if you can. Get your finances in order as much as you can, so figure out exactly what you’re spending and what your margins are.
Stockpile canned goods and basic survival supplies ahead of time like it’s the goddamn apocalypse. Seriously, have at least a month of dry goods and preserved food, you have some time (maybe) so start collecting canned food, sacks of dried beans and rice, toilet paper and soap, other supplies you buy regularly. This will give you a safety net if it gets bad, it’s one less [major] thing to worry about as you shift around your expenses and priorities.
Get information ahead of time about where your local DES/unemployment offices are, and what’s required to apply. Find out ALL the programs you can apply for, from, nutrition assistance to grants to stipends or tax credits for whatever your family situation is. You won’t get through on the website, it will be crashed with traffic, so be ready to go stand in line with your paperwork. You will get some number of months of benefits if you qualify (requirements vary by state) and most likely after some political contention, congress will pass emergency funding for extensions and stimulus checks. But it won’t last forever.
Go visit your nearest food bank now. Bring them some food and socks, get to know who runs things so that when it’s your time to stand in line, they know you already and have good associations.
We don’t really know how bad it could get. So get a gun. There may be civil unrest at some point. Our world is about two missed meals away from anarchy, or at the very least crime will increase and homes will get broken into, and police will likely be understaffed and overworked. You will be on your own.
And I am convinced that LLMs are fundamentally incapable of delivering on the promises being made by the AI CEOs.
As a, uh, atypical American, and someone into the ML scene and previously employed in an LLM dev job… I agree.
I don’t think ML is going away, as what’s been made so far are niche tools in the same way a hammer is, but the level of hype and conning is literally criminal.
If you can shift stocks around, take them out of indexes and put the cash in crash-resilient stocks like Berkshire Hathaway (which somewhat famously/infamously saves cash to buy dips during crashes), or Walmart. I’m thinking on such a “Noah’s Ark” basket for myself.
I’m not knowledgeable enough to comment on bonds, gold, or whatever else your savings may be in. But don’t believe a word anyone says to you about crypto.
Start saving a bit extra too, if possible, as the crash may not come for some time. And you want to avoid selling invested savings when the markets at its lowest.
On the tech side, you can get more into self hosting to not be so dependent on Big Tech. You’re on the perfect site to learn that.
If you ask me, that even includes dabbling in open-weights ML stuff, as that might suddenly become a more marketable skill once all the OpenAI hype implodes, and companies sipping the Koolaid turn more practical/frugal.
Other than that… I dunno. Depends on your work and lifestyle, I suppose. I think this will be a bumpy ride no matter what we do.
As a security engineer, I implore anyone to have an LLM walk you through standing up an SIEM.
Like don’t get me wrong. They’re phenomenal. But they just aren’t capable of complex tasks yet.
Not a useful answer, but a reinforcement of the problem.
Without data centers, GDP growth was 0.1% in the first half of 2025, Harvard economist says
That’s pretty horrific.
It’s also not completely fair, some of that money would have been spent elsewhere without datacenters. Investors still gonna invest.
Lots of reasonable personal advice here. I want to suggest some community driven ideas, though they’re less fleshed out than I’d like.
Look into community and common gardens (and if they don’t exist, start pushing for a local org to make such space). If you are renting, look into tenants unions (or consider organizing your own).
Invest some in food kitchens + homeless shelters now, while you’ve got something to share. Consider volunteering and becoming more familiar with the resources (you may not need it, but others could).
Consider broader political organizing. The people in power (even in local positions!) when the crisis hits will definitely matter. America gave big buy-outs to businesses during previous crashes; but it could payout to citizens just as easily. Lookup and start discussing policy solutions that could help insulate you and your community. Bring this up at a city council meeting. Write a county representative.
Hard assets make a lot of sense when paper assets do not.
Real estate and precious metals are the traditional hard assets. The stock market can implode, but a home will remain a home, an acre will remain an acre, an ounce will remain an ounce.
There are difficulties and risks and efforts required with hard assets, theres a reason why soft assets developed, but when things go wrong people trust what they can hold and walk on - and thus seek real estate and precious metals as they are certain and tangible.
With a little more trust in the system, there are softer assets available such as bonds, specifically treasury bonds, and there are etfs that attempt to exclude the ai bubble such as XMAG, or the sp500 but equally distributed instead of by market cap which increases diversity like RSP to reduce the fallout of the ai bubble pop
Theres a million ways to navigate a bubble, do the research and find confidence in your plan, and think about how you’ll react in various scenarios, especially when the numbers go down or arent going as high as expected
Real estate
I saw that you put a caveat in there about it, but I’m going to make it a little more clear.
If anyone here has lived through the dot.com bubble in Seattle (and probably the bay area), they’ll have seen that real estate is great if it’s paid for. If you go underwater on your loan and kicked out, which is how the banks got so much real estate in 08, you’re fucked. There *are no general rules, but guides.
In general, investing borrowed money is risky… People just don’t realize they’re doing that when they take on a mortgage.
This reminds me that I wish there was a basic course on money and the systems around it, that explains everything like you just did. It’s not magic, but it’s obfuscated behind so many terms and people trying to sell content, that it’s not a simple thing to figure out on one’s own.
Real estate is a trouble prone investment normally, much less in this crazy market; I specifically wouldn’t want to touch that right now.
Can’t speak for metals, but also be careful there…
Thing about a bubble like this is you don’t know when it’s going to pop. I like the saying “the market can stay irrational longer than you can stay solvent.”
What I’m saying is to be careful about going all in on more pure hedges. If this lasts another 4 years and one’s into stuff like XMAG and metals, and they drop in a crash anyway, you may end up in a worse position than if you had held the S&P 500. I think a better perspective is to avoid “buying a hedge” and instead invest in companies (or other assets) one thinks will be productive and grow with the bubble or not. They’ll grow however long the bubble goes, and keep growing after.
an ounce will remain an ounce
Buy cocaine futures, got it.
I don’t know about you but an ounce never remains and ounce you cut that shit make two ounces then someone else does the same and sells it as grams
An ounce just isn’t the same anymore with all this inflation
Shrinkflation is ridiculous, you’re lucky if you even get 25 grams now. /j
