Will The AI Boom End Like The Railroad Crash Of 1873?
The guest compares the AI buildout with past investment booms, arguing that debt-financed expansion and companies’ fear of falling behind could drive capacity beyond demand. He points to historical railroad financing and the 1873 crash as examples of how funding shocks, excess capacity, and tighter credit can damage markets, while noting that crises are hard to time. The discussion also raises current risks, including inflation constraints, limited fiscal room, and the possibility that weaker AI investment or profits could trigger a broader correction.