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https://law.vanderbilt.edu/congress-should-start-planning-for-a-potential-ai-crash/
Trillions of dollars of capital investment in AI infrastructure are propping up the U.S. economy, yet revenues from AI are not increasing at a rate commensurate to this investment. This overreliance on AI investment, coupled with the opaque and complex financial engineering involved, means that the cost of a market correction could look like 2008 — an economy-wide crash with unpredictable and systemic consequences. If such a crash comes to pass, Congress would likely consider legislation to reform the market. Instead of scrambling to identify the right policies during an economic crash, Congress should start thinking seriously about and planning for a potential AI crash now, according to a new report from Asad Ramzanali, VPA Director of AI and Technology Policy.
Ramzanali offers a set of proposals for post-AI crash reforms. These include:
First, Congress should curtail the financial engineering—circular equity investments, opaque debt, and distortive government subsidies—that may be the proximate cause of the crash, and the government should prosecute any related frauds and illegal activities.
Congress should reform AI markets by establishing a Glass-Steagall for AI, utility-style regulations for digital utilities, a new regulatory agency, and a ban on surveillance-based business models. Following the Great Depression, Congress passed Glass-Steagall, which was repealed in the late 1990s, setting the stage for the 2008 financial crisis. Today, fervent demand for AI software is driving investment in AI infrastructure (chips, data centers), but that investment is distorted by the fact that the same few companies often own or invest in both sides of the coin, driving overinvestment in infrastructure. C
I downloaded the full 48 page report. It's worth at least a skim. Scary stuff. I worry about a stock market "correction" that sandbags my 401K) I'm old enough to remember the 2008 recession and the impacts on the stock market.
Trillions of dollars of capital investment in AI infrastructure are propping up the U.S. economy, yet revenues from AI are not increasing at a rate commensurate to this investment. This overreliance on AI investment, coupled with the opaque and complex financial engineering involved, means that the cost of a market correction could look like 2008 — an economy-wide crash with unpredictable and systemic consequences. If such a crash comes to pass, Congress would likely consider legislation to reform the market. Instead of scrambling to identify the right policies during an economic crash, Congress should start thinking seriously about and planning for a potential AI crash now, according to a new report from Asad Ramzanali, VPA Director of AI and Technology Policy.
Ramzanali offers a set of proposals for post-AI crash reforms. These include:
First, Congress should curtail the financial engineering—circular equity investments, opaque debt, and distortive government subsidies—that may be the proximate cause of the crash, and the government should prosecute any related frauds and illegal activities.
Congress should reform AI markets by establishing a Glass-Steagall for AI, utility-style regulations for digital utilities, a new regulatory agency, and a ban on surveillance-based business models. Following the Great Depression, Congress passed Glass-Steagall, which was repealed in the late 1990s, setting the stage for the 2008 financial crisis. Today, fervent demand for AI software is driving investment in AI infrastructure (chips, data centers), but that investment is distorted by the fact that the same few companies often own or invest in both sides of the coin, driving overinvestment in infrastructure. C
I downloaded the full 48 page report. It's worth at least a skim. Scary stuff. I worry about a stock market "correction" that sandbags my 401K) I'm old enough to remember the 2008 recession and the impacts on the stock market.
