For non-brits, Bank of England the UKs central bank and is a lot like the US Fed. Their comments carry a lot of weight and do impact government policy.
Not enough central banks were making comments about the sub-prime bubble that led to the 2008 crisis. Getting warnings about a possible AI bubble by a central bank is both significant and, in performing the functions of monetary and financial stability for a country, the prudent thing to do.
this is how capitalism does things. no one wants to overinvest but no one wants to be left behind and everyone is sure that either there's not gonna be a pop or they can sell before it pops.
it has been educational to see how quickly the financier class has moved when they saw an opportunity to abandon labor entirely, though. that's worth remembering when they talk about how this system is the best one for everyone.
AI is a risk. The thing we know is going to bite us in the butt is our continued massive sovereign debt burden and lack of any political will whatsoever to either increase taxes or reduce spending. The dollar is not going to do well this century and creditors confidence is already starting to decline.
In fact, the further we go into debt - the more we are implicitly betting our society on an AI hail mary.
A country that issues its own currency cannot run out of money or be forced into default in that currency. What we call the national debt is the total of money the government has created and not yet taxed back. Those dollars are private savings in another form, not a burden that must one day be repaid.
Creditors do not fund government spending; they hold safe interest-bearing assets created by it. The real risks to society are not financial but productive and ecological. What matters is whether we are using our labor, technology, and resources to meet real needs, not the size of a number on a balance sheet.
>>> Despite persistent material uncertainty around the global macroeconomic outlook, risky asset valuations have increased and credit spreads have compressed. Measures of risk premia across many risky asset classes have tightened further since the last FPC meeting in June 2025. On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on Artificial Intelligence (AI). This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic.
Actually, the quoted 'sudden correction' is not referring specifically to AI, but the market in general
"The market is propped up by these companies for sure. It's propping up the New York Stock Exchange, other exchanges. And so if those companies were just all of a sudden dip, even a little bit, you'll see the effects, feel the effects of that in the stock market."
"You don't necessarily have to care about AI or the future of OpenAI or the future of Nvidia even, to care about this story because this has reached into so many other markets. The financial markets, equity markets, debt markets, real estate markets, because data centers are real places that need to be built. Also your energy bills might be higher if you live next to a data center., So this extends far beyond now at this point, the AI sector."
"A wave of deals and partnerships are escalating concerns that the trillion-dollar AI boom is being propped up by interconnected business transactions."
"Never before has so much money been spent so rapidly on a technology that, for all its potential, remains largely unproven as an avenue for profit-making."
"The recent wave of deals and partnerships involving the two are escalating concerns that an increasingly complex and interconnected web of business transactions is artificially propping up the trillion-dollar AI boom. At stake is virtually every corner of the economy, with the hype and buildout of AI infrastructure rippling across markets, from debt and equity to real estate and energy."
This is fair. We're now evaluating open-source LLMs to develop our in-house solutions, adding them to our products and services. As soon as they released the models, the moat was, depending on the context, somewhat gone.
Isn't it a self-fulfilling prophecy at that point ? I have been hearing so many "it's going to crash, sell" from all sorts of sources since mid-August...
Current valuations are based on the belief genuine AGI is around the corner. It’s not. LLMs are an interesting technology with many use cases, but they can’t reason in the usual sense of the word and are a dead end for the type of AGI needed to justify current investments.
I used to scoff at the idea of the AI-bubble (or any recently called-for tech bubble) being like the 90s given the way technology/the internet is now so integrated into our lives, but the way he spelled it out it does seem similar.
For me the question is who is going to subscribe who hasnt already. And that is before we consider the next gen hardware that can run this stuff locally.
But from what I see of the economy around me here, people just dont have the spare funds for LLM luxuries. It feels like 15+ years of wage deflation, and company streamlining, has removed what little spare spending power people had here. Not forgetting the inflation we have seen in the euro zone.
Even if the bet is now an 'all in' on AGI, I see that more as an existential threat than an economic golden egg bailout.
I think there will be an increase in subscribers as people get more used to them. But there's probably also people like me who just dropped 2k on a new system to self host my own to customise the pipeline, and integrate it into my house without sending data offsite.
23 comments
[ 5.3 ms ] story [ 60.4 ms ] threadhttps://www.theguardian.com/business/2025/oct/08/bank-of-eng...
For non-brits, Bank of England the UKs central bank and is a lot like the US Fed. Their comments carry a lot of weight and do impact government policy.
Not enough central banks were making comments about the sub-prime bubble that led to the 2008 crisis. Getting warnings about a possible AI bubble by a central bank is both significant and, in performing the functions of monetary and financial stability for a country, the prudent thing to do.
AI is useful. But it's not trillion-dollars useful, and it probably won't be.
it has been educational to see how quickly the financier class has moved when they saw an opportunity to abandon labor entirely, though. that's worth remembering when they talk about how this system is the best one for everyone.
In fact, the further we go into debt - the more we are implicitly betting our society on an AI hail mary.
Creditors do not fund government spending; they hold safe interest-bearing assets created by it. The real risks to society are not financial but productive and ecological. What matters is whether we are using our labor, technology, and resources to meet real needs, not the size of a number on a balance sheet.
>>> Despite persistent material uncertainty around the global macroeconomic outlook, risky asset valuations have increased and credit spreads have compressed. Measures of risk premia across many risky asset classes have tightened further since the last FPC meeting in June 2025. On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on Artificial Intelligence (AI). This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic.
Actually, the quoted 'sudden correction' is not referring specifically to AI, but the market in general
[1] https://www.bankofengland.co.uk/financial-policy-committee-r...
"You don't necessarily have to care about AI or the future of OpenAI or the future of Nvidia even, to care about this story because this has reached into so many other markets. The financial markets, equity markets, debt markets, real estate markets, because data centers are real places that need to be built. Also your energy bills might be higher if you live next to a data center., So this extends far beyond now at this point, the AI sector."
https://www.bloomberg.com/news/articles/2025-10-08/the-circu...
"A wave of deals and partnerships are escalating concerns that the trillion-dollar AI boom is being propped up by interconnected business transactions."
"Never before has so much money been spent so rapidly on a technology that, for all its potential, remains largely unproven as an avenue for profit-making."
"The recent wave of deals and partnerships involving the two are escalating concerns that an increasingly complex and interconnected web of business transactions is artificially propping up the trillion-dollar AI boom. At stake is virtually every corner of the economy, with the hype and buildout of AI infrastructure rippling across markets, from debt and equity to real estate and energy."
https://www.bloomberg.com/news/features/2025-10-07/openai-s-...
It’s going to be a gruesome train wreck.
I used to scoff at the idea of the AI-bubble (or any recently called-for tech bubble) being like the 90s given the way technology/the internet is now so integrated into our lives, but the way he spelled it out it does seem similar.
But from what I see of the economy around me here, people just dont have the spare funds for LLM luxuries. It feels like 15+ years of wage deflation, and company streamlining, has removed what little spare spending power people had here. Not forgetting the inflation we have seen in the euro zone.
Even if the bet is now an 'all in' on AGI, I see that more as an existential threat than an economic golden egg bailout.
I think there will be an increase in subscribers as people get more used to them. But there's probably also people like me who just dropped 2k on a new system to self host my own to customise the pipeline, and integrate it into my house without sending data offsite.
> Last month my parents decided to invest their extra cash into “AI” by paying a broker to buy “the AI stocks” they keep hearing about on the news.