The Viral Substack Post That Sent Wall Street Over the Edge
A financial research firm published a grim outlook for what the world could look like in the next year or two. If they're right, we're not prepared for what is to come.
Earlier this week, the Dow Jones took a hit. A hypothetical investor memo published by financial research firm Citrini went viral, suggesting that everything is not as it seems within the AI revolution. Some investors got spooked, leading to a temporary sell-off.
Wall Street has been mixed on the development of AI. While some are betting that AI companies like NVDA 0.00%↑ will go to the moon, others are concerned that companies like OpenAI are over leveraged. Either AI is the investment of a lifetime, or it’s a bubble. Investors have started taking sides, parking their cash where they think AI is heading.
Citrini’s viral Substack post asks a question that few have considered: what if the AI revolution is both at the same time? What if it leads to massive gains for Wall Street investors and it’s also a bubble that destroys the economy as we know it?
One thing that’s for certain is that AI advancement is inevitable. Days after the Citrini post went viral, Anthropic announced it would be loosening its safety standards. Major AI companies are in a race to capture market share while making technical advancements in AI capabilities. While Anthropic previously had tight safety standards, it recognizes its competitors aren’t playing by the same rules they are. The company’s logic: why handicap ourselves? If you can’t beat them, join them, and maybe in the process set a new industry-wide standard that leads to the safer use of AI for everyone.1
Given that there’s no incentive to slow down anytime soon and the government is wholly disinterested in regulating artificial intelligence, it’s reasonable to come to the conclusion that Citrini’s forecast is not only possible but plausible. The pace of development is happening far faster than workers, businesses, and institutions alike can keep up. The shockwaves it will send throughout the economy won’t just decimate specific jobs or individual sectors exposed to AI but the entire foundation upon which the economy has been built in the first place.
That is bad news for everyone – even savvy investors on Wall Street.
This essay will offer a synopsis of Citrini’s forecast. It will look at how destruction of the white collar workforce will result in downstream consequences that trickle down into the rest of the economy. It will argue that reduced consumer purchasing power and lower consumer spending will pose a systemic risk to the economy as high-earning “prime” consumers are no longer able to play the role they’re expected to. This will lead to widespread economic contraction and possible defaults in the financial system as bets made on continued growth are no longer viable. Because government institutions are ill-equipped to handle this type of catastrophic event and because AI companies aren’t incentivized to account for the negative downstream consequences of their actions, this will likely lead to an economic restructuring the likes of which we have not seen before.
The fact that Wall Street has responded not once but twice in the last 60-ish days to pressures coming from the nascent AI sector suggests there is enough credibility in these dystopian forecasts. The recognition that systemic failure is possible and that there is nothing being done to mitigate the risks is enough to reshape the facts on the ground now, exacerbating the likelihood that the predictions made in Citrini’s essay actually come to fruition.
My analysis of Citrini’s memo is below for Tomorrow Today subscribers. You can also read Citrini’s full essay, The 2028 Global Intelligence Crisis here or watch my commentary on their analysis here.
Citrini’s viral essay is a forward looking investor memo from the year 2028. It argues that while an AI boom will benefit Wall Street initially, the party won’t last long. As AI decimates the white collar class, it will eventually lead to a macroeconomic bust. Unless you own AI or the infrastructure that powers it, you’ll be a loser in the new economy that emerges – including investors.
The essay opens up with a simple question: what if AI continues to see exponential growth and what if that is actually a bad thing?
While Wall Street is reaping the rewards of AI investment and all of the “productivity gains” it’s generating, the real economy – the Main Street economy – has been crippled. Efforts to cut costs as AI development advances have rendered hundreds of thousands of white collar workers jobless. Job losses were initially contained to industries directly impacted by AI – software development, for example – but it didn’t take long for job losses to spread across the economy.