i think we are in for a recession worse than the 2008 crisis

i don't have good answers, only less bad choices while @Citrini7 piece says exactly what i have thought about

we are in an AI prisoner's dilemma at every level

→ AI gets so good
→ companies fire high-paid workers
→ replaced with cheap AI
→ fired workers spend less
→ businesses make less revenue
→ use MORE AI to cut costs
→ more jobs disappear

the assumption = the financial system was built on humans earning money

the stock market, loans mortgages, banks all assumed humans keep earning. when that breaks entire financial system collapses

even though AI makes economy more productive it crashes human economy
- China won't slow AI if US does. US won't slow if China doesn't.
- corporations won't sacrifice efficiency if competitors don't
- leading to prisoner's dilemma

the dilemma described was for incumbents as they sit still and die slower, applies EQUALLY to AI labs themselves and the structure is self-reinforcing:
- more businesses cut costs → more capacity to freely invest
- more investment → stronger AI
- stronger AI → overwhelms competitors
- competitors running same calculation
- nobody can turn wheel first

this is gravely concerning because even if you see the trap you won't/can't escape it
- businesses know cutting workforce for AI creates systemic risk.
- but competitors are doing it.
- if you don't, you lose market share and go bankrupt anyway

individual rationality → collective catastrophe

its a classic tragedy of commons except instead of depleting shared resource, we're depleting consumer purchasing power
- the financial system breaking is where this gets scary
- loans mortgages based on steady income assumptions
- if mass unemployment hits those assumptions explode
- banks holding mortgages from people who lost jobs to AI.
- those mortgages default. banks collapse. credit markets freeze

we've seen this played out in 2008 but AI-driven version could be way worse because:
- 2008: housing bubble burst but people still had jobs to recover into
- AI scenario: jobs permanently gone. no recovery path

the coordination problem becomes unsolvable and would need global agreement among:
- AI labs to slow development (lol good luck)
- corporations to maintain human employment despite AI efficiency
- governments to regulate in coordinated fashion across borders
- none of these actors can coordinate
- even if they could nobody trusts others to follow through

the wheel will turn eventually

question is how many casualties before it does so we're probably just going to ride this out and see what breaks first

https://x.com/arndxt_xo/status/2025959438902010340