I agree with Eliezer’s point here that the AI bubble could pop without a recession under a competent Fed: https://xcancel.com/ESYudkowsky/status/1971311526767476760#m, and I think Jerome Powell is likely competent enough to handle this (less certain about potential successors).
That tweet doesn’t sound right to me. Or at least, to me there’s a simpler and more direct explanation of bubbles in terms of real resources, without having to mention money supply or central banks at all.
During a bubble, people are having fun because resources are being misallocated: misallocated to their fun. Some rich chumps are throwing their resources at something useless, like buying tulips. That bankrolls the good times for everyone else: the tulip-growers, the hairdressers that serve the tulip-growers and so on. But at some point the rich chumps realize that tulips aren’t that great, and that they burned their resources just to make a big bonfire and make everyone warm for awhile. When they realize that, the tulip growers will lose their jobs, and then the hairdressers who served them and so on. That’s the pain of the bubble ending, and it’s unavoidable, central bank or no.
I agree with Eliezer’s point here that the AI bubble could pop without a recession under a competent Fed: https://xcancel.com/ESYudkowsky/status/1971311526767476760#m, and I think Jerome Powell is likely competent enough to handle this (less certain about potential successors).
That tweet doesn’t sound right to me. Or at least, to me there’s a simpler and more direct explanation of bubbles in terms of real resources, without having to mention money supply or central banks at all.
During a bubble, people are having fun because resources are being misallocated: misallocated to their fun. Some rich chumps are throwing their resources at something useless, like buying tulips. That bankrolls the good times for everyone else: the tulip-growers, the hairdressers that serve the tulip-growers and so on. But at some point the rich chumps realize that tulips aren’t that great, and that they burned their resources just to make a big bonfire and make everyone warm for awhile. When they realize that, the tulip growers will lose their jobs, and then the hairdressers who served them and so on. That’s the pain of the bubble ending, and it’s unavoidable, central bank or no.