Which will tank the US economy faster? Inflation (and layoffs) or the coming AI data center write-offs which are certain to happen?

Photo Above – Musk canceled production of the Cybertruck after just 2 years. Because there’s no demand at $60,000 each, and the factories are running at 10% capacity. Musk NOW claims the Cybercab ($30K) will keep his factories humming. But that’s what the original Cybertruck was supposed to sell for. Is anyone buying this BS?

I did NOT ask ChatGPT to answer this question: is inflation - or AI - a bigger threat to our economy? I didn't ask, because I saw a news article this morning that ChatGPT – and almost every other LLM – can’t even count to 4. They all claim – adamantly – that “seventeen” has only 3 “e’s” in it. Google this if you don't believe me.

So if we are spending billions to turn our banks accounts and shopping over to an AI system that can’t even count to past 3, then why would I ask it anything about the US economy?

ChatGPT is a subscription-based computer game. Not a financial tool, But I’m not declaring that AI it will be the ruin of the US economy. I’m voting for inflation. Hear me out.

America is approaching 500,000 layoffs this year. Xfinity just announced thousands of layoffs in Pennsylvania, California, and several other states. Because people are bailing – by the millions – for cheaper streaming services. Inflation has driven cable bills too high. Firing thousands of Xfinity workers will probably lead to more cable cancellations, because it will take longer to get service outages fixed. ("Press 1 to confirm your appointment a week from next Tuesday . . .")

The average home mortgage is now well over 7%. But buyers shouldn't wait. Rates will be even higher after the Federal Reserve meets in December. And with construction costs this high, homebuilders are laying off their workers. Permits for new construction are at multi-year lows.

Drive past any mall. The parking lots are 2/3rds empty. Blame high gasoline prices, high food prices, high electronics prices (all the good chips are going to data centers. Or on secret flights from Nvidia to Beijing). Friends tell me that even Goodwill stores are raising prices on discarded clothes and furniture.

The average new car in America now costs $51,000 - plus taxes, tags, registration fees, destination fees. They seldom advertise actual cars during NFL games anymore - only pickup trucks. The average cost of an F150 or Silverado is $68,000.

The New York Times is fronting a story this morning about stores selling thanksgiving dinner pies for $150 each. Farmers are probably going broke trying to raise turkeys.

Electricity. Gasoline. Food. Rent. This is what folks in Europe are rioting about. There’s arson and unrest because so many people are out of work and can’t afford to buy stuff.

All these layoffs – especially in America – have the potential to create an economic death spiral. Car repos, home loan defaults, and store bankruptcies. Anyone remember 2008-09? The federal government claims credit for “fixing 2008 housing crisis" by throwing trillions at corporate America to bail them out. And adding the bill to the national debt which we must repay. Is this what we want in 2027 too?

Just to be fair though, I’m NOT saying that that faulty AI products are without risk. Because if corporations - and people like you and me - are cutting expenses, there are going to be a LOT of half-finished data centers around the world. Bank failures, maybe?

Politicians campaign with the promise that they can repeal business cycles and prevent future recessions. But all the government did was burden us with $41 trillion in debt, which is why the Federal Reserve keeps sticking it to us with higher interest rates.

I’m just sayin’ . . .