"Situationship" is my $BTC bull porn essay on how the AI bubble will burst, and why the money printer will go hyper brrrr and take us back to a rip roaring bull market. "The question of internal framing is the key variable that determines whether AI is a bubble. But before we understand the bubbliciousness of AI, the better question to ask is in what kind of businesses are we investing, or in relationship terms, “What are we”? The dichotomy, at least to my Luddite brain, is the distinction between what investors believe AI CAPEX represents: is it technology or real estate? The zeitgeist is that this multi-trillion dollar build out is “technology” and must receive insane growth multiples by the market. But I believe AI CAPEX is just another boring real estate play. However, in this instance, what’s inside the data center is compute that creates silicon-based lifeforms that will aid human civilizational development in the most profound way since the railroads. The distinction between real estate and compute is important because the recently post-pubescent hedge fund bro, the bank, the private credit fund, and ultimately the government believes funding the building of a data center and power plant is like lending to Apple, instead of lending to Lehman Brothers. The bursting of the AI bubble will occur because financial intermediaries, tacitly supported by the US and Chinese governments, will over build data centers and everything that goes into providing the substrate to house chips that train AI models and conduct inference. Therefore, the AI bubble is a credit story like 2008 and not an earnings story like 2000.[1]" Link to my substack and the full article on my bio.
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