Unlike past speculative bubbles, the current AI frenzy has near-universal, top-down support. The government wants domestic investment, tech giants are in a competitive spending arms race, and financial markets profit from the growth narrative. This rare alignment of interests from all major actors creates a powerful, self-reinforcing mandate for the bubble to continue expanding.

There are no scalable, productive investments (e.g., factories, real estate) offering attractive returns, as many physical assets trade below replacement cost. This surplus capital, with nowhere to go, is funneled into speculative bubbles like AI, creating a 'fake' economy.

A condition called "fiscal dominance," where massive government debt exists, prevents the central bank from raising interest rates to cool speculation. This forces a flood of cheap money into the market, which seeks high returns in narrative-driven assets like AI because safer options can't keep pace with inflation.

The current AI spending frenzy uniquely merges elements from all major historical bubbles—real estate (data centers), technology, loose credit, and a government backstop—making a soft landing improbable. This convergence of risk factors is unprecedented.

Widespread credit is the common accelerant in major financial crashes, from 1929's margin loans to 2008's subprime mortgages. This same leverage that fuels rapid growth is also the "match that lights the fire" for catastrophic downturns, with today's AI ecosystem showing similar signs.

Governments with massive debt cannot afford to keep interest rates high, as refinancing becomes prohibitively expensive. This forces central banks to lower rates and print money, even when it fuels asset bubbles. The only exits are an unprecedented productivity boom (like from AI) or a devastating economic collapse.

Unlike the 2008 crisis, which was concentrated in housing and banking, today's risk is an 'everything bubble.' A decade of cheap money has simultaneously inflated stocks, real estate, crypto, and even collectibles, meaning a collapse would be far broader and more contagious.

The most immediate systemic risk from AI may not be mass unemployment but an unsustainable financial market bubble. Sky-high valuations of AI-related companies pose a more significant short-term threat to economic stability than the still-developing impact of AI on the job market.

The current crypto environment mirrors the lead-up to the 2008 financial crisis. 'Good money is chasing after many intrinsically weak assets,' which are then complexly leveraged and integrated into the balance sheets of systemically important institutions, creating a growing, underappreciated systemic risk.