Todays brutal market crash gave a preview of what the next two years are likely going to look like under an Anti-AI Democrat Congress.
Chat GPT may still respond, Claude may still say hello, but America’s AI future is on life support. For all practical purposes AI advancement in America ceased to exist on the night of November 3rd.
The incoming Democratic House and Senate aim to put the brakes on AI, and with it America will sign its own digital death warrant, and the cost is going to be beyond anyones comprehension.
The Democratic sweep of the elections means that the landscape has changed entirely when it comes to AI. The free market approach is over and the age of government regulation is here.
Small-minded, vindictive politicians, many of whom have the flimsiest of grasps on what they seek to regulate, are seeking to impose their views and will on an industry that will be central to the world for decades to come. (Bookmark this: In time we will see the heads of AI dragged before Congress like the heads of Big Tobacco.)
The consequences of the next two years will be far-reaching, catastrophic, will likely be unrecoverable and it only took two days to see it start.
So here are five things that every incoming militant Democrat ought to know before they run their mouth anymore:
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Your money matters. We are not going anywhere.
The climb ahead is steep and the market can be cruel. But Americans built fortunes from raw ambition! The railroad barons who opened a continent, the oil wildcatters who drilled through dry holes until the gusher hit, the traders who turned American free enterprise into the world’s capital of capital.
They went through worse and they bet everything on the American idea that markets and drive create wealth. We will not watch that edge get dulled.
We press for prosperity every session, even through the drawdowns, the way the builders of this country did.
All of us here at The Capitalist appreciate your support, your loyalty and your time to read us everyday, so we make this promise to you.
Your money matters. We will staff the desks that bring you the news and information that matters so you can do what you do best, build your American Dream.
We are not going anywhere.
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First, there is a fundamental failure to understand where the AI industry is right now.
The AI industry has operated in a start-up mentality. It built its product, it was popular, and to get profitable it borrowed heavily to grow its capacity to reach that profitability. As Anthropic’s IPO documents revealed, these firms’ revenue is DWARFED by the scale of the loans and obligations they have signed.
We have covered before the scale of these loans and the threat they pose to these firms, but to now add restrictions, regulations, taxes, and levies on top of this already fragile arrangement is financial suicide.
The government regulation that Democrats will seek to impose will cover taxes on profits (that have not been made), environmental regulations on data center build-outs (that have not been built), as well as strangling the power generation facilities that the firms need to power the growth needed to become profitable in the first place!
There is the small matter of who is on the hook (you are, not the government…..yet)
The cost of the AI build-out in America is largely built on investments by private credit and pension firms. When you see a headline that says “X hundreds of billions to be invested by Z firm into Y project,” that money—be it bond raises or investment capital—has to come from somewhere. It’s come from the guys running your 401K.
If those investments go bad, (and they are starting to) then there is no return. Thats when the dominos start to fall. We have covered the “cockroaches” in pension funds before.
Most people have no idea if they are exposed; the first sign they might get will be when their 401K tanks because a data center they were unknowingly invested in gets denied or shut down.
And let’s not even talk about what this would do to the stock market.
Tell me how Democrats don’t understand economics without TELLING me that Democrats don’t understand economics.
Well, heaving a brick at the one sector that has carried the US economy is a good place to start.
Rightly or wrongly (we’re not here to talk about the merits of it), the concentration of growth in the S&P 500 and the NASDAQ is in AI. It’s a fact the S&P would not be where it is right now if not for AI and the firms associated with it.
Chipmakers like NVIDIA and AMD and stocks involved in the AI build-out (memory, optical, biotech) have surged because America has led the way. If Democrats do what they say they will, all of that will vanish and the market will implode. You think people are pissed about the Iran War being a bad idea? Just wait till they see their investments replaced with a smoking crater.
On top of that, the left seeks to control the AI firms.
Already there are calls to nationalize SpaceX and seize it from Elon Musk (and worse!)
This is a blatant, politically motivated revenge play, especially when certain AI companies have all but begged for government support as their debts and obligations spiral beyond the GDP of small nations, but in the end it won’t matter—the results will be the same.
Because at no point has the federal government been able to run ANYTHING efficiently. They can’t fix the potholes in the streets or prevent government programs from being defrauded to the tune of billions, yet apparently Congress in its infinite wisdom can regulate AI. Also it won’t stop at regulation. Full control will come.
We all lived through the Biden years, do you want to live in a world circa 2020 where AI has become a mini Dr Fauci in your pocket? Wired in to everything that you do? I suspect not.
And then there is the 8,000-pound gorilla in the room.
China
In the past few weeks we have already seen glimpses of the dark side of what AI can do. The hacks, the rogue agents. If Democrats seek to hamper home-grown AI at every turn, this will have cataclysmic results for Americans because we will be, for the first time, outgunned on the battlefield.
America has enjoyed superiority in combat practically since the days of the P-51 Mustang over Germany. In the future that will not exist.
Americans have been lulled into a sense of security because it is “generally” accepted that American AI models are “better” than other models. If Democrats slow the pace of development, the lead that America currently enjoys will evaporate and vanish.
Expert opinions vary, but broadly China is thought to be roughly a year to anywhere as little as 6 months behind America when it comes to AI development.
America needs the best tools it can have in this new fight. Democrat actions will hamper that. It would be like putting a 50 mpg gas restriction on a B-52. Great for the environment, not so great for long-range strike capability.
The wars of the future will largely be fought on the internet, in ways the average person will see (refrigerators switching off to create food scarcity or bank and crypto accounts being drained) to more nefarious and Machiavellian things like manipulating the algorithms on the content you see to sway people on certain subjects.
We already saw this on TikTok. In China what is served is content about how to be a good citizen. In the rest of the world it is content designed to unpick the cohesive fabric of society. You think that happened by accident?
In the future it will happen and you won’t even know it’s happening. Where do you think all the Anti-AI sentiment came from in the last few months? 43 out of 44 data center moratoriums passed this week.
Do you really think that all the people who voted against data centers knew what they were voting for? That it would affect their 401K? That it would wipe trillions of dollars off of their investments? One suspects not. They watched TikTok and were told “Data centers BAD.”
If Democrats walk down this path, as they almost certainly will, it will be the end of America’s position in the world. The glittering AI future will not belong to America. It might be a footnote in history, but given that China will likely win, it will likely be scrubbed as effectively as a certain incident in a certain Square.
America may have voted blue because they were mad about the Iran war, or the price of gas, or inflation. It is highly unlikely that the incoming Democrats will fix any of those things. They are fixated on subpoenaing everyone from Trump on down, banning guns and impeaching and arresting everyone they don’t like. Fixing gas prices is lower on the list.
What is absolutely certain is that if the incoming Congress pursues a misguided vendetta against AI, America will lose “Bigly”.
It’s already happening.
Good.
I guess we are back to slowly and safely declining, while we wait for government to tell us how to innovate and what to say and think. For that briefest of moments I really thought we were back to dreaming big and being hopeful for a crazy looking future instead of wallowing in our own misery and prognosticating how likely everything will be terrible. 😞