The AI Bubble—A Three Hour Tour
“Just sit right back and you’ll hear a tale,
A cautionary tune,
Of Roman lords and techie dreams,
And bubbles popped too soon.
The mighty world of AI grew
Like Rome’s estates of old,
With leveraged bets and borrowed coins,
Their stories would unfold.
The Senators played BRRR with land,
And VCs chased the code,
While all believed new empire’s gold
Would endlessly explode.
But Tiberius turned the rule of law,
The lenders called their dues,
From Silicon to Italy,
Oh panic spread like news!
The market froze, estate was lost,
And credit disappeared,
Tacitus wrote, ‘All hope was gone,’
The crowd was gripped by fear.
So beware the three-hour tour, my friend,
Of hype and borrowed schemes,
For bubbles burst—and fortunes fall—
With shattered techie dreams!”
The snake eating it’s tail, to mix metaphors:
https://lnkd.in/eJxSrxDk
AI’s biggest power play, though not the only one:
Here’s how the “Ellison Loop” works:
• Oracle signs a $300B deal with OpenAI to supply GPUs.
• The GPUs don’t exist yet — but Wall Street doesn’t care. Oracle stock rockets.
• Ellison’s net worth jumps $100B in a single day.
• He invests the gains back into OpenAI.
• OpenAI then uses that capital… to pay Oracle for the same $300B deal.
• Stock jumps again. Ellison repeats the cycle.
Ellison is simultaneously the customer and vendor, the investor and the beneficiary.
He created a recursive economy where money flows in circles and he sits in the center of the loop.
And then there is the NVIDIA->OpenAI->NVIDIA loop: https://lnkd.in/eEhgMtsC
__________
Arie van Gemeren, CFAIn 33 AD, Rome experienced its first financial crisis.
The story should terrify every leveraged real estate investor today.
Roman senators had discovered the “infinite money glitch”: Borrow against your estates to buy more estates. Use those as collateral for more loans. Repeat until you own half of Italy.
Sounds like BRRR?
For a decade, it worked brilliantly.
Then Emperor Tiberius enforced an old banking law. Suddenly, lenders needed to back their loans with Italian land. So they called in their debts.
All of them. At once.
What followed was financial contagion:
Day 1: Loans get called
Day 3: Everyone’s selling, nobody’s buying
Day 5: Property prices collapse
Day 7: Credit markets freeze completely
Tacitus wrote: “Credit was gone, and property could not be sold even at ruinous losses.”
Rome’s entire aristocracy faced bankruptcy. Commerce stopped. The empire’s financial system was dying.
Tiberius faced the same choice every leader faces in crisis: Let it burn clean, or bail it out.
He chose bailout. Because why not?
100 million sesterces injected into the banking system. Interest-free loans for three years.
History’s first quantitative easing. In ancient Rome.
It worked… temporarily:
→ Credit markets unfroze
→ Property transactions resumed
→ Crisis “ended”
But Rome never recovered its financial dynamism. The precedent was set:
When things get bad enough, government will intervene.
Within a generation: Nero debased the currency
Within a century: Chronic inflation
Within three centuries: Empire collapsed
The pattern NEVER changes:
Leverage
→ Trigger
→ Collapse
→ Bailout
→ Moral hazard
→ Bigger crisis
Rome 33 AD. John Law’s France. America 1837, 1907, 2008, 2020.
Same playbook. Exponentially bigger numbers.
My latest deep dive explores how a crisis 2,000 years ago wrote the script every central banker still follows today: https://lnkd.in/gHyx39cR
They will print. They always print. The question is: Are you positioned for what comes next?
P.S. – Roman senators who survived swore off leverage forever. The ones who didn’t? They were leveraged 10:1 on Italian farmland. Some lessons are truly timeless.
