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Over $6 trillion funneled into artificial intelligence and cryptocurrency represents the largest concentrated technology investment in history—equivalent to a quarter of global GDP. This unprecedented capital surge has driven nearly all U.S. economic growth recently, with AI giants like Nvidia and Microsoft ballooning to a collective $35 trillion valuation. Yet finance analyst Alan Kohler posits a terrifying counter-narrative: The gravest threat isn't a market crash, but the absence of one. If these technologies deliver on their promises, the societal disruption could make the 2008 financial crisis look tame.

When Success Becomes the Crisis

AI's explosive adoption reveals the paradox at its core. Since ChatGPT's 2022 debut, AI-generated content surged from 10% to 52% of online articles. Productivity gains are real—but so is the human cost. Companies are already shedding jobs in favor of AI automation, with analysts predicting 10-50% permanent unemployment. Kohler notes a chilling market response: "Companies laying people off because of AI are being rewarded by shareholders," ensuring the trend accelerates. This mirrors history's "Engels Pause," where 1790-1840 technological advances spiked GDP but froze wages and increased joblessness for decades.

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What if the double digital bubble of the mid-2020s — artificial intelligence and crypto — is about to burst? (AAP: Bianca De Marchi)

The Unemployment Quagmire

  • Low-skill apocalypse: Drivers, writers, and call-center staff face obsolescence without obvious transition paths. Unlike industrial revolutions, AI eliminates roles without creating comparable new ones.
  • Policy paralysis: Traditional economic tools like interest rate cuts or stimulus spending could ignite inflation during an AI-driven productivity boom, leaving governments powerless.
  • Social fracture: 15% unemployment might trigger unrest without systemic overhauls like universal basic income—yet political will for such change remains absent until crises erupt.

Crypto's Anarchy Problem

Simultaneously, cryptocurrency's $5.8 trillion ecosystem—built to bypass "trusted intermediaries" like banks—enables rampant fraud. Blockchain's cryptographic trust mechanisms have birthed 20,000 coins, including notorious scam vehicles like $Trump Coin. Australian crypto ATMs alone funnel $275M annually into "getaway cars for scammers," with elderly victims like "Mary" losing $364,000 in cash-fed transactions. As Kohler observes, crypto's design facilitates money laundering while destroying financial sector jobs—a dangerous combination if adoption surges.

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The blockchain was created to replace trust with cryptographic proof. (Getty Images: Paul Yeung/Bloomberg)

No Off Switch

Sam Sicilia, CIO of HostPlus super fund, encapsulates the dilemma: "Switch off the AI? Show me how that's possible." With national competitiveness tied to AI dominance and crypto's decentralized architecture resisting control, regulation lags behind reality. Current efforts focus narrowly on deepfakes and cheating, ignoring existential labor market threats. The grim irony? A market crash might offer temporary respite by slowing adoption, letting society catch up. But if valuations hold, we'll face permanent disruption with no roadmap. As Kohler concludes: "It hardly bears thinking about"—yet we must.

Source: ABC News analysis by Alan Kohler