The AI boom is propping up the economy, but some are warning that the guardrails are coming off. Journalist Andrew Ross Sorkin, a renowned financial reporter, warns of potential risks. He compares the current market surge to the Roaring '20s, a period marked by record highs and speculation. Sorkin's concerns stem from the rapid rise in stock prices, which he believes may not be sustainable. He highlights the role of artificial intelligence and technology in this boom, but also warns of potential overvaluation.
Sorkin's expertise spans two decades, during which he has covered the markets extensively. He founded the DealBook newsletter and co-hosts 'Squawk Box' on CNBC. His work includes creating the TV show 'Billions' and writing bestsellers about market crashes. His latest book, '1929', explores the market crash of a century ago, raising questions about whether we are reliving history.
The journalist points out the similarities between the current market surge and the 1920s, including the rise in stock prices and the use of credit to invest. He warns that the lack of stringent regulations and the democratization of finance could lead to a repeat of the devastating 1929 crash. Sorkin highlights the role of speculation and debt in the 1920s, where people took on credit to invest, leading to a sugar rush that eventually crashed.
The current market, Sorkin argues, is being propped up by the AI boom, with hundreds of billions of dollars invested in artificial intelligence. This investment is either a gold rush or a sugar rush, and it's hard to predict which it will be for a few years. Sorkin warns that the guardrails, such as the SEC rules and the Consumer Protection Bureau, are being removed, allowing more speculation and debt in the market.
The journalist also discusses the democratization of finance, where wealthy individuals have access to private investments, and the push to open up the market to more people. This raises concerns about the role of guardrails and the potential risks for ordinary investors. Sorkin warns that the market is being opened up too quickly, and the lack of stringent regulations could lead to a crash.
In conclusion, Sorkin's warnings highlight the potential risks of the AI boom and the removal of guardrails. He emphasizes the need for caution and the importance of understanding the market's risks, drawing parallels to the 1920s and the devastating 1929 crash.
