Economist David McWilliams Warns of Potential AI Market Crash

LOS ANGELES, California — David McWilliams, a prominent economist and author, recently shared insights on the evolving American economy during a conversation with Fortune. Fresh off a transatlantic flight from Ireland, McWilliams is in the U.S. for a nationwide tour promoting his new book, which has gained international acclaim.

McWilliams, known for his engaging storytelling style, discussed his impressions of America, noting a distinct energy he associated with its economic atmosphere. “You kind of feel the boominess of the place, right?” he remarked, reflecting on conversations with Uber drivers discussing stocks, Bitcoin, and AI innovations.

The Dubliner expressed that the American approach to finance is markedly different from Europe. He pointed out that the obsession with money has historical roots, referencing Alexis de Tocqueville’s observations from the 1840s. McWilliams attributed this financial fervor to the unique opportunities America offers, particularly in technology sectors like AI.

However, he cautioned that the current investment climate, particularly in artificial intelligence, could lead to a crash. “AI doesn’t create any jobs,” he stated, emphasizing the volatility of investments in technologies deemed ‘perishable.’ He likened GPUs to ‘digital lettuce,’ which can become obsolete rapidly.

McWilliams elaborated on the risks associated with AI investments, noting that companies heavily investing in rapidly evolving technology may face significant depreciation soon. This view reflects broader market concerns voiced by analysts, including Ed Yardeni and Michael Burry, regarding the sustainability of current tech valuations.

Despite these warnings, McWilliams expressed confidence in America’s ability to recover from any financial downturn. He believes the U.S. continues to thrive as an innovation hub. “Acceptance of risk is why the U.S. is much more innovative than Europe,” he asserted, pointing to historical figures like Alexander Hamilton for establishing a robust banking framework.

Furthermore, McWilliams criticized traditional economics as overly complex and dry, advocating for a storytelling approach to understanding market dynamics. He encapsulated this sentiment by stating that humans are fundamentally wired to engage with narratives rather than abstract computations.

As discussions about the implications of AI and financial technologies unfold, McWilliams maintains a hopeful outlook on America’s future, underscoring the cultural significance of money as an element of opportunity rather than division.