Last year, investors worried that AI would crash the economy by making too little money.
Now, they fear it will do so by making too much.
On Sunday, a little-known financial analysis firm called Citrini Research published a piece of science fiction: A memo dated June 2028, in which its researchers sketch a pocket history of “the global intelligence crisis” — an AI-triggered meltdown of the world’s financial, economic, and political systems.
In this account, the problem isn’t that AI proves unprofitable — and America’s data centers become rusted-out memorials to a 21st century Tulip Mania.
In Citrini’s telling, AI does exactly what its boosters promised (at first, anyway). The technology fuels rates of productivity growth unseen since the 1950s, generates mind-boggling profits for its owners, and massive GDP gains.
But it also irrevocably devalues white-collar labor and rapidly destroys a wide array of major businesses. Over time, the AI boom eats the rest of the economy. Growth and the S&P 500 both collapse, unemployment tops 10 percent, the mortgage market wobbles, the Occupy Silicon Valley movement blocks the entrance to OpenAI’s offices — all while the big labs keep raking in cash.
Such counterintuitive soothsaying might seem unremarkable. Bloggers sketch dystopian AI scenarios every day. Yet the Citrini memo appeared to do what few — if any — works of science fiction have done before: reduce the value of US stocks by more than $200 billion.
AI and the white-collar doom loop
To understand why the memo made such an impression, it’s worth examining its vision in more detail.
Citrini tells two distinct — but overlapping — stories. The first is about how AI could trigger a doom loop that destroys consumer demand. The narrative goes like this:
The cycle perpetuates itself with no natural brake.
Citrini Research
Citrini’s second story is a micro one, focused on how AI will disrupt certain businesses and industries. The core idea is that AI agents will turbo-charge competition — and shrink rents — throughout the white-collar economy.
Here’s a summary of the memo’s basic reasoning:
With margins collapsing, these rent-extracting firms accelerate the “do layoffs, invest in AI, see lower demand because no one has jobs, do layoffs” cycle.
And then there’s a financial crisis
In Citrini’s narrative, all this puts strains on the financial system. Traders and businesses made a lot of highly leveraged bets on the then-reasonable assumptions that 1) competition would not suddenly skyrocket throughout the consumer economy and 2) highly skilled professionals would almost always be able to pay off their mortgages.
AI explodes these premises, along with some financial institutions’ balance sheets. Credit conditions tighten. The recession deepens.
There are some problems with these stories
It can be difficult to know precisely why stocks moved up or down at any given time. But on Monday, it sure looked like Citrini’s memo weighed on markets, as shares of several companies it mentioned — including DoorDash — fell unexpectedly. Many financial publications attributed these declines to the Substack post.
For one thing, Citrini said it was merely exploring one under-discussed hypothetical, not claiming that its scenario was likely to happen.
For another, there are many reasons to think Citrini’s narrative is implausible — at least, in its full details.
Here are a few prominent objections to its reasoning:
AI won’t necessarily cause mass white-collar unemployment. Generative AI has been with us for a while now, yet US unemployment remains near historic lows. Even the most AI-exposed professions have been holding up well: Job openings for software developers actually increased over the past year and radiology employment has been rising.
Every previous general purpose technology has eliminated some jobs but also created new ones. The constraint on employment has historically been fiscal and monetary policy, rather than the capabilities of machines. Human wants are infinite. And companies have found countless ways to employ human labor in service of those wants.
There are reasons to think this time will be different — but also, reasons to think it will not. And our experience thus far provides cause for taking the latter seriously.
All that money invested in AI goes somewhere. That said, the memo’s core premise — that AI will displace a wide swath of white-collar workers — isn’t implausible. Its attempt to work through the implications, though, isn’t entirely convincing
In Citrini’s scenario, AI companies are reaping world-historic profits off the largest productivity gains in nearly a century — and plowing them into new infrastructure, at a rate of $200 billion per quarter. The sector’s boom continues, even as consumer demand collapses.
But it’s not clear that these two things could actually persist simultaneously.
When AI labs pour hundreds of billions into data centers, the money does not vanish — it flows to construction laborers, electricians, plumbers, HVAC technicians, steel workers, power plant supervisors, turbine technicians, engineers, and lawyers. And those people turn around and spend a portion of their earnings on goods and services in their local areas.
An economy in which AI monopolizes investment might not be ideal for national welfare. But it isn’t obviously inimical to growth-sustaining demand. Instead of addressing this point, Citrini simply asserts that the money spent on AI doesn’t circulate through the broader economy.
DoorDash exists for a reason. On a micro level, Citrini almost certainly overestimates how easily entrepreneurs can undercut existing firms with the aid of agentic AI.
Sure, Bob can vibecode “DoorSprint” overnight and offer lower fees. But providing competitive customer service, logistics optimization, insurance, or recourse for when a driver steals a pizza isn’t easy. And coding agents can’t instantly persuade restaurants, drivers, and consumers that DoorSprint can be trusted to faithfully mediate financial transactions. Which is a big problem since — in the world Citrini sketches — agentic AI would almost certainly be minting scam apps at industrial scale every day.
Collapsing rents would increase consumer demand. But okay, let’s say Citrini is right that AI will force down prices across a wide array of industries. That would effectively redistribute income away from business owners and toward consumers: When DoorDash is forced to charge lower fees, it makes less money and its customers’ dollars go further.
This sort of redistribution increases consumer demand. Working-class Americans spend a higher share of their incomes than wealthy shareholders do. So taking a dollar from the latter — and giving it to the former — tends to increase total consumer spending in the economy.
This dynamic wouldn’t necessarily outweigh the demand-destroying factors in Citrini’s scenario. But the memo fails to even acknowledge this tension between its two stories.
The government would probably do something. In Citrini’s narrative, America’s productive capacity skyrockets: Thanks to AI, the nation can generate drastically more economic value per worker-hour than it can today.
At the same time, millions of America’s most politically and socially influential citizens are ruined.
The first development would give the US government the capacity to restore growth: It could collect massive revenues from the beneficiaries of all that new production, and give the money to Americans who’d spend it.
The second development, meanwhile, would seemingly give Congress an impetus to enact such redistribution. When high-paid consultants, lawyers, financial analysts, and software engineers are all laid off at once, they are unlikely to suffer quietly. Privileged strata abruptly losing their expected status and living standards is the stuff from which revolutions are made. If their dispossession coincided with a collapse of the broader economy, politicians would likely scramble to redirect dollars in their general direction.
All this said, Citrini’s note is still a fascinating and useful thought experiment. No one can be certain where AI is taking us. And the technology’s consequences could very well be destabilizing.
The fact that Citrini’s memo (apparently) rattled global markets is itself an indication of this moment’s radical uncertainty: Even Wall Street traders are struggling to distinguish science fiction from reality.
