Speculative Growth and the AI "Bubble"

Beyond the binary debate over whether the high valuations of AI-related companies are simply a bubble or reflect fundamentals, this presents a "third possibility." That is, even if valuations are temporarily overestimated, the real capital accumulated in the process could permanently transform the economy's productive capacity.

The core mechanism is as follows:

• Investment acceleration: Temporary overvaluation raises expectations of returns on investment, accelerating capital investment.
• Income redistribution: As AI capital accumulates, income shifts from labor to capital owners, increasing the wealth of capitalists, who have a higher propensity to save.
• Falling interest rates: The accumulated capital and increased savings generate a feedback effect that lowers interest rates over the long term.

According to this model, an economy can transition from a "low-capital state" to a "high-capital state," and the success of this transition depends on the speed of learning. If sufficient capital is installed before valuations adjust, the economy settles into a high-capital steady state characterized by low interest rates.