this post was submitted on 10 Oct 2026
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I dunno. The market affect is mostly perception. I mean why should unrelated stocks suffer when AI companies fall, yet they do. So I don't think the length of time actually impacts the severity of the crash. But I'm no economist. That's more of a "I don't see why", rather than a "no it won't"
The main issue is that increasingly AI companies are making up a big portion of index funds which are required by law to be purchased by mutual fund managers and thus part of retirement accounts, so value will be evaporated out of retirees accounts. The larger the bubble the more the impact.
Also note that the only reason the US is not in recession right now is due to AI market "growth" so the GDP correction that follows will cause companies who have invested in the technology (not just AI companies, but most of the Fortune 500) to contract. The fallout will be unpredictable, but the most likely scenario is layoffs. Further, the Fed will be reluctant to cut interest rates, because inflation is extremely high due to tariffs, so the one lever the government has to stave off the recession has been compromised by the current administration. So the recession will be deeper and worse with a longer recovery than it would otherwise have.
So why care? Because grandma's retirement will disappear, a bunch of people will be laid off and the levers available to mitigate the impact have already been pulled. Oh and inflation will get worse when our government bails out AI tech bros to the tune of $1T.
So I agree on the impact, and on the why care. But I'm not seeing why waiting long makes it worse. Based on what you said, waiting longer could help if it can hold out until this tariff war is over (one way or the other). Then it might be possible to lower interest rates to soften the impact. If it can hold out for a whole new administration even, that could help a lot. Though that is also what would likely trigger it, as a new administration will likely restore regulations that have been relaxed, increasing costs to business. But I would rather pay that price at that time with that administration than this one.
The bubble is growing over time. It will have a more severe impact in two years than it would if it happened tomorrow.
That makes logical sense, but I am looking for a more solid explanation. Again, I am not saying it isn't, I am asking how could I say that to someone and then back it up with a solid why.