Freakonomics Radio

Snapshot · Freakonomics Radio

684. He Helped Clean Up the Last Crash. Does He See Another One Coming?

Explore episode Aug 7, 2026

Where this was said

This Time Is Different? AI vs. History's Technology Booms

At 33:29 · chapter starts 29:40

Drawing on Ken Rogoff and Carmen Reinhart's 'This Time Is Different,' Gensler builds the historical case that the AI boom is following a well-worn script. Every major general-purpose technology — from canals in the 1830s to the internet in the 1990s — generated a capital expenditure phase where spending dramatically outpaced revenues, followed by a correction. AI's current ratio of $750 billion in capex versus only $150–200 billion in native revenues is, he says, far from equilibrium — and historically that imbalance always resolves eventually. Two arguments are made that AI is different: first, that hyperscalers are funding the boom from their own cash flows rather than borrowed money (Gensler thinks this is partly true but notes they are increasingly tapping debt markets and off-balance-sheet financing through neo-cloud companies like CoreWeave); second, that AI's productivity gains will be so large and so fast they will justify the investment (Gensler is skeptical in the near term). He invokes the cartoon character who runs off a cliff, feet still moving, to describe the current moment.

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