Governments are making a dangerous bet on the AI boom
Long-term bond yields in the US, France, Japan, and Britain have climbed to their highest levels since the 2007-09 financial crisis, signaling that the era of ultra-low interest rates is over. The Economist argues that governments are betting on an AI-driven productivity boom to justify rising debt burdens, a gamble that could backfire if the technology fails to deliver. The piece warns that markets are already pricing in higher yields, and that fiscal policies may be too reliant on an uncertain AI payoff.
For anyone who was wondering if, when inflation fell after the pandemic, yields would return to the lows of the 2010s, markets appear to have supplied a decisive answer: they will not.
- gpt5
It's private companies making a bet on the AI boom.
What governments do (which is the actual content of the article) is betting on economic growth to exceed the growing debt.
- zekrioca
- ducktective
I wonder about Japan and Europe these days. Back in the 80s, when Japan was pursuing the "Fifth-Generation Computers", EU and US scrambled to compete with Japan. Like, it was a big deal for strategists and decision-making high-level politicians of that era.
Now in 2020s, it seems only China is tailing US and in turn, US is wary of China. What gives?
- ares623
A "bet" implies there's a risk of losing if it doesn't play out. As far as the individuals in the Govt and the involved companies are concerned, there is no risk for them. It's not their money, and the individuals will come out much better off regardless of outcome. It is simply a good investment.
- feverzsj
Trump administration doesn't care. They just use it to manipulate market and make billions for themselves.