Jens Asbjørn Bøgen
The report paints a far bleaker picture of the risks than what icomes from the White House.
Investing heavily in a new technological leap feels like a sure bet to win the future.
Governments and tech giants are pouring billions into the latest digital rush.
Yet, behind closed doors, some financial experts worry the entire gamble could crumble.
Under the surface
The Trump administration openly champions generative artificial intelligence.
However, a leaked Treasury Department draft tells a different story, NOTUS reported Monday.
In the draft, career analysts express concern over the potential systemic risk of an AI bubble, as the AI-tech companies are more entrenched in the economy than what has been seen in past tech booms.
If these firms falter, the fallout will spread quickly. Analysts warned that “A downturn in the AI market would send shockwaves throughout the entire economic ecosystem,” hitting stock markets, private credit, chip makers, and power utilities.
The financial core is highly exposed. The draft stated that “AI investors are taking risks so significant that much of the financial system now rests upon AI meeting expectations for productivity gains and profitability,” NOTUS reported.
A stark contrast
This internal panic clashes with the White House’s public cheerleading. In public, the administration has “shown nothing but bullishness toward the AI industry,” according to NOTUS.
Treasury Secretary Scott Bessent recently praised tech firms for spending $750 billion on AI infrastructure. “Could we do at least that?” Bessent asked during a speech. “Can we do maybe more?”
For Bessent, the only real threat is falling behind global rivals. He told G7 leaders that “the biggest risk to AI is China getting ahead of us,” the report noted.
A Treasury spokesperson dismissed the leak as unvetted. They told NOTUS that official policy states “Artificial intelligence will be a key driver of America’s new Golden Age,” delivering unprecedented gains.
Shadows of debt
The document was written for top officials, including Federal Reserve Chair Kevin Warsh. It warns that the sector is vulnerable to electricity shortages and funding drying up.
Critics are already demanding transparency. According to NOTUS, Senator Elizabeth Warren stated that tech companies rely on “shadowy forms of debt and balance sheet magic to fund their multi-trillion dollar AI buildouts,” prompting her to push for a new monitoring bill.
