Citrini Research just published a viral scenario for AI causing economic collapse by 2028. It's rattled AI proponents.

[highplainsdem]

From Marketwatch via MSN:

https://www.msn.com/en-us/money/markets/there-s-another-ai-doom-post-doing-the-rounds-this-time-the-s-p-500-dives-nearly-40/ar-AA1WTDIY

White collar job hiring will begin to collapse, they say. In their scenario, the bond market will notice this — white-collar workers represented 50% of employment and drove roughly 75% of discretionary consumer spending — and yields will start to fall.

In a normal recession, the cause eventually self-corrects. But this downturn’s cause will not be cyclical. As companies lay off workers, they’ll use the savings to buy more AI, and therefore cut even more workers. With fewer workers, there’ll be less consumption. It is a feedback loop with no natural brake, they add.

-snip-

And then “the daisy chain of correlated bets” will start to fracture. Private credit companies will have to sharply mark down their software investments. Moody’s will downgrade billions of dollars those debts in April 2027. Software backed loans start defaulting in the third quarter of 2027. Insurers with links to private credit are forced by regulators to raise capital or sell assets.

Citrini goes into great detail about these linkages, which are worth reading here. For example, they see house prices in San Francisco tumbling 11%. The government will be ideologically hamstrung in its response, reluctant to levy taxes on the AI economy to support displaced workers. “While the politicians bicker, the social fabric is fraying faster than the legislative process can move,” says Citrini.

Citrini's scenario - https://www.citriniresearch.com/p/2028gic - has had millions of views since it was released yesterday afternoon.

I read a lot of reactions to it online yesterday. Some AI enthusiasts refuse to believe it can happen. They're still convinced that despite all the layoffs we've already seen from AI, the technology will magically provide millions and millions of new jobs to replace all the jobs being lost - that the AI companies WANT to be lost, as they peddle their AI tools to businesses as a way to get rid of as many workers as possible. I saw one AI promoter say there will be millions of new factory jobs with a reindustrialization of the US - ignoring the tech sector's plans for automated factories.

The companies planning to benefit themselves from laying off employees have all been betting on other companies not doing the same thing, so overall employment will stay the same and consumers can keep our consumer-driven economy going.

None of them envisioned AI making the situation as dire as Citrini says could happen within two years, with the mad rush to automate with AI - and with AI agents in particular.

Citrini's prediction on how use of AI agents could collapse business profits in many sectors:

Subscriptions and memberships that passively renewed despite months of disuse. Introductory pricing that sneakily doubled after the trial period. Each one was rebranded as a hostage situation that agents could negotiate. The average customer lifetime value, the metric the entire subscription economy was built on, distinctly declined.

-snipping a paragraph on consumer savings from AI agents price-matching so much that forces prices down-

Financial advice. Tax prep. Routine legal work. Any category where the service provider’s value proposition was ultimately “I will navigate complexity that you find tedious” was disrupted, as the agents found nothing tedious.

Even places we thought insulated by the value of human relationships proved fragile. Real estate, where buyers had tolerated 5-6% commissions for decades because of information asymmetry between agent and consumer, crumbled once AI agents equipped with MLS access and decades of transaction data could replicate the knowledge base instantly. A sell-side piece from March 2027 titled it “agent on agent violence”. The median buy-side commission in major metros had compressed from 2.5-3% to under 1%, and a growing share of transactions were closing with no human agent on the buy side at all.

And with each reduction in profits, businesses will likely automate more. Fewer consumers will have money to spend. And the downward spiral continues.

Citrini's scenario predicts likely bipartisan support for subsidies to households, with deficit spending and some taxation of AI companies. They mention deficit spending during Covid, but that was viewed as a short-term emergency, which unemployment from AI isn't likely to be.

So more drastic solutions will likely be proposed:

The most radical proposal on the table goes further. The “Shared AI Prosperity Act” would establish a public claim on the returns of the intelligence infrastructure itself, something between a sovereign wealth fund and a royalty on AI-generated output, with dividends funding household transfers. Private sector lobbyists have flooded the media with warnings about the slippery slope.

FWIW, Sam Altman of OpenAI actually suggested a few years ago that every human on Earth be entitled to 1 eight-billionth (or whatever the number would be) of the value of the world's "compute" to sell or use as they saw fit, but he hasn't continued suggesting that and I suspect he might've brought it up as a way to stop talking about a UBI from government financed by taxing the rich more.

We can forget about AI companies being willing to share the wealth.

One of the most liberal venture capitalists and tech lords, Vinod Khosla, (https://en.wikipedia.org/wiki/Vinod_Khosla ), who's liberal enough to have suggested raising capital gains taxes and eliminating some business tax breaks so most Americans will not be taxed, reacted so badly to more extreme policies possibly becoming necessary that he had this to say yesterday about an article in the SF Standard on what Bernie Sanders and Ro Khanna want from AI companies - https://sfstandard.com/2026/02/21/bernie-sanders-rips-silicon-valley-s-supposed-good-intentions-i-don-t-believe/ - and he called them "morons" and "commies" in a post on X...which I'll post in a reply below, but this is the text:

Bernie Sanders, Ro Khanna warn of AI’s potential negative consequences. Morons like ⁦@RoKhanna⁩ and ⁦@BernieSanders⁩ will stop all the good AI can do to protect their religion. Good intentions but bad outcomes is ok for these socialists/ commie

Khosla posted that several hours after the Citrini paper was released. He'd almost certainly heard a lot about it, if not read it, by then.

Battle lines are being drawn.

AI bros who might've once sounded willing to share maybe a small part of the wealth are likely to feel less generous if they see an economic slump coming that could demand more sharing.

And that SF Standard article had included what a former campaign manager of AOC wants:

Scattered amongst the crowd were a number of prominent professors and other political celebrities, including Saikat Chakrabarti, the former campaign manager and protégé of Rep. Alexandria Ocasio-Cortez (D-NY), a liberal icon.

Chakrabarti, who is running for Rep. Nancy Pelosi’s long-held congressional seat in San Francisco, told the Standard that while he appreciated the seriousness with which the speakers approached AI, he was disappointed to see neither of them going far enough.

“We need to be talking about public ownership of these companies,” Chakrabarti said.

No need to wonder what even a somewhat liberal venture capitalist like Khosla thought of that, though he didn't name Chakrabarti...