Ben Hunt: The AI Boom Could Trigger the Next Financial Crisis

In this week's Stansberry Investor Hour, Dan welcomes Ben Hunt back to the show. Ben founded Epsilon Theory, a newsletter with more than 100,000 readers that examines markets through the lens of narrative. He's also the president and co-founder of Perscient, an AI research firm and software company.

Ben kicks things off by explaining why interest rates have been going up and why the rise might not be as much of a short-term event as folks believe. He says that while the war in the Middle East has contributed to the short term, there is such a surge of borrowing coming from the Big Tech companies that the government sees this as a chance to make money from it. And unlike the conflict that has no definite end date and could conclude relatively soon, the hyperscalers will be borrowing for a greater period of time. Ben says that those companies are the new "too big to fail," so they will do whatever it takes to protect themselves from a loss, including obtaining a government backstop on their debt. But he wants there to be a limit to how much the businesses can gain in the event of continued rapid success. (0:00)

 Next, Ben shares why there could be concerns for annuity reinsurers. While the insurance industry can handle rising interest rates, if they increase too much, too quickly, that jeopardizes wealth managers who advise their clients to put their money in annuities. And with insurers using Treasurys as a hedge, if rates also have an impact on the Treasurys, they'll be devastated. And then, Ben wonders with all of the data-center build-out spending whether there will be room for three competitors at the top. (21:17)

 Finally, Ben provides his thoughts on AI. He believes that AI is becoming so integrated into our way of life that it has changed our way of thinking. Additionally, because it has surpassed being used for labor and has reached the point where it can "think" as well as humans, occupations like mathematicians may no longer be needed, and those who pursue such fields do so as a hobby. But while AI can provide us with rapid answers and is used in writing, Ben believes that as long as the need for conversation exists, humans will always be at the center of creating – and that cannot be replaced. (37:45)