Everybody's Business – "Will AI Crash the Economy?"

Podcast by: Bloomberg & iHeartPodcasts
Hosts: Max Chafkin & Stacey Vanek Smith
Episode Date: August 22, 2025

Overview

This episode dives into the growing skepticism around artificial intelligence (AI) and its actual economic impact, questioning whether the AI boom is a bubble poised to crash the economy. The show also explores fast food trends amid economic stress, with a spotlight on Taco Bell’s resilience, and concludes with an analysis of the significance of the Federal Reserve meeting in Jackson Hole. The main event is a candid interview with Ed Zitron, tech PR expert and host of the “Better Offline” podcast, who details why he believes AI is overrated and potentially dangerous to the financial markets.

Main Segments & Key Discussions

1. Is the AI Hype All Hat, No Cattle?

[01:12 – 06:19, 06:03 – 22:27]

Context & Skepticism

• Hosts discuss the week's market jitters stemming in part from doubts about AI's transformative power.
• Max shares his worry that AI's economic potential is grossly overrated: “This is the risk that the AI just, like, doesn’t do anything, and all these businesses that are spending tens of billions of dollars… will wind up being worth a lot less than we think.” (06:24)

The Bear Case: Interview with Ed Zitron

• Ed Zitron, self-proclaimed “AI hater”, lays out why he thinks AI is overhyped, risky for the economy, and why the media & markets should shoulder some blame.

Highlights:

• Lack of Meaningful Utility:
  • Zitron argues, “When you actually look at what these models can do and their actual outcomes, they don’t do that much. They’ve not been that useful. They never have been that useful.” (09:09)
  • “Large language models are inherently limited in what they can do. They are inconsistent. They hallucinate, which is when they authoritatively state something that isn’t true… A hallucination will mean it does something wrong.” (13:22)
• Corporate Adoption Myths:
  • Max cites an MIT study: “MIT just put out a study suggesting that 95% of the generative AI pilots that companies are pursuing are failing.” (12:12)
  • Zitron adds: “Enterprise adoption of AI is huge. It’s everywhere. The problem is it doesn’t learn. It isn’t good at complex tasks, it isn’t good at workflows.” (12:45)
• Misleading Market Narrative:
  • Zitron on AI-driven market gains: “This entire thing is vibes… All of these companies seeing growth from AI are not seeing growth from AI. They are riding a bump of already existent growth…” (14:49)
  • “Any narrative in markets is scary because they can make the markets go to these pornographic heights… then they can drop the moment someone makes a sour fart and everyone smell.” (15:31)
• Systemic Risks:
  • Zitron breaks down concerns about concentrated tech market value: “The Magnificent Seven makes up 42% of Nvidia’s revenue… If their whims change, Nvidia’s revenue drops.” (17:26)
  • Data center spending (“more of economic growth than all consumer spending combined”) is pegged to AI expansion, which he warns is unsustainable. (17:26)
• Potential Crash Scenario:
  • “Vibes based market means that once the vibes sour, money go down, market go down. At that point, the markets would turn to fundamentals.” (18:46)
  • Zitron’s bleak outlook: "I don't think there is any cushioning the fall anymore." (20:55)
• Media & Market Responsibility:
  • Zitron doesn’t mince words: "The media has failed here categorically, across the board. I'm not going to name names, but there are people that should be ashamed of themselves." (20:55)
  • “The markets are nonsensical growth drunk idiots. And as long as we obsess with growth, we will keep creating these cycles." (21:39)

Memorable Quotes:

• Ed Zitron: “Every description that I've heard of how people use [AI] is just what Google search should be.” (10:28)
• Stacey Vanek Smith: “I use AI as a research assistant, but there are some really exciting uses… AI deciphered the whale language. We were able to talk to whales for the first time.” (11:25)
• Max Chafkin: “If that story [AI] started to collapse, their [tech titan] values would collapse.” (16:34)

2. Pop Culture and Markets: Labubu Craze

[02:37 – 06:03]

• Brief comedic exploration of the Labubu toy craze, a hit Chinese import that is outselling even Barbie.
• Hosts' children (and their friends) offer puzzled, funny takes on why these “demonic bunnies” have caught on, underlining the unpredictable nature of consumer fads and China’s growing cultural export power.
  • Child: “People just have bad tastes these days.” (04:31)
  • Max: "Honestly, cute monster. I guess that's the answer.” (04:46)

3. Fast Food Winners & Losers: Taco Bell’s Secret Sauce

[25:03 – 37:48]

Guest: Dina Shanker, Bloomberg Businessweek food reporter

• Despite industry-wide slowing sales and low-income consumer pullback, Taco Bell is thriving.
  • Dina Shanker: “Taco Bell turns out is growing. And not only are they growing, they're actually not even seeing pullback from low income consumers, which McDonald's and Wendy's both reported that they were...” (27:19)
• Reasons for Taco Bell's resilience:
  • Remains consistently cheap (“How many other places can you order like six different things off the menu for less than ten dollars?” [28:30])
  • Constantly introduces new, limited-time menu items (Cheez-It Crunchwrap, Street Chalupas, Midnight Baja Blast, etc.).
  • Viral social media presence — “There's a whole genre… people just ordering things from Taco Bell and eating them on camera.” (28:30)
• Broader economic insight: Rising fast food prices are pushing lower-income customers out, but Taco Bell's cheap innovation bucks that trend. “If you are dependent on low income consumers, then those consumers are pulling back and… you’re like, I’ll just make dinner at home.” (32:37)
  • Higher-end “fast casual” chains (like Sweetgreen and Chipotle) are also reporting disappointing sales, suggesting broader spending pullbacks.
  • Potential takeaway: “If people are pulling back from Sweetgreen… then I think we have a pretty bad sign.” (37:04)

4. Underrated of the Week: Jackson Hole and the Fate of the Fed

[39:04 – 42:24]

• The Federal Reserve’s big gathering in Jackson Hole is called an “underrated” story because of its market-moving potential.
• Stacey explains: “Donald Trump… they're really making a play to have much more control over the Fed, which has traditionally been quite independent. A lot of people see this as a big threat to the economy if that becomes politicized.” (40:20)
• Jerome Powell’s upcoming speech is seen as pivotal for central bank independence amid political pressure.
• Max jokes: “I cannot imagine a more boring thing than a conference full of central bankers. But why this speech is significant?” (39:52)

5. Revisiting AI and Algorithmic Price Fixing

[42:24 – 44:05]

• Listener email points out how AI is being leveraged (controversially) for rental price fixing (DOJ settlement with major landlord Greystar).
• Stacey: “AI is effective. It has an excellent business use case. It can now force all of our price fixing. Yeah, it's amazing if you're a crooked landlord.” (43:07)
• Max clarifies there was no admission of wrongdoing by Greystar but notes the case illustrates the “shadow side” of AI business use.

Memorable Quotes & Moments

• Ed Zitron [on AI’s real market value]:
  • “All of these companies seeing growth from AI are not seeing growth from AI… it's not coming from AI.” (14:49)
• Stacey [on AI’s practical uses]:
  • “It helps me in the same way like a very fast, semi competent intern would.” (09:55)
• Max [on the AI narrative]:
  • “...a significant part of our retirements [is invested here]… and then you have this additional problem... all this capital investment.” (16:13)
• Dina Shanker [on Taco Bell’s marketing]:
  • “A never ending menu means never ending online content.” (27:43)
• Stacey [on fast food economics]:
  • “If you are dependent on low income consumers, then those consumers are pulling back... making dinner at home is always less expensive and even more so when prices have gone up.” (32:37)

Timestamps & Notable Segments

| Time | Topic | Speaker(s) | |-----------|-----------------------------------------------------------|---------------------| | 01:12 | Episode open, theme of AI skepticism | Max & Stacey | | 06:03 | Max expresses AI economic bubble concerns | Max | | 08:13 | Interview with Ed Zitron begins | Ed | | 09:09 | Zitron's core arguments on AI limitations | Ed, Stacey | | 14:49 | Impact of AI “vibes” on stock market | Max & Ed | | 16:32 | Discussion about the tech sector and Nvidia's dominance | Max & Ed | | 18:46 | Zitron’s “vibes-based market” collapse scenario | Ed | | 20:55 | Zitron: “no cushioning the fall anymore” | Ed | | 25:03 | Taco Bell’s economic success story | Stacey & Dina | | 27:43 | Social media’s role in Taco Bell’s success | Dina | | 32:37 | Broader fast food struggles and consumer cutbacks | Dina | | 36:01 | Are Taco Bell’s gains a warning sign? | Max, Dina | | 39:04 | The undervalued significance of the Fed’s Jackson Hole mtg| Stacey, Max | | 42:24 | Listener email about AI and price fixing | Max, Stacey |

Conclusion

• Skepticism toward the AI-fueled market boom is growing, with Ed Zitron laying out a detailed, data-informed argument that AI’s usefulness—and value—is massively overstated, creating dangerous risks for the economy.
• Taco Bell serves as a rare bright spot in a struggling fast food sector, using low prices and menu creativity to weather economic hardship.
• The upcoming Federal Reserve meeting in Jackson Hole is presented as a crucial economic event, particularly amid political threats to central bank independence.
• Listener engagement brings in new concerns about AI’s real-world impact on markets, notably in rental pricing.

Final Question from Hosts: Are you an AI hater, or an AI lover? Tell us your take at everybodys@bloomberg.net.

Tone: Informal, energetic, skeptical (on AI), humorous, analytical

For more, follow Ed Zitron’s podcast “Better Offline” and check out his substack for in-depth critiques of AI and tech market dynamics.