A severe case of economic collapse. Economic Armageddon is the total breakdown of a national or global financial system. It is caused by either continuous economic depression, hyperinflation, or a breakdown in commerce.
When there is an Economic Armageddon, it is difficult for people to put food on their table. A financial system collapse means that very few people, or none, can afford daily necessities, leading to widespread poverty.
A continuous economic depression occurs due to the fall in gross domestic product, a high unemployment rate, and widespread business failures. When this situation cannot be resolved by government policy, it worsens and may lead to a total system collapse.
Hyperinflation refers to an uncontrolled increase in the price of goods and services. The price increase is from 50% monthly thereby decreasing the value of money. When this is consistent, low-income earners cannot afford staple foods. Middle and high-income earners will find it difficult to maintain their status.
Commerce breakdown arises from business failures. Companies are incurring losses and there is no cash to pay debts. For economic Armageddon, every effort by the government to aid the company's existence will be abortive. This will lead to the shutdown of companies and businesses nationwide or globally.
Government efforts to control depression, hyperinflation, and commercial breakdown are through fiscal and monetary policies. But, when economic Armageddon occurs these policies will not help curb the problem. As a result, there will be social chaos, a high rate of unemployment, poverty at various levels, and the currency will be worth little to nothing.
How Artificial Intelligence will cause Economic Armageddon
There is a belief among economists that the AI revolution can lead to economic Armageddon. This is due to the following predictions.
An AI bubble may occur that is similar to the internet bubble from 1995 to 2001. Stock prices of many technology companies skyrocketed. Investors were putting their funds in it without proper knowledge of these companies. The impact was the fall in the price of shares of these companies that resulted in a huge loss to investors.
Tech companies are using large sums of money to invest in artificial intelligence without considering the future outcomes of their investment. EY, an accounting consulting firm, recently queried the financials of the Meta company because it contains an off-balance sheet transaction that might have a significant impact on the company. This off-balance sheet transaction relates to an investment in an AI data centre.
This is also true with other tech companies like Microsoft, Anthropic, Nvidia, AMD, and others. If this investment fails, then it might be a repeat of the internet bubble or worse. This might result in Economic Armageddon.
They believe that AI will make jobs faster and reduce the need for humans in handling routine roles. Employees have started losing jobs and any employee who cannot adapt to the use of AI may be relieved from their job. Also, there is a threat to entry-level roles. If this continues over time, it will affect individual disposable income and lead to poverty and other economic problems resulting in an AI Economic Armageddon.