From Ed Dowd: Beyond the Narrative
I opened up X last night and my jaw dropped as I read this post about the Anthropic CEO’s wife:
What? Absolutely surreal. The Source is the WSJ. Not some random Substack or 4chan thread. The Journal!
Sure…let’s hand over the U.S. economy to these folks…because nothing says “trust us with the commanding heights of capital allocation, national security, and the next industrial revolution” quite like a resume that includes Epstein outreach and revolutionary pornography. These are the visionaries powering the AI miracle that is currently propping up half the stock market, justifying trillion-dollar valuations, and absorbing every spare dollar of hyperscaler capex while the rest of the real economy quietly stalls. Anthropic is supposed to be safety-first, helpful, honest Claude, the “responsible” alternative to those reckless OpenAI cowboys and is now part of the small club of companies we are told will midwife AGI, reshape labor markets, and deliver the productivity boom that magically solves debt, demographics, and stagnation. Not to worry though, the CEO’s wife is his sounding board and networker who once shopped a porn startup to Jeffrey Epstein. If I was writing a movie script titled “The Epstein Class” I don’t think I could have scripted this nonsense if I tried.
We have already seen this movie.
In the late ’90s it was DotCom and the Telecom bubble. In the mid-2000s it was synthetic CDOs structured by the smartest guys in the room who somehow never noticed the underlying loans were garbage. Today it is circular AI deals, negative free cash flow disguised as “investment in the future,” off-balance-sheet financing gymnastics, and private credit still willing, for now, to paper over the gap between chip prices and actual sustainable demand. Hyperscalers are burning cash at rates that would make a 1999 telecom CFO blush. Enterprise adoption is showing cracks. Power constraints are real. Open-source models are crushing pricing power. And yet the market keeps treating every new data-center announcement like divine revelation.
Strip out the AI-related spending and what does U.S. growth look like? Not pretty. The stock market’s concentration in a handful of AI-adjacent names has reached levels that would have been called reckless in any prior cycle. Semiconductors alone are a comically large slice of the indices. We’re told this time is different because the technology is transformative. Fair enough, I happen to believe the underlying tech is powerful and will eventually deliver real productivity. Just like the internet did but the internet also produced a multi-year capital destruction event first, after which the real winners emerged from the wreckage in the aftermath.
The infrastructure build is the bubble. The eventual companies that figure out how to make money without vaporizing capital will be the investments years from now. Right now we’re lighting money on fire at scale while pretending the unit economics somehow work at current chip prices and current model commoditization.
And into this carnival stroll the same interlocking networks of Silicon Valley operators, former Google royalty, and “visionaries” whose personal histories somehow never quite make it into the glossy profiles until a WSJ reporter decides the scrubbing has gone too far. Epstein connections used to be disqualifying. Revolutionary porn companies used to be a punchline. Now they’re just colorful origin stories on the path to shaping the future of intelligence itself.
Anthropic has already given us a taste of the product: quietly profiling users, downgrading them mid-conversation without disclosure, charging full price for the lesser model, and storing prompts while preaching about safety and against government surveillance. They are preparing for an IPO. Of course they are…growth at all costs narratives work until the day the market decides it would like to see actual earnings and transparent financials. Some of these firms have already shown a charming reluctance to share numbers with potential lenders. That usually ends well.
The sarcasm writes itself. We spent years being lectured about systemic risk, ethical AI, and the dangers of concentrated power. Then we watched the same ecosystem that produced the surveillance capitalism model of the 2010s pivot seamlessly into the “we’ll build the digital prison but this time it’s for your own good and also AGI” phase, while the personal networks behind the leading labs look like they were assembled by a particularly unsubtle “Epstein Class” screenwriter.
I’m not anti-AI. I’m anti-fantasy finance dressed up as technological inevitability. The technology will survive the bubble the way bandwidth survived the telecom crash. What won’t survive is the current set of valuations, the current capital allocation decisions, and the current pretense that the people steering the largest capital wave in a generation are uniquely wise, uniquely ethical, or uniquely free of the usual human frailties.
“He has brought down rulers from their thrones but has lifted up the humble.” Luke 1:52
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