In 900 Days Capitalism Breaks — And People Enter the “Loss Domain” | Tom Bilyeu Deepdive

In just 900 days, you'll be living through the end of capitalism itself. Your job, how you earn income, the very way the world determines your economic value, it's all going to be different. Why 900 days? Because that's approximately how long it will take AI to get to the stage where it can outperform humans on any task that can be done on a computer screen. The white-collar, professional, college-educated jobs that built the middle class will be [music] performed by AI. AI will be faster, cheaper, and it will scale almost infinitely. There are two fundamental laws at work. First, game theory, which says any technology that promises an advantage will be developed at reckless speeds. Second, humans want everything faster, cheaper, and more reliable. When something is all three, people will choose it every time. AI promises an advantage, and it is getting faster and cheaper and more reliable by the minute. The magnitude of the end of capitalism simply cannot be overstated. The entirety of how the world works is going to change. Your value in the eyes of the market is no longer going to be determined by what you can do because AI will be able to do it better. And that's going to have massive consequences. Some are knowable, and some are not. But if you don't wrap your head around what's coming, you're going to get left behind. So, what is coming? Who's it going to help, and who is going to get obliterated? That's what we're going to talk about right [music] now. Here is a hard truth no one seems to understand. AI is going to break the economic loop that currently makes you valuable. Everything in your life outside of love and religion is geared towards you finding a way to add value to the economy. Your parents sent you to school where you were taught what you'll need to do to get a job. Once you graduate, your job controls the flow of your day, your week, and your year. The very structure of your life is built around your career. Where you live, what you can afford, how long your vacations are, what kind of health care you have, what you wear, how you wear your hair. It's all to a shocking degree downstream of how you interface with the world economically. No one likes to think of it this way, but from the perspective of how the world works as a system, we're all economic units. You do a thing, you get paid a wage for that, your wage then turns into rent, groceries, Netflix, gas, kids' clothes, date night, etc. All of those purchases become someone else's revenue. That revenue lets companies hire more people, invest in more equipment, launch more products. That creates more jobs, generates more wages, and sparks more consumption, starting the loop over. And all of your economic power is built around [music] one simple fact. You're able to trade time for money because smart human labor is hard to come by. And that's the thing. Economics is all about determining [music] the value of scarce things. If something is too abundant, its value essentially drops to zero. And guess what AI is going to do to the scarcity of human-like intellectual labor. >> [music] >> It's going to make it extremely abundant, and that will drive its value to near zero. Roughly 70% of all task hours in developed economies are already happening on screens, and that is the low-hanging fruit for AI displacement. We are not a society of farmers and factory workers anymore. We are a society of people sitting in front of laptops. That is native territory for AI. It doesn't have to learn how to operate in the physical world to take over that work. It already lives in the same environment that that work is being done in. That begs the question, what happens to society when tens of millions, perhaps hundreds of millions, perhaps more, are no longer economically viable? Zoom back out to the economic loop of labor, wages, consumption, revenue. If companies don't need to buy nearly as much labor, they don't pay nearly as many wages. If AI creates as many new jobs as the Industrial Revolution did, great, crisis averted. But every theory for the AI-saturated future that I've heard still requires humans to be uniquely valuable for capitalism itself to continue to function. And my belief is that the average human will not be uniquely valuable in an AI future. The best of the best will certainly have a longer shelf life, but the law of averages says that half of humans are worse than the average person. Even if you'll only grant me that half of white-collar workers are about to get replaced by AI, it's still going to wipe out capitalism as we know it. If globalism managed to stagnate American wages for 40 years, which it did, imagine what AI replacing half of white-collar workers is going to do. Wages merely stagnating would defy the physics of money. Far more likely would be wages actively declining or outright disappearing for a huge chunk of the population. This would arrest consumption since a huge percentage of people would simply not have enough money to buy things. This would force businesses to cut costs which would only further accelerate humans being replaced by AI. That's why when consumption falls, you enter a death spiral that becomes almost impossible to pull out of. Now, this isn't me pulling something randomly out of thin air. If you saw my interview with Stability AI founder Emad Mostaque, this idea is going to sound very familiar to you. Capitalism is a labor-centric economic system and it won't survive in its current form when labor is no longer the scarce resource. Society is going to be forced [music] to reorganize around whatever is going to become scarce next. But the real question is how fast is the phase transition going to be? Sometimes these kinds of transitions are slow. Wouldn't that be nice? But sometimes they're fast and violent. >> [music] >> In our case, given how fast AI is improving, the transition appears that it's going to be brutally fast. If you don't understand what's going to replace labor as the thing the system [music] cares about, you'll be left trying to sell something the market no longer needs. So, the next question becomes obvious. What will people do to generate money if they can't sell their labor? And will money even matter? When people lose their economic footing, they don't become careful and conservative. They become volatile. We like to imagine that when circumstances deteriorate, people tighten their belts, make rational trade-offs, and calmly adjust to their new reality. But that isn't what actually happens. When people feel cornered, especially economically, they shift into a completely different psychological mode. >> [music] >> A mode Nobel Prize winning psychologist Daniel Kahneman called the loss domain. Under stable conditions, people are risk averse. Under threat, they ironically become risk seeking. If you're headed towards ruin anyway, the logic goes, why not place the bet that might save you? Even if the odds are terrible, [music] even if the downside is catastrophic, even if the bet itself will accelerate the spiral you're actively trying to escape. Desperation rewires the way that people relate to risk. That is the loss domain. And people don't end up there because they're irrational, they end up there because a serious threat alters their internal model of the world. Inside the loss domain, the human brain stops valuing safety. It stops optimizing for stability. It even stops caring about probability. It starts operating on one primal instinct, get it all back in one move. That's where AI is pushing us. And we saw how we behave in this mode on full display in 2020 during COVID. The moment people felt the ground shifting beneath them, jobs disappearing overnight, wages falling, [music] the future collapsing into uncertainty, the entire country turned towards massive speculation. Tens of millions of new brokerage accounts appeared in a matter of months. Options trading, which most people barely understood, absolutely exploded. Meme stocks surged, not because the underlying businesses changed, but because people needed a story that felt like salvation. Crypto roared. NFTs appeared out of nowhere and were treated like a lifeline. People weren't investing, they were gasping for air. The markets became a pure casino because so many people felt desperate, were in the loss domain, and casinos [music] of all types offered hope when reality felt bleak. And if you think 2020 was an anomaly of modern behavior, think again. Look at what happened during the Great Depression. The market collapse didn't cause people to be cautious, it created a nationwide gambling culture. >> [music] >> Illegal betting parlors surged, lotteries, horse racing, and numbers games became so widespread, sociologists called them the shadow economy of the desperate. This is like 100 years ago. Men who lost their jobs did not retreat into quiet contemplation and a rebuilding phase. Just like they will do now, they chased risk because risk was the only remaining lever that felt like it could change their fate. Whole neighborhoods were kept afloat, not by wages, by a constant churn of speculative schemes. These are different eras, but it's the same psychology. We'll get back to the show in a moment, but first, let's talk about what actually slows down content creation. Most creators think their bottleneck is editing skills or ideas, but the real bottleneck is asset acquisition, [music] the gap between needing a shot and actually having it in your timeline. >> [music] >> Searching multiple sites, finding the perfect clip, and then seeing that it's 80 bucks. So, what most people do is they end up settling for something that's good enough so they don't blow their budget. Storyblocks solves this. It removes the bottleneck entirely because you get unlimited downloads for one predictable price. [music] Video, music, sound effects, templates, all of it. No caps. No per asset fees. You need something, you download it, you keep moving. Everything is pre-licensed and royalty-free, so there is no legal anxiety. You are protected. To get started with unlimited stock media downloads at one set price, head to storyblocks.com/impact or just click the link below. And now, let's get back to the show. When labor collapses, identity and a sense of direction collapse. And when those things [music] collapse, people grasp for anything that restores the feeling of agency. Now, project that forward into a world where AI doesn't threaten 5 or 10% of jobs, but massively reduces the economic value of roughly half of all white-collar workers effectively at the same time. As more and more people lose their job and wake up to the reality that they're not going to find a new one, speculation is going to run rampant, especially if money remains as cheap as it is today. Or God forbid, we get more stimmy checks. We will be straight back to 2020 yellowing. For that reason, I'm long on Pokémon cards. Obviously, I'm kidding. One Piece is a much better investment. Sorry, I could not help myself. [music] But my assumption is that people are going to hurl their money into all kinds of insane investments just like that, looking to get rich quick. And at least for a while, some of it will work because desperate people with free money gamble. If you thought the speculation was wild in 2020 or back in the 1930s, you ain't seen nothing yet. Society will begin reorganizing psychologically in response to AI long before we figure out how to reorganize economically. And while we figure it out, that transition is going to be brutal. The 900-day countdown is to a transition that will be emotional, structural, cultural, and deeply destabilizing. When labor stops being the thing the economy values, the only thing left with any meaningful scarcity is human judgment. Judgment is the wisdom of knowing what to build, why it [music] matters, and understanding who something is being built for, and what good even looks like. It's not about effort. It's not showing up and working hard. It's discernment. The ability to cut through noise and find the best option available when faced with nearly infinite options. In a post-labor economy, judgment and entrepreneurial savvy will be the things of value in the traditional economy. Society is likely to fracture into four distinct groups. One, people who have both judgment and entrepreneurial abilities. They'll build AI-enabled companies of one that operate like companies of 50. Dramatically reducing the number of people that we need in the workforce. They'll ride the traditional economy until the wheels of capitalism literally fall off. The second group, people with good judgment but no desire or ability to be an entrepreneur. They'll become high-value employees in a world where the ability to guide AI is more important than the ability to perform tasks. [music] They'll be the last employees standing, but they're going to be very few in number by the time the wheels of capitalism come off the vehicle. The third group, people who have entrepreneurial skills but lack the taste to drive product creation. These people will either partner with someone who has great judgment, or they'll burn out chasing possibilities that never quite work in the marketplace. The fourth group is everybody else. This will be the majority of white-collar workers. They don't have exceptional taste or entrepreneurial skills or desire. Therefore, they will learn the hard way that the new economy doesn't need their labor. The odds they will depend on [music] some form of UBI is basically 100% and the sad reality is that most people simply won't adapt. Not because they can't learn the tools, but because people hate change. What is going to emerge on the other side of the AI [music] transition is a world where very few things are actually scarce. And given capitalism is a structure for decentralizing price discovery for scarce goods through open markets. The very idea of our current economic system doesn't make sense in a world where both intelligence and labor will effectively be free and abundant. This is one of those things that to capture what a shocking transition this is going to be is extremely difficult. The very frame of reference that we live inside of tells us that capitalism is a fundamental structure of the world. But it is not. Things are going to change. And it is nearly impossible to see precisely what's going to be on the other side of that. >> [music] >> So, the question becomes what does the transitional economy look like? That we should at least be able to see a little bit better. And how do we make it work to our advantage? The people who thrive in the next 900 days are not going to be the ones who guess perfectly [music] correct. They'll be the ones who get the direction of travel correct and build an all-weather strategy that will allow them to thrive even as capitalism itself becomes dysfunctional. Here's how you do that. Step one, develop emotional sobriety. People panic in the face of massive uncertainty and rapid change. But that makes everything >> [music] >> worse. It's the one thing you shouldn't do. Don't make all or nothing bets. Don't YOLO into anything. Stay calm and keep enough cash on hand to take advantage of opportunities which will absolutely present themselves or just have the ability to survive prolonged economic difficulties. And always remain humble in the face of extreme uncertainty. Two, own assets. There are no guarantees in life, but the fact that you will get ahead by owning a diversified basket of inflation resistant assets when the government is running deficits comes close. Plus, if AI causes the kind of disruption I and many, many others are expecting, the government is going to have to print more and more money to pacify a public that will be growing more and more uneasy as the job market [music] continues to soften. It's already started. Not only will the government likely be printing money in unprecedented amounts, but odds are that people will be locked in the loss domain speculating like mad >> [music] >> in the hopes of finding a path out of their hopelessness even if that path is a reckless one. The people that are unemotional and in a position to play the long issue game are the ones who are going to benefit from everyone else's recklessness. Now, I've done countless videos on how to invest well when facing an uncertain future. Here's one of them. You can watch that if you want more information. All right. Three, learn to orchestrate AI, not just use it. [music] I spend a lot of time teaching entrepreneurs how to use AI efficiently. I've used it at my own company to cut my head count in roughly half while increasing our revenue and profits. >> [music] >> If you're not going to be an entrepreneur, the goal should be to become indispensable to an entrepreneur, so that you're the last man standing with a salary. Step four. If you have the stomach for it, build your own thing. With AI, the cycle of company formation and collapse may become very condensed, but that doesn't mean it's not the perfect time to start a business of your own. That puts you in a position of control and [music] power, and it is quite honestly never been easier to start a company than it is today. And I'm talking not by a long shot. This is as easy as it is ever been before in history. If you don't know where to start, you can check the link in the comments. I run a course called Zero to Founder all about how to get started and generate actual revenue. >> [music] >> There's no such thing as getting rich quick, though, I will warn you now, but you really can build something that matters without a bunch of money, especially today with AI. Five. Create an income stream that can survive volatility. >> [music] >> The next few years are going to be unstable. Markets will spike and crash, speculation will roar, traditional jobs will wobble, and you will be in a much better position if you have assets that offer cash flow or a side hustle that kicks off some cash, rather than just relying solely on your salary. Six. Avoid debt. This one is controversial because debt done well, especially in an inflationary environment, >> [music] >> can be magical. But debt done poorly will end your economic future. Given that the vast majority of people do [music] debt terribly, I advise you avoid it as much as humanly possible, and certainly don't use that to invest unless you are ninja level. As a PSA, remember this. You will never have perfect information about the future. Waiting for clarity is the same as standing still. 900 days is less than 3 years for us to be marching towards something as profoundly disruptive as the dismantling of capitalism itself is insane. It will be hard, if not impossible, to see around this corner. That is going to cause most people to freeze, to gamble with reckless abandon. Because we are all likely to be surprised by the future. You can't just shrug and say, "Well, capitalism is about to be gone anyway, so why bother?" You've got to deal with a world in transition. [music] And that means investing based on how things are today, as well as having an eye on the uncertain future. Brace yourself for speculative mania and a lot of both hype and [music] fear. Put a plan together that is unemotional and execute against it. Don't be overly rigid and definitely don't panic. In 900 days, the world is not going to look anything like the world [music] that we are used to. The era is coming to a close. Now, listen. Maybe Emad is wrong about the timing, but even if you double it, this is still going to happen way faster than any other transition in history. So, don't waste time clinging to the collapsing [music] economic order. Build a version of the future in your mind. Know what you need to do to survive and thrive this kind of disruption. Get into assets, master AI, and never stop playing to win. All right. If you want to see me explore topics like this in real time, be sure to join me live Wednesdays and Fridays at 6:00 a.m. Pacific on YouTube, X, Twitch, and Kick. [music] You can join the debate or just chill in the community. All right, I'll see you there. If you like this conversation, check out this episode to learn more. In the next 1,000 days, AI will not only replace a startling number of humans in the workforce, it will make the entire structure of our economy obsolete. That is the unnerving