Step into the casino that now passes for the American economy.
Donald Trump campaigned on bringing back American manufacturing and rebuilding what America once was — factories, workers in hard hats — from the ground up. But the investment needed to get there, in both the factories and the workers, hasn’t happened.
What he has ushered in instead is a casino economy, built on speculation and risk. Across markets and policy, wagers on the future are being made with other people’s money at a cost that could prove catastrophic.
This economy is largely defined by froth. What was once a fluke has become the operating system of modern markets: like stock prices largely driven by sentiment rather than fundamentals (recall GameStop and AMC in 2021 and the dot-com boom), the overwhelming power of social media and the flurry of bets on something not quite real.
Look and you will see gambling throughout the economy — in markets, policy and how we talk about the future:
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The tech giants spending billions on A.I. data centers and the power grid to sustain them.
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A government shutdown over Americans’ ability to keep their health care.
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Tariffs used like poker chips to try to shrink the trade deficit.
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The increasingly erratic treatment of the U.S. dollar.
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The rise of over 13 million memecoins
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JPMorgan now allowing institutional clients to use Bitcoin and Ether as loan collateral
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Venture capital funding companies that let people “bet against their bills”
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And the recent rumblings of bad loans from regional banks.
Public and private sectors are rolling dice that the foundations of the U.S. economy will hold under the pressure. Meanwhile, the institutions and programs that help cushion risk — like Medicaid and the social safety net, information systems, independent regulators and Federal Reserve independence, even the legal system — have come under attack.
As the public sector steps back from its role as a stabilizer, the private sector has rushed in as a gambler, betting that technology alone can hold the system together. Big Tech companies are wagering trillions on A.I. infrastructure that might revolutionize everything, chasing a jackpot that could reshape the world — or leave a mountain of empty data centers and broken promises.
The A.I. boom has grown into one of the largest speculative waves in market history. The sector value of A.I.-linked companies is 17 times larger than the market capitalization of the dot-com era at its peak and over four times as large as the subprime bubble, according to MarketWatch. Goldman Sachs says that A.I.-related firms have borrowed a record $141 billion to keep that dream alive. Microsoft, Apple and Nvidia alone now account for over 20 percent of the S & P 500’s total market cap, their valuations swelling on bigger and bigger A.I. promises, and creating a concentration so extreme that the entire index moves with them.
The promises are grand — such as curing cancer, personalizing vaccines and medical treatment optimization — yet many of those dreams have already devolved into next-generation social media apps, like OpenAI’s Sora and Meta’s Vibes.
The funding frenzy is turning inward. The companies are spending much of their money on one another. Nvidia and OpenAI have entered into a $100 billion deal where OpenAI would essentially use the Nvidia money to buy Nvidia’s chips. So it’s kind of like Nvidia paying themselves $100 billion for their own product. Many A.I. companies are starting to make their products free, too, with Perplexity offering its previously $200-per-month browser for the low price of $0.
The boom can’t last forever. According to Bob Elliott, chief executive at the financial firm Unlimited Funds, hyperscalers — cloud providers that operate huge global data centers to provide computing power and services to power A.I. — are planning to slow the pace of spending growth. The hyperscalers are still estimated to spend about $1.2 trillion into 2027. (And hopefully, as the backbone of the economy, they will.) But the A.I. spending boom — the billions (roughly $300 billion this year) being poured into the chips, servers and power infrastructure to keep these systems running — may already be peaking.
There is no cushion for the enormous risk that the A.I. companies — and investors, and therefore a typical American 401(k) holder — are taking on. A.I. companies represent roughly 75 percent of recent S&P 500 earnings growth, 80 percent of profits and 90 percent of capital expenditure.
The government is gambling that blanket tariffs will somehow restructure global trade in our favor, despite no historical precedent for this approach succeeding against piles of evidence suggesting it won’t. Soybean farmers need a bailout. Scotch whisky might get an exemption — not to help Scotland, but to protect Kentucky bourbon producers. The tariffs are turning into a rather lucrative side hustle for the administration. Trade lobbying has boomed, and carve-outs are growing, two signs that the bureaucracy is certainly making some people very rich.
At the same time, Washington is betting that the dollar maintains its reserve currency status during this tumultuous time, as we weaponize it unpredictably and alienate traditional allies. The U.S. dollar has been posting poor performance all year against other currencies.
As the economy becomes more unpredictable, Mr. Trump and Republicans have shrunk the safety net that catches people when volatility catches up with them. They cut Medicaid and did not extend Affordable Care Act subsidies in order to fund further tax cuts. Social Security and Medicare are on the table for reform.
This is the cruelest logic of the casino economy, stripping away health coverage from working-class Americans to give tax breaks to companies gambling on speculative ventures; reducing food assistance to fund capital gains preferences for investors playing the memecoin market; firing hundreds of thousands of federal workers to “save” money while bleeding institutional knowledge and capacity.
The math doesn’t work. The morality doesn’t either. In this economy, individuals bear the downside risk, while corporations and the wealthy collect the upside. It’s a rigged game where the house — seemingly, the already rich — always wins.
The question is why this hasn’t all collapsed yet. The answer is actually simple: time. Economic systems have inertia. Institutions built over decades don’t crumble overnight. The dollar’s global dominance rests on 80 years of habit, and there really is no viable alternative. And as the economist John Maynard Keynes warned, markets can stay irrational longer than most people can stay solvent.
But the floorboards are starting to creak. Consider three scenarios for how this plays out:
The jackpot nobody really believes in. Maybe the bets pay off. A.I. productivity gains materialize. Tariffs coincidentally align with a global trade rebalancing. The dollar remains dominant through sheer force of habit and lack of alternatives. Cutting social programs doesn’t trigger health care disruption or social unrest because private charity and family networks pick up the slack. The stock market stabilizes at new, A.I.-justified valuations. This requires essentially everything breaking right simultaneously, the equivalent of hitting several slot machine jackpots in a row.
The controlled burn gets out of control. More likely, we see a rolling series of smaller crises. A major A.I. company admits its infrastructure isn’t generating returns, triggering a sector-wide repricing. Tariff retaliation hits specific industries hard — agriculture, automotive, aerospace — creating regional economic pain. A health crisis hits Medicaid-dependent regions particularly hard. Each crisis is manageable in isolation, but they compound. Market volatility becomes the norm. Consumer confidence wavers. Business investment pauses. We enter a prolonged period of economic anxiety, with low growth punctuated by frequent shocks.
The foundation buckles. The nightmare scenario is that too many bets go bad simultaneously. An A.I. bubble bursts just as trade tensions escalate into a serious global trade war. The dollar faces a real challenge from a coalition of nations tired of U.S. economic unpredictability. A major bank or tech company fails, exposing interconnected risks, as we are just seeing glimpses of now with the recent bankruptcies of Tricolor and First Brands, which is threatening the swelling private credit industry. As Jamie Dimon, the chief executive of JPMorgan, put it, “When you see one cockroach, there are probably many more.” Unemployed workers have nowhere to turn. Consumer spending craters. What starts as a market correction becomes a full-blown economic crisis.
The scary part? We wouldn’t necessarily see a crisis coming because casinos are designed to keep us playing until suddenly we look down and realize all our chips are gone. Economic crises often appear suddenly, even when they’ve been building slowly.
In a real casino, the math guarantees the house wins over time. We will likely see some winners: the A.I. giants collecting billions in investment before delivering returns; the private equity firms buying up distressed assets when bets go bad; the ultrawealthy who can afford to lose on speculation because they have enough diversified assets; the political class that makes the rules while being insulated from consequences.
But we will likely see losers, too. And there are likely to be many more Americans in that category.
Sure, economies run on risk, growth and ambition. But there’s risk, and then there’s reckless gambling. When safety nets are stripped away to help absorb the losses if bets don’t turn out, when trust is lost, excessive risk-taking stops becoming productive and morphs into something predatory.
Casinos run on illusion — the belief that the next hand will be different. But economies don’t have to.
Kyla Scanlon is the author of “In This Economy? How Money & Markets Really Work” and Kyla’s Newsletter.
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