Posted on 01/03/2026 6:38:01 AM PST by Twotone
Welcome to the techno-feudal state, where citizens are forced to underwrite unnecessary and harmful technology at the expense of the technology they actually need.
The economic story of 2025 is the government-driven build-out of hyperscale AI data centers — sold as innovation, justified as national strategy, and pursued in service of cloud-based chatbot slop and expanded surveillance. This build-out is consuming land, food, water, and energy at enormous scale. As Energy Secretary Chris Wright bluntly put it, “It takes massive amounts of electricity to generate intelligence. The more energy invested, the more intelligence produced.”
That framing ignores what is being sacrificed — and distorted — in the process.
Beyond the destruction of rural communities and the strain placed on national energy capacity, government favoritism toward AI infrastructure is warping markets. Capital that once sustained the hardware and software ecosystem of the digital economy is being siphoned into subsidized “AI factories,” chasing artificial general intelligence instead of cheaper, more efficient investments in narrow AI.
Thanks to fiscal, monetary, tax, and regulatory favoritism, the result is free chatbot slop and an increasingly scarce, expensive supply of laptops, phones, and consumer hardware.
Subsidies break the market
For decades, consumer electronics stood as one of the greatest deflationary success stories in modern economics. Unlike health care or education — both heavily monopolized by government — the computer industry operated with relatively little distortion. From December 1997 to August 2015, the CPI for “personal computers and peripheral equipment” fell 96%. Over that same period, medical care, housing, and food costs rose between 80% and 200%.
That era is ending.
AI data centers are now crowding out consumer electronics. Major manufacturers such as Dell and Samsung are scaling back or discontinuing entire product lines because they can no longer secure components diverted to AI chip production.
Prices for phones and laptops are rising sharply. Jobs tied to consumer electronics — especially the remaining U.S.-based assembly operations — are being squeezed out in favor of data center hardware that benefits a narrow set of firms.
This is policy-driven distortion, not organic market evolution.
Through initiatives like Stargate and hundreds of billions in capital pushed toward data center expansion, the government has created incentives for companies to abandon consumer hardware in favor of AI infrastructure. The result is shortages that will hit consumers hard in the coming year.
Samsung, SK Hynix, and Micron are retooling factories to prioritize AI-grade silicon for data centers instead of personal devices. DRAM production is being routed almost entirely toward servers because it is far more profitable to leverage $40,000 AI chips than $500-$800 laptops. In the fourth quarter of 2025, contract prices for certain 16GB DDR5 chips rose nearly 300% as supply was diverted. Dell and Lenovo have already imposed 15%-30% price hikes on PCs, citing insatiable AI-sector demand.
The chip crunch
The situation is deteriorating quickly. DRAM inventory levels are down 80% year over year, with just three weeks of supply on hand — down from 9.5 weeks in July. SK Hynix expects shortages to persist through late 2027. Samsung has announced it is effectively out of inventory and has more than doubled DDR5 contract prices to roughly $19-$20 per unit. DDR5 is now standard across new consumer and commercial desktops and laptops, including Apple MacBooks.
Samsung has also signaled it may exit the SSD market altogether, deeming it insufficiently glamorous compared with subsidized data center investments. Nvidia has warned it may cut RTX 50 series production by up to 40%, a move that would drive up the cost of entry-level gaming systems.
Shrinkflation is next. Before the data center bubble, the market was approaching a baseline of 16GB of RAM and 1TB SSDs for entry-level laptops. As memory is diverted to enterprise customers, manufacturers will revert to 8GB systems with slower storage to keep prices under $999 — ironically rendering those machines incapable of running the very AI applications they’re working on. Real innovation sidelined
The damage extends beyond prices. Research and development in conventional computing are already suffering. Investment in efficient CPUs, affordable networking equipment, edge computing, and quantum-adjacent technologies has slowed as capital and talent are pulled into AI accelerators.
This is precisely backward. Narrow AI — focused on real-world tasks like logistics, agriculture, port management, and manufacturing — is where genuine productivity gains lie. China understands this and is investing accordingly. The United States is not. Instead, firms like Roomba, which experimented with practical autonomy, are collapsing — only to be acquired by the Chinese!
This is not a free market. Between tax incentives, regulatory favoritism, land-use carve-outs, capital subsidies, and artificially suppressed interest rates, the government has created an arms race for a data center bubble China itself is not pursuing. Each round of monetary easing inflates the same firms’ valuations, enabling further speculative investment divorced from consumer need.
Hype over utility
As Charles Hugh Smith recently noted, expanding credit boosts asset prices, which then serve as collateral for still more leverage — allowing capital-rich firms to outbid everyone else while hollowing out the broader economy.
The pattern is familiar. Consider the Ford plant in Glendale, Kentucky, where 1,600 workers were laid off after the collapse of government-favored electric vehicle investments. That facility is now being retooled to produce batteries for data centers. When one subsidy collapses, another replaces it.
We are trading convention for speculation. Conventional technology — reliable hardware, the internet, mobile computing — delivers proven, measurable utility. The current investment surge into artificial general intelligence is based on hypothetical future returns propped up by state power.
The good old laptop is becoming collateral damage in what may prove to be the largest government-induced tech bubble yet.
Don’t care who you are, that there’s FUNNY!
>> “And you get a Chromebook ... and you get a Chromebook ... and you get a Chromebook ...”
Are you quoting a fourth grade publick skool teacher on the first day of class???
“Is our kids learing?”
“Yes, they’re learing AI on there Cromebooks!”
I certainly agree with you! I can't imagine a life without Him.
It is funny.
It is even funnier when you hear the tech bros preaching sentient AI sooner rather than later.
This is fun tech, and just like the word processor vs typewriter it will improve productivity.
AI will also expose us to new downsides, ie., the word processor caused reports to be bloated and way longer than necessary since the cost of a typo or bad sentence was much lower vs typewriter. To wit: https://en.wikipedia.org/wiki/AI_slop
Approaching Generative AI with that mindset will profit mankind.
Don't forget the thousands of Indian "programmers" who are modifying it in real time as needed.
AI Chatbot Turns Out to Be 700 Engineers in India:
https://tech.co/news/ai-startup-chatbot-revealed-as-human-engineers
(DISCLAIMER: In reality, I love my Chromebook. I've got Linux Mint installed bare metal on this here ACER Chromebook, and it's a pure joy to use.)
Great heads up. I’m going to procure all the extra RAM I need now. 16GB is not enough for processing video running Win10 on Ubuntu as a virtual machine.
AI data centers are going to have to become electricity generators to be self-sustaining. They could then export excess power back to the grid as a profit line. Short of that, if data-center induced brownouts become pervasive, the public will become angry at the politicians who created the mess.
>> It is even funnier when you hear the tech bros preaching sentient AI sooner rather than later.
Majored in CS in the early eighties. A few of the (mostly professorial) tech bros were preaching (with a LISP) “sentient AI” way back then. Those precocious students among us were mocking it as “artificial stupidity”. I have since been blessed with a whole career free from “sentient AI” intruding and screwing things up. I’m glad I’m long in the tooth and not just starting out!
>> I’m jus’ sayin’ that a young whipper snapper could do a lot worse
...and I’m telling the GOD’s Honest Truth! Our ISD really DOES hand out Chromebooks to each fourth grader! You know... so’s they can “lear”. :-)
>> AI Chatbot Turns Out to Be 700 Engineers in India:
And they’re all named Abraham!
There are a lot of chip manufacturing facilities that are incapable of making those “$40,000 AI chips”. The shortage will mainly be felt at the high-end of consumer electronics, and temporarily. I work for a chip manufacturer. We have no interest in AI because we aren’t built for it. We mainly make chips for industrial and consumer electronics . . . automobiles, drones, IoT, etc. There might be some indirect effects from competition for raw materials, but since AI is going for the high-end (and therefore, fewer, more expensive components), I don’t foresee a huge, long-lasting impact.
Mankind has a bad track record with emerging technologies - too often to it’s own detriment. “Renewable energy” that failed to live up to the hype is one example of how people succumb to the ‘Gee whiz’ factor before analyzing the negative permutations of their new toy.
This allowance of too many natural resources to be used up for a nebulous outcome does not bode well for our future...especially after the desired results will be available soon enough without all this expenditure of water, energy and materials.
Bookmark.
If AI is intelligent, why does it need so much electrical power to operate a giant search engine?
Lotsa crazy stuff happening ...
EVERYONE IS FOCUSING ON POWER USAGE-—
WAIT UNTIL THEY FIND OUT ABOUT THE MASSIVE WATER USAGE——
AND IT IS NOT RECYCLED-—UP INTO THE AIR, INCREASING HUMIDITY
You are close to the target. I took my first programming course in 1960. Developed millions of lines of code to create expert heavy machinery design and computer controlled manufacturing of complex shapes. Computers have zero intelligence. They are amazing at following programmed instructions and have wonderful memory.
It’s a shame ordinary Americans who do not need or use AI will pay higher electric bills and water issues.
If I know how to short “AI”, I would do it.
In my field, “AI” is all the rage, and it’s wrong a lot of the time.
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