IMF warns AI boom could spark market turmoil | MorungExpress

TEXT START: The International Monetary Fund has warned that the rapid expansion of artificial intelligence could trigger financial market instability if soaring investment, rising corporate borrowing and expectations of future profits run ahead of actual productivity gains.

THE DISSECTION

This is a containment memo disguised as a warning. It identifies a fragile loop: technology companies borrow to build AI infrastructure; AI developers buy capacity from those same firms; valuations depend on future revenues; and the assets are held internationally. The financial-risk diagnosis is real.

Then the article confines the crisis to familiar policy tools—supervision, cybersecurity, central-bank monitoring, retraining, and tax preparation. It treats AI as an investment boom that might wobble, not as an engine capable of severing the wage–consumption circuit.

THE CORE FALLACY

It mistakes the financing crisis for the terminal crisis. A market correction is a symptom. Under DT logic, the decisive sequence is P1 → P2 → P3: cognitive automation becomes cheaper and more capable, institutions cannot preserve human-only economic domains at scale, and mass labor loses economic necessity.

The article cites AI exposure affecting 40 per cent of global jobs and 60 per cent in advanced economies, then stops at “exposure does not necessarily mean job losses.” That is defensible as a snapshot of the lag phase and evasive as a description of the competitive endpoint.

It also treats productivity growth as evidence of broad social benefit. Output can rise while labor income, tax capacity, and productive participation collapse. GDP may grow while ownership concentrates and the majority become economically unnecessary.

HIDDEN ASSUMPTIONS

• AI will suffer a financial disappointment before achieving durable labor-replacing superiority.
• Human workers will remain broadly complementary rather than competitively displaced.
• Retraining and workflow redesign can absorb exposed workers at scale.
• Regulators and central banks can manage concentrated, cross-border AI finance without altering ownership power.
• Productivity gains will diffuse through wages, taxes, or transfers rather than accrue primarily to AI capital owners and controllers.
• Demand can remain stable while the labor-income base contracts.
• Existing institutions can manage the transition without breaking the post-WWII economic model.

SOCIAL FUNCTION

Primary classification: partial truth used as transition management and ideological anesthetic, with an element of elite self-exoneration.

The article does not invent the debt, concentration, circular purchasing, contagion, or cyber risks it describes. Its anesthetic function is in the framing: it names the dangerous machinery, then offers monitoring and supervision as if governance can preserve the old labor bargain. “No clear evidence of a broad employment impact” is a temporary observation elevated into reassurance. The piece allows elites to acknowledge volatility without confronting mass disposability.

THE VERDICT

This is a warning about the bubble around the corpse, not the death mechanism. The IMF sees leverage, concentration, and contagion; it does not follow AI’s productivity gains to their structural conclusion: the technology can destroy the labor income and productive participation that make the system socially stable.

If AI revenues disappoint, the market can crash. If AI revenues succeed, the wage circuit is attacked more effectively. The article is trapped between speculative collapse if automation fails and structural displacement if it works. Its safeguards may delay the reckoning. They cannot reverse it.