Arthur Hayes is bullish on AI stocks right now — and he’s the first to admit it’s speculative. But he’s also mapped out exactly how and why the AI bull market ends, and why the bust that follows could rival 2008 in severity.

Drawing on the Red Queen effect from a paper by researchers at Chinese University of Hong Kong, Hayes explains why AI CapEx is structurally different from ordinary capital investment: if your model isn’t the best, your entire investment goes to zero. That creates a perpetual spending race with no exit. When it breaks, it breaks hard.

The AI deflationary bust — knowledge workers losing jobs, missing debt payments, banks developing holes in their balance sheets — threatens the fractional banking system. The only resolution, Hayes argues, is the one he always comes back to: money printing. And that’s the bull case for Bitcoin.

This clip is from a longer conversation on war, AI, and the bull market thesis. Full episode here: https://youtube.com/live/gP81Xze6Gh4

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