From dot-com to SpaceX: why this cycle will be worse than previous ones

Financial markets in 2026 have reached a state of maximum complacency that historically precedes major crashes. The 25-year cycle of ultra-loose monetary policy, starting with the dot-com bubble and passing through the 2008 crisis, has culminated in the AI boom of 2023–2026. The combination of artificially suppressed prices, circular financing, commoditization of AI, growth of shadow banking, and a K-shaped economy creates systemic risks of unprecedented scale.

The dot-com and 2008 playbooks

In the late 1990s, the Federal Reserve slashed rates after the Asian crisis and the collapse of hedge fund LTCM. The internet offered a perfect speculative narrative: the 'new economy' supposedly invalidated old valuation methods. Companies with minimal revenue and no profit received huge valuations. Cisco reached a market capitalization above $500 billion in March 2000. Two years later, the Nasdaq had lost roughly 80%. Many investors who bought at the peak never recovered their money.

After the dot-com crash, the Fed again cut rates to multi-decade lows. Chairman Alan Greenspan promoted adjustable-rate mortgages. Banks relaxed lending standards and issued loans to subprime borrowers. These loans were packaged into complex financial products and sold globally. When rates rose, millions of borrowers defaulted. The government was forced to bail out too-big-to-fail institutions. Losses ultimately fell on ordinary citizens and future generations.

The AI bubble and circular financing

The current cycle combines all previous mechanisms and adds new ones. Artificial intelligence became the most compelling story in decades, with trillions of dollars poured into infrastructure. Private companies artificially underpriced their products for clients to show rapid growth. A circular financing mechanism emerged: large players invested in startups and infrastructure, which in turn bought products and services from related companies. This created an illusion of fast growth and enormous demand. Sam Altman and other tech magnates aggressively promoted the AI narrative while building mutual funding schemes.

When real numbers emerged — including during IPO preparations — the returns from most corporate AI projects proved absent or extremely low. Large companies began limiting AI tools as computing costs spiraled. A commoditization trap set in: semiconductor and chip companies dominate the tech sector while the rest shrinks. AI quickly becomes a commodity. Companies first save on labor, temporarily boosting margins. Then revenue falls as entry barriers disappear. Algorithms become available to all competitors, eroding unique advantages and turning markets into price wars.

A vivid zero-sum example: Micron shares surged after strong earnings, but Apple's market cap fell sharply the next day after price hike announcements. One company's win within the chain was another's loss, ultimately hitting consumers.

Shadow banking and systemic risk

Beyond the AI bubble, other threats have accumulated. The volume of loans issued by non-bank financial institutions in the U.S. has exceeded $2 trillion. Private credit funds have repeatedly restricted investor withdrawals. This part of the system remains lightly regulated yet deeply linked to traditional markets. Blue Owl and similar funds lent heavily to AI and software startups against future revenue that proved illusory. When disappointment set in during 2026, the funds faced mass redemption requests and imposed withdrawal limits. If tech valuations collapse, problems in private credit could spill into traditional banks through complex financing chains.

SpaceX became a symbol of the cycle's final stage. The largest capital raise in history occurred at a roughly $1.8 trillion valuation, even though the company remains unprofitable. Demand far exceeded supply. Investors sold other tech stocks to free up cash for the offering.

Political interference and the K-shaped economy

Politicization of the Federal Reserve, pressure on regulators, and a series of decisions undermining institutional trust have created an environment where markets no longer price risk rationally. The parallels with the late Roman Empire are clear: concentration of power, weakening institutions, rising political spectacle, and disregard for long-term consequences.

The K-shaped economy is stark: while the U.S. stock market shows high capitalization, the University of Michigan Consumer Sentiment Index stands at historically low levels. Only a thin layer of wealthy individuals benefit from rising assets. For the majority, real incomes stagnate or fall, costs rise, and confidence in the future declines. In May 2026, Core PCE inflation rose 3.4% year over year — the highest since October 2023 — with a six-month pace above 4%. Real economic pressure is already visible through rising costs and consumer caution.

The Bank for International Settlements, in its annual economic report published June 29, 2026, warns that the combination of high government debt, the AI investment boom, and dependence on non-bank financial institutions makes markets extremely fragile. All this follows a long period of cheap money and loose central bank policy.

All these factors have been present for years. Yet markets, policymakers, and much of the public remain in a state of maximum complacency. This condition has historically preceded the deepest crises. Blame is shared: monetary authorities that pursued ultra-loose policy for decades, politicians who deliberately weakened institutions and pressured regulators, the financial sector that chased yield at any cost, and media that supported the dominant narrative.

History shows that periods of maximum complacency always end. The only question is how painful the reset will be and who will extract long-term advantages from it.