The Bank for International Settlements, as the central bank for central banks, historically warned of leverage and shadow banking risks before the 2008 crisis. Its annual economic reports have long focused on the cross-infection paths of debt accumulation and asset bubbles. This time, incorporating AI capital expenditures into the same framework continues the tracking of vulnerabilities in the latter stages of innovation waves.

In terms of capital pathways, super-large tech companies are shifting from operating cash flows to bond issuance and private credit to support AI infrastructure. Private credit related to AI loans has surged from about $3 billion in 2010 to over $40 billion in recent years, motivated by a desire to seize dominance, but the increase in circular equity and supplier contracts adds risks of multiple collateralization of assets.

Similar cases can be seen in the 19th-century canal and railway frenzy and the 2000 internet bubble, both driven by debt expansion, which later led to investment contraction and economic recession due to delayed returns. Currently, AI is in a transition phase from a peak in capital expenditures to potential return verification, with its industry position shifting from a growth engine to a potential financial amplifier.

Essentially, this is a combination of capital concentration and financial fragility. Debt financing amplifies excessive investment in the technology race, and once productivity realization lags, the linkage between the leverage chain and the sovereign debt market will accelerate the transmission from tech corrections to broader financial condition tightening.

ABAB News · Cognitive Laws

The fragility of debt-amplified technology frenzy
The endpoint of investment frenzies is often a financing reversal
Sovereign debt and private leverage form a new risk loop