Video News/In Focus with Jeremy Szafron

(Kitco News) - The artificial intelligence boom is a speculative bubble with less than a year left before it bursts, and the debt that threatens the financial system is private rather than sovereign, according to Steve Keen, the economist voted first for warning earliest about the 2008 crisis. Speaking with Kitco News, Keen said revenue from serious AI users is running at roughly one-fifth of what the companies are spending, a gap he compared to the 19th-century railway bubbles, and warned that only a handful of firms will survive the bust. He argued the debt that matters is private debt, not the roughly $40 trillion in federal debt drawing headlines, and that commercial banks create money when they lend, a process he said accounts for more than 90% of the money created since 2000. Keen cautioned that companies which have serviced their loans comfortably for years could still default once losses spread and begin eating through bank capital, which he said the Federal Reserve's stress tests fail to capture. On gold, he called it a speculative commodity that does well when people distrust the financial system, while warning it is "not a one-way bet" because leveraged holders can be forced to sell into a crisis to cover other losses.