Uploaded May 2026 | Updated September 2026, 1 week ago
In this video, we walk through what economists actually mean by a "bubble," why markets can misprice even genuinely valuable technologies, and what history's biggest financial booms — tulips, railroads, fiber optics — can teach us about the current AI investment surge.
In 1637, a sailor in the Netherlands sat down for a meal and accidentally ate
what was, at the time, one of the most valuable commodities in Europe: a tulip bulb worth roughly a year's salary. He didn't know. The merchant feeding him was furious. And the Dutch tulip market was about to collapse.
Today, over $258 billion in venture capital flowed into artificial intelligence
in a single year — more than 60% of all global venture capital — and a growing number of economists are asking the same question they should have asked in 1637: Is anyone actually going to pay more?
Topics covered:
- What’s a "bubble."?
- ”Bubbles barely exist”
- Two Econ Nobels clash
- The Austrian School view
- Optimists drive prices up
- The"great capex boom" pattern
- Why AI is(n’t) different from tulips
- Are all bubbles the same?
Sources & further reading:
fee.org/articles/could-artificial-intelligence-finally-make-central-planning-work/?utm_source=youtube&utm_medium=social&utm_campaign=fee-online
fee.org/articles/artificial-intelligence-in-the-united-states/?utm_source=youtube&utm_medium=social&utm_campaign=fee-online
fee.org/articles/the-fearmongers-are-wrong-about-artificial-intelligence-and-robots/?utm_source=youtube&utm_medium=social&utm_campaign=fee-online
Chapters:
0:00 The Sailor and the Tulip Bulb
1:15 The AI Investment Surge
1:54 What is a Financial Bubble?
3:12 Why Do Bubbles Happen?
4:00 The Austrian School & Cheap Money
4:18 Market Asymmetry & Price Bias
4:54 Lessons from Railroads & Fiber Optics
5:47 Is AI Different?
6:41 The Macro Perspective on AI Value
7:08 AI as a General Purpose Technology
7:32 Timing: The Real Risk of Bubbles
8:05 Is AI a Bubble? The Final Verdict
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Follow us everywhere:
FEE on Instagram: instagram.com/feeonline
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Credits:
Written by Sergio Martínez
Produced by Daphne Posadas
Edited by Luis Fernando López
Project Management by Abby Richardson
Thumbnail Design by Yorel Ktech
#economics #artificialintelligence #aibubble #tulipmania #economicbubble
In this video, we walk through what economists actually mean by a "bubble," why markets can misprice even genuinely valuable technologies, and what history's biggest financial booms — tulips, railroads, fiber optics — can teach us about the current AI investment surge.
In 1637, a sailor in the Netherlands sat down for a meal and accidentally ate
what was, at the time, one of the most valuable commodities in Europe: a tulip bulb worth roughly a year's salary. He didn't know. The merchant feeding him was furious. And the Dutch tulip market was about to collapse.
Today, over $258 billion in venture capital flowed into artificial intelligence
in a single year — more than 60% of all global venture capital — and a growing number of economists are asking the same question they should have asked in 1637: Is anyone actually going to pay more?
Topics covered:
- What’s a "bubble."?
- ”Bubbles barely exist”
- Two Econ Nobels clash
- The Austrian School view
- Optimists drive prices up
- The"great capex boom" pattern
- Why AI is(n’t) different from tulips
- Are all bubbles the same?
Sources & further reading:
fee.org/articles/could-artificial-intelligence-finally-make-central-planning-work/?utm_source=youtube&utm_medium=social&utm_campaign=fee-online
fee.org/articles/artificial-intelligence-in-the-united-states/?utm_source=youtube&utm_medium=social&utm_campaign=fee-online
fee.org/articles/the-fearmongers-are-wrong-about-artificial-intelligence-and-robots/?utm_source=youtube&utm_medium=social&utm_campaign=fee-online
Chapters:
0:00 The Sailor and the Tulip Bulb
1:15 The AI Investment Surge
1:54 What is a Financial Bubble?
3:12 Why Do Bubbles Happen?
4:00 The Austrian School & Cheap Money
4:18 Market Asymmetry & Price Bias
4:54 Lessons from Railroads & Fiber Optics
5:47 Is AI Different?
6:41 The Macro Perspective on AI Value
7:08 AI as a General Purpose Technology
7:32 Timing: The Real Risk of Bubbles
8:05 Is AI a Bubble? The Final Verdict
Please Subscribe: youtube.com/@FEEonline
Follow us everywhere:
FEE on Instagram: instagram.com/feeonline
FEE on Facebook: facebook.com/feeonline
FEE on X: https://x.com/feeonline
FEE on TikTok: tiktok.com/@feeonline
Credits:
Written by Sergio Martínez
Produced by Daphne Posadas
Edited by Luis Fernando López
Project Management by Abby Richardson
Thumbnail Design by Yorel Ktech
#economics #artificialintelligence #aibubble #tulipmania #economicbubble
