Beyond the Intelligence Crisis

Everyone is talking about the Citrini Research essay, The 2028 Global Intelligence Crisis. It’s a great thought experiment: a speculative dispatch from June 2028 that imagines AI triggering a cascading economic meltdown.

What follows take the form of a response to that essay. Think of it as a delivered in the same spirit as Citrini’s original essay: it’s a speculative counter-scenario. A search for new ways of seeing, rather than a claim to have all the answers (no one does). And one that draws on years of research and analysis published in @ RaoulGMI‘s Global Macro Investor and in The Exponentialist, the tech-focused research service that Raoul and I run.

The Citrini Research essay has garnered a whole lot of attention, and with good reason. It’s a beautifully constructed thought experiment: a speculative dispatch from June 2028 that imagines AI triggering a cascading economic meltdown. S&P down 38%. Unemployment at 10.2%. Prime mortgages cracking. The private credit complex unravelling via a daisy chain of correlated bets on white-collar productivity growth.

The scenario is internally coherent, the financial mechanics are painstakingly researched, and the central thesis — that abundant intelligence destroys the consumer economy it was supposed to supercharge — is provocative. Parts of it may well prove prescient. There is real disruption ahead, and possibly extreme difficulty. The transition into an age of abundant intelligence was never going to be smooth.

For five years and more, I’ve been immersed in this kind of thinking. I’ve been building frameworks to understand what happens when intelligence becomes abundant, when the AI-energy flywheel begins to spin, and when we transition from a human-centred economy towards something radically new. In the essays I’ve written on all this, I’ve described it as a transition into a radically new kind of economic system: into a form a post-human economics. And from the vantage point of that work, I want to offer a thoughtful response to the Citrini thesis — grounded in years of my own analysis — that arrives at a very different conclusion.

Citrini’s thesis is that abundant intelligence destroys the income side of the economy — wages, jobs, consumer spending — and that this triggers a financial crisis. My thesis is that abundant intelligence destroys the cost side of the economy at the same time, and potentially faster. When the price of goods and services collapses alongside wages, you’re not in a crisis. You’re in a transformation into a radically new system; one in which all the old norms, rules, and metrics fall into incoherence.

The core error in Citrini’s piece, then? Their essay measures a post-human economy with human-economy instruments. And then mistakes the incoherence of the readings for collapse.

No one has a crystal ball, and no one has all the answers. We’re all trying to put together a seven-dimensional puzzle that none of us fully understand. But I think the Citrini essay, for all its sophistication, may be making a profound and revealing error. And I think my own work points towards it.

My timeframe is also longer than Citrini’s. Their scenario plays out across two years. I’m looking across ten to twenty. I accept that there may be severe turbulence ahead: a Fourth Turning moment of disruption, social upheaval, and institutional breakdown. Some version of what they describe is probably coming. But my thesis is that AI and the broader forces of the Exponential Age can eventually take us to a radically new kind of economy. One that actually works. One that, in many ways, works better than anything we’ve known.

The Wrong Metric

Here’s the core move I want to make; if I’m right it reframes everything.

Every single data point the Citrini essay deploys to build its case — unemployment at 10.2%, the S&P down 38%, mortgage delinquencies spiking in San Francisco, the velocity of money flatlining — is denominated in the old system. Every metric is native to the economy we have always inhabited. An economy built around human labour inputs, conditions of material scarcity, and GDP as the scorecard.

The essay’s authors, understandably, look at these readings and see catastrophe. But what if those metrics aren’t recording the death of the economy? What if they’re recording the death of an economic measurement framework that is no longer able to describe what is actually happening?

Think about it this way. The Citrini piece has a powerful concept at its heart: Ghost GDP. Output that shows up in the national accounts but never circulates through the real economy. They deploy this as evidence of dysfunction. But I’d flip it entirely. Ghost GDP isn’t a bug; it’s a signal. It’s telling us that GDP itself is breaking down as a meaningful measure of what’s going on. The instrument is failing, and Citrini is reading the failing instrument as though it’s telling the truth about the patient.

In my work on post-human economics, I’ve argued that as we transition towards an economy built on automated inputs and radical abundance, GDP becomes incoherent. It can’t capture an economy in which the cost of many goods and services is falling close to zero — unevenly and at different speeds, but falling nonetheless. It can’t capture the vast increase in human wellbeing that occurs when intelligence is superabundant and near-free. And it certainly can’t capture the emergence of autonomous economic activity — AIs transacting with other AIs — that has no meaningful connection to human labour markets at all.

In a post-human economy, GDP is not a coherent measure of anything. What metric, then, should we be watching?

Intelligence Per Unit Energy

Here’s my answer; an idea that sits at the heart of all my thinking on the coming post-human economy.

The most coherent measure of flourishing in the economy that is coming is intelligence output per unit energy. How efficiently does our civilisation convert energy into useful intelligence?

This is the metric that resolves the paradox at the heart of the Citrini scenario. Because at the exact moment their scenario shows GDP contracting, the S&P in freefall, and unemployment surging, intelligence per unit energy is going vertical.

Think about what’s driving the Citrini crisis. AI models are getting better. Compute is getting cheaper. Inference costs are falling through the floor. Energy systems, managed by AI, are becoming more efficient. Each of these forces — the very forces that are destroying old-economy metrics — is simultaneously pushing intelligence per unit energy skyward.

This is the key insight: there are two lines on the chart. One — GDP, employment, consumer spending — is falling. The other — intelligence output per unit energy — is rising at an exponential rate. The Citrini essay watches only the falling line and concludes we’re in crisis. My contention is that the rising line is the real signal. And the falling line is the noise of a dying system.

In a world where intelligence is becoming superabundant, everything lies downstream of better and more abundant intelligence. Scientific breakthroughs. New materials. Advanced healthcare. Cheaper energy. Better infrastructure. More efficient manufacturing. All of it flows from the same source: the relentless improvement in our ability to convert energy into intelligence.

The Citrini essay sees a GPU cluster in North Dakota and says: that machine just destroyed 10,000 white-collar jobs in Manhattan. I look at the same GPU cluster and say: that machine also just collapsed the cost of drug discovery, materials science, legal services, education, energy management, and software development. Both observations are true. But the essay focuses on the income side of the ledger while barely glancing at the expenditure side.

And that’s the deeper error.

Radical Abundance

Ghost GDP cuts both ways.

Yes, output decouples from the labour market. The Citrini piece is right about that. But the same force that destroys wages also destroys costs. When AI pushes the price of legal services close to zero, you don’t need a $180,000 salary to access legal representation. When AI collapses the cost of medical diagnostics, you don’t need expensive health insurance to get a diagnosis. When coding agents make software near-free, the $500,000 annual SaaS renewal that Citrini agonises over isn’t just a problem for the vendor — it’s a massive saving for the buyer.

What looks like a collapsing consumer economy through GDP’s lens is, from another angle, the birth of deflationary prosperity. Abundance wealth. Real purchasing power exploding even as nominal incomes fall. The acquisitive power of ordinary people surges in ways that no traditional metric captures.

If a person earns $50,000 in a world where AI has pushed the cost of healthcare, education, legal advice, financial planning, software, entertainment, and creative services close to zero, are they better or worse off than a person earning $180,000 in the world of 2024?

The Citrini essay never once considers this. It tracks the decline in wages without tracking the simultaneous decline in what wages need to buy.

I can hear some readers screaming at me. I’m not naive. There are important goods and services whose costs won’t fall fast, or at all. Housing. Physical food. Energy, at least for a while. The process will be deeply uneven. Some domains will see costs collapse in years, others will take a decade or more. And the transition will be painful for many, and that is a crucial social reality that we must contend with in ways that reach beyond the scope of this essay, but that I’ve written about elsewhere. I’ve written about the sharp turn ahead, and I’ve warned about the Fourth Turning moment that is likely coming. There will be social upheaval and political convulsion. I’m not disputing any of that.

But the Citrini scenario frames the transition as a one-way spiral into oblivion. There’s no natural brake, they say. The displacement loop has no floor.

I disagree. The brake is abundance itself.

The Foundation Layer Flywheel

And this brings me to the engine I call the Foundation Layer Flywheel.

Back in 2023, I wrote about the deeply symbiotic relationship between AI and clean energy. AI requires massive amounts of energy. But AI is also the only technology capable of managing the kind of hyper-complex, distributed energy system we’re building. More AI unlocks more energy. More energy fuels more AI. And round it goes.

This flywheel is foundational to the entire Exponential Age. It underpins everything that happens above it. And it is the reason the Citrini displacement spiral has a natural brake — one their model doesn’t account for.

As intelligence per unit energy improves, the flywheel spins faster. Cheaper, more abundant AI makes the energy system smarter. A smarter energy system delivers cheaper energy. Cheaper energy makes AI even cheaper. And cheaper AI cascades downstream into everything: cheaper materials science, cheaper manufacturing, cheaper healthcare, cheaper infrastructure.

The Citrini essay imagines a negative feedback loop: AI destroys jobs, displaced workers spend less, companies buy more AI, repeat. No natural brake.

But there’s a positive feedback loop running in parallel, and it’s at least as powerful: AI gets smarter, energy gets cheaper, intelligence per unit energy rises, the cost of everything downstream of intelligence falls, the material conditions of life improve even as nominal GDP contracts.

Which loop dominates? That’s the question. And it seems to me that the positive loop has physics on its side. It’s driven by exponential improvement in the conversion of energy to intelligence — a curve that has been steepening for years and shows no signs of slowing. The negative loop, by contrast, is driven by institutional and political inertia: slow-moving things like mortgage markets, fiscal policy, and labour market adjustment. These are real, and they cause real pain. But they are not immutable laws of nature. They are human constructions that humans can change.

AI and Robots Are Demographics

Here’s another thing the Citrini essay misses entirely, and it’s one of the most important macro forces of our time.

Demographics.

The developed world is running out of workers. Working-age populations are in steep decline across the US, Europe, Japan, South Korea, and China. This is the demographic doom loop I’ve written about often. Fewer babies, longer lives, top-heavy population pyramids that have never existed before in human history.

As Raoul has long made clear, the golden rule is: GDP Growth = Population Growth + Productivity Growth + Debt Growth. Population growth is gone. It’s been gone for a while. And that means the only way to keep the GDP game alive has been to grow the debt. We’re borrowing from tomorrow to keep the party going today.

Now consider what happens when AI and humanoid robots arrive inside this context. The Citrini essay frames the arrival of machine intelligence as an invasion of a healthy labour market. AI storms the gates and millions of workers are flung aside.

But that’s not the reality. AI is arriving into a world that desperately needs it. We don’t have enough people. Working-age populations across the Global North are shrinking so fast that without AI and robots, GDP growth would be heading for structural decline anyway.

Kevin Kelly calls what is about to happen The Handoff. As the human population peaks and declines, billions of AI agents and tens of millions of humanoids come on stream to fill the void. We are handing over the economy to non-human actors.

This doesn’t eliminate the pain of transition for individuals. Real people losing real jobs face real hardship, and we need to address that. But at the macro level, AI and robots aren’t so much replacing workers as filling a demographic hole that was about to swallow the economy whole.

The Citrini scenario imagines a world in which AI has destroyed the jobs market and no one can find work. But what if the reality by 2028 looks more like this: AI and humanoids are filling millions of roles that were already going unfilled due to labour shortages, while the humans displaced from knowledge work migrate — painfully, yes, but with support — into the emerging economy I’m about to describe?

The Human Residual

Because here’s what the Citrini piece never considers. As the old economy contracts, a new one is bootstrapping itself from below.

I’ve written about the rise of the solo industrialist. Sam Altman talks about the one-person, billion-dollar company. In certain domains, AI tools and agents allow a single hyperproductive individual to produce the kind of output now associated with hundreds of employees. We’re going to see millions of these new economic actors — solo operators and micro-teams managing swarms of AI agents — generating huge value in ways the old economic framework simply can’t see.

Anthropic’s research on how people use Claude shows the shape of this future. Software development. Consulting. Financial services. Marketing. Content creation. In each domain, a highly competent person armed with AI is becoming a one-person enterprise. This is new economic activity. And much of it will take place outside the structures the Citrini piece monitors.

But there’s an even deeper shift underway. As machine intelligence handles all the brainwork — the coding, the legal filings, the financial analysis, the data crunching — economic value migrates up Maslow’s hierarchy towards something only humans can provide.

I’ve called this the Human Residual. The portion of value creation that requires a human being to be a human being. It’s the attention, empathy, and recognition of another person who truly sees you. It’s the art and narrative that comes from someone with real, lived experience. It’s the counsellor who helps you through a stressful house move, the guide who helps you navigate a life crisis, the community builder who creates a space where you feel you belong.

When the AI has done all the paperwork, what remains scarce? Feelings. Connection. Meaning. And a vast new economy will form around these irreducibly human outputs. It will generate huge value. But it won’t show up in GDP, and it won’t be captured by the metrics the Citrini piece tracks.

This is the economy that emerges on the other side of the singularity. Not a dead zone of mass unemployment. But a world in which the old economy has been composted to feed something new, strange, and in many ways far richer.

System Transition

Let me bring all this together.

The Citrini piece asks: what happens when the scarce input becomes abundant?

It’s the right question. For the entirety of modern economic history, human intelligence has been the scarce input that commanded a premium. And they’re right that this premium is unwinding. Machine intelligence is now a competent and rapidly improving substitute for human intelligence across a growing range of tasks. That much we agree on.

But Citrini concludes that the unwind of the human intelligence premium is the crisis. I’d argue it’s the transition. They’re watching the caterpillar dissolve and screaming that the organism is dying. And they’re not wrong, exactly — the caterpillar is dying. But something else is forming inside the chrysalis.

What’s forming is a post-human economy. An economy in which intelligence is no longer scarce but abundant. In which the cost of knowledge work, and eventually much physical production, falls close to zero. Not overnight, not evenly, but relentlessly. In which the fundamental measure of flourishing is not how much nominal economic output we produce, but how efficiently we convert energy into intelligence. And in which the value that humans exchange with one another migrates away from brainwork and towards something deeper: empathy, meaning, connection, creativity, and the irreducible experience of being alive alongside other conscious beings.

We’re not heading towards the Global Intelligence Crisis. We’re heading towards the Global Intelligence Transition into a radically new kind of economic system, and one we’re all struggling to understand. And yes, the transition will be turbulent; possibly severely so. There will be disruption, pain, and political convulsion. The Fourth Turning is likely real. Some version of what Citrini describes — the job losses, the SaaS collapse, the friction going to zero — is probably coming, and sooner than most people think.

But across the longer timeframe I’m working with — ten to twenty years, not two — the conclusion they draw starts to look shaky. A 57% drawdown rivalling the GFC, with no natural brake? That conclusion depends on one assumption: that the old metrics are still telling the truth about the system.

I don’t think they are. There will be real pain. But the pain is a feature of the transition, not evidence that the destination is catastrophe.

There are two lines on the chart. GDP is falling. Intelligence per unit energy is rising. One of these lines is the signal. The other is the noise of a dying measurement system.

If we’re to understand what is happening around us now, we need to make sure we’re watching both lines.

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