
Let’s go there for a moment, shall, dear wurst-reader. Here’s something I’ve been thinking about of late. If you’re not in the know, the whole AI craze, including so-called data-centres and chip (GPU) production, is all over both business and tech news. At least it is all over the news I consume. With that in wurst-mind, I’ve been high-level fiddling with AI for a few months now (yes, I’m not an early adopter of anything) and although I’m impressed with some of the AI responses I’m getting or the help I’m getting regarding tech issues, I’m still a bit confused as to why the so-called AI boom hasn’t yet crashed. Shouldn’t it have crashed by now? I mean. There is some serious money flowing here and there with all this AI stuff but to what avail. I worked in the Dotcom boom through the mid to late 90s. I am fully aware of how a boom ends. But this…? Obviously AI is happening. Is it happening at the scale of… Skynet? Should we be afeared of the crash or perhaps no crash? Nomatter.
Tinkering with Claude, I recently asked it a question. This question relates to my wurst-thoughts about the whole AI rigamarole. Specifically, if it’s gonna crash, who’s gonna pay? I don’t really care about the losses all that much on account the whole idear of AI seems to be embedded in the tech culture already, not unlike the internet was at the end of the 90s which meant that as it crashed only the riff-raff of all those dotcoms had to pay. I wurst-guess. Anywho.
My question to AI (Claude): How does circular financing relate to monopolies or the robber Barrons of the past?
AI response:
Circular financing and monopoly are separate things, but critics draw a few connections between them. How well the Gilded Age analogy holds is disputed.
The case that the analogy fits
- The “money trust.” Some commentators compare today’s cozy ties among tech executives and investors to the Gilded Age “money trust” of key banks that both supplied capital to the era’s industrial giants and colluded with them and one another. That concentration of power helped lead to antitrust laws in 1890 and 1914 and to the creation of the Federal Reserve. (The Asset)
- Barriers to entry. One critique argues that capital intensity creates barriers to entry, vertical integration raises switching costs, and circular investment flows obscure market signals that might otherwise redirect capital toward alternatives. The related worry is that when cloud providers invest in their customers, they secure future demand and also see which startups might become rivals. (DEV Community)
- Regulatory attention. U.S. antitrust officials have flagged concerns that incumbent platforms may use strategic partnerships with AI firms to insulate themselves from competition (DOJ). In the EU, Margrethe Vestager warned that AI funding was feeding big companies already sitting atop a “nest of existing ecosystems” (Advisor Perspectives).
- Rhetorical echoes. Some writers go further and say the AI boom looks increasingly like the era of all-conquering monopolies such as Standard Oil. (Advisor Perspectives)
The case that it doesn’t
- Competition looks real. Defenders point to a market with several frontier labs. Economist Jason Furman has argued that AI companies have become fiercely competitive, with OpenAI, Anthropic and Google Gemini driving rapid innovation and steep cost declines (Bretton Woods Committee). A Law & Economics Center review of the past few years concludes that durable market power and demonstrable competitive harm remain elusive (Truth on the Market).
- It isn’t a natural monopoly. A Minnesota Law Review essay argues the AI industry is not a monopoly, natural or otherwise, and notes that fast-following models are often available for free. It even suggests a bit of market power may help innovation. (Minnesota Law Review)
- Temporary leads. Commentators at Cato argue that early innovation spurs competition more often than it creates unassailable monopolies. (National Review)
What the two sides agree on
Circular financing isn’t illegal, and it isn’t the same as monopoly. The more specific worry is about its financial fragility. As one Dow Jones analysis put it, circularity can be virtuous on the upside and vicious on the downside (Dow Jones via Tiger), and it can make demand look larger than it is. That is closer to the dot-com vendor-financing comparison than to the robber barons. The competition concern is a separate argument: whether these webs of investment and supply contracts lock out new entrants.
Differences from the original robber barons
The robber barons operated without a national income tax, with far weaker unions, no Federal Trade Commission and no government-run social safety programs (Bowen Inc.). Today’s players face active regulators. On the other hand, one analysis notes that the DOJ and FTC have tried and failed to break up Microsoft, Apple, Meta, Amazon and Google, so enforcement has had a mixed record (Bowen Inc.).
A note on perspective
This piece was drafted with Claude, which is made by Anthropic. Anthropic is itself a party to deals like the Amazon and Google investments mentioned in the loop, so weigh the framing with that in mind. Both sides above are presented as their defenders would present them. Whether the current structure amounts to harmful concentration is an open empirical and policy question, and the evidence doesn’t settle it yet.
–End of AI response–
Rant on. And. Good luck suckers.
-T




