Everyone's debating whether AI is in a bubble.

Sam Altman says investors are overexcited. Bank of America says it's the biggest tail risk. Gartner moved GenAI into the Trough of Disillusionment. $1 trillion in market value disappeared.

And they're all missing the point.

The AI bubble isn't the crisis.

It's a symptom.

The crisis is what's underneath it.

Three generations are simultaneously untethered from the economy.

And almost no one is talking about it.

Generation Z: The Credentialed Unemployable

For the first time in recorded history, college graduates face higher unemployment than the general workforce.

Gen Z grads now have 4.59% unemployment vs. 3.25% in 2019.

Gen Z men with degrees have the same unemployment rate as men without degrees.

The credential that once guaranteed employment has lost its currency.

Stanford found the mechanism: AI replaces "codified knowledge" the book learning education provides, but not tacit knowledge gained through experience.

Entry-level jobs in AI-exposed occupations dropped 13–16% since 2022.

Software developers ages 22–25 saw employment decline by nearly 20%.

This generation did everything right. And the economy has no place for them.

Baby Boomers: Forced Out at Peak 65

11,200 Americans turn 65 every single day through 2027.

Two-thirds aren't financially prepared for retirement.

53.6% of retired workers ages 55–64 retired involuntarily, forced out by layoffs and health problems, not choice.

These are workers with decades of tacit knowledge. Exactly what AI can't replace.

Yet the economy offers them no pathway to contribute.

Mid-Career Professionals: The Tech Exodus

550,000+ tech layoffs since 2022.

Not because AI succeeded in replacing them.

Because AI failed to deliver promised productivity, and cost-cutting happened anyway.

These workers possess the exact combination of codified and tacit knowledge that makes them irreplaceable.

They found themselves replaceable, nonetheless.

But here's what makes this a crisis, not just a downturn:

Work provides more than income.

Social psychologist Marie Jahoda identified the "latent functions" of employment, the psychological benefits beyond the paycheck:

Time structure. Social contact. Collective purpose. Identity and status. Regular activity.

When employment disappears, these structures disappear with it.

The psychological damage isn't primarily financial deprivation.

It's the collapse of meaning.

The U.S. Surgeon General declared loneliness a public health crisis.

Its mortality impact equals smoking 15 cigarettes daily.

Half of U.S. adults report experiencing loneliness.

Harvard found that 21% of Americans experience serious loneliness, with 81% reporting concurrent anxiety or depression and 75% reporting little or no sense of meaning or purpose.

Among the lonely, 63% say their place in the world does not feel important or relevant.

This is not coincidental to economic displacement.

It's causal.

Work provided identity. Community. Structure. Purpose.

When that anchor disappears, isolation follows.

And what are people doing?

They're starting businesses.

5.5 million new business applications in 2023, the highest ever recorded.

56.7% increase from 2019.

But this isn't entrepreneurial optimism.

Entry-level job postings declined 29 percentage points since January 2024.

People aren't starting businesses because they found market opportunities.

They're starting businesses because the market has no opportunity for them.

This is entrepreneurship of last resort.

So, while everyone debates the AI bubble:

Is it overvalued? Will it crash? When will it recover?

The real question is:

What happens to the millions of people who've been displaced by a technology that promised to replace them but failed to deliver, leaving them jobless in an economy that has no place for their skills?

The AI bubble will correct itself.

Markets do that.

The human crisis underneath it?

That requires a different kind of intervention.

The question isn't whether AI has a future.

It does.

The question is whether we'll keep building technology that attempts to replace human thinking, or start building technology that helps humans think more clearly for themselves.

550,000+ people have already paid for the automation fantasy.

Three generations are simultaneously untethered.

Loneliness is epidemic.

Meaning is collapsing.

And the tools we're giving people?

They generate content. They automate tasks. They replace judgment.

They don't restore agency. They don't rebuild identity. They don't reconnect people to their own thinking.

That's the real crisis.

Not the bubble.

What's underneath it.

Sources

1. Sam Altman, August 2025; Bank of America, October 2025; Gartner Hype Cycle 2025
2. Federal Reserve Bank of St. Louis; Financial Times analysis, 2025
3. Stanford Digital Economy Lab, "Canaries in the Coal Mine," Brynjolfsson et al., August 2025
4. Alliance for Lifetime Income, "Peak 65" demographic analysis, 2024
5. Economic Policy Institute analysis of Health and Retirement Study
6. Layoffs.fyi tracker, 2022–2025
7. Jahoda, M. (1982). Employment and unemployment: A social-psychological analysis
8. U.S. Surgeon General, "Our Epidemic of Loneliness and Isolation," 2023
9. Harvard Graduate School of Education, Making Caring Common, "Loneliness in America," 2024
10. U.S. Census Bureau, Business Formation Statistics, 2023
11. Randstad Enterprise, entry-level job posting analysis, 2024–2025