🥛 The 2028 economic time bomb 💣

GM. This is Milk Road, the crypto newsletter that stares down doomer outlooks… then hands you a pair of safety goggles and a treasure map.

Here’s what we’ve got for you today:

✍️ The 2028 economic time bomb.
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THE 2028 ECONOMIC TIME BOMB 💣

Yeah, yeah - I know.

We need to talk about Citrini’s “AI economic time bomb” theory, ‘cause it’s:

Everywhere.
Being blamed for the hundreds of billions of market losses yesterday.

So here it is, explained in (what an online read-time estimator tells me will take) 2 mins and 32 secs.

ICYMI: On Sunday afternoon, Citrini dropped a fictional research memo written from June 2028, imagining a world where AI succeeds so spectacularly that it breaks the economy.

Source: @Citrini7

And to no one's surprise: Twitter absolutely lost its mind over it.

Here's the full breakdown of the article, plus who actually wins if this (purely fictional) outlook actually plays out…

The setup starts by ‘looking back’ at the year of our lord, 2026:

AI makes it trivially easy to replicate SaaS products in-house.
Enterprise software gets brutally repriced.
Companies watch revenue collapse as customers cancel licenses.

The idea being: why pay for seats when AI replaced the humans who sat in them?

Stocks initially rally as layoffs boost margins, the S&P touches 8,000, and everyone celebrates.

(Ok, not so bad?)

Then the feedback loop kicks in…

Companies threatened by AI adopt AI aggressively to cut costs… those savings fund more AI development… more AI development displaces more workers… and so on…

The problem being: there's no natural brake on this cycle.

Source: CitriniResearch

Displaced white-collar workers drive roughly 65% of discretionary spending - and in this scenario, those that keep their jobs are all taking 50-60% pay cuts in their new roles.

The result? They stop spending.

Citrini calls this the "Intelligence Displacement Spiral".

Next comes the intermediation collapse…

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THE 2028 ECONOMIC TIME BOMB (P2) 💣

In this proposed future:

AI agents eliminate the friction that entire business models were built on.

Travel booking? Gone. Insurance renewals? Automated. Real estate commissions? Compressed. Delivery apps? Disintermediated.

Even card payment interchange gets squeezed.

Machines don't have brand loyalty - nor do they get tired and settle for the easy option. They optimize ruthlessly, every single time.

And by 2027, it will become systemic.

Private credit markets crack as PE-backed SaaS deals start defaulting.

Regulators panic and tighten capital requirements → this forces asset sales into an illiquid market → the doom loop accelerates.

And in 2028, the mortgage threat hits.

Home prices fall sharply in tech-heavy cities, while prime borrowers all of a sudden start going delinquent, as the income assumptions underlying $13T in mortgages no longer hold.

(Unlike 2008, the loans in this scenario would have been good on day one... but the world would have changed shortly after they were written.) 👇

Source: CitriniResearch

Then comes the policy paralysis:

Government revenues collapse.
Political gridlock prevents any meaningful response.
Taxes on labor income fall as labor's share of GDP craters.
Proposals like computing taxes and AI dividend funds get bogged down in partisan fighting.

The S&P sits 38% off its highs, unemployment hits 10.2%, and nobody can agree on what to do.

The warning here, from Citrini, is this:

Assess how much of your portfolio rests on assumptions that might not survive the decade.

(And while you’re at it - assess how much of society survives along with it.)

Ok. That’s terrifying. Let’s quickly cleanse our palates by remembering that this is a made-up scenario, based on a whooole bunch of hand-wavey assumptions.

That said - while we’re holidaying here in the city of Doomsville (in the great state of Fantasy Land), let’s have some fun by bucking the “everyone is screwed” trend and ask:

Who are the winners of this scenario?

We have a few contenders on our list...

1. Nvidia

Based on Citrini's outlined scenario, Nvidia likely continues crushing earnings throughout.

The companies causing the displacement still need chips, and the demand for compute doesn't stop just because workers are getting displaced.

(If anything, it accelerates.)

2. Stablecoins

If government deficits balloon to fund transfers to displaced workers → bond markets will demand higher term premiums to absorb that supply.

Higher premiums on bonds mean better yields for stablecoin issuers. Circle and USDC holders could benefit massively from this dynamic.

3. Scarce assets

When equity markets are no longer reliable sources of capital growth or preservation, money needs somewhere to go.

Scarce assets that are detached from the AI threat, like BTC and gold, could well become the escape hatch. 👇