Long read: THE 2028 GLOBAL INTELLIGENCE CRISIS

Earlier this week, global markets went into turmoil on the back of research from a little known research firm called Citrini in collaboration with Alap Shah, the CIO of an investment management firm. What did the research say that spooked the market? To begin with, the title: The 2028 Global Intelligence Crisis. Over the past few weeks, stocks across several sectors have been hammered on the back of how AI’s rapid progress is going to make their business models redundant, including India’s IT services. The timeline of 2028 which is pretty much around the corner was enough to send an already spooked market into a tailspin. But there were elements to the essay worth paying attention to as well as parts that can be construed as fiction at best.

To be fair to the authors, this is a ‘speculative thought experiment’ written as if it were a financial memo from June 2028, exploring what could go wrong if AI capabilities continue advancing rapidly. The authors explicitly state it’s a scenario, not a prediction.

“ June 30th, 2028

The unemployment rate printed 10.2% this morning, a 0.3% upside surprise. The market sold off 2% on the number, bringing the cumulative drawdown in the S&P to 38% from its October 2026 highs.

Traders have grown numb. Six months ago, a print like this would have triggered a circuit breaker.

Two years. That’s all it took to get from “contained” and “sector-specific” to an economy that no longer resembles the one any of us grew up in. This quarter’s macro memo is our attempt to reconstruct the sequence – a post-mortem on the pre-crisis economy.

The euphoria was palpable. By October 2026, the S&P 500 flirted with 8000, the Nasdaq broke above 30k. The initial wave of layoffs due to human obsolescence began in early 2026, and they did exactly what layoffs are supposed to. Margins expanded, earnings beat, stocks rallied. Record-setting corporate profits were funneled right back into AI compute.

The headline numbers were still great. Nominal GDP repeatedly printed mid-to-high single-digit annualized growth. Productivity was booming. Real output per hour rose at rates not seen since the 1950s, driven by AI agents that don’t sleep, take sick days or require health insurance.

The owners of compute saw their wealth explode as labor costs vanished. Meanwhile, real wage growth collapsed. Despite the administration’s repeated boasts of record productivity, white-collar workers lost jobs to machines and were forced into lower-paying roles.

When cracks began appearing in the consumer economy, economic pundits popularized the phrase “Ghost GDP“: output that shows up in the national accounts but never circulates through the real economy.

In every way AI was exceeding expectations, and the market was AI. The only problem…the economy was not.

…AI capabilities improved, companies needed fewer workers, white collar layoffs increased, displaced workers spent less, margin pressure pushed firms to invest more in AI, AI capabilities improved…

It was a negative feedback loop with no natural brake. The human intelligence displacement spiral. White-collar workers saw their earnings power (and, rationally, their spending) structurally impaired.”

The essay then goes on to elaborate how software is getting decimated before extending the thesis to all intermediary businesses from food delivery to travel booking to payments (Mastercard) to financial advice and a number of others. These sector risks extend to system risks through impact on consumption and in turn financial contagion from mortgage lenders to private equity and eventual economic collapse. They even have a take on how AI’s impact on Indian IT services (the biggest exporter in the country) will make India go to the IMF again.

As one would expect, there has been plenty of criticism on the essay such as this one – The Citrini post is just a scary bedtime story by Noah Smith or this one.

First criticism is that the timeline is too short and sensationalistic. AI will disrupt the world but a lot slowly than 2028. Second, in a slow transition, humans will find other ways to become useful, citing Jevons paradox. And hence essentially while the author might be right in impact on specific businesses and workers in those industries will inevitably bear the pain in the short run, but it won’t collapse the economy.
But where the essay is useful is it helps with a scenario-based stress test for investors.

There are critics from two extreme ends of the spectrum of AI believers. At one extreme, the biggest bulls on AI say AI will destroy jobs but it will create so much abundance in the world that nobody needs to work. At the other end are those who say AI is just hype and it will all die down soon and normalcy will return to the world. The truth like always is likely somewhere in the middle. Derek Thompson puts it best with Nobody Knows Anything – Derek Thompson. From an investment perspective, Ben Carlson drills some sense here saying doom narratives are a great sales strategy but for investments, we are better off with an optimistic bent of mind.

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