The AI ‘new era’ illusion: why every boom looks different—but ends the same

The beginning of the 20th century, much like the beginning of the 21st, was an era of increasing optimism. The financial panics of 1873 and 1893 were in the past, new technologies like electricity and internal combustion were just gaining traction and Morganization was creating trusts insulated from the ravages of competition. The financial journalist Alexander Dana Noyes wrote at the time that the market “based its ideas and conduct on the assumption that we were living in a New Era; that old rules and principles and precedents of finance were obsolete; that things could safely be done today which had been dangerous or impossible in the past.” Yet the old rules still applied and the irrational exuberance led directly to the Panic of 1907. That’s the problem with “new era” thinking. It doesn’t just benefit innovators, it also creates space for marginal players and even outright hucksters. They amplify the boom, but also push risk higher across the system. And when they collapse, they take everyone else with them. The gravity defying economics of increasing returns I was working on Wall Street in 1995 when the Netscape IPO hit like a bombshell. It was the first big Internet stock a…