🔑 Stop ignoring this.

Reading time: 11 minutes / Become my affiliate / Sponsor this newsletter

Greetings from above,

What do a mortgage lender, a DoorDash driver, and a Mastercard executive have in common? In two years, they might all be asking the same question: "What happened?"

Two weeks ago, Robert sent me an article at midnight. No commentary. Just a link. That's his version of pulling the fire alarm.

It was a piece from CitriniResearch. Two Wall Street analysts wrote a fictional "macro memo" from June 2028. A financial post-mortem. The S&P 500 down 38%. Unemployment at 10.2%. The mortgage market cracking. And the cause wasn't a pandemic or a housing bubble.

It was AI doing exactly what we keep saying it will do. Working. Fast. Cheap. Better.

I read it three times. Not because it's definitely going to happen. But because every single domino they describe is already sitting on the table. And I realized: most people building businesses with AI have no idea what the second and third order effects of this technology look like.

This newsletter is about those effects. And how to position yourself on the right side of them.

Today's newsletter will show you:

Let's build your competitive advantage!

AI stocks. Metals. Crypto.

Surprise, surprise; gold crashed 16%. Silver plunged 34%. Bitcoin dropped to 1 year lows.

All supposedly "uncorrelated" assets moving in lockstep largely because of overleveraged margin.

JPM strategists warn that the same leverage is still a risk.

Those markets may be recovering now, but cascading liquidations could trigger quickly across several asset classes simultaneously.

So much for diversifying away risk, right?

But get this–

70,819 everyday investors have allocated $1.3 billion fractionally across 500+ exclusive investments. 

Not real estate or PE… Blue-chip art. Sounds crazy, right?

Now it’s easy to invest in art featuring legends like Banksy, Basquiat, and Picasso, thanks to Masterworks.

They do the heavy lifting from acquisition to sale, so you can diversify with the strategy typically limited to the ultra-wealthy.

(Past sales delivered net returns like 14.6%, 17.6%, and 17.8% on works held longer than a year.)*

Our subscribers skip the waitlist

_{*Investing involves risk.  Past performance is not indicative of future returns. Important Reg A disclosures: masterworks.com/cd}

This isn't doom-posting. It's scenario planning. The best investors and strategists don't predict one future. They model multiple futures and prepare for all of them.

Here's the scenario, broken into five stages.

Each one is already showing early signals in 2026.

Companies adopt AI. Margins expand. Earnings beat expectations. Stocks rally. Everyone celebrates.

But here's the trap. When companies cut white-collar headcount, the savings flow straight into more AI capability. Each round of layoffs funds the technology that enables the next round.

The feedback loop:

The analysts call this the "Intelligence Displacement Spiral." It's a loop with no off switch. Each company's individual decision is rational. The collective result is catastrophic.

Why it matters for you: If your business model depends on selling services to employed white-collar professionals, your customer base is shrinking. Not someday. Now.

GDP keeps growing. Productivity stats look incredible. Politicians brag about the numbers.

But the output is being generated by machines, not people. The analysts coined a perfect term for it: "Ghost GDP." Output that shows up in national accounts but never circulates through the real economy.

Think about it this way. A GPU cluster in North Dakota can produce the work of 10,000 white-collar employees in Manhattan. GDP counts that output. But those 10,000 people aren't getting paid anymore. They aren't spending at restaurants, buying homes, or renewing their gym memberships.

The key question nobody's asking: How much money do machines spend on discretionary goods? Zero.

The US consumer economy is 70% of GDP. When the consumers get replaced, the economy looks healthy on paper while the actual money flow between humans dries up.

This is the stage that should terrify every business owner reading this.

AI agents don't just replace workers. They replace the human behaviors that entire business models depend on.

Here's what dies when AI agents handle consumer decisions:

Subscription inertia. Your customers forget to cancel. AI agents don't forget. They audit every recurring charge monthly.

Brand loyalty. You spent millions building habitual app usage. An agent doesn't have a home screen. It checks every option every time.

Price ignorance. Humans don't have time to compare prices across five platforms. Machines do it in milliseconds.

Information asymmetry. Real estate agents, financial advisors, insurance brokers, anyone whose value was "I know things you don't" is exposed. AI agents know the same things. Instantly.

Payment friction. The 2-3% credit card interchange fee exists because cards are convenient. When agents find cheaper payment rails (stablecoins, direct transfers), that fee evaporates.

The analysts describe DoorDash as the poster child. Its entire moat was: "You're hungry, you're lazy, this app is on your home screen." An agent doesn't have a home screen. It checks 30 delivery apps and picks the cheapest one every time.

Why it matters for you: Audit every revenue stream in your business. Ask: "Does this revenue depend on my customer being too busy, too lazy, or too uninformed to find a better option?" If yes, that revenue has an expiration date.

Private equity firms spent the last decade buying software companies with borrowed money. The loans were backed by "Annual Recurring Revenue." The assumption: subscription revenue keeps recurring.

AI broke that assumption. When AI agents can replace your SaaS tool, that "recurring" revenue becomes "revenue that hasn't left yet."

The scenario describes Zendesk, taken private for $10.2 billion, defaulting on its $5 billion loan. Customer service AI replaced the entire product category.

But here's where it gets systemic. The "permanent capital" funding these loans came from life insurance companies. Firms like Apollo bought insurers (Athene), then invested policyholder money into the same PE-backed tech debt that was now defaulting.

Translation: Regular people's retirement savings and annuities were invested in loans to software companies that AI is killing. The "sophisticated institutional capital" that was supposed to absorb losses was actually Main Street's money wearing a different hat.

Why it matters for you: If your retirement is in a variable annuity or life insurance product from a major alternative asset manager, understand what it's actually invested in. Ask questions.

The US mortgage market is $13 trillion. Every mortgage assumes the borrower will stay employed at roughly their current income for 30 years.

What happens when that assumption breaks? Not because the loans were bad (like 2008), but because the world changed after the loans were written?

The scenario describes 780 FICO borrowers, 20% down payments, perfect credit histories, starting to miss payments. Not because they were irresponsible. Because their $180,000 product manager job was replaced by a $200/month AI agent.

In the 2008 crisis, the loans were bad on day one. In this scenario, the loans were good on day one. The economy shifted underneath them.

The math is brutal: The top 20% of earners drive 65% of all consumer spending. When these people lose jobs or take 50% pay cuts, the consumption hit is massive relative to the number of jobs lost.

Why it matters for you: If you're carrying a mortgage based on a white-collar salary, build reserves aggressively. If you're selling to white-collar consumers, diversify your customer base.

Here's the thesis at the core of this entire scenario, in one paragraph:

For all of modern economic history, human intelligence was the scarce input. Capital was abundant. Resources were substitutable. But the ability to analyze, decide, create, and coordinate could not be replicated at scale. Every institution, from the labor market to the tax code to the mortgage system, was built on that assumption. AI is now unwinding that premium. Human intelligence is becoming less scarce and less valuable. The financial system is repricing. And that repricing is painful.

This doesn't mean collapse is inevitable. It means the economy needs new frameworks. And the analysts make an important point: building those frameworks is one of the few tasks left that only humans can do.

The canary is still alive. We still have time to position ourselves correctly.

1. Stress-test your revenue against the "zero friction" scenario.

Go through every line of revenue. Ask: "Would an AI agent, acting on behalf of my customer, still choose me?" If your value is convenience, habit, or information advantage, you're exposed.

2. Build for the "middle" economy, not just the top.

The white-collar spending class is at risk. Businesses that serve ONLY high-earning professionals are concentrated in the blast zone. Diversify your customer base across income levels.

3. Own the relationship, not the transaction.

AI agents optimize transactions. They can't replace genuine community, trust, and identity. The businesses that survive the zero-friction economy will be the ones that built something machines can't replicate. Think: memberships, communities, brands people identify with.

4. Stack cash. Seriously.

The scenario describes displaced workers burning through savings for two to three quarters before the data catches up. If your income depends on a white-collar role, build a bigger buffer than feels comfortable. If you run a business, build reserves for a 6-month revenue dip.

5. Position yourself as the human-in-the-loop, not the human being replaced.

The new jobs that AI creates pay less and are fewer. But they exist. The winners are people who direct AI, not people who compete with it. Use AI as your tool. Build systems. Become the person who orchestrates the machines, not the person the machines replace.

💡 Use this prompt to run the same scenario analysis on YOUR business. It applies the five-stage framework from the article to your specific situation and gives you a concrete risk report with action steps.

What you learned today:

This isn't about being bearish on AI. We're more bullish than ever.

It's about understanding that a tool powerful enough to 10x your business is also powerful enough to 10x the disruption around you.

The people who win aren't the ones who ignore the second-order effects. They're the ones who see them first and position accordingly.

No more building on assumptions that won't survive the decade.

You now have the frameworks to see what's coming. And the prompts to prepare.

And as always, thanks for being part of my lovely community,

Keep building systems,

🔑 Alex from God of Prompt

P.S. What's your biggest vulnerability? Reply and tell me the one revenue stream you're most worried about. I'll break down how to defend it in a future issue.