After the AI Crash: Bubble Burst or an Economy-Wide Crash?
Asad Ramzanali (Vanderbilt Policy Accelerator/Vanderbilt U.)
March 2026
Public concern about the level of AI investment is everywhere. While some compare today’s scenario to the dot-com bubble, the economy’s overreliance on AI investment, coupled with opaque financial engineering, means that a market correction could look more like the 2008 Great Recession, an economy-wide crash with systemic consequences. After such a crash, Congress will scramble to identify a reform agenda. In a rush, broader reforms that take time to formulate get shelved for quick action. It doesn’t have to be so. Instead of waiting for the crisis and hastily developing insufficient policies, lawmakers should prepare for this anticipated crisis now. Of course, a response depends on exactly how a crash comes to pass. But for meaningful reforms to have a chance, policymakers need to begin debating them. To that end, this paper describes how a crash might occur and outlines policies for Congress to consider in response.