By Mathew Carr
June 4, 2026 — The AI bubble may burst when those who have made billions from it need to sell some of that wealth in order to get money for other reasons.
Eg, money to pay new wealth taxes, or repay debt.
So says Ray Dalio is an American billionaire investor, hedge fund manager, and author, speaking to Bloomberg (see link below. The entire video is worth watching.)
Dalio’s best known as the founder of Bridgewater Associates, which grew to become the world’s largest hedge fund. As of June 2026, he has an estimated net worth of $21.5 billion, ranking him among the wealthiest individuals globally. [1, 2, 3, 4]
He says wealth taxes might prick the AI bubble, which is already here. He was vague about how close markets were to bursting the AI bubble …He said we were “close” …before correcting himself to “closer.” (See transcript near bottom)
Key bit from Dalio:
Below for full transcript
CarrZee: There are plenty of other reasons why wealthy people might sell. eg They get worried about a bubble and want to shift to having more cash in their portfolios. They could all decide tomorrow to sell in order to build a warchest to exploit any drop in valuations or invest in the billions of dollars of AI offerings coming up. That may trigger a run on existing AI securities, which are valued at very high prices vs past earnings.
Other reasons to trigger a run out of AI-related stocks: Giant climate disaster would spur opportunity for climate investment.
Riots in the streets about inequality, social injustice, uncaring/abusive capitalism could spur investment in personal security/bunkers in remote places.
New governments focussed on social capitalism decide to regulate big business properly….about time.
In New York City, there is a new tax on expensive second homes being negotiated — essentially a wealth tax:
Details:
- The Target: An annual fee specifically levied on second homes (pied-à-terres) valued at over $5 million where the owner does not reside full-time in NYC. [1, 2] Gemini
- The Scope: It impacts roughly 13,000 luxury apartments and townhomes often left vacant as “wealth storage” by ultra-rich non-residents. [1, 2, 3]
- The Rate: While the final sliding scale is still being negotiated with the state legislature, previous variations proposed up to a 4% annual surcharge on values exceeding $25 million, aiming to generate $500 million in annual city revenue. [1, 2, 3]
Many others are warning about the AI bubble
https://x.com/dariocpx/status/2062424024656044170?s=46
…and the desperate need for solutions to inequality.
Oxfam, the UK social justice group:
Full transcript Otter AI part checked (emphasis added, cuts first bit of video):
Speaker 1 0:06 (Dalio)
All great technology changes produce bubbles, and the reason they produce bubbles is because nobody can get it exactly right.
Okay, there you have to either spend a ton of money to capture your market share, and so on, and you don’t worry about whether it’s too much or not … or you don’t spend enough money and you lose your market share, and it’s very imprecise with a lot of competition.
Okay, and then when people bet on the technology, which I’ll bet on the technology, but they think that buying the stocks is betting on the technologies, which is a different thing, because the stocks can be expensive, and so on.
That’s a problem, and what happens is when wealth grows a lot relative to incomes. I want to distinguish wealth from incomes.
Okay, wealth is …. you can create wealth very easily in the following way. You say I’m going to have a raise $50 million on a billion dollar valuation. Okay, that’s counted as a billion dollars of money, and now you’re a billionaire, but you only put up 50 million.
Okay, and so wealth, you cannot spend wealth. Wealth is, you have to sell wealth to get money, because you can only spend money.
So, when there’s a lot of wealth relative to the amount of money there is, there is a vulnerability, and bubbles burst when money, when wealth needs to be converted into money, often that’s because of debt, but it could be for anything,
It could be for wealth taxes, for example, supposing you put in wealth taxes, then those people who have wealth are going to have to sell some of that wealth to pay taxes.
That dynamic that I’m talking about accompanies the miracle technologies that over a period of time have wonderful implications for productivity, so I don’t think it has a problem with productivity.
I do think about productivity, it has a big wealth gap implication. A very small percentage of the population is going to do unbelievably, and a lot of people won’t, so what do we do? Can we work together politically to deal with those issues?
Bloomberg: And how do you do?
I’m not optimistic on us working together to solve [inequality]
Speaker 2 2:34 Bloomberg:
a bubble that bursts eventually?
Speaker 1 2:35
So I think it is. Yes, and then that moment, there’s always the issue of a bubble, and we can measure a bubble. I have indicators that there’s how many people are over on what’s the sentiment.
A lot of indicators for bubble, and we are right now rising close to ….closer to ….not at the same level in 2000 and same level in 1929
Speaker 2 2:58
specific level where you say, “Oh no, here’s the one that we really need to worry about.
Speaker 1 3:01
The thing about it is, there’s two parts to it. There’s quote a bubble, and then there’s the pricking of the bubble, and the pricking of the bubble happens when there’s a need for wealth to be sold to get the money, like normally in a dynamic of a debt problem, if you take Japanese bubble, take the 29 bubble, take the 2000 bubble, all of them have an element of tightening money to, because it can’t go on forever, it’ll find its bubble.
The question is, how long you let the bubble go before there’s the pricking? So, in order to do the market timing, to know how to market time, it requires both the understanding of the bubble and the looking for the pricking, and the pricking is the converting of wealth into money, because I need money in order, but I have wealth, but so I have to sell some of the wealth in order to get the money, that’s how it works. That dynamic is following that kind of path, even though it’s a wonderful technology that’ll have great [benefits]
Speaker 2 4:04
Really could talk about this all day,
Ends
Notes
1. Building a Financial Behemoth [1]
2. Pioneering Investment Strategies
- The “All Weather” Portfolio: A pioneering “risk parity” strategy designed to perform well across all economic environments (e.g., inflation, recession, or growth). [3, 9, 10, 11, 12]
- Alpha vs. Beta Separation: Unbundling a portfolio’s returns into market-tracking passive returns (Beta) and active, skill-based management returns (Alpha). [3, 9, 13, 14, 15]