Architecture of Mania
Artwork (Unknown) from Cosmos
Read while listening to '“Ephemerage” by Australis
Alan Greenspan (a problematic genius) termed irrational exuberance as a psychological virus. As economist Robert J. Shiller explains, market manias operate like naturally occurring Ponzi schemes — they are sustained not by real economic value, but by the self-generating enthusiasm of the crowd. This happens when public attention latches onto a seductive "New Era" narrative, the intoxicating belief that a groundbreaking new technology has permanently broken the old rules of economics. Once this narrative takes hold, investors completely ignore traditional reality checks, such as corporate cash flows or Shiller’s CAPE ratio which measures stock prices against a decade of real earnings. Instead, an arbitrary psychological anchor is set. Prices skyrocket because everyone believes the next person will pay even more, and when people see their neighbors getting rich overnight, logic breaks down. The fear of missing out overrides common sense, turning a trend into a runaway epidemic.
In today's corporate world, what I like to call the “architecture of mania” has taken the form of a borderline psychotic obsession with artificial intelligence. It precisely mirrors the late-1990s dot-com bubble when companies watched their stock prices double instantly just by adding ".com" to their names. Hmmmmm. Today, legacy companies are running the exact same playbook, hastily rebranding themselves as "AI-native" to show that they are keeping up with the crowd. Corporate earnings calls and financial news outlets serve as the breeding ground for this trend. By endlessly repeating the word "AI," executives soothe institutional investors and fund managers who are gripped by a pack mentality and terrified of looking left behind.
Modern technology has allowed this financial mania to fracture into a decentralized, populist counter-culture run by everyday retail investors trading cryptocurrency, NFTs, and "meme stocks." The slow, static internet chat rooms of the 1990s have transformed into algorithmic networks like Reddit and TikTok, which spread financial hype at supersonic speed. Apps have turned investing into a video game. Basically, by offering zero-commission trading and the ability to buy tiny fractions of shares from a smartphone, the barrier to entry has been destroyed. This allows highly volatile online communities to coordinate massive, overnight surges into assets that often have zero real-world utility. While this bottom-up wave brands itself as a rebellious, anti-establishment movement, its economic engine is identical to the one Shiller diagnosed — a loop that relies entirely on a blind faith in the crowd and a stream of new buyers to keep the illusion alive.
Contrasting these two modern trends reveals a fascinating paradox. The same human mania is happening in two completely different ways at the same time. On one side, you have the institutional AI boom — orderly, corporate, backed by billions in venture capital, and discussed in suits on Wall Street. On the other side, you have the chaotic, populist world of crypto and meme stocks, driven by internet culture, digital memes, and a desire to disrupt the traditional financial system. And beneath their wildly different appearances, the psychological engine driving both markets is identical. Both sides are fueled by the exact same herd behavior, the same collective suspension of disbelief, and the same desperate rush to board a train before it leaves the station.
And finally, comparing these dual waves proves a profound truth — while our financial tools and apps change, human emotion remains exactly the same. Bubbles are not glitches in the financial system, rather, they are recurring bi-products of the human herd mentality amplified by modern media. When a community's imagination is captured by the promise of a world-changing shift, people surrender their independent judgment to match the consensus of the group. For any observer of history, the enduring lesson of Greenspan's warning and Shiller’s work is that new technology doesn't change our flaws. Instead, it changes the speed and scale of the contagion, while the mechanics of human mania remain untouched.
