By Chris Kremidas-Courtney
Donald Trump’s second presidency rests on two intertwined illusions: that technology can save American economic supremacy and that purity can restore order. His crusade against immigrants and trans people promises protection from cultural decay; his worship of artificial intelligence promises protection from economic decline. Both sell the same fantasy; that America can be made whole again by tightening boundaries around who belongs and the promises being sold by Silicon Valley’s AI hype.
But illusions do not endure forever. Just as his denial of science and mishandling of the pandemic destroyed his claim to competence in 2020, the bursting of the AI bubble could do the same before 2026. The first collapse was biological and the next may be financial. And both, in the end, could save democracy by forcing Americans to face reality.
According to analysts, global AI spending will reach $1.5 trillion in 2025, 50% higher than the size of the dot-com boom when adjusted for inflation. The European Central Bank has already warned of a speculative “bubble in AI stocks,” while the Financial Times notes valuations have detached from reality.
This bubble is not based on a niche fad but rather a speculative empire spanning chips, data centers, logistics, health, and defense.
When the AI bubble bursts, the shock will be nationwide. Many of the new AI infrastructure projects Trump boasts about like massive data centers in Ohio, Iowa, and Texas were touted as proving he had revived American industry. If they go dark, the illusion of a “Trump boom” will vanish with them.
Trump’s AI Action Plan crowned Big Tech as the engine of his nationalist movement, calling its billionaire lords “patriots of innovation.” But his base despises those same companies, seeing them as “woke,” globalist, and morally corrupt. The uneasy fusion of populism and plutocracy has held only because Trump convinced each side the other was useful. The tech elite got deregulation; his followers got the illusion of cultural victory.
When the AI bubble bursts, that fragile balance collapses.
An AI crash would corner Trump between his Big Tech financiers and his ethnonationalist base. Tech giants would plead for emergency liquidity, insisting their systems are too critical to fail. But any bailout would detonate his coalition. To his base, already softened by the Epstein scandal, rescuing his wealthy cronies would look like treason.
The administration might frame it as a “national security” intervention to counter China. Yet the MAGA grassroots would see through it. The same movement that rose against “globalist elites” would turn on him, claiming he had become one.
If Trump refuses to act, the economic fallout could still erase his aura of strength. Either path ends in political rupture.
Trump’s war on immigrants and trans people springs from the same impulse as his faith in AI, the fantasy of purification through control. He promises to purify the body politic by excluding the “other” and to master the economy by embracing Silicon Valley’s digital utopianism.
When the bubble bursts, both myths, purity and mastery, will collapse together. The administration will learn that no wall can contain economic chaos, and no algorithm can stabilize an ideology built on exclusion.
Trump’s immigration clampdowns are already starting to starve the tech sector of talent. In a post-crash environment, those same companies will demand looser visa rules to survive. The optics will be ruinous since the self-proclaimed border enforcer would be rescuing Big Tech with foreign workers.
If the crash comes before 2026, the timing could be politically fatal. A pre-election collapse would expose Trump’s “AI miracle” as mirage. Layoffs and stalled construction across red states would undercut his claim to economic genius. Headlines would blare Trump Tech Crash, echoing Trump’s COVID Failure in tone if not in tragedy. The Republicans could face huge losses, despite their best efforts to rig the election in their favor.
Populist media could splinter, with some accusing him of betraying his movement to Silicon Valley and others calling for retribution against “globalist saboteurs.” Economic anxiety and cultural panic would merge into a volatile emotional chemistry, one Trump may try to weaponize through even harsher attacks on immigrants, trans people, and journalists.
But resentment is much more difficult to deflect toward the “other” once reality closes in. The pain will land in the same towns that believed the myth of rebirth. And when it does, the spell may finally break.
The pandemic revealed how denial of reality can destroy a sense of invincibility. Trump tried to dominate the virus with bravado, and his failures severely damaged any illusion of competence. The AI crash would be the same reckoning in digital form and with a deep and lasting economic impact.
Democracies sometimes renew themselves through disillusionment. When the markets fall and the rhetoric fails, citizens may remember that self-government depends not on purity or prediction but on participation. If 2020 exposed the danger of denying science, 2026 may expose the danger of denying truth itself, especially when the bills come due.
Every populist project eventually meets a moment when spectacle collides with substance. For Trump, that moment will come when the AI crash erases his twin myths of prosperity by giving Big Tech a free hand and national purity through exclusion.
He can rescue Big Tech and lose his base. Or let it burn and lose his authority. Either way, his regime which was built on grievance and illusion will be confronted by a reality his media allies cannot spin.
And perhaps, as we saw in 2020, that confrontation will save democracy again. Because when the bubble bursts and the propaganda is too far from reality, the American right may finally see the truth of what they’ve been supporting and decide they want something better.
Finally, it’s an enduring sign of weakness in American democracy that we once again need a disaster to save us from authoritarianism. The question which remains is that if an AI-led market crash does eventually topple Trumpism, will Americans seize the opportunity to rebuild a more durable democracy, or muddle along (again) until the next demagogue rises?
