Block just fired 40% of its workforce. Not because business was bad—because AI could do the work cheaper. And here’s the kicker: the stock market loved it.
Welcome to what I call CHAOS Economics: the collision between AI-driven job losses and government money-printing that’s about to reshape who gets rich and who gets left behind.
The Military-Industrial Complex Just Joined the AI Party
Remember when people thought governments would pump the brakes on AI to protect jobs? The Iran conflict just answered that question with a hard no. Autonomous targeting systems. AI-coordinated drone swarms. Machine learning algorithms making battlefield decisions faster than any human could. The side with better AI won before the first missile launched.
Washington got the message loud and clear: fall behind on AI, and you lose wars. Lose wars, and you lose sovereignty. So every regulation that might slow down AI deployment? Now it’s framed as a threat to national security. Even Anthropic, which tried to resist military use of its AI, got labeled a “supply chain risk” and pushed toward the exits.
Translation: the government isn’t going to stop AI. It’s going to accelerate it.
The SaaS Graveyard Is Getting Crowded
Block’s 40% layoff wasn’t a one-off. It’s the template. Klarna replaced 700 customer service reps with AI. Duolingo cut contractors. Atlassian laid off 1,600 people while doubling down on automation. The list grows every week.
But here’s where it gets interesting: the market is finally pricing in what this means for legacy software companies. Salesforce, Adobe, Intuit—these were supposed to be untouchable compounders. Now they’re getting hammered.
Why? Because if an AI agent can do what Salesforce does—track customers, log interactions, generate follow-ups—why pay $50,000 a year? If generative AI can replicate Adobe’s creative tools, why pay $10,000 per employee? If an AI can do your taxes better than TurboTax, what’s Intuit’s moat?
The deflationary tsunami is here. When intelligence becomes cheap, the companies that package and sell specific versions of intelligence lose their premium.
The Spiral Is Already Spinning
Here’s how it works: More job displacement → more political pressure → government prints money to cushion the blow → asset prices inflate → wealth concentrates in the hands of people who own the machines.
The companies building the AI infrastructure—Nvidia, AMD, Taiwan Semiconductor, the hyperscalers—are now dual-use national security assets. Translation: untouchable by regulation. Governments aren’t going to handicap what they view as strategic weapons.
Meanwhile, physical assets become the real hedge. Data centers need gigawatts of power. Energy, land, water, infrastructure—these become scarce when digital abundance explodes. Nuclear and utilities might not be sexy, but they’re essential.
The Window Is Closing
When I first called this out, I said you had 12-24 months before everyone caught on. I’m revising that downward. Block’s layoffs made global headlines. Software stocks are tanking. AI-enabled military operations are reshaping real conflicts.
The structural damage is accumulating faster than the official data can capture it. Most people will spend the next six months arguing about whether AI will “really” take their job while looking at a low unemployment rate—a lagging indicator by design.
It won’t. The transformation is already here.
