A Chinese startup rocked the U.S. tech sector with a cutting-edge AI (which they shouldn’t be able to build) at a much lower cost. Suddenly, the global dominance of the American tech sector can no longer be assumed. Today we ask, what does this tell us about the future?
By Peter Reagan
China has been all over the news lately, this time not for any geopolitical maneuvering or because Trump is railing against the Chinese Communist Party again (though, I’m sure that both of those situations will happen again soon).
No, China is in the news this time because they announced a new breakthrough in artificial intelligence (AI) technology. A Chinese startup called DeepSeek announced that they are able to field AI of similar quality giants like ChatGPT but at a fraction of the price.
How much of a price difference?
Well, the U.S. technology giants spent a quarter of a trillion dollars developing their models. DeepSeek spent a pittance compared to that. It’s actually shocking how little they invested. Brooke Seipel for McAfee writes,
DeepSeek’s AI models, including its latest version, DeepSeek-V3, claim to rival the most sophisticated AI systems developed in the U.S. – but at a fraction of the cost.
According to reports, training its latest model required just $6 million in computing power, compared to the billions spent by its American counterparts. This affordability has allowed DeepSeek to climb the ranks, with its AI assistant even surpassing ChatGPT as the top free app on Apple’s U.S. App Store.
Talk about disrupting that part of the tech industry. DeepSeek invested just 0.0024% of the combined investment amounts that U.S. firms invested, and they say that they’re able to offer AI services similar to or better than the ones offered by U.S. tech firms. That’s $250 billion in set-up costs vs. $6 million!
No wonder the American tech industry is freaking out…
And that means that they’re able to offer their AI that people and businesses want at even less than pennies on the dollar compared to U.S. AIs – while still turning a profit.
What does this tech breakthrough mean for the U.S. economy?
Smart question to ask, and the answer is: We don’t know, yet.
DeepSeek’s announcement has only come out within the last week, so we’ll have to see the fallout from this.
The situation with DeepSeek does bring up something that too many people ignore, though, and that is the impermanence of any particular sector of the economy.
A huge sector of the economy right now is tech. But tech wasn’t even remotely on the forecast just a century ago…
… and however long you may think that humans have been on this planet, it’s clear just from the recorded history that we have that a single century isn’t a very long time.
In fact, just 150 years ago, automobiles didn’t exist (the first car wasn’t built until the 1880s). Now, most adults in the U.S. have a personal vehicle (car, truck, SUV, etc.).
All this to say that economies and the technologies driving economies change all the time and, sometimes, relatively quickly.
And going along with those economic changes, the economies of nations rise and fall depending on how well they adapt and innovate, which are two things that the anti-free market crusaders in the western world seem to want to squelch.
Sure, the availability of physical resources (oil, minerals, etc.) in the U.S. helped to drive the America’s ascendance in economic power on the world stage, but do you know what the real driver of U.S. economic growth is?
It’s actually two things – and they may surprise you
The things that caused the explosive growth in the U.S. economy weren’t any kind of physical objects.
No, the drivers were ideas, principles.
The first principle was an emphasis on the free market instead of central planning. Our capitalist system uses a relatively free market
The free market, of course, is where people are allowed to make their own economic decisions based on their interests and goals.
Despite what some in the political sphere want to tell you, no one at a central office can actually tell you the best way to get what you want in life or the best solution to the problem that you’re wanting to solve.
Central economic planning can’t know all of the details to be able to plan this for you. Or for anyone else.
That’s why centrally planned economies never grow over the long-term as much as a free market.
And the other principle?
Long term planning
Too many people want the government to do their long-term planning for them, but if you truly want to succeed in an area of your life, it’s vital that you do your own long-term planning.
I’m not kidding about this.
There is a reason that the book Think and Grow Rich, a book that has been called the book that generated the most millionaires in history since it was first published in 1937 (and has sold over 70 million copies since then) starts off the book with the idea of knowing what you want, making a plan to get it, and then taking consistent action towards the achievement of that goal.
Planning for the long term is important for success.
Want to be a great spouse or successful parent? Then, planning ahead by learning communication skills will help with both of those.
Want to get in better shape physically? Learn about diet and nutrition, put together a plan of action, and take consistent action to improve your health.
Want to be in a better position financially? Then, figure out how you want your finances to be at that future date, put together a plan to get there, and do what it takes over that period of time to get where you want to be.
Long term planning followed by consistent action on that plan is one of, if not the most important key to success in any endeavor.
And in your financial planning…
Future-proofing your finances
As you make sound financial plans, understanding principles specific to a sound financial house is another key.
So, you should be thinking in terms of your overall, long term goal, and you should also be thinking about the steps that you want to take to reach your financial goals…
… while keeping in mind that we cannot predict the future. Part of our financial planning requires us to admit we have no idea what may happen over the next few years (let alone the next decade or two).
That’s why you include in your planning a way to stabilize that house no matter what is going on in the overall economy.
I’ve talked before about how precious metals have a historical track record of stability of value and of being resistant to inflation, and those are primary reasons why I recommend diversifying into precious metals.
Because no matter what happens with American tech or industrial dominance over the long run, you can still ensure your finances are on sound footing – today and tomorrow.
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