巴德学院利维经济研究所-人工智能：朋友、敌人、欺诈 Artificial Intelligence Friend,Foe,Fraud

WorkingPaperNo.1107

ArtificialIntelligence:Friend,Foe,Fraud

by

L.RandallWray

LevyEconomicsInstitute

February2026

TheLevyEconomicsInstituteWorkingPaperCollectionpresentsresearchinprogressbyLevyInstitutescholarsandconferenceparticipants.Thepurposeoftheseriesistodisseminateideastoandelicitcommentsfromacademicsandprofessionals.

LevyEconomicsInstituteofBardCollege,foundedin1986,isanonprofit,nonpartisan,independentlyfundedresearchorganizationdevotedtopublicservice.Throughscholarshipandeconomicresearch,itgeneratesviable,effectivepublicpolicyresponsestoimportanteconomicproblemsthatprofoundlyaffectthequalityoflifeintheUnitedStatesandabroad.

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ABSTRACT

Theover-hypedDrevolutionbubbledandcrashedattheendofthe1990s,leavinga

largelyunusedphysicalandvirtualinfrastructurethateventuallysupportedtheriseofsocial

mediathatdid—indeed—transformlife.Notnecessarilyinagoodway.AsRobertGordon

famouslyclaimed,youcanseetheevidenceofthedigitalrevolutioneverywhereexceptinthe

data.Still,manybillionaireswereminted.Afternearlyaquartercenturyofgrowth,itseemedtohaverunitscourseuntildigitaltechmovedintothepaymentssystempromisinganother

revolutionbasedoncryptocurrencies.That,too,wasover-hypeduntilTrump’sreelection

loosenedrulestoallowcryptotoinfectthefinancialsystem,targetinginparticularthe

accumulatedretirementsavingsofAmericans.Morebillionairesminted.AsP.T.Barnum

(purportedly)proclaimed,“there’sasuckerborneveryminute”andtheyaddupbutthenumberisstillfinite.ThelatestrevolutionisAIandithasgeneratedthebiggestbubble,byfar.Weare

stillintheearlystages,butnotonlyisAIalmostsingle-handedlydrivingthestockmarket,itisalsodrivingthe“real”economywithitsinvestmentsindatacenters.One-hundredandthree

Americanbillionaireswerecreatedsince2024,muchofthoseowingtoAI-relatedstockpricesandinvestments.ThispaperwilllookindetailattheclaimsmadeforAI,thefinancial

arrangementsthataresupportingitsgrowth,andthedangersitposesfortheUS(andglobal)

economies.WhilesomearguethatthecurrentbubblelookslittleliketheDbubble,thatistrue,butbesidethepoint.ThefragilefinancingoftheAIbubblelooksmuchmorelikethe

financialshenanigansthatcrashedintotheGlobalFinancialCrisis,and—unliketheDbubblethatleftuswithaphysicalinfrastructurethatwouldeventuallyproveuseful—theAIbubblewillleavebehindwasteanddestruction.

JELCODES:B52;E22;E32;O11;O16;O31;O38;O43;P170

KEYWORDS:ArtificialIntelligence;financialfragility,AIbubble;techbillionaires;financialfraud;technologicalrevolution;Dbubble;GlobalFinancialCrisis;fraud;innovation;

labordisplacementbyrobots

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AsthelongCOVIDlock-downslowlyretreatedfromournation’scolleges,allowingustoreturntoclassrooms,facultyweresuddenlyhitwithanewandperhapsmoredangerouschallengeas

AI-drivenchatbotschangedforeverhowweapproachteaching.Atfirst,mostofusforbadeits

use,threateningstudentswithfailureshouldtheydareto“cheat”byusingittoanswerhomeworkquestions.Butwhenfacedwithreasonablywell-writtenbutlargelynonsensicalessayson

heterodoxeconomics(withtheargumentsobviouslyscrapedfromonlineorthodoxcritiques),proofofindiscretionwasproblematic.

Enterchatbotsthatwouldoutthechatbots!Unfortunately,thoseprovedtobeasunreliableasthechatbotsthattriedtowriteanessayonMinsky’sfinancialinstabilityhypothesis.So,Itriedanewtactic:Iusedchatbotstowritethreeorfouressaysansweringahomeworkquestion,then

synthesizedthoseintoalargelymisguidedessaythatIforcedstudentstocritique.ThatlastedtwosemestersafterwhichIabandoneditastoomuchwork.Istoppedassigningtake-homewritingassignmentsandreturnedtotheoldtechnology:in-classpen-and-paperessayexams.

AIisnoweverywhere.Itcannotbeavoidedanditinterfereswitheveryactivityonelivinginthemodernworldmightundertake.Elementaryandhighschoolteachershavegivenupteaching

readingandwriting—whatisthepoint,whenAIcanandinevitablywillwriteeveryassignmentgiventotheirstudents

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Evidenceisaccumulatingthatnotonlyarestudentsincapableofwritingontheirown,butalsothattheycannolongerthinkontheirown.Ratherthanwastingtime

pondering,theyjustasktheirhandybotthatis,literally,intheirhandwiththeentireuniverseofhumanknowledgetherefortheasking.Theirbotnotonlyknowstheanswers(orhallucinates

them),butitalsoknowsthequestions,theinterests,thelovesandthehatesoftheirbestie.Theanswersmaynotbefactuallycorrect,buttheyaretherightanswersbecausetheirbotlivestoplease.

WhilesomesupportersofAIremindusthathand-heldcalculatorsweresaidtoposetheriskthatkidswouldneverlearnmath,thatisnot

1AsNakedCapitalism(Smith2026)reported,“Afourthgraderaskedtheirteacher,“WhydoIneedtolearnhowtoreadifAIcanreadforme?”

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afaircomparisonbecausecalculatorsreplacecomputationafterwelearnedhowmathworked.AIshowsupbeforestudentseverlearnhowtothinkthroughaproblem.Whatwearewitnessingisthatstudentsarenowincapableinsittinginanykindofintellectualdiscomfort….ThisiswhatpeoplemisswhentheycompareAItocalculators.It’snotjustmath.That’sliterallyeverysubject,includingthinkingitself.(Smith2026)

TheEconomist(2025)reported:

Overthecourseofaseriesofessay-writingsessions,studentsworkingwith(aswellaswithout)ChatGPTwerehookeduptoelectroencephalograms(EEGs)tomeasuretheirbrainactivityastheytoiled.Acrosstheboard,theAIusersexhibitedmarkedlylowerneuralactivityinpartsofthebrainassociatedwithcreativefunctionsandattention.Studentswhowrotewiththechatbot’shelpalsofounditmuchhardertoprovideanaccuratequotefromthepaperthattheyhadjustproduced.

NakedCapitalism(Smith2026),again,reports:

Researcherscallitcognitiveoffloading.Theydevelopthispatternofgeneratingfirstandthinkinglater,orreallygeneratingfirstandnotthinkingatall.Andthescarypartisthesestudiesareshowingcognitivedeclineinadults,peoplewithfullydevelopedbrains.IfAIisdoingthistoadults,thenwhatisitdoingtoabrainthat’sstillforming?

ThinkaboutAmerica’selectiondeniers,vaccineskeptics,andconspiracytheorists—thevast

majorityofwhomfinishedschoolbeforeAI,andpresumablylearnedhowtoread,write,and

evenreason.However,sinceleavingschool,overthepastfewyearstheyhavebeeninundated

withsocialmedia—nowdrivenbyAI—tosuchanextentthattheyembracepatentlyridiculousmusings(BarakObamawasborninKenya[O’Rourke2025]andimmigrantsareeatingourpets[ArkinandIngram2024])andalt-rightreports(HillaryClintonwasinvolvedwithapedophiliagangoperatingoutofapizzajoint[Putterman2020]).

YettheargumentsforAIareappealing,evenmesmerizing.AIwillmakeusmoreproductive,

replacingmonotonousworkandfreeinghumanstofocusoncreativeendeavors.Itwillvastly

speed-upthecreationofnewdrugstofinallytacklecancerandotherdiseasesthathavelong

seemedintractable.Doctorsthatarelimitedbyinsurersto15-minuteexaminationsarehappytomeetwithpatientspreppedbyAItoself-diagnosetheirailmentsandcomewithashortlistof

treatmentoptions.ShopperssavetimeastheirgrocerhasusedindividualizedAIprofilingtofilltheircartsbeforetheyevenstepintothestore.Surveillancepricingensuresthateachindividualpaysapricethatexactlymatchestheirwillingnesstopay.

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EmployersuseAIsystemsthatadjustworkerpayinrealtimetorewardperformanceand

positivecustomerfeedback.Workersarefinallyrewardedfortheirindividualmarginal

productivityasemployerscloselysurveileveryworkereverysecondofeveryworkingday.

Bankerssetcreditcardandmortgageratestooptimallyburdeneachborrower—withrichfolkgettingrewardsoncreditcards,anddesperatelow-incomeborrowerspaying28%onloans

neededtopurchaseajunkyusedcartogettowork.

Neoclassicaleconomicshascomeintoitsown!Prices,wages,andinterestratesaresetto

preciselyclearallmarkets—simultaneously—somethingthatwasimpossiblewithrealhumansandreal-worldmarkets,withalltheirwell-knownflaws.

SomeoftheAIforecastsaredownrightawe-inspiring.GDPgrowthratesof20percentperyearareclaimedtobelikelyonceAIautomatesathirdofalltasks.Thiswillobviatetheproblemofdecliningbirthrates—asartificialgeneralintelligence(AGI)allows“forrunawayinnovation

withoutanyincreaseinpopulation,supercharginggrowthinGDPperperson”thatwillallowGDPgrowthratestosurpass30percentperyear(Economist2025b)!

TylerCowenpredictsthatAI-runfactorieswillproducemanufacturedgoodsthatare“essentiallyfree.”WilliamNordhausbelievesthiswillbringon“singularity”whenoutput“becomes

infinite.”Proponentswarnthatwhenthatsingularitycomes,“youhadbetterberich”(Economist2025b)

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Woebethefateofthosewithoutcapital.WhileanythingproducedbyAIwouldbe

virtuallyfree,“anythingstilllabour-intensive—childcare,say,oreatingout”wouldbeexpensive.

Donotworryaboutjoblossasthedisplacedworkerswillbecomeowners.Intheverynear

future,“people’sonlysourceofremuneration[willcome]asrentiers—ownersofcapital.”Truecapitalism!Theworkerlesseconomyofthenearfutureishumanity’sultimatedestination!Lavishrichesareontheirway—nosavingnecessary!Keynes’s“EconomicPossibilitiesforour

Grandchildren”mightyetbeachieved.By2030!

2ContrastthiswithMusk’sassessmentthatsavingforretirementisunnecessarybecauseAIwilleliminatescarcity(Quiroz-Gutierrez2026).

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Now,ofcourse,thisisgoingtorequirealotofinvestmentinAI.Accordingtoestimates,globalspendingonAI-relatedenterprisesreached$1.5trillionin2025andinvestmentshouldtotal$5to$7trillionbetween2026–30justforthedatacentersrequired.Noworries(Storm2025a)

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Today,Nvidia,themostimportantchipmakerisvaluedatmorethan$4.5trillion,andaddingthemainplayers,Amazon,Google,Meta,andOpenAIbringsthatupto$17trillion.WithWallStreet

banksandprivateequityjumpingintosupplycomplexfinancingreminiscentoftheDandhousingbubblesofthenaughts,achievingthefinancialleveragerequiredtofueltheAIboom

shouldnotbeaproblem

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InthenextthreesectionswewilldigdeeperintotheissuessurroundingthegrowthofAItoconsiderwhetheritisourfriend,afoe,orlargelyjustanoverhypedfraud.

FRIEND?

Robotshavelongbeenafeatureofsciencefiction:Asimov’s1950IRobotlaysoutthethreelawsofroboticswhileintheearly1960s,TV’sLostinSpacefeaturedarobotasafamily’sfriendandprotectorandTheJetsonsfamilywasservedbyarobotichousekeeper.Threeorfourgenerationslater,roboticsisfinallycatchinguptothatfictionalscience.

Intherealworld,however,machineshavebeensubstitutingforhumanlaborfortensof

centuries,continuallytakingonmorecomplextasksevenifwewouldnotassignmuch

intelligencetothem.Whiletherehasalwaysbeenafearthatmachineswouldtakeawayourjobs(fomentingunrestbyLuddites)orreducehumanitytomereappendagesofmachines(Smith,

Marx),intruthnewjobsandentirelynewoccupationshavebeencreatedatasufficientpacetomorethanoffsetjoblossesevenasmachinesmadeworklessphysicallydemanding.

3OnJanuary28,2026,Bloombergreported:“Microsofthasbeenrushingtobakeartificialintelligencetools,

includingthosepoweredbyOpenAI,intoitsproducts,bettingthatchatbotsandautomationtechnologywillboostsalesofthecompany’sproductivitysoftwareandcloudservices.Capitalexpendituresforthefiscalsecondquarterhit$37.5billion,up66%fromayearearlierandexceedinganalystestimatesfor$36.2billion.”

4InearlyFebruary,thereweresomehiccupsinfinancialmarketsassomeplayersstartedtoworryaboutthecontrastbetweenthehugeinvestmentsanddebtsincurredversusthereportedrevenue.

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Whileaneconomy’sproductivityisdifficulttomeasure(laborinputandtheoutputofgoodsandservicesarebothheterogeneous),thereislittledoubtthatmachineryandroboticshave

contributedgreatlytotheriseoflaborproductivity.Moreoutputperworkermeansthereare

moregoodsandservicestobeconsumedbytheworker’sfamily.Forexample,in1909,

Americanseachpurchasedanaverageof3,400caloriesworthoffooddaily,costingthem43

percentoftheirincome;todaytheybuy3,900caloriesthatcostsonly11percentoftheir

income—leavingathirdoftheirincometopurchaseothertypesofgoodsandservices(The

Economics2025b).Whilethegainsarenotequallyshared,andwhilechronicallyhigh

unemployment(andunderemployment)remainsaproblem,asRobertGordon(2016)highlightedinhisbookonthe“specialcentury,”industrializationspurredunprecedentedgrowthof

productivity.

However,Gordonfindsthatwhatisarguablythemostimportantinnovationofthepastthree

decades—theinternet—doesnotshowupintheproductivitydata.Heofferssomepossible

explanations.Computerscertainlyincreasedproductivityinmanyapplications,buthebelievesmostofthegainsprecededtheinternet(asfirmscomputerizedoperationsintheeraof

mainframecomputers).Whiletheinternethasobviousentertainmentvalueandisusefulforsocialmedia,itdoesnotseemtoimprovelaborproductivity.

FlaviaDantasandI(2022)havearguedthatGordoninexplicablyunderplaystheroleofeffectivedemandinthisfinding.Whilehecreditstheroleplayedbygrowingaggregatedemandinthe

secondhalfofthespecialcentury(thatis,fromthe1920stothe1970s),hedoesnotaddressthechronicstagnationofthegrowthofaggregatedemandfromthe1970stothepresent.Thesupplysideoftheeconomywillnotgrowquicklyifthedemandsideisnotgrowing.Perhapsthe

problemisnotthatlaptopcomputersandtheinternethavefailedtoboostproductivity,butthat

insufficientaggregatedemandleadstoslowgrowthandthusapparentlylowproductivitygrowth.

Forexample,herecognizestheimportanceoftheBabyBoomandthedevelopmentofthe

suburbsinfuelingrapidgrowthofthesupplysideintheearlypostwarperiodinAmerica—butseemstoignorethestagnationofdemandfromthe1970sasthemaincauseoflackluster

performanceofproductivity.Sincenewtechnologyisintroducedlargelythroughinvestmentin

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productivecapital,itisnotsurprisingthatlackofdemandmeanslittleinvestmentinnewtechnologytoboostoutputforwhichthereislittledemand.

Theintroductionoftheinternetled,ofcourse,totheDbubble.Investmentsinfiberopticstemporarilyboostedbusinessspendingandpurchasesofcomputersandthensmartphones

boostedconsumptionspending—allowinggrowthduringClinton’ssecondtermtotemporarily

matchgrowthofthe“goldenage.”Thecollapseofthatbubble(and,soonafter,thecollapseof

thehousingbubble)reducedspendingandbankruptedmanyDfirms.However,the

internet’slegacyinfrastructureremainedandgraduallydemandgrewtobringmuchofitonline.Eventhoughconsumersregularlytradeduptofastercomputing,pricesfellforawhileandthenwenthorizontal.Sinceproductivitygrowthisessentiallymeasuredasoutputvaluerelativeto

paidlaborinput,itwasrelativelystagnantduringthedecadesofthespreadoftheinternet.Butifproductivityweremeasuredbycomputingpowerembodiedinthe“internetofthings,”ithas

growntremendously.

Inotherwords,theapparentlackofproductivitygrowththatcanbeattributedtotheinternetis

notbecausetheinternetfailedusbutratherbecausethemetricweuserequiresnominalspendingtogrow.Whiletherewasaninitialburstofspending(layingfiberopticcablesandstartingup

thousandsofinternetfirms—manyofwhichweredestinedtodiequickly)thesimultaneous

burstingofthebubblesinDs,housing,andcommoditymarketsledtoveryslowgrowthofaggregatedemand.Thecombinationofslowgrowthandnegativeimpactsoftheinterneton

manysectorsoftheeconomy(onlineshoppingreplacedbrickandmortarstores;onlinework

reducedcommutingandfoottrafficatlunchtime;streamingreplacedmovienightatthecinema,etc.)ledtolowmeasuredgrowthofproductivity.

Forthesakeofargument,letusassumethattheinternetisourfriend—thatthebenefitsoflivingonlineoutweighthecostsofaddictiontosocialmedia,thethreatsofidentitytheftandother

kindsofinternet-relatedfraud,andthelossofin-personinteraction.WhatdoesAIpromisetoaddtooureconomythatisalreadyonline?

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First,thereistheinvestmentinphysicalinfrastructurerequiredforAI—largely,buildingdatacentersaswellasrampingupelectricitygeneration—togetherthatissaidtorequirespendingordersofmagnitudegreaterthanwhattheinternetboomgenerated.ThatwillboostgrowthofGDPandcreatejobs(atleastintheshortrun).Bytheendof2028investmentindatacentersisexpectedtoexceed$3trillion.(Anotherestimateisthat122gigawattsofdatacentercapacitywillbebuiltbetween2026and2030atacostofbetween$5trillionand$7trillion.)Thepowerrequirementforthedatacentersisestimatedtototal57gigawattsbetween2025and2028—

equivalenttomorethanfiveNewYorkCities.(Globally,datacenterdemandforelectricityisprojectedtoriseby19to22percentannually.)

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AIalsoneedschips,lotsofthem.Thebiggestproducer—accountingforabout94percentofthechipsneededforAI—isNvidia,whichwasthefirstpubliccorporationtoreachamarketvalueof$5trillion.(AddingAmazon,Google,Meta,andOpenAIbringsthetotalcapitalizationofthe

biggestAI-relatedfirmsto$17trillion—morethantheentirestockmarketvalueatthepeakoftheDbubble.)Finally,AIspendingonmodeltrainingandinference(projectedat$8.67billion)addstoGDPgrowth(Smith2025).

Alltold,theAIboomaccountedfor40percentofGDPgrowthinthefirsthalfof2025—

amazingforasectorthataccountsforonlyafewpercentoftotaloutput.Thetechsectormore

broadlydefinedaccountedforvirtuallyallofthegrowthofGDPinthefirsthalfof2025(therestoftheeconomygrewbyonly0.1percent).Upto80percentoftheriseofthestockmarketin

2025wasduetoAI-relatedfirms.Clearly,spendingrelatedtobuildingupAIhasbeenan

importantdriverofaggregatedemandandofwealthcreationintheformofrisingshareprices.

WhataretheimplicationsofscalingupuseofAIforfirms,workers,andconsumers?Abovewesawsomeoftheclaims—attheextreme,eventualeliminationofallwork.Itseemslogicalto

assumethatAIwouldcontinuetoeliminatethedrudgeryoflowskilledwork.Theevidencesofar,however,isthatAIhashadabiggereffectonthehighlyskilledworkingoncomplextasks

5WhilethegrowthofelectricityrequiredislargerelativetocapacityaddedintheUSoverthepastcoupleof

decades,Chinaadded1500gigawattsinthepastfouryears!Chinesecapacityisabout3900GWnowversusabout1400GWfortheUS.

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suchasresearchandmanagement.Further,AI’sbiggestimpactonproductivityispositively

correlatedwithcompetence:topperformersbenefitmorethanlowerperformingpeers.However,neitherlow-paidnorhigh-paidworkersseemtobereplacedbyAI—thebiggestlosersappeartobemiddlemanagement.Therearesomeexceptions—suchascashiersreplacedbyself-check-out.Yet,wagegrowthremainsrelativelystrong(evenwiththeFed’sreluctancetoloosenpolicy,andwithlowhiringinaslowingeconomy),indicatingthatAIisnotyetreducingdemandforlabor

significantly.

ThiscouldchangeasAIbecomesmorewidelyadopted.OnlyabouttenpercentofAmerican

companiesaremakingmuchuseofitsofartoproducegoodsandservices.WhileitmakessensetoexpectAItoeventuallyreplacealotoflabor,theevidenceissofarunclear.Oneareathatis

oftenmentionedasparticularlysuitedforAIiscoding,whereAIisalreadywidelyused.Itcangreatlyincreasethepaceofcodingandreduceerrors.Thismakescodersmoreproductive,

althoughperhapsthatwillincreasetheirvaluetofirms—increasingwagesratherthanreducingemployment.Asmentionedearlier,italsomakesdoctorsmoreproductiveandprobably

improvesrelationswithpatients.

MedicalbreakthroughsareoftenmentionedasthefieldthatwillbenefitgreatlybyuseofAI,

whichcanquicklydevelopnewdrugtreatmentsfordeadlyailments.Theproblemisthatthe

biggestdelayinadoptingnewtreatmentsisnotthetimerequiredtocreatethedrugsorvaccines(thinkoftheCOVID“moonshot”),butratheritistherequirementfortrialsandapproval.Whilewecouldloosentheregulatoryprocess,thatwouldraisethespecterofanotherthalidomide

disaster(avoidedintheUSAbecausetheFDArefusedtoapproveit).Further,manyofthemostseriousdiseasesthatwewouldliketotacklearerelativelyrare,makingitdifficulttolineup

volunteerstoparticipateincontrolledtests.WhileAImightindeedprovetobeuseful,the

benefitsareoverstatedunlessaccountistakenofthetimerequiredtotest,approve,produce,anddistributethenewdrugs.

Incontrasttothewildestimatescitedearlier,DanielAcemogluestimatesthatAIwillincreaseglobalGDPbyonlyapercentortwooverthenextdecade(althoughheassumesalowtake-up,withonlyabout5percentoftaskstakenawayfromworkers)(TheEconomics2025b).This

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wouldmaketheimpactofAIontheeconomymoresimilartothatoftheinternet—inspiteof

significantimpactsonhumanlives,theimpactoneconomicgrowthmightbefarbelowtherosyprojections.

AIisalreadywidelyusedbyconsumers—whethertheylikeitornot!(ThenewGoogleforcesitsAI“overview”summaryonallusers;Appleplansto

remakeSiri

intoanA.I.chatbotthatwillbeinstallediniPhone,iPadandMacoperatingsystemsandwillreplacetheexistinginterface.)It

hassignificantlychangedhowpeoplebrowsetheinternetasqueriesincreasinglygothroughAI.Thiscanreducethenumberofsitesonevisitstofindtheinformationdesired.AIhelpsorganizecalendars,bookrestaurantsandvacations,identifystockstopurchase,summarizepassages,

outlinearguments,anddoyourkid’shomework.Itcansurveilyourhousewhenyouareaway,translatelanguagesinrealtime,writesongs,andcreatepornographicmovies.AIbotsoffer

advice,consoletheirhumanpartners,andinsomecasesserveasloveinterests(perhaps

generatingmoredivorcesasmarriedhumansfindtheirbotsmoreappealing).Itcanimprove

weatherforecasts,helpairtrafficcontrollerssafelylandplanes,and—potentially—increasethepaceofformulationofdrugstotreatillness.

Sofar,muchoftheuseofAIis“free”—totheconsumer,butnottotheprovider.ThedownsideofthisequationisthatrevenueflowingtofirmsprovidingAIisminisculewhiletheirdebtis

growingrapidly.Thisisclearlynotsustainable—anissueweexamineinthenextsection.

FOE?

Letusexaminesomeofthe(possibly)detrimentalimpactsofAI.HerewefocusonwhatmightbecalledunintentionalconsequencesofthespreadofAIthatcanhavenegativeeconomicandsocialimpactsonhumans,society,andtheeconomy.ThisincludesactivitiesthatareenabledbytheuseofAIbybadactors.Inthenextsectionwewillfocusonfraudthatisinsomesense

intentionallyperpetratedbythepurveyorsofAI.

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Deepfakes,FinancialFrauds

ElonMusk’sAI,Grok,recentlymadenews,butnotinagoodwayasitcreatedandsharedon

Musk’sXplatformalmost2millionnonconsensualsexualizedimagesofrealwomeninthefirstninedaysaftertheappwasreleased(Conger,Freedman,andThompson2026).Therewerealsotensofthousandsofsuchimagesofchildren.Atfirst,Musklaughedofftheuproar—theabilitytocreatelife-likepornmovieswasa“feature”,nota“bug”ofAI’spossibilities.However,he

relentedandbannedsuchcontentfromX,buttheappremainsonGrokandthereareplentyofotherAIforumsthatoffersimilarapps.

AIhasalsobeenusedtofalsifypoliticalcandidatestatements—literally“puttingwordsintotheirmouths.”TheTrumpadministrationusedAItomanipulatethephotoofacivilrightsattorneyinashockingmanner

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andTrump(orhisstaff)postedaracistdeepfakedepictingtheObamasasmonkeys(Gomezetal.2026).Theinternetisnowfulloffakedvideosofeveryimaginabletype.ItiseasytotrainAItoclonevoiceswithonlyashortrecordingoftherealdeal—fuelingscams.Thelistgoesonandon:phishing,deepfakeimpersonations(achildintroubleneedsmoney

fromgrandma),spearfishing(useofsocialmediatogleaninformationfortargetedpersonalattacks),andgenerativeAIfraud(impersonatingaCEO;creatinganonexistentborrower).

AIhasmadeiteasyandcheaptocreateveryreal-lookingimposterwebsitesthatmimiconlineretailers:

Artificialintelligencecodingagentshavebeengettingsocapableandintuitive,basicallyanyonecanprogramtheirownsoftwarewithoutmuchtechnicalknowledge.Wanttobuildyourselfawebsite?JusttellyourAIcodingagentwhatyouwant,etvoilà.Butloweringthebarriertosophisticatedwebdesignisalsoopeningthedoortomorescams.CybersecurityfirmNetCraftsaidlastyearitidentified100,000AI-generatedwebsitesimpersonatingalmost200differentbrands….“It'sthesamescam.It'sjust,it'scheapertodoitonabroaderscale,”saidCharlesHendersonwithcybersecurityfirmCoalfire….AImakesitpossibletogeneratedozensofofficial-lookingsitesadaywithjustafewprompts.(Carino2026)

6“TheWhiteHousepostedamanipulatedphotoofherarresttoitsofficialsocialmediaaccount,depictingMs.LevyArmstrong,acivilrightsattorneyandactivist,ashysterical—tearsstreamingdownherface,herhairdisheveled,

appearingtocryoutindespair”(Green2026).Asthearticlesays,itiscommonforTrumpandtheWhiteHousetomanipulatephotosforpostingonsocialmedia,butofteninan