---
id: "concept-end-of-cheap-capital"
type: "concept"
source_timestamps: ["\\\"§ So Long", "Cheap Capital\\\""]
tags: ["macroeconomics", "corporate-finance", "capital-markets"]
related: ["claim-wacc-historical-norms", "claim-ai-drives-interest-rates", "concept-value-based-management", "contrarian-ai-capital-scarcity", "prereq-wacc"]
definition: "The reversal of a 20-year trend of inexpensive borrowing, driven by rising federal debt and massive capital demands for AI and energy infrastructure."
speakers: ["Michael Mankins", "Matthew Crupi"]
sources: ["reskilling"]
sourceVaultSlug: "hbr-seg-reskilling"
originDay: 10
articleStem: "hbr-sig-49-ai-squeezing-middle-managers"
sourceUrl: "https://hbr.org/2026/06/ai-is-squeezing-middle-managers"
sourceTitle: "AI Is Squeezing Middle Managers"
---
# The End of Cheap Capital

**Definition.** For roughly two decades, companies operated in an environment where borrowing was relatively inexpensive, enabling **growth-at-all-costs** strategies. [[entity-bain-and-company|Bain & Company]] researchers [[entity-michael-mankins|Michael Mankins]] and [[entity-matthew-crupi|Matthew Crupi]] argue this era is definitively ending.

**Three compounding drivers:**
1. Rising **U.S. federal debt**, which crowds out private investment.
2. **Massive surges in AI-infrastructure spending.**
3. **Parallel energy-infrastructure investment** required to power the AI buildout.

Together these intensify competition for capital and are expected to drive the [[prereq-wacc|weighted average cost of capital (WACC)]] for large companies back to historical norms — the **high single digits, by 2030** (see [[claim-wacc-historical-norms]]). The AI-as-driver mechanism is detailed in [[claim-ai-drives-interest-rates]], and the paradox that the AI boom is *ending* cheap capital rather than being purely deflationary is captured in [[contrarian-ai-capital-scarcity]]. The strategic response is [[concept-value-based-management]].

**Enrichment caveat.** The overlay flags the specific 2030 high-single-digit WACC figure as a **forward-looking Bain estimate**, not independently confirmed in the result set — directionally plausible but model-based. A counter-lens: cheap capital may not end uniformly — capital-light service businesses may face lower effective constraints than industrial or infrastructure-heavy firms — and offsetting deflationary AI effects (lower operating and working-capital needs) could partially blunt the capital-scarcity story.

Related: [[claim-wacc-historical-norms]] · [[claim-ai-drives-interest-rates]] · [[concept-value-based-management]] · [[contrarian-ai-capital-scarcity]] · [[prereq-wacc]] · [[quote-end-of-inexpensive-capital]]