Very interesting. I've heard it said for years that technological advancement has masked the affects of monetary inflation. I can see how further tech advancement. There's a lot of hype about AI but I've come around to see it as a evolution of computing power that has utility and should increase productivity. And as we should expect at this point politicians will try to scare us into supporting regulation of this false threat.

Eventually but probably not for many years.

AI will need to be coupled with robotics and bio manufacturing and probably some sort of energy breakthrough before we get massive deflation. While we are still pulling stuff out of the earth to get the materials and minerals we need to make the goods AI can only have so much impact. Even if labour costs went down drastically due to AI replacing jobs governments will be forced to print the difference and hand out money because a fiat debt based system cannot sustain on even a small amount of persistent deflation.

i also think this is going to happen, but i do worry that basically everyone believes the same thing. i haven’t heard many people even entertaining the idea that money printing doesn’t immediately come to the rescue to offset deflation.

i get the idea that governments have just as much debt as consumers and like to print money, but if AI does lead to deflation and money printing isn’t the immediate response, that feels like trouble.

the likelihood of this is small, but the impact if it occurs is huge.

Everything in economics considers a human timescale. Valuations of stocks with dcf are still thinking about multiples of years. These multiple numbers would be arbitrary if they weren't about humans making their money back and therefore are very much scaled by human lifetimes

This is the part even the smart people who think that they understand inflation miss.

Typical CPI vs "M2 money supply inflation" confusion. Those smart people that think they understand inflation they model it as money supply inflation, which is not the case. We have bullshit human-made consumer basket that is used to measure against known as CPI.

I remember one conversation with a really smart guy. He said something like "Once we figure out asteroid mining productivity will increase by (for discussion sake lets say) 900% and things will get cheaper.

No uh dude, if productivity increases 900%, they print 902% more money to hit the 2% inflation target measured in CPI.

The Price Of Tomorrow, by Jeff Booth, is great on this topic.

My favorite Austrian economist often reminds agriculture as an example where the developed technology should result into deflation, but it didn’t. (in principle we can produce so many goods with just so little “effort” these days unlike 100 years ago)

Yes, and they will use it to promote UBI and CBDCs. BTC is the only escape mechanism...

our duty is to make fiat obsolete, deprecated and garbage.

Yes, in hard monies like #Bitcoin, but not in fiat currencies because they will print the diference to the bolivion

What a click bait title article with a bunch of the same ol general economic mumble jumble

AI per se will not create inflation. Inflation is defined as the increase in money supply among economists who know what they are talking about.

Every efficiency gain in the production of goods and services, coupled with a sound money economy, creates deflation. Buying power increases. Debasement of money is theft (fiat). Plain and simple.

AI hype has exceeded its capabilities for the time being. There is an unimaginable amount of desperate money out there.

Nope