Will Artificial Intelligence Help Prolong The Current Fiat Monetary System?
2191 sats \ 11 comments \ @siggy47 12 Apr econ
I’m sure many of us have read Jeff Booth’s The Price Of Tomorrow, which describes how new technologies are deflationary. He discusses artificial intelligence as an example, and of course bitcoin.
I have no doubt that his vision of the future will come to pass, and bitcoin will be the money of that future. In the meantime, though, I am wondering if the incredible growth of generative artificial intelligence might help to prop up the fiat system for a while, buying time for central banks to kick the can down the road.
This article lays out what I’m talking about:
https://www.aei.org/articles/what-would-be-the-impact-of-an-ai-boom-on-interest-rates-and-inflation/
There’s no doubt that the U.S. Government needs inflation to monetize the incredible amount of debt it has built up. Without technological advancements improving efficiency, that inflation would likely spiral out of control quickly. AI might in fact keep inflation in check just enough to allow this house of cards to remain standing for a while.
I’m wondering what other stackers think?
write
preview
related posts
96 sats \ 1 reply \ @grayruby 12 Apr
One could argue potential productivity gains from AI is the only hope the fiat system has left besides outright debt monetization. Personally, I think debt to gdp is a stupid measurement to use but everyone uses it so that gives it some value. Theoretically, if AI can increase productivity in excess of the rate the debt is increasing, debt to gdp will continuously decline and all the participants in the fiat system will likely think everything is fine and play the record all night long.
reply
71 sats \ 0 replies \ @siggy47 OP 12 Apr
Exactly. Productivity can prolong the show for a while.
reply
85 sats \ 4 replies \ @DesertDave 12 Apr
Maybe. I don't spend energy on understanding these things much. I focus on what I want to build. We all know where we are headed and that's all that matters to me.
reply
11 sats \ 3 replies \ @siggy47 OP 12 Apr
I can certainly understand that. I enjoy the hell out of thinking about this stuff for some perverse reason.
reply
75 sats \ 2 replies \ @DesertDave 12 Apr
It's super interesting. I like watching in a sense from afar. I think technology is awesome when it works for us. I just can't get into the weeds.
reply
11 sats \ 1 reply \ @siggy47 OP 12 Apr
Oh, I don't have much interest in AI. I meant I'm interested in the economics of it, and how it might affect bitcoin adoption.
reply
75 sats \ 0 replies \ @DesertDave 12 Apr
Yeah, I get it. I imagine it has an impact short term.
reply
75 sats \ 0 replies \ @jakoyoh629 12 Apr
I think it might help, but it's not a definitive solution. It can help detect fraud and improve efficiency, but the problem is structural and that's harder to solve. The economy needs inflation, say 2%, but with the massive printing of money, it's difficult to keep it at acceptable levels. Only time will tell.
reply
75 sats \ 0 replies \ @Coinsreporter 12 Apr
US needs to stabilize its dollar debt empire for sometime, imo. If it doesn't it risks being insolvent, not today, not tomorrow but within the next decade.
reply
75 sats \ 0 replies \ @Undisciplined 12 Apr
It's an interesting dynamic for sure. The scenario you're describing would likely have enormous economic volatility.
Offsetting the deflationary pressure from a major technological advancement will require extremely artificially low interest rates. That's going to cause wild misallocations throughout the economy.
At the same time, the technology itself will be causing major disruptions throughout the economy, so the search for equilibrium will likely involve wild swings.
One of the things that the past few years of supply chain disruptions has made clear is that the enormous regulatory burden on our economy has made it very rigid, so it's not going to be able to smoothly adjust to new conditions.
That's a recipe for shortages, bankruptcies, mass layoffs, etc.
Ultimately, that kind of volatility in the underlying economy is not great for the fiat currency residing on top of it.
reply
0 sats \ 0 replies \ @BitcoinGuru 12 Apr
There’s no doubt that the U.S. Government needs inflation to monetize the incredible amount of debt it has built up.
Exactly, you're correct 💯
reply