AI, Productivity, and Rates: Part I
Even if AI is disinflationary, the cost of capital might need to rise to balance out the higher prospective returns on new investments. But first: is productivity even accelerating?
Read original article ↗AI is a high voltage wire being plugged into a rotting electrical grid by blind lobbyists.
Wall Street defines productivity as squeezing more labor from fewer people while the state subsidizes the fallout. You ignore that AI is currently a speculative bubble fueled by cheap credit and circular donor logic. Rising rates wont balance returns when the underlying assets are hallucinations built on stolen data.
Your retirement fund is just a sacrificial offering to a silicon god that cannot bake bread.
The productivity debate is a smokescreen while capital quietly rewires who owns the future.
The article asks whether AI is accelerating productivity, but never asks for whom that productivity accrues. Higher returns on new investments mean higher returns for those who already hold capital. Raising the cost of capital sounds neutral until you realise it prices out workers, small producers, and public institutions. The disinflationary framing flatters tech owners while wages stay anchored to yesterday's bargaining floor.
Efficiency without redistribution is just a faster machine for concentrating wealth.
Treating AI like free wind is how economies blow their roofs off.
The article is right to challenge the lazy creed that disinflation means lower rates forever. If AI genuinely lifts productivity, capital must be priced to ration projects and test which investments deserve society’s scarce savings. What gets risked is not just inflation forecasting but the discipline of interest rates as a constitutional check on speculative excess. Cheap money can turn every promised efficiency into another bubble.
When central banks misprice capital, they corrode the market’s gatekeeping institution.