shdu@shdu11546816
My best guess is that AI is going to soon cause a Deflationary Doom Loop due to the Paradox of Thrift.
As chatbots become agents, the layoffs will accelerate and spending behavior will rapidly change for many previously high income workers.
In macroeconomics, the Paradox of Thrift states that when everyone tries to save money at the same time, aggregate demand plummets, causing businesses to fail, which drives wages down further, forcing people to save even more.
The Physical Labor Glut: As millions of software engineers, lawyers, and corporate managers flood the market for physical jobs (plumbing, electrical work, elder care, construction), supply will vastly outstrip demand.
The Wage Floor Collapse: Wages for physical labor will probably crash to subsistence levels—just enough to buy calories and a crowded room. Because humans are panicking and hoarding every spare penny, discretionary spending will probably collapse except for the capital class.
"Everything becomes cheap and abundant" is a utopian narrative with one major flaw:
The employee class spends most of their money on Rent, Transportation, and Food... Intelligence is not the primary bottleneck for physical resources.
AI cannot print more land in desirable zip codes, it cannot bend the laws of thermodynamics to make gasoline infinitely efficient, and it cannot materialize calories out of thin air.
It's increasingly hard to fathom a future where 2/3 of the population doesn't become useless eaters.
