Instead of eliminating entire jobs, AI unbundles them into tasks. It will replace roughly 80% of these tasks while significantly enhancing the remaining 20%. This creates a "K-shaped" divergence, amplifying those who adapt and leaving behind those who don't.

Just as 1990s free trade brought cheap goods by outsourcing manufacturing, AI will bring cheap digital services by outsourcing cognitive labor to a "new country of geniuses in a data center." This analogy suggests the result will be concentrated wealth and broad job displacement.

AI is driving a K-shaped economy. At the macro level, the AI sector booms while others decline. At the corporate level, AI stocks soar past others. At the individual level, a skills gap is widening between those who can leverage AI and those who can't.

In an unpredictable AI-driven job market, the most reliable path to financial security is not a specific skill but owning assets. This allows individuals to participate in the massive wealth generated by the technology itself, providing a hedge against inflation and potential job displacement, and avoiding a future of dependency on government assistance.

Economist Thomas Piketty's theory that inequality grows indefinitely was historically countered by the complementarity of labor and capital. However, AI could make capital a full substitute for labor, breaking the market's self-correcting mechanism and validating Piketty's thesis for the future.

The U.S. economy can no longer be analyzed as a single entity. It has split into two distinct economies: one for the thriving top tier (e.g., AI and tech) and another for the struggling bottom 60%. The entire system now depends on spending from the rich; if they stop, the economy collapses.

A pervasive anxiety is growing in the tech world: the current AI boom might be the final opportunity to amass significant wealth before AI automates value creation, making money effectively worthless. This FOMO is driving a frenzy to get on the "right side" of the AI divide, fearing a future with a permanent, ultra-wealthy tech class.

Beyond its use in warfare or the risk of AGI, Ray Dalio identifies a critical societal risk of AI: it will worsen wealth inequality. It achieves this by replacing jobs while simultaneously driving massive stock market gains concentrated in a very small number of technology companies.

A key driver of future AI-fueled inequality is that most people hold their wealth in their homes. Unlike financial assets, home equity provides no direct exposure to the massive productivity gains and capital returns generated by automation. This structural issue means the benefits of AI will disproportionately flow to capital holders.