Investors' inflation expectations remain anchored due to recent disinflationary history and a strong belief in technology's deflationary power. This creates a market where the significant, non-zero risk of a new, higher inflation regime is not properly priced.

A strong argument suggests that robust economic spending combined with weak labor growth points to higher productivity, potentially from AI. Because productivity gains are disinflationary over the long term, this could give the Fed justification to lower interest rates now without worrying as much about current inflation levels.

Technological innovation should naturally cause deflation (falling prices). The Fed's 2% inflation target requires printing enough money to first counteract all technological deflation and then add 2% on top, making the true inflationary effect much larger than officially stated.

While economic principles suggest AGI will be hugely deflationary, Sam Altman points out a paradox. The massive, urgent investment required to build AI compute could drive a strange, inflationary period where capital is extremely valuable, creating profound uncertainty about interest rates.

While AI is expected to be disinflationary long-term, its immediate impact could be inflationary. The massive capital expenditure required to build AI infrastructure will significantly increase demand in a fully employed economy before the productivity benefits are realized.

While technology creates efficiencies and drives down the cost of specific goods, it cannot overcome persistent money creation by central banks. Since abandoning the gold standard, overall price levels have consistently risen despite massive technological leaps. AI will likely follow this pattern.

Elon Musk argues that AI and robotics will cause such extreme deflationary pressure through hyper-productivity that governments will be forced to accelerate money printing. This won't be for stimulus but to simply keep pace with the explosion in goods and services.

Technologies like AI and robotics create massive deflationary pressures. To counteract this, governments will be forced to print more fiat currency, debasing it. This macro environment makes a scarce, decentralized asset like Bitcoin a critical tool for corporations to preserve capital and protect their balance sheets from inflation.

As AI gets exponentially smarter, it will solve major problems in power, chip efficiency, and labor, driving down costs across the economy. This extreme efficiency creates a powerful deflationary force, which is a greater long-term macroeconomic risk than the current AI investment bubble popping.