Instead of a universal productivity boom, AI will eliminate repetitive white-collar jobs. This will shrink the consumer base, reducing overall demand and creating a powerful deflationary force, further entrenching a feudal economic structure with fewer 'lords' and more 'serfs.'

Critics of AI-driven economic collapse argue these scenarios wrongly assume a static economy. Historically, massive productivity gains from technology have lowered costs, expanded markets, and created entirely new industries and forms of consumption, rather than just eliminating jobs.

Beyond simple productivity gains, AI will eliminate the need for entire service-based transactions, such as paying for basic legal documents or second medical opinions. This substitution of paid services with free AI output can act as a direct deflationary headwind, a counterintuitive effect to the typical AI-fueled growth narrative.

Despite negative public perception, AI is the engine behind the current economy. It's deflationary, helps with the cost of living, and is responsible for a majority of recent GDP growth. This has sparked a blue-collar construction boom, yet political rhetoric focuses on doomerism and regulation.

Contrary to fears of mass unemployment, AI will create massive deflationary pressure, making goods and services cheaper. This will allow people to support their lifestyles by working fewer hours and retiring earlier, leading to a labor shortage as new AI-driven industries simultaneously create new jobs.

Economists see no AI job loss in data because, like cheaper coal in the 1860s, cheaper intelligence via AI doesn't shrink demand. Instead, it explodes it, creating new roles and applications that offset initial displacement.

Like past technological leaps, AI's economic impact will be sequenced. Expect immediate real income gains as new products emerge. The broader disinflationary effects from productivity improvements will only materialize later, after businesses fully re-engineer their operations.

Technological shifts can create a period where national productivity soars but real wages for skilled workers fall. We are in a modern 'Engels Pause,' similar to the 19th-century Industrial Revolution, which historically led to revolutions in ownership, education, and political power.

In a high-impact AI scenario, massive productivity growth leads to gluts of goods and services. This causes prices to collapse, creating massive deflation. This deflation acts as a universal pay raise, dramatically increasing everyone's real wealth and purchasing power.