Wars, particularly in the Middle East, don't directly cause higher interest rates. Instead, they disrupt energy supplies like oil, leading to widespread inflation. This inflation then forces central banks to raise interest rates to cool the economy, creating a clear causal chain.
The current AI boom is temporarily inflationary. It demands huge investments in data centers and energy today, increasing demand and driving up prices. The widespread, deflationary productivity benefits of AI will take much longer to materialize across the broader economy, creating a lag.
Financial firm Apollo projects that interest rates will likely fall regardless of AI's ultimate outcome. Success would bring deflationary productivity gains, while failure would trigger a stock market crash and a "flight to safety" into Treasury bonds. Both divergent paths lead to lower rates.
Beyond direct investment, the AI boom contributes to inflation indirectly. Rising AI stock prices create a "wealth effect," making everyday investors feel richer. This prompts increased consumer spending on goods and services, which drives up demand and, consequently, inflation and interest rates.
Organizations like the Tarbell Center, funded by tech figures like Dustin Moskowitz, provide grants to journalists at major outlets like Time and Bloomberg. This creates a potential conflict of interest, as newsrooms cover the AI safety debate while being financially supported by an organization with a strong pro-safety stance.
The current debate around coordinating AI safety protocols mirrors the historical struggle to mandate seatbelts. Just as automakers and the public initially resisted the cost and inconvenience of seatbelts despite clear safety benefits, the AI industry now faces similar collective action problems and resistance.