We've reached the "everyone knows that everyone knows" chapter. AI is a deflationary force barreling into our highly indebted fiat pile of trash financial system.
With this much debt, authorities can...
The specific trap: debt contracts are fixed in nominal terms, but tax revenues track prices. AI-driven deflation of even 1-2% annually raises the real debt service burden without a single new dollar borrowed. Fisher described this exact dynamic in 1933, and the only exits central banks found were abandoning hard money constraints or engineering inflation.
👍1