Had a nice little conversation with a VeniceAI agent this morning and then when we got onto the topic of exponentially improving technology and deflation he spit out this little nugget and kind of broke my brain-
But here's the brake, and it's real-
Deflation equals output growth minus velocity growth. And AI is the single largest velocity event in monetary history.
Machine-to-machine settlement at machine speed means you need far less money sitting around to support a given volume of transactions. If velocity rises as fast as output, the deflation rate collapses toward zero and the holder earns almost nothing — because real money balances equal Y/V, and if both grow together, balances are flat.
Someone smarter than me want to weigh in on this?
But here's the brake, and it's real-
Deflation equals output growth minus velocity growth. And AI is the single largest velocity event in monetary history.
Machine-to-machine settlement at machine speed means you need far less money sitting around to support a given volume of transactions. If velocity rises as fast as output, the deflation rate collapses toward zero and the holder earns almost nothing — because real money balances equal Y/V, and if both grow together, balances are flat.
Someone smarter than me want to weigh in on this?
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