Kurt on Nostr: It seems that if "AI works" as some expect, it will be a perfect time for an ...

It seems that if "AI works" as some expect, it will be a perfect time for an ultra-hard money like Bitcoin to step in.

AI itself will already be a hard driver in "productivity-driven deflation", the cost of goods going down due to increased efficiency, but business can still profit due to higher volume in people buying more. A deflationary money will also stabilize prices better than an inflationary money.

When people think of deflation they think of "demand-driven deflation", the kind we had in the Great Depression when prices went down because no one is buying anything.

In the case of productivity-driven deflation with a fixed money supply, the economy is likely to see falling prices, increased purchasing power, and real economic growth. Unlike deflation caused by weak demand (e.g., during a recession), this type reflects a healthy, efficient economy.

The only "catch" is being caught with too much debt as this burden can increase over time in deflationary conditions.