Artificial intelligence could radically reshape the global economy by pushing it into a deflationary spiral. OpenAI CEO Sam Altman expressed his thoughts on this supposition in his recent chat with Zerodha co-founder Nikhil Kamath. Altman, however, admitted that the short-term impact of Artificial General Intelligence (AGI) could look nothing like conventional theory predicts.
Responding to a question by Kamath on the impact of increased productivity, Altman said, “I feel confused about this. If you look at the basic economic principles, it’s supposed to be hugely deflationary and yet if the world decides that you know building out AI compute today is super important to things tomorrow, maybe something very strange happens with the economy, and maybe capital is important because every piece of compute is so valuable. I think it’s like yeah it should be deflationary eventually, but I could see it being weird in the short term.”
Altman believes that the arrival of artificial general intelligence (AGI) holds the potential to bring efficiency that eliminates scarcity, creating a downward pressure on prices and eroding the traditional returns to capital.
That contradiction, he argued, could lead to outcomes that appear illogical under today’s financial assumptions. He even recounted a personal incident where a friend of his also predicted that either the interest rates would be ‘minus 2% or 25%,’ indicating the possibility of high inflation in a world where efficiency pushes the value-worthiness of money or of deflation in the logical sense due to scarcity going away.
Responding to Kamath’s follow-up on his opinion of inflation slipping into negative territory, the OpenAI chief added that while long-run dynamics point toward deflation, the near term could see intense demand for resources, particularly advanced chips and compute infrastructure, sending borrowing costs and capital allocation into unpredictable territory.
“Maybe it’s just like we’re in this massive expansionary time where you’re trying to like build the Dyson sphere in the solar system and you’re borrowing money at crazy rates to do that and then there’s more expansion beyond and more and more and I don’t know like I find it very hard to see more than a few years in the future at this point,” Altman added.