Good Sunday to you,
In case you missed them, I put out two articles this week. Here they are.
By now I am sure you will have stumbled across Matt Shumer’s essay Something Big Is Happening, which has gone bananas viral. Eighty-one million views on X alone. That’s even more than We’re All Far Right Now.
Shumer describes how AI capability is improving exponentially, meaning that most screen-based jobs facing imminent, significant disruption. By that he means all but disappearing. His advice is blunt: get good at using AI now; assume much of what you do will be automated, and thus your doing it will soon be redundant; and start saving up, there’s economic upheaval coming.
It’s perhaps the best articulated essay there is describing this bleak view of what is coming.
From my own little vantage point, I’m not nearly so pessimistic. I use AI a lot, and I use it more and more. Its rapid improvement over the last six months has been obvious, though it still cannot recognise humour, let alone write it - humour that’s actually funny, anyway. So it’s rather like the BBC comedy department in that regard.
EDIT: Having written that last paragraph, I just watched this. It is a perfect Frat Pack joke. I’ve now watched a load of other clips made with AI movie generator Seed Dance 2.0 from Byte Dance (parent company of TikTok), and I’ve a mind to short Disney first thing on Monday morning. The content is breathtaking, even the comedy.
I use AI as a sounding board, for legal and regulatory questions, bureaucratic procedures, personal advice, career and business advice, videos, images. I use it to proof read copy, in the case of PR which I hate writing, I use it to actually generate copy; it helps me with titles, SEO summaries and research. I am not at the point where it writes my articles for me, and I like to think I would not let that happen, but I know others are: I am increasingly reading pieces in respectable broadsheets that are clearly written by bots.
That represents a lot of work I might once have given to other people.
On the other hand, if I had needed to pay someone proper money to do it, I probably would not have done it at all.
In that sense it is not so different from the democratisation of media that followed the turn of the 21st century, when filmmaking, podcasting and publishing suddenly became accessible to anyone with a laptop.
From a personal point of view I know I have lost a shedload of voiceover work to AI, and what used to be my main source of income no longer is. More annoying, my voice, with the countless documentaries, promos, trailers and ads I’ve voiced over the years, has been harvested, modelled and copied like mad. Not a lot I can do.
But the net result to the world is more content, better content, produced faster and at lower cost.
I’m not sure quite how end-of-days it all is. But Shumer’s finger is on the pulse in a way mine is not.
Let’s assume he is more right than I am. What then?
Two things follow.
First, AI is deflationary. Services get cheaper. Productivity rises. Labour loses bargaining power.
Second, governments will not sit back and watch demand collapse. If employment and incomes come under pressure, the political response will be fiscal support, especially if it win s elections. This means more borrowing, therefore lower interest rates, and more money-printing.
Different routes, same destination: easy money.
That is essentially the conclusion reached by analyst Lyn Alden in her latest newsletter, though her reasoning is more technical. The Federal Reserve has already moved from balance sheet reduction back to ongoing expansion. Not a dramatic “QE moment”, but a structural, steady increase to keep the financial plumbing functioning. She calls it the “gradual print”.
Jefferies’ Chris Woods, whose Greed & Fear letter I have come to rather like, arrives at a similar place via politics. The US government is now so sensitive to interest costs that sustained tight policy is unrealistic. If markets wobble or growth weakens, intervention returns. Monetary restraint will not survive contact with fiscal reality.
Hedge fund billionaire, Ray Dalio’s argument, laid out in his latest offering, is similar, though simpler and colder. The United States is late in a long-term debt cycle, with borrowing rising faster than income. There are three ways out: austerity, default or money printing. The US will choose the third. If foreign buyers will not fund the deficits at acceptable rates, the central bank ultimately does. Different language, same conclusion.
Which brings me to an interview I listened to this week, between Grant Williams and Rabobank’s Michael Every. Every thinks stable coins will act as the funding vehicle.
Every’s argument is more macro than AI or the Fed. He believes we are seeing a structural shift in the global economic system, comparable to the late Soviet period.
With Communism in its final throes, Gorbachev tried to transform the USSR from a military-industrial economy into a consumer one. It failed and the system collapsed.
The United States, Every argues, is now attempting the reverse. After decades of financialisation and consumption, it is trying to rebuild industrial and military capacity. That means: industrial policy, trade protection, supply-chain control and capital directed toward production, rather than asset inflation. Instead of buying US treasuries, foreign dollars get recycled into US manufacturing, industry and, yes, its military.
This is not the liberal globalisation model of the last thirty years. It is economic statecraft. This means growth may be slower and inflation structurally higher, while financial markets less dominant relative to the real economy.
Success is by no means guaranteed, but the direction of travel is toward a more managed, more political, less free market economic system.
So … large forces are converging. Different stories, maybe, but the destination is be rather similar.
AI will improve productivity, but lower labour power
Governments will be forced towards fiscal support
No longer independent, central banks will drift towards balance sheet expansion
Geopolitics will drive reindustrialisation and energy demand
Which brings us to the question that matters.
What are the implications for your money?
Where do you put it?
