Lucabryan
AI, Keynesian Economics & the Price of Everything Have you noticed the increase in the amount of people complaining about the lack of jobs or how companies have made the recruitment process more difficult? Keynes warned about mass unemployment in a world where machines do all the work. That future is arriving fast. As AI automates more jobs, mass unemployment could slash consumer demand, driving the price of many goods toward zero. In classic Keynesian terms, when demand collapses, so does economic activity. Governments may need aggressive intervention to avoid deflationary spirals and keep economies afloat. AI isn’t just a tool, it’s a test of whether Keynesian policies can adapt to a world where productivity soars but wages and demand fall behind. THE DILEMMA As all companies are adopting AI with the hope to cut labour and save money, a paradox will emerge. If the majority of the population becomes unemployed, then how will they consume the products and services offered by these companies? Government intervention scenario: The government is likely to step in, and one of the most probable measures in this scenario would be to raise corporate taxes and use the additional revenue to support consumer spending. However, a key concern is that government intervention is often hampered by inefficiencies in public systems. Alternative scenario: People might rely on the informal economy to survive. In the worst-case scenario, this could lead to riots and severe social instability. $BTC (Bitcoin) $TSLA (Tesla Motors, Inc.) $OIL (Oil (Non Expiry)) $EURUSD (EUR/USD) $USDBRL (USD/BRL) $GOLD (Gold (Non Expiry))
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