[ExI] How new AI economics might change our systems

[BillK]

On Sun, 20 Sept 2026 at 18:09, <spike at rainier66.com> wrote:

> BillK, several AIs missed something really important in that list of
> things that cannot be discarded: debt.
>
>
>
> A government can devalue its currency and diminish its debt, but it still
> owes the bond holders.  Devaluing its currency comes at a price: its
> borrowing cost goes way up.  If it gets carried away with devaluing its
> currency, a government may find itself unable to borrow.  Yanks fail to
> realize how little they would be able to get from the federal government
> unable to borrow money.
>
>
>
> The AIs appear to be fans of modern monetary theory, however it doesn’t do
> much with post-modern monetary theory, which posits that modern monetary
> theory is incorrect.  We had a good explanation of modern monetary theory
> by a former economic advisor:
>
>
>
> https://www.youtube.com/watch?v=1Fj0zRmEWYc
>
>
>
> OK that clears it up.
>
> spike
>
> ---------------------
>


I mentioned the USA deficit to Gemini and got a long response; maybe this.
maybe that.......
BillK

Gemini 3.8 Flash, High Thinking Level:
The Bottom Line

In the *short-to-medium term (the next 3–7 years)*, AI is likely to *widen
the US deficit*. The combination of high borrowing costs to finance the
infrastructure buildout, transitional labor market frictions, and
escalating geopolitical spending will front-load costs before productivity
gains fully mature.

In the *long term*, the $2 trillion deficit will either be:

*Rendered obsolete* by an explosive growth wave that dramatically lowers
the debt-to-GDP ratio; or

*Turned into a full-blown sovereign debt crisis* if the displacement of
human labor drains traditional income tax coffers before the political
system can agree on how to tax machine productivity.
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