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Why would AI cause deflation?

by vlehto 8y ago

graycat 8y ago
Everything the AI driven robots do will get done for less money, maybe a lot less. AI used for ad targeting will let advertisers get more for their money, spend less on ads per dollar of revenue, make advertising more efficient and, thus, lower the costs. E.g., some of the old print publishers learned a very hard lesson the hard way, "paid full tuition", about how much computing, and in particular, early Google style ad targeting, could be for ads. If an AI controlled farm tractor can plow, fertilize, seed, cultivate, and harvest the corn or wheat crop on the North 40 acres, or the south 2000 acres, the farmer can do other things, corn and wheat prices can fall, will fall due to competition, etc. Again, automation has made big, huge improvements in economic productivity, e.g., let what used to be mostly for royalty at huge prices available to nearly everyone at low to essentially free prices. So the old prices have fallen enormously, and that's definitely deflation. E.g., we got our first electronic digital computers by people putting together vacuum tubes, resistors, capacitors, inductors. "If you have to ask what it costs, you can't afford it." So, maybe the price would ruin a few $million. Now, with massive automation of microelectronics, hurry up, buy before the price goes down farther, can get the processor in my startup's first server, and AMD FX-8350, 64 bit addressing, 8 cores, standard clock speed 4.0 GHz, quantity 1, retail, for less than $100, with money now worth ballpark only 10% of then. So, automation has produced several factors of 10 less in cost. Similarly for agriculture versus food gathering, ocean sailing versus oars, steam ships versus sailing ships, light from electricity versus whale oil, coal gas, kerosene, candles. Apparently some applied math called AI has helped reduce some costs. Deflation.
- vlehto 8y ago
  If advertising costs go down because of AI, then advertising prices will go down too. That money then goes somewhere else entirely, but anyhow gets spent. If there seems to be more money around for various causes than before, that looks to the market as if money supply has increased. Which definitely will cause inflation. Business seems to be getting more profitable because of that applied math, so investing in it seems smart. True deflation would see value of money to shoot up so quickly, that you are better of if you just stuff cash under your mattress.

Why would AI cause deflation?

by vlehto 8y ago

Why would AI cause deflation?

Everything the AI driven robots do will get done for less money, maybe a lot less. AI used for ad targeting will let advertisers get more for their money, spend less on ads per dollar of revenue, make advertising more efficient and, thus, lower the costs. E.g., some of the old print publishers learned a very hard lesson the hard way, "paid full tuition", about how much computing, and in particular, early Google style ad targeting, could be for ads. If an AI controlled farm tractor can plow, fertilize, seed, cultivate, and harvest the corn or wheat crop on the North 40 acres, or the south 2000 acres, the farmer can do other things, corn and wheat prices can fall, will fall due to competition, etc. Again, automation has made big, huge improvements in economic productivity, e.g., let what used to be mostly for royalty at huge prices available to nearly everyone at low to essentially free prices. So the old prices have fallen enormously, and that's definitely deflation. E.g., we got our first electronic digital computers by people putting together vacuum tubes, resistors, capacitors, inductors. "If you have to ask what it costs, you can't afford it." So, maybe the price would ruin a few $million. Now, with massive automation of microelectronics, hurry up, buy before the price goes down farther, can get the processor in my startup's first server, and AMD FX-8350, 64 bit addressing, 8 cores, standard clock speed 4.0 GHz, quantity 1, retail, for less than $100, with money now worth ballpark only 10% of then. So, automation has produced several factors of 10 less in cost. Similarly for agriculture versus food gathering, ocean sailing versus oars, steam ships versus sailing ships, light from electricity versus whale oil, coal gas, kerosene, candles. Apparently some applied math called AI has helped reduce some costs. Deflation.

vlehto 8y ago
If advertising costs go down because of AI, then advertising prices will go down too. That money then goes somewhere else entirely, but anyhow gets spent. If there seems to be more money around for various causes than before, that looks to the market as if money supply has increased. Which definitely will cause inflation. Business seems to be getting more profitable because of that applied math, so investing in it seems smart. True deflation would see value of money to shoot up so quickly, that you are better of if you just stuff cash under your mattress.