AI Is About to Define and Split the Price of Everything
The same technology that eventually drives goods and services toward zero is making the durable scarce assets behind them dearer. Here is what that does to money, to debt, and to your savings.
The coming years will feel inflationary and deflationary at the same time, and that is not a contradiction. It is the central monetary fact of the AI transition, and it decides where wealth accumulates.
AI will make almost everything it can reproduce cheaper, year after year: software, media, routine knowledge work, and manufactured goods. The things it cannot reproduce will get dearer, because value flows to whatever stays scarce.
Money sits between the two forces. Governments keep creating it to carry their debts, which inflates prices, while technology keeps pushing prices down. The result is a split screen, and that split, more than any single model or breakthrough, is what will move wealth around over the next decade.
Energy and compute are scarce today, but capital is flooding into generation, grid, and chip fabs precisely because those things are the bottleneck, and abundance is what happens next, when that investment bears fruit. The cost of intelligence per unit is already collapsing, and energy follows as the buildout matures. So energy and compute are the scarce inputs of the moment, being manufactured into the cheap and abundant layer over the transition. What stays scarce is the layer underneath the machines, the things you cannot build more of: land in the right place, grid interconnection and the permits that gate it, the physical and mineral bottlenecks, proprietary data, gold, bitcoins. That durable scarce layer is where the value migrates.
Right now the pressure is inflationary, and it is fiscal. Debasement is the subtle erosion of money’s value that happens when governments create it faster than the real economy grows, and today it takes the form of financing large deficits with newly created money. A state that owes a fixed number of dollars is relieved a little every year that each dollar buys less, since the debt stays the same size while everything around it drifts up. This is the oldest and most politically comfortable way to lighten a debt, as it doesn’t require a vote. It also has a ceiling. Push it too far, and bond markets demand higher yields the moment they anticipate inflation, which raises the cost of the very debt you are trying to inflate away. That window is closing.
Then the second force arrives, running the other way. AI and robotics drive the cost of anything reproducible toward zero, and put downward pressure on salaries at the same time. For most households, whose spending sits mostly in reproducible things, the lived experience of AI is deflationary: the same money goes further each year. This is what abundance feels like from the demand side.
The deflation is not uniform, and that is the part that matters. AI collapses the price of what it can copy and lifts the price of what it cannot. The durable scarce layer, land, grid rights, permits, data, and gold, gets dearer as the abundant layer gets cheaper, because the displaced value migrates to scarcity. What we end up with is a split price level. And a single national inflation number, averaging a collapsing category against a soaring one, becomes less and less meaningful. The average hides the divergence, and the divergence is the story.
A connected shift touches on who gets to own the future. Enterprises that are already run or co-run by autonomous agents are experimenting with raising money by issuing digital tokens directly to the public rather than through venture-capital and private-equity rounds. Tokenization is simply the issuing of ownership as digital tokens on a blockchain, so a share in an asset, a fund, or a company can be divided finely, held directly, and traded without the usual layers of intermediaries. For a generation, the fastest-growing private companies raised capital privately, while ordinary savers were locked out of most of the gains. Tokenized capital formation reopens that opportunity, and it offers a way for workers facing diminishing salaries to hold a claim on future growth. The public debate has already moved from universal basic income toward ownership, with figures from Sam Altman to Bernie Sanders now proposing equity stakes and public wealth funds. That is the transition happening in real time.
The price split induced by AI+debasement resolves the paradox I opened with. Debasement and deflation do not cancel; they run in sequence. A heavily indebted system cannot tolerate broad deflation, because falling prices make fixed debts heavier in real terms, which is the mechanism behind every serious credit crisis. So when technology pushes prices down hard, central banks print to stop the fall, and the money they create does not spread evenly. It flows to the assets AI cannot cheapen. Consumer prices stay flat while asset prices climb. This is how an economy runs deflationary at the checkout and inflationary in the asset markets at the same moment, and it is why abundance, left to run through the system we have, concentrates wealth rather than spreading it.
Demographics lean on the same lever. Populations across the rich world and China are shrinking while the agentic population explodes. Fewer people means softer demand for ordinary goods, which deepens the deflation in the abundant category. Historically, a shrinking workforce meant shrinking output, because output was tied to workers. AI breaks that link.
All of which raises the obvious objection: a state carrying tens of trillions in fixed debt cannot possibly pay it back once wages thin and margins collapse, as the tax base collapses with them. That fear is overstated, and it rests on a hidden assumption, that the state raises money the way it does today, by taxing income and profit. In an abundance economy that method implodes, and three other mechanisms open. Taxation moves onto the durable scarce, land, grid, permits, at rates far higher than today, because those bases have to carry the load wages used to bear. The state shifts from taxing to owning, taking equity in the productive economy and paying its bills from dividends rather than payroll. And the state’s own costs collapse alongside everyone else’s, so it needs far less revenue to do what it does.
The conclusion for savers and investors depends on which deflation the authorities allow to happen, and that is a policy choice. Left untouched, productivity deflation would reward the cautious: cash would buy more each year, and safe bonds would gain in real terms. But a system carrying this much debt will not permit rampant deflation, because falling prices raise the real debt burden toward crisis. So the authorities create money to defend the debt, and the new money flows into the scarce assets machines cannot cheapen. In that realized world, cash roughly holds its value against everyday goods while falling steadily behind assets, and real assets, equities, and scarce inputs reprice upward. Cash keeps you level with the falling price of the abundant and leaves you far behind on the rising price of the scarce.
The people protected are those who own the scarce assets. Wage earners and pure savers are not. That widens the gap between labor and capital, and it is the clearest practical reason that broad participation in ownership stops being a matter of preference and becomes a matter of protection. It is also why the policy fight of the agentic economy transition is not really about income at all. It is about who owns the scarce things, how heavily they are taxed, and whether ordinary people are given a way to own a share before the opportunity closes.
A note on independence: All opinions shared in this newsletter are my own and do not reflect the views of dmg events, ADIPEC, or any affiliated organizations. This is personal analysis, not institutional positioning.