[tarsinge]

Generative AI has potential and there are fun experimentations, but nothing game changing for the vast majority of businesses at the moment. People always overestimate short term change a new technology bring. Sure long term as with the internet it will change everything. But for now in the broad picture of the economy this is a toy and the FED doesn’t care about it. “AI” looks more like a Hail Mary for VC before being definitely crushed by high rates at this point.

[Timber-6539]

I somewhat agree with you on some points. Am not all in on AI becoming a main driver for business productivity (not yet at least) but that's not really up to me to decide. It could very well be a flop but we could be calling it no more revolutionary than the fax machine and be wrong about it just like Paul Krugman's infamous prediction in 1998.

The tech boom was as much influenced by silicon valley VC money as it was by the technological solutions themselves. AI fits into the same playbook. It's only rational to look at it in the same lens. The only difference is that tech has hit its limits as we are seeing with the layoffs but AI presents itself as a new vehicle to continue with the inflation.

The reason the Fed care about AI in my view is because it's new a conduit for letting loose the money printer. Once AI begins increasing economic output they'll have their missing piece for ZIRP. Without this, opening the floodgates again will be a catastrophic mistake as the inflation won't match the productivity output.