Artificial Intelligence Predicted to Cause Massive Economic Deflation, Says OpenAI Investor

Vinod Khosla, a billionaire and early backer of OpenAI, predicts that artificial intelligence (AI) will have a “hugely deflationary” effect on the global economy over the next 25 years. He believes that current measures of GDP and economic health will become less relevant, but goods and services will be abundant. Khosla’s outlook contrasts with the inflationary pressures that the economy has been experiencing for the past two years. In a deflationary environment, prices decrease, resulting in lower profitability for companies and stagnant or shrinking economic growth. However, Khosla believes that AI will change the economic landscape, making traditional measurements less meaningful. He also questions what the appropriate measures and questions should be in this new paradigm. Khosla’s venture-capital firm invested $50 million in OpenAI in 2019, making it the largest investment in the company’s history. Khosla has frequently discussed the opportunities and risks associated with AI, noting that China poses a greater risk than sentient AI. Elon Musk, CEO of Tesla, has also predicted significant economic effects resulting from AI, envisioning a future of abundance and the elimination of poverty.