OpenAI CEO Sam Altman flags deflationary shock from AGI; here's what he predicts for the future world economy

Artificial intelligence could radically reshape the global economy by pushing it into a deflationary spiral. OpenAI CEO Sam Altman expressed his thoughts on this supposition in his recent chat with Zerodha co-founder Nikhil Kamath. Altman, however, admitted that the short-term impact of Artificial General Intelligence (AGI) could look nothing like conventional theory predicts.

Responding to a question by Kamath on the impact of increased productivity, Altman said, “I feel confused about this. If you look at the basic economic principles, it's supposed to be hugely deflationary and yet if the world decides that you know building out AI compute today is super important to things tomorrow, maybe something very strange happens with the economy, and maybe capital is important because every piece of compute is so valuable. I think it's like yeah it should be deflationary eventually, but I could see it being weird in the short term.”

Altman believes that the arrival of artificial general intelligence (AGI) holds the potential to bring efficiency that eliminates scarcity, creating a downward pressure on prices and eroding the traditional returns to capital.

That contradiction, he argued, could lead to outcomes that appear illogical under today’s financial assumptions. He even recounted a personal incident where a friend of his also predicted that either the interest rates would be ‘minus 2% or 25%,’ indicating the possibility of high inflation in a world where efficiency pushes the value-worthiness of money or of deflation in the logical sense due to scarcity going away.

Responding to Kamath’s follow-up on his opinion of inflation slipping into negative territory, the OpenAI chief added that while long-run dynamics point toward deflation, the near term could see intense demand for resources, particularly advanced chips and compute infrastructure, sending borrowing costs and capital allocation into unpredictable territory.

“Maybe it's just like we're in this massive expansionary time where you're trying to like build the Dyson sphere in the solar system and you're borrowing money at crazy rates to do that and then there's more expansion beyond and more and more and I don't know like I find it very hard to see more than a few years in the future at this point,” Altman added.

A Dyson sphere is a hypothetical megastructure that intends to completely take in the Sun’s energy to fulfil Earth’s power needs. Here, this implies the fact that such a megastructure of expansion humanity builds that inflation prevails, despite the elimination of scarcity.

Altman’s comments come as central banks worldwide grapple with slowing growth and persistent inflationary pressures, leaving policymakers little room to imagine a deflationary future. Yet if AGI delivers exponential productivity gains, traditional economic moats built on capital accumulation may erode, forcing governments and businesses to rethink fundamentals.

In a deflationary world, Altman suggested, not all sectors would collapse in value.

“In a deflationary world, some things can face huge deflationary pressure, and others can be the sink for all the extra capital. So, I'm not sure they would go down in a deflationary world, I would bet they go up because the excess capital has to flow somewhere,” Altman added.