Macro analyst Luke Gromen is raising alarms about the financial consequences of rapid AI adoption, arguing that white-collar workers are far more exposed to disruption than most analysts acknowledge.
In a new interview on The Money Matters Network, the macro guru says AI and automation could undercut labor market and wage stability for millions of white-collar workers, leading to all types of credit delinquency.
“Ultimately, AI automating so much information work means AI creating massive amounts of mortgage delinquencies and car loan delinquencies, etc. Because look, white collar people have no idea what’s coming for them.”
According to Gromen, banks and other financial institutions will have no choice but to absorb the massive losses, forcing them to sell their US Treasury holdings to finance the losses. He also believes that AI wiping out white-collar jobs will ultimately create a deflationary environment, as consumer demand falls off the cliff and the US government falls short on generating revenue from payroll taxes.
Data shows that the US collected $1.71 trillion in payroll taxes last year.
With the US paying nearly $1 trillion in net interest on its over $38.33 trillion national debt, Gromen predicts that the government will have to sell more Treasuries amid the deflation. He adds that the large liquidation of Treasuries will push the dollar higher, prompting foreign holders of US debt to sell their bond holdings as well.
“I don’t know when this thing really hits a critical tipping point, but once it does, banks are sellers of Treasuries. Deficits are going to be increasing the Treasury supply… Oh, by the way, the dollar is probably going to go up in this, which means foreigners are going to be selling Treasury as well. Deflation with leverage, where it is across the system, tells you ugly things.”
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