The world’s wealthiest person says the best way to deal with AI job disruption is for the US government to step in and issue direct checks to Americans.
In a new post on X, Elon Musk says traditional monetary economics breaks down in a world where AI and robots are producing goods and services at a scale that far outpaces human labor.
“Universal HIGH INCOME via checks issued by the Federal government is the best way to deal with unemployment caused by AI. AI/robotics will produce goods and services far in excess of the increase in the money supply, so there will not be inflation.”
Musk explains that the standard inflation argument against issuing more money only holds when the supply of goods and services stays constant. According to Musk, AI’s impact on the economy will be so massive that it will put downward pressure on prices if the money supply does not increase at the same pace.
“In a normal economy, issuing more money simply increases the dollar price of the existing output of goods and services, meaning people do NOT get more stuff. If AI/robots massively increase goods and services output, then you actually MUST issue dollars to people or there will be massive disinflation. Prices are simply the ratio of goods and services output to number of dollars.”
Massive deflation, which is a sharp, broad and sustained fall in prices, carries consequences that go well beyond cheap goods. When prices fall persistently, consumers delay purchases, expecting further declines, causing business revenues to shrink while debt obligations stay fixed, and central banks lose their primary tool for stimulating growth.
Left unchecked, the dynamic can feed on itself in a downward spiral, reducing demand, triggering layoffs and defaults, and ultimately contracting the broader economy. The same mechanism was witnessed in the 1930s, which deepened and prolonged the Great Depression.
To avoid repeating history, Musk’s solution is to give away free money via Universal High Income.
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