The Fairy Tale: AI Saves the Economy The institutional pitch is simple: AI → higher productivity → lower inflation → lower rates → higher asset prices. Clean. Elegant. Convenient. Markets love it because it justifies stretched valuations and keeps the “soft landing” narrative alive. Central banks tolerate it because it suggests they can eventually ease without reigniting inflation. But that story compresses time. AI is not just code floating in the cloud. It is a physical buildout happening in the real world — and the real world runs on constrained energy, raw materials, skilled labor, and debt financing. Before AI disinflates, it builds. And building is inflationary. Phase One: The Industrial Surge Nobody Is Pricing Correctly Call it what it…
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