AI's biggest blind spots and unknowns for Fed policy, laid out by Fed Chairman Kevin Warsh.

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31 segments

0:00

We recognize that AI is a new variable,

0:03

potentially a new factor of production

0:07

that will have consequences both for the

0:09

economy and for the conduct of monetary

0:12

policy. Everex expanding pools of

0:14

capital pouring into AI related

0:17

infrastructure. Reports put annualized

0:19

token sales for the two leading labs

0:21

alone at more than a hundred billion

0:24

dollars, an increase of 500%

0:27

from just 12 months ago. It opens up

0:30

some major lines of inquiry. Will the

0:31

application of AI cause a significant

0:34

sustained rise in productivity across

0:36

the economy? Will token usage be

0:38

complimentary or competitive to labor?

0:41

Will the next generation of AI models

0:43

demand even greater capital intensity

0:46

too? Among the other yet unknowns is the

0:48

resulting market structure. Who gets to

0:50

make the money? It's not obvious where

0:52

the returns on capital will land or on

0:54

what time scale. Early on, how much of

0:57

the surplus goes to owners of scarce

0:59

assets, the AI labs or chip makers or

1:02

energy producers or cloud providers?

1:05

Over time, how much of that value

1:07

acrrues to businesses and consumers? And

1:09

importantly, what are the implications

1:11

for workers and for the employment side

1:14

of the Fed's mandate?

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The speaker discusses artificial intelligence as a significant new economic factor, noting the massive surge in capital investment. The core inquiry focuses on AI's potential to boost productivity, its relationship with labor, and the distribution of economic gains among capital owners, businesses, and workers, with specific interest in the implications for monetary policy.