"The good news is that the world is richer than ever, with $600 trillion in wealth. The bad news is that it is out of financial balance. Since 2000, asset values have risen much faster than GDP; that's a boon for those who have assets to begin with but doesn't do much for those who are just getting started and need broad-based income gains."
"First, rapid productivity growth is the most effective counterweight to today's tilted profile. And second, artificial intelligence (AI) can help-up to a point. For AI to fulfill its potential, countries must not only position themselves to benefit from its capabilities in technological and business terms, but also macro-economically. Otherwise, it would be like eating a heaping bowl of carbohydrates to fuel a workout-and then skipping the gym. The results won't be pretty."
"Consider the United States. It is at the forefront of AI-related innovation, investment, and adoption. To keep up the positive momentum, however, it needs to save more (i.e., borrow less). The national debt is, almost 120% of GDP, more than double what it was in 2000. If annual budget deficits keep growing, potentially higher inflation, interest rates, and long-term uncertainty could destabilize the economy and threaten the investment needed for a continued AI boom."
Global wealth is around $600 trillion but financial imbalances undermine broad-based prosperity. Asset values have outpaced GDP since 2000, concentrating gains among existing asset holders while limiting income growth for newcomers. Only about a quarter of wealth gains came from real investment; much of the remainder is paper appreciation. Debt has surged, with each dollar of investment linked to $1.90 in debt, and the top 1% hold at least 20% of wealth in major economies. Rapid productivity growth is the primary remedy, and AI can help partially, but macroeconomic positioning, higher savings, and fiscal discipline are required to sustain benefits.
Read at Fortune
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