The Five-Year Window: How AI Could Permanently Freeze Economic Mobility

A provocative theory is circulating in economic and technology circles, suggesting that we may have only about five years remaining to improve our financial position before artificial intelligence fundamentally transforms the economic landscape. The core argument is stark: once AI becomes sophisticated enough that anyone can create virtually anything, those who don’t own a stake in that AI-powered future may find themselves permanently locked at their current economic level, unable to advance regardless of their efforts or talents.

This isn’t mere speculation from obscure corners of the internet. Elon Musk, the CEO of Tesla and SpaceX, has discussed similar concepts extensively, outlining two potential outcomes for humanity’s AI-powered future. When asked about whether some form of universal basic income would become necessary, Musk articulated his vision: “Working will be optional because you’ll have robots plus AI and we’ll have, in a benign scenario, universal high income, not just universal basic income.”

Two Divergent Futures

Musk’s first scenario—the benign or optimistic outcome—envisions a world where traditional concepts of money might become obsolete. In this future, robots equipped with artificial intelligence would perform most or all labor, freeing humans from the necessity of work. The economic system would provide abundantly for everyone, though the exact mechanisms of how this would function remain somewhat vague.

The second scenario is considerably darker. It describes a continuation and acceleration of what economists are beginning to identify as a K-shaped economy—a bifurcated economic system where the wealthy become progressively richer while the poor become progressively poorer. In this version of the future, artificial intelligence would act as the dividing line, permanently freezing people at whatever economic position they occupy when this transition occurs.

While this sounds dystopian and depressing, examining current economic indicators reveals patterns that could support this theory. We’re witnessing unprecedented situations across multiple asset classes and economic metrics simultaneously.

The Current State of Everything at All-Time Highs

Financial markets are reaching record levels across numerous categories. The S&P 500, the benchmark index representing America’s largest publicly traded companies, continues hitting all-time highs. The median age of first-time homebuyers has reached an all-time high, reflecting how increasingly difficult it has become for younger generations to enter the housing market. Gold prices have surged to all-time highs, driven partly by countries like China and the United States accumulating the precious metal as a potential hedge against dollar instability or as an alternative reserve asset. Silver has similarly reached all-time highs. Beyond precious metals, commodities across the board are experiencing elevated prices.

Perhaps most concerning, debt levels—whether government debt, corporate debt, or household debt—have all reached all-time highs. These simultaneous peaks raise fundamental questions about what’s driving these trends.

Several explanations circulate in financial media and among economists. Some worry about potential global conflict, even invoking the specter of World War III as a destabilizing force. Others suggest we’re experiencing an AI bubble that will eventually burst, causing dramatic market corrections. The honest answer is that nobody knows with certainty what will happen next, and making definitive predictions about crashes, bubbles, or apocalyptic scenarios is an exercise in speculation rather than analysis.

The Money Printing Experiment

Rather than predictions, it’s more valuable to examine the underlying experiment we’re currently living through—an unprecedented global trial of running debt-based economies with constant monetary expansion while simultaneously entering an era where artificial intelligence eliminates many traditional opportunities for economic advancement.

To understand this experiment, we need to start with a basic question: What is an economy supposed to do? The traditional answer is that economies naturally go through cycles, expanding and contracting in regular patterns. However, human beings generally dislike the contraction phases. We prefer continuous growth because rising markets and expanding economies create wealth and opportunity.

Because of this preference, we’ve developed economic tools designed to extend growth periods and minimize contractions. Central banks lower interest rates to encourage borrowing and spending. Governments provide stimulus payments to boost consumer demand. Monetary authorities engage in quantitative easing—a process where central banks create new reserves and use them to purchase government bonds from investors, effectively injecting liquidity into the financial system.

The scale of this monetary expansion has been extraordinary. Approximately 40% of all U.S. dollars currently in existence were created after 2020, primarily through central bank reserve creation and bond purchasing programs. This represents an unprecedented expansion of the money supply in a remarkably short period.

The Deflationary Baseline

Technology entrepreneur and author Jeff Booth has articulated a compelling perspective on what would happen without this constant monetary intervention. His argument is straightforward: the natural state of a technologically advancing economy should be deflationary, not inflationary.

Here’s the logic: If the amount of money in circulation remained constant while technology continued improving, prices for goods and services would naturally decline over time. Things would become cheaper because human innovation makes production more efficient, faster, and less costly. Technology’s fundamental effect is to do more with less—to increase productivity and reduce the resources required to create value.

This clearly doesn’t describe our current reality. Instead, we experience the opposite—prices generally increase over time. Items that cost a certain amount a hundred years ago now cost significantly more. This isn’t because these items became harder to produce; in most cases, production has become dramatically easier and more efficient. The reason prices rise is that the supply of money continually expands as governments and central banks create more of it.

This monetary expansion creates a particular perception of reality. Since the year 2000, global net worth or wealth has approximately quadrupled, rising from roughly $160 trillion to around $600 trillion—about 5.4 times global GDP. For individuals who invested in assets like stocks, real estate, or businesses during this period, their wealth appeared to grow substantially. However, what actually happened is that the value of currency declined relative to these assets. People who simply saved money in cash saw their purchasing power erode significantly, even though the nominal number of dollars they held didn’t change.

This dynamic explains why assets appear to rise in value indefinitely over long time periods. It’s not necessarily that the assets themselves are becoming intrinsically more valuable—it’s that the measuring stick (currency) is continuously being devalued through expansion of the money supply.

The K-Shaped Economy Explained

The current economic environment is increasingly described as K-shaped, a term that captures how society is splitting into two divergent trajectories, much like the two arms of the letter K extending in opposite directions from a central point.

On the upper arm of the K are people who own assets—stocks, real estate, businesses, intellectual property, or anything else that benefits from monetary expansion and easy credit conditions. These asset owners see their wealth increase as asset prices rise.

On the lower arm of the K are people who primarily rely on income from labor and their savings held in cash. These individuals face rising costs for housing, food, healthcare, and other necessities, but their incomes don’t necessarily keep pace with these increasing expenses.

Current statistics illustrate this divide starkly. The top 10% of U.S. earners now account for approximately half of all consumer spending in the country. Meanwhile, the bottom 80% of earners account for only about 37% of consumer spending. The dividing line falls roughly at $175,000 in annual household income.

Families earning above this threshold are spending freely on discretionary items—elaborate birthday parties, expensive weddings, international travel—and continuously increasing their spending month after month. The bottom 80% of American households, by contrast, are cautious with spending, carefully managing budgets in the face of rising costs.

The Historical Pattern and the New Difference

At this point, one might reasonably ask: hasn’t this always been the case? We’ve long heard that “the rich get richer and the poor get poorer.” Economic inequality has existed throughout human history. Currently, the top 10% of Americans own approximately 90% of all stocks, and the top 1% alone own roughly 50% of all stock market wealth.

The critical difference between the historical pattern and what may emerge over the next five years concerns economic mobility—the ability to move between economic classes. Throughout American history, despite persistent inequality, individuals could start at the bottom of the economic ladder and work their way up. Someone could learn valuable skills, start a business, identify market inefficiencies, develop competitive advantages, and become wealthy through effort, intelligence, and sometimes luck.

Economic mobility has historically depended on finding inefficiencies—opportunities where things could be done better, faster, or cheaper than they currently are. Businesses exist specifically to address these inefficiencies, creating value by solving problems or meeting needs more effectively than existing solutions.

How AI Changes the Equation

Artificial intelligence fundamentally alters this dynamic. AI systems can make processes enormously more efficient and operate far faster than human beings across an expanding range of tasks. Over time, AI progressively closes the gap between how things currently operate and how efficiently they theoretically could operate. AI compresses inefficiency toward zero.

When everyone has access to AI tools that can build websites, write software code, analyze financial markets, create content, automate workflows, and perform countless other tasks, many traditional pathways to economic advancement disappear. Activities that once required specialized skills or significant time investment become trivially easy for anyone with access to AI tools.

For people already positioned at the top of the economic K—those who own substantial assets—this technological transformation is tremendously beneficial. Their capital becomes more productive than ever as AI-powered systems maximize returns and minimize costs. For people on the bottom arm of the K, however, advancement becomes increasingly difficult because fewer and fewer inefficiencies remain to identify and exploit. The traditional ladder of economic mobility loses its rungs.

This is how AI could potentially freeze people at their current economic positions. If you don’t own productive assets before AI eliminates most market inefficiencies, you may never be able to accumulate such assets afterward.

The implication is that our goal between now and this potential inflection point should be to acquire ownership of some productive component of the economy—whether stocks, precious metals, real estate, intellectual property, social media followings, or anything that can be trademarked or copyrighted before AI makes creating superior versions trivially easy.

Some observers suggest this transition could occur as quickly as eight to twelve months, though this seems extremely aggressive. A timeframe of five to ten years appears more realistic, though the exact timing remains uncertain.

Would Money Even Exist?

If this scenario actually unfolds, would money itself become obsolete? Would robots simply handle all production while humans receive universal basic income? This represents Elon Musk’s optimistic scenario.

The answer likely depends on what we understand money to fundamentally be, and here competing economic philosophies offer radically different perspectives.

Two major schools of economic thought provide competing frameworks: Keynesian economics and Austrian economics. These theories explain what money is by describing what economies should do and what role, if any, governments and central banks should play in economic management.

The Keynesian Experiment We’re Living Through

Today, virtually every nation operates under what’s called Keynesian economic theory. This approach begins with a fundamental assumption: economies are not inherently stable. Left to their own devices, economies would frequently fall into recessions or depressions, causing widespread suffering through unemployment and reduced living standards.

Therefore, according to Keynesian thinking, governments and central banks must actively intervene during economic crises. They help by making borrowing easier through lower interest rates, running budget deficits (spending more than they collect in revenue), and injecting money into the financial system to keep people spending.

In Keynesian economics, preventing economic collapse takes priority over allowing markets to naturally reset, even if this means accumulating higher government debt and even if it inflates asset prices like real estate to levels that turn more people into renters rather than owners.

From this perspective, the current situation—where stocks, housing, and other assets reach all-time highs—doesn’t indicate something broken. Rather, it represents the system functioning exactly as designed.

Keynesians believe inflation (the general increase in prices) should run at approximately 2% annually. Why? Because they argue modest inflation incentivizes people to spend money rather than save it. Why would encouraging spending over saving be desirable? Because, Keynesians contend, constant consumer spending drives innovation and business creation. Without strong consumer demand, businesses like Disneyland or McDonald’s might never have been built.

The Austrian Alternative

The Austrian school of economics views Keynesian theory with profound skepticism. Austrian economists believe the world functions better when failures are allowed to occur periodically and when money is based on fundamental truth.

What is this “truth”? Austrian economics holds that saving money should be rewarded and that prices should generally decline over time as technology improves productivity. If this isn’t happening, you’re not living in an economically honest system.

This debate echoes arguments among America’s Founding Fathers, particularly Thomas Jefferson, who warned extensively about the dangers of allowing money to be borrowed against and expanded. Jefferson believed that unchecked, governments would create increasingly more paper money to fund wars and make political promises. He warned that allowing banks and central authorities to control money creation would eventually “deprive the people of all property until their children wake up homeless.”

Austrian economics argues that giving governments the ability to print money inevitably leads to corruption because it removes the consequences of bad decisions. If money can be created at will and economic failures are always prevented through intervention, the economy loses its self-cleansing mechanism that eliminates poorly managed businesses and corrupt actors.

When central banks rescue failing banks and governments bail out certain corporations but not others, they’re allowing political and financial interests to determine winners and losers rather than letting market forces make these determinations. These decisions may be compromised by corruption and conflicting incentives.

For Austrian economists, money should be “hard money”—assets like gold or silver that governments cannot create more of at will. Paper currency could still exist, but it should be backed by these base-layer assets that maintain scarcity and therefore value.

The Question We Face

Returning to the original question: if AI transforms society within five years, will we live in a world of abundance where money becomes unnecessary, or in a world of economic stratification and control?

The answer may depend on how we collectively “vote with our money”—what assets we choose to hold and what economic systems we support.

Under the current Keynesian system, the optimistic version suggests robots will handle labor while universal basic income provides for everyone. Governments would determine how much people receive, when they receive it, and under what conditions—likely involving digital identification and extensive surveillance. This system might work, but the risk is that as fewer people produce direct economic value, whoever controls money creation controls access to life’s necessities. Power becomes increasingly concentrated.

The Austrian vision looks quite different. If technology genuinely makes production cheaper and more efficient, the money people save should reflect this through increased purchasing power. If robots perform the work, humans should benefit not because governments give them more money, but because they own assets—sound money and things that cannot be diluted through arbitrary creation of more units.

Many observers believe we’re witnessing this transition play out now, which explains why markets keep reaching higher levels—people are attempting to position themselves on the right side of the K-shaped economy before the window closes.

The Final Question

Perhaps the real question isn’t about predictions but about understanding the moment we’re living through: Are we watching the final phase of an economy where advancement comes from identifying inefficiencies and building businesses to address them, before moving into a world where advancement requires existing ownership of valuable assets?

This may be the last period in human history where you can get ahead primarily by building something new, because in the future, the only way to advance may be through ownership of assets acquired before this window closed. If this theory proves accurate, we have limited time—perhaps five years, perhaps ten—to position ourselves before the gap closes and economic positions solidify for generations. The opportunity to improve economic standing through effort and innovation may be running out as AI eliminates the inefficiencies that traditionally created space for new businesses and economic mobility.