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# Memo: AI Expected to Lower Inflation Immediately After We Finish Causing Inflation With It
- URL: https://www.dailydebasement.com/fed-reassured-ai-will-eventually-lower-inflation-once-everyone-finishes-spending-trillions-of-dollars-making-it/
- Published: 2026-08-17T00:56:33.000Z
- Updated: 2026-09-01T14:04:49.000Z
- Author: The Daily Debasement
- Tags: Memos, Money, Economy

**INTERNAL FEDERAL RESERVE MEMORANDUM** 
**SUBJECT:** Artificial Intelligence and the Inflation Outlook  
**CLASSIFICATION:** Please Do Not Forward to CNBC

Colleagues,

Our current assessment remains that artificial intelligence will be strongly disinflationary over the long term.

Unfortunately, reaching the long term will first require spending several trillion dollars.

To achieve the productivity gains expected from AI, the private sector must construct data centers, purchase semiconductors, expand electrical grids, build power plants, hire engineers, acquire land, install cooling systems, and secure enough electricity to briefly make nuclear power seem like the modest option.

These activities may increase demand for:

- Labor
- Steel
- Copper
- Electricity
- Construction
- Capital
- Everything else we are currently trying to make less expensive

This should not alter our conclusion that AI is disinflationary.

It merely means AI will lower inflation **after the inflation required to build AI is complete.**

The expected sequence is therefore:

1. Spend trillions building AI infrastructure.
2. Create shortages while doing so.
3. Observe upward price pressure.
4. Express concern about inflation.
5. Wait for AI productivity gains.
6. Receive productivity gains.
7. Declare victory over inflation partly caused by Steps 1–3.

Staff should continue describing this process as a “transition.”

Please avoid the phrase **“setting the house on fire to install a more efficient thermostat.”**

That language tested poorly.

— **Monetary Policy Strategy Division**

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Inspired by:

[Reuters - "Fed's Barkin: Still an "open question" if rate hike will be needed to meet inflation target" (August 13, 2026)](https://www.reuters.com/business/feds-barkin-still-an-open-question-if-rate-hike-will-be-needed-meet-inflation-2026-08-13/?ref=dailydebasement.com)