New paper: AI buildout could push 10-year real yields from 5.1% to 13.6%
sudoraohacker · x · 2026-10-21
A new paper, "Saving for the Machines," argues the AI transformation requires enormous investment, and the only way to induce saving for it is a large rise in real interest rates. In the benchmark scenario, the 10-year real yield jumps from 5.1% to 13.6% on impact.
That makes government borrowing far more expensive: a back-of-the-envelope case with debt at 100% of GDP (typical Western Europe) and a balanced primary budget shows severe fiscal strain, raising the risk that AI "poisons" modern public finances.
Repster @sudoraohacker agrees long-term real rates will rise much higher, pressuring governments and every sector not deeply adapting to AI — "it's gonna be messy."
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