AGI Can Lower Interest Rates

A new heterogeneous‑agent asset‑pricing model (Caleb Maresca, NYU) shows that transformative AI — capable of automating most labor — can simultaneously accelerate growth and depress the risk‑free rate to near zero, while expanding the equity premium. Under baseline calibrations the model moves growth from about 2% to 11% and pushes safe yields down even across maturities. — If true, this undermines the straightforward use of long‑term bond yields as a market signal for expectations about transformative AI and affects monetary policy, pension funding, and investment strategies.