Can AI, Compute Economies, and Digital Currency Solve the Debt-to-GDP Crisis?

Chad Johnston
14 hours ago
5 min read

A Hypothesis on Post-Professional Economies, AI-Driven GDP Growth, and the End of Scarcity-Based Finance

The global economy is facing a structural problem: Debt is compounding faster than productivity.

Public and private debt relative to GDP has reached historically extreme levels across most developed economies. In Canada, total debt (government + household + corporate) now exceeds 400% of GDP. In the U.S., total debt is over 350% of GDP. Similar ratios exist across Europe and parts of Asia.

Historically, debt-to-GDP crises are resolved through:

Inflation
Default / restructuring
Financial repression
Productivity booms

This paper explores a fourth pathway:

A structural GDP expansion driven by AI, compute-based production, and digitally-native financial infrastructure potentially large enough to outpace debt growth and re-anchor currencies to real productivity.

This is not a prediction. It is a hypothesis about what becomes possible if certain technological and financial systems mature.

1. The Structural Problem: Debt Is Growing Faster Than Productivity

Modern economies rely on leverage. Governments borrow to fund infrastructure and social systems. Households borrow for housing. Corporations borrow for expansion. The system works as long as GDP grows faster than debt servicing costs.

But productivity growth in advanced economies has been slowing for decades:

U.S. labor productivity growth averaged ~2.8% (1950–1973) but fell to ~1.4% (2005–2019).
Canada shows similar long-term productivity stagnation.
Real wage growth has lagged asset inflation.

At the same time, debt has accelerated:

Global debt exceeded $300 trillion in 2024 (Institute of International Finance).
Debt-to-GDP ratios are structurally elevated due to aging populations, housing inflation, and fiscal expansion.

This creates a long-term imbalance: Debt grows exponentially; productivity grows linearly. That gap is what AI potentially changes.

2. AI as a New GDP Engine: Compute as the New Capital Layer

AI changes the nature of production.

Historically, GDP scales with:

Human labor
Physical capital
Energy

AI introduces a new factor of production:

Compute + intelligence as scalable, non-linear capital.

Key economic implications:

Software agents can perform cognitive labor at near-zero marginal cost.
AI systems scale horizontally one model can serve millions of users simultaneously.
Once trained, AI “workers” do not require salaries, healthcare, or rest.
AI accelerates R&D cycles, compressing years of innovation into months.

This changes the production function of GDP.

Instead of:

GDP ≈ Labor × Capital × Productivity

We move toward:

GDP ≈ Compute × Intelligence × Energy × Automation

McKinsey estimates generative AI could add $2.6–$4.4 trillion annually to global GDP. Goldman Sachs estimates AI could boost global productivity by 1.5 percentage points per year over the next decade.

If this compounding effect persists, GDP growth could structurally outpace debt growth, which is the only non-destructive way to resolve debt-to-GDP imbalances.

3. The Disintermediation Hypothesis: The End of Many Professional Middle Layers

Our hypothesis goes further:

Many professional services (realtors, brokers, lawyers, accountants, financial advisors) become structurally less necessary once AI + public, transparent, programmable legal and financial infrastructure exists.

This is controversial but not irrational.

AI is already:

Drafting contracts
Performing tax preparation
Providing financial planning
Automating compliance
Performing document review
Conducting due diligence

The cost curve of professional services is collapsing.

If legal frameworks become:

Machine-readable
Publicly auditable
Embedded into programmable contracts
Integrated with on-chain identity (KYC + wallets)
Linked to AI risk engines for underwriting and compliance

Then a large portion of today’s “professional class” becomes:

Infrastructure operators rather than gatekeepers.

This is similar to what happened to:

Travel agents
Stock brokers
Media distributors

4. Stablecoins as the Currency Layer of the AI Economy

In an AI-driven economy, speed of settlement, programmability of money, and machine-to-machine payments become critical.

Traditional banking rails were built for humans, not autonomous agents.

Stablecoins introduce:

24/7 programmable settlement
API-native financial rails
Atomic delivery-versus-payment
Embedded compliance logic
Machine-readable accounting

In this model, stablecoins become:

The transactional currency layer of the AI economy, while fiat remains the sovereign accounting unit.

This does not require replacing the dollar.It requires upgrading the rails the dollar moves on.

As AI agents transact on behalf of businesses, users, and even governments, money becomes software.

That alone compresses transaction costs across the economy, increasing velocity of capital, which raises effective GDP without increasing physical resource consumption.

5. Asset-Backed AI Finance: The New Credit Layer

With AI-native risk engines, on-chain identity, and transparent asset registries, credit underwriting becomes:

Continuous instead of episodic
Data-driven instead of form-based
Collateralized in real-time
Auditable by regulators
Programmable in repayment logic

This enables:

Asset-backed loans tied directly to productive assets
Automated covenant enforcement
Lower default rates through real-time risk repricing
Lower interest spreads due to reduced information asymmetry

As cost of capital drops, productive investment increases, further expanding GDP.

6. The Macro Feedback Loop: How Debt-to-GDP Could Normalize

Our core hypothesis can be summarized as a feedback loop:

AI drastically reduces the cost of producing goods and services
GDP expands through compute-driven production and automation
Stablecoin rails increase capital velocity and reduce transaction friction
AI underwriting lowers cost of capital
Asset-backed lending expands productive capacity
Cost of living falls relative to income
Governments face lower social service pressure due to cheaper goods and services
Debt becomes manageable relative to GDP
Currency purchasing power stabilizes as real productivity rises
The system exits the debt trap without inflationary collapse

7. The Social Shift: From Scarcity Negotiation to Value-Based Exchange

As goods and services become cheaper:

The need for adversarial negotiation declines
Many transactions become standardized
AI agents handle optimization
Human interaction shifts toward:
- Creativity
- Community
- Meaning
- Innovation
- Relationship-building

In economic terms, society transitions from:

Scarcity-driven bargaining to Abundance-driven coordination

This is not utopian but it represents a structural reorientation of what humans spend time doing when survival is less financially constrained.

8. What Has to Be True for This to Work (Critical Assumptions)

This vision depends on several non-trivial assumptions:

AI productivity gains must materially exceed debt growth rates
Compute and energy costs must fall faster than demand grows
Regulatory systems must adapt to programmable finance
Stablecoin rails must integrate with sovereign monetary systems
Political capture must not prevent cost savings from reaching citizens
AI benefits must not concentrate only in a few mega-firms
Social safety nets must bridge transitional unemployment

If these conditions fail, the outcome could just as easily be:

Wealth concentration
Technological unemployment
Increased inequality
Political instability

So this is a fork in the road, not an inevitable outcome.

9. Conclusion: A Post-Professional, Compute-Driven GDP Expansion Is the Only Non-Destructive Exit From the Debt Trap

Historically, societies exit debt crises through:

War
Inflation
Default
Financial repression

AI introduces a potential fifth path:

Outgrowing the debt through an unprecedented expansion in productive capacity.

If compute becomes the new capital base, stablecoins become the transactional layer of AI economies, and professional intermediation costs collapse, GDP growth could structurally outpace debt growth for the first time in modern history.

In that world: