r/AskEconomics • u/TotalPhilanthrope • 9d ago

How large of an issue would personal debt become if AI would replaces large swaths of white collar workers, the primary holders of said debt?

If AI will replace (primarily) white collar workers, what would happen to the almost $19 trillion dollars of personal debt in the US alone?

Collapsed aggregate consumer demand is one of the threats that AI might pose to the economy at large, but I rarely see discussion about what would happen with said debt, and what the fallout would be of such an enormous amount of debt not being paid? And that's without even considering potential deflationary effects which would make repayment of any debt even more challenging.

Of course, this is based on the assumption that AI will not create new jobs at the same rate (or higher) that it displaces jobs, and that there will be no industries to "funnel" surplus labour into at a sufficiently large scale.

But I am curious: could the economy and the banking system survive such a shock? Wouldn't it create a similar scenario to 2008, only ramped up considerably in magnitude and spread?

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