Author: Route 2 FI

Translated by: Deep Tide TechFlow

Deep Tide Guide: While the public still views AI as a tool for efficiency, companies have begun to silently rewrite the logic of employment. The author points out that those who possess capital and infrastructure will enjoy the productivity dividend alone, while ordinary people who rely on climbing the salary ladder to accumulate their first bucket of wealth may only have a few years left to catch up.

Less discussed risks lie in the real estate market. Housing prices ultimately depend on the mortgage repayment ability of the white-collar class; once high-paying jobs shrink, central banks, constrained by inflation, may fall into a policy dilemma of "cutting rates to raise prices" or "maintaining high rates to accelerate sales," leading the author to propose coping strategies.

Recently, I have been deeply contemplating AI.

I want to talk not about the hyped concepts in the market, such as which large model is the strongest this week, or which AI-themed coin skyrocketed, but about how this technology will fundamentally change the reality of ordinary people.

The deeper I think, the stronger my premonition becomes: before a major change in social structure occurs, the window for ordinary people to truly accumulate wealth on their own may only be a few short years.

To be honest, I hope I am wrong in my judgment. But rather than waiting until the change really happens and being caught off guard, I would prefer to completely think through the whole logic now.

AI is far more than an efficiency tool

The vast majority of people still view AI as a tool for enhancing personal efficiency.

Using it to write emails faster, asking it questions directly instead of opening Google search, treating it as a readily available therapist, or compressing a PPT that originally took 5 hours to complete into just 5 minutes.

These are indeed true, and I use it frequently every day.

But please consider from another perspective what this means for a company. If one employee who is extremely good at using AI can do the work of 5 people, what happens to the other 4?

Companies cannot always pay 5 salaries for 1 person's output. Typically, a company will not lay off everyone overnight because that can easily make the headlines; instead, they often take a more gentle approach:

• Stop hiring junior employees;
• Not replace old employees when they leave or retire;
• Reduce salary increases because your position suddenly becomes easier to replace;
• Maintain the same level of business output with a more streamlined team.

All of this happens quietly. No one will receive a dramatic letter saying, "AI has taken your job."

The ladder for career advancement slowly disappears without anyone noticing, while the bottom step often collapses first. For young people trying to enter the workforce, this is the most chilling aspect.

The showdown between assets and wages

If we simplify the underlying logic, my view is as follows.

If you own assets, AI is likely good news for you. As labor costs continue to decrease, company profit margins will actually rise.

And this surplus profit will ultimately flow into the hands of those who own: shareholders, founders, and those who possess core infrastructure, large models, computing power, and scarce resources.

But if your only source of income is a salary, then your current competitor is a tireless entity: it doesn’t need to sleep, doesn’t get sick, doesn’t sit down to negotiate salary conditions with you, and every year it becomes cheaper and stronger.

The term "Permanent Underclass" originates here. I know this sounds somewhat alarmist.

But if the vast majority of societal value flows to the capital end, while the value of human labor continues to be suppressed, then the gap between the owners and the dispossessed will become more difficult to bridge than ever before in the future.

In today’s situation, you can still save some money from a decent salary and slowly climb up through investments. The real question is: how long will this pathway remain open.

The unmentioned hidden worry: the real estate market

This is also a key element that has been repeatedly circling in my mind, because for the vast majority of ordinary families, their house is fundamentally all their wealth, and at the same time, it is usually also their largest debt.

The operation of the entire real estate market is actually built upon a core premise: people can maintain their sources of income and repay their mortgages on time.

So, once a considerable proportion of white-collar jobs disappear in a short time, or salary levels experience a dramatic decline, what will happen next? Here is a potential chain reaction:

1. Many people lose their jobs or face significant pay cuts. Office clerks, administrative staff, customer service, junior programmers, and various analysts—these positions, which typically support standard mortgage repayments, will be the first to get hit.
2. Borrowers can no longer afford their monthly payments. Especially those who bought homes with maximum leverage during high housing prices and high interest rates will be the first to face repayment difficulties.
3. Forced to list properties for sale. Some will preemptively list to minimize losses before banks repossess, while others will have no choice in the matter.
4. A large number of properties flood the market at the same time. Meanwhile, potential buyers eligible for mortgage approval are dwindling because banks also need to assess whether buyers have a stable income source.
5. Housing prices plummet. The subsequent situation is that many homeowners who recently bought houses will find their mortgage balances exceed the current value of their properties.
6. Sell-off waves and tightening credit create a vicious cycle. This will force more people to panic sell, with banks tightening risk controls further, pushing housing prices into a deeper decline.

This is a standard negative feedback loop: falling prices trigger more sell-offs, and more sell-offs further depress prices.

We witnessed a similar scene in 2008, but it is important to note that that crisis was initially ignited by subprime bad loans, whereas this time, the fuse may be jobs being directly replaced by software.

This time, can policy cushion the fall?

I am not saying all this will definitely happen. The government and the central bank will likely use all means to prevent the situation from spiraling out of control: cutting rates, launching rescue plans, allowing mortgage payment pauses, and even possibly introducing some form of universal basic income (UBI).

Real estate involves deep political entanglements, and decision-makers will never let it fall freely.

But what truly worries me is: this time, do they really have the space to cut rates significantly?

In 2008 and 2020, the script for saving the market was very simple and direct: keep lowering interest rates to zero and then turn on the printing press.

At that time, inflation wasn’t a real issue, so there was almost no resistance from the market or society.

But now, inflation levels are still relatively high, with daily expenses such as food, rent, electricity, and insurance already elevated. If the central bank takes aggressive cuts to support the housing market, it will risk subjecting all ordinary people to higher prices.

Therefore, decision-makers may very likely get stuck between two equally bad options:

• Significantly lower interest rates to save the housing market and employment, but this could likely trigger an even stronger inflation rebound, which would hit the already struggling groups the hardest.
• Maintain high rates to curb inflation, at the cost of helplessly watching more people stop paying, thus accelerating the arrival of the housing sell-off tide.

Additionally, government subsidy plans or universal basic income require astronomical financial resources. These funds usually have to be raised through the issuance of national debt, and debt expansion will also raise inflation and interest rate expectations. It’s worth noting that many countries today carry debts far exceeding those of 2008.

To be honest, I am not sure whether decision-makers have as much market-saving space as the public assumes they do.

I guess they will inevitably try to catch the bottom, most likely choosing to cut rates and tolerate higher inflation, because politically, a real estate collapse is much harder to manage than a rise in daily commodity prices.

But this is not true salvation; it merely shifts the way ordinary people are harmed: the house you own may preserve its value on paper, but the purchasing power of your currency continues to diminish.

No matter which path is taken, in a world where job incomes are no longer secure, real estate cannot naturally equate to a "safe asset." Ultimately, how much a house is worth depends on how much a working person can borrow from a bank to pay for it.

Of course, the script might not unfold this way

To be fair, there is another side to the story.

AI may also significantly lower the costs of vast amounts of goods and services, creating many new jobs that we can’t even imagine today, and the entire transition process of society may be slower and smoother than I have described. Historically, every significant technological change has initially sparked panic, but ultimately, the number of jobs created often surpasses those destroyed.

However, in my opinion, the difference this time lies in the speed of change and the fact that it targets intellectual jobs, not just manual labor.

Even if society ultimately restores balance in the long term, going through several years of severe turbulence will still be enough to destroy the financial foundations of many ordinary people.

So, what should ordinary people do?

There are no perfect answers to this question, but here are some thoughts on how to cope at this stage:

• Make good use of the current time window. If you currently have a decent income, please force yourself to consume more restrainedly than usual and save as much cash as possible. For a long time to come, now may be the easiest time to build a financial safety net.
• Hold quality assets early. This could be stocks, cryptocurrencies, a business of your own, or a scarce skill that the market is still willing to pay a high salary for. In short, you must own things that do not entirely rely on selling your time.
• Be the one who remains, not the four who are eliminated. Maximize your usage of AI tools in your professional field. Before AI replaces everyone, those skilled in navigating AI will first displace those who cannot use it.
• Be highly prudent with leverage. Taking on a high mortgage while your budget is already tight is essentially betting that your job income will be absolutely stable for the next 25 years. Ensure you leave yourself some room to handle sudden tough times.
• Don’t go all in to escape difficulties. I understand the impulse to get rich quickly very well; believe me, I've been grappling in the crypto market myself. But forcing high-risk bets due to a sense of urgency often only makes the situation worse. The slow and seemingly tedious accumulation of compound interest is severely underestimated today.

Final thoughts

What is most subtly troubling at this moment is that we have already caught a glimpse of the future direction: AI is still rapidly evolving, jobs are becoming increasingly insecure, and various assets are becoming more expensive.

Most people will adopt a mindset of luck and wait until the crisis truly hits them before waking up. But in my view, now is the time to proactively step out of the comfort zone and start taking action, rather than waiting until later.

I do not oppose AI at all; on the contrary, I believe it is one of the most important technological breakthroughs in human history. Precisely because of this, we should take its profound impacts with utmost seriousness.