Ep. 371: Paul Krake on AI's Post-Cyclical World, 10% Unemployment Risks, and the End of Friction

The traditional business cycle is fading as technological advancements, particularly AI, reduce economic friction and fundamentally shift the labor-capital dynamic. AI acts as the final layer of friction removal by replacing human cognition, potentially leading to 10% unemployment in the 2030s as knowledge work faces significant displacement. Corporate profit margins have trended upward as capital becomes more influential and labor's share of GDP declines. Monetary policy is losing its efficacy because it cannot address these structural, supply-side changes, necessitating a shift in fiscal policy to support labor. Paul Krake, investor and author of *Growth Without You*, argues that investors should remain long on equities, as the economy becomes less cyclical and margins remain elevated, despite the long-term societal challenges posed by AI-driven job displacement.