OpenAI investor Vinod Khosla predicts AI will deflate the economy over the next 25 years

• Vinod Khosla said AI should have a "hugely deflationary" effect on the economy over 25 years.
• "Current measures of GDP and the economy will be less relevant," Khosla wrote in an X post.

The billionaire and early OpenAI backer Vinod Khosla says he expects AI to fundamentally change the global economy.

"AI should be hugely deflationary over twenty five years," Khosla wrote on X on Monday.

His outlook is a stark departure from what markets and the economy have been dealing with for the better part of two years. Inflationary pressures have continued even as price growth has come down from multidecade highs.

In a deflationary environment, prices fall, leading to lower profitability for companies and stagnant or even shrinking economic growth.

But Khosla predicted that AI's impact would make traditional measures of economic health less relevant.

"Capital should be scarce for a while, current measures of GDP and the economy will be less relevant but goods and services should be in great abundance," he said. "The key question is what are the right measures and the right questions."

Khosla's venture-capital firm invested $50 million into OpenAI in 2019, the largest investment in the firm's 15-year history.

The 68-year-old investor has often expounded on the opportunities and risks of AI. On December 12, Khosla told attendees of Fortune's Brainstorm AI conference that AI wasn't the world's great threat.

"The doomers are focusing on the wrong risks," Khosla said, adding, "By far, orders of magnitude, higher risk to worry about, is China, not sentient AI killing us off."

Khosla isn't alone in forecasting dramatic economic effects of AI.

When Elon Musk unveiled Tesla's AI robot last year, he predicted the economy could become "quasi-infinite" if the robots were capable of manual labor.

"This means a future of abundance," Musk said. "A future where there is no poverty, where you could have whatever you want in terms of products and services."

He added, "It really is a fundamental transformation of civilization as we know it."

Representatives for Khosla did not immediately respond to a request for comment from Business Insider sent outside regular business hours.