Why AI’s Deflationary Shockwaves Will Drive Bitcoin to Monetary Supremacy
The first thing that hits you on a Wall Street trading floor isn’t the smell or the flashing screens. It’s the sound. Clicking keyboards, chirping sales assistants, bellowing managing directors and the hum of the hive as they collectively do deals.
In my first week, I figured out you could tell how the day was going by the tone of that sound alone. I also figured out that the kid whose father ran a hedge fund got the good tips so he got to hang out with the MDs, and the rest of us got to fetch the coffee. I didn’t have the right last name, the right summer house, or the right opinion on sailboats, so I learned to look for other things.
I learned to look for the arbitrage in everything.
There was an arbitrage in knowing which analyst was about to get fired and an arbitrage in knowing which IT guy could get you a faster terminal. And there was a big one, I found, in listening to the people everyone else was paid to ignore. That habit led me to leave the whole gilded circus of Wall St behind. In February of 2013, I walked out of a glass tower in midtown for the last time, cashed out, and put my own name on the door: McDonagh Family Office. It was just me working out of my apartment, completely convinced that the real game wasn’t on the floor anymore. It was happening in places where my old bosses in the corner offices weren’t even looking.
Better to Be Lucky
My new life led me down two ridiculously uncomfortable, career-defining paths. The first was into the world of machine learning, which was what we called AI back before it got a better marketing department.
I used ML to machine read financial statements and built a hedge fund around that idea. Then I started backing pasty-faced academics in Palo Alto who kept talking about “neural networks.” They had this crazy notion that you could teach a machine to think. Not just calculate, but learn. My old colleagues thought I was nuts, chasing science fiction and “Star Trek investments”.
The second idea came from a programmer I met at the Princeton Club in 2012. He tried to explain a “trustless, decentralized ledger” to me. It made almost no sense, but one thing he said stuck with me: the supply was mathematically, unchangeably finite. In a world where the Chairman of the Federal Reserve could add three zeros to the money supply with a single press conference, the sheer absurdity of a fixed supply felt like the punchline to a joke nobody had told yet. I bought some Bitcoin that afternoon. It wasn’t an investment in a company or a technology. It was an arbitrage on the sanity of every central banker on Earth. I bet that greedy people were going to stay greedy. I bet they would print more money to make their lives easier.
For years, these two bets, AI and Bitcoin, lived in separate corners of my portfolio, the weird cousins nobody wanted to talk about at family gatherings. The AI companies were supposed to be the future but I mostly got Skynet/Terminator jokes and “aren’t we all gonna lose our jobs?” dooming.
Bitcoin was, well, who knew what Bitcoin was?
Digital gold? A protest vote? A Tulip bulb for nerds?
It took me a while to see how the two strange ideas in my head, one creating infinite intelligence, the other enforcing absolute scarcity, weren’t just parallel thoughts. They were two tectonic plates grinding against each other beneath the surface of the global economy. And they’re not just grinding anymore. They’ve crashed together and are actually reinforcing each other. The crash is going to be quiet at first. It’ll show up as prices for things, your Uber ride, your kid’s online tutor, the software that runs your business, starting to fall when they’re supposed to be rising. With the exception of LCD TVs and a few other classes of tech… prices have constantly marched upward. That’s about to change thanks to AI, which will create a deflationary shockwave across the economy. And the reaction from the people who run our financial world, the ones who fear falling prices more than anything, will be to unleash a tidal wave of new money to stop it. They will print. And print.
(And print.)
In the chaos that follows, the world will be forced to look for an anchor. Something real in a sea of endlessly generated fiat currency. And it will find the one monetary asset in history whose supply can’t be changed by a panicking committee. This is the story of the Great Repricing. It’s the story of how the engine of infinite creation will crown the king of absolute scarcity. And it’s already begun.
The AI Avalanche
Everyone’s an AI expert now.
Your barber has a take on large language models. Your dentist is worried about his job after seeing a demo of a Japanese dentist robot.
It’s a bubble of noise, but underneath it, something real is happening. Something more fundamental than the last tech boom, or the one before that. Previous technological waves made us more efficient. The steam engine let one man do the work of a hundred horses. The computer let one accountant do the work of a hundred clerks with ledgers. They were productivity multipliers for human labor.
AI is different. It’s not a better tool. It’s can make tools, it can use them (via agents) and it can also coordinate with other systems, including AI (virtually as agents and physically as robots).
AI is a better worker. Let it work.
Humans aren’t being replaced. We’re being promoted.
It started in the world of bits and bytes, the information economy. For the past few years, AI has been systematically dismantling the cost structure of any industry that relies on brains instead of brawn. Think about what a law firm really sells. It’s not paper. It’s thousands of hours of a junior associate’s time spent reading documents. An AI can now read and summarize a million documents before that associate has finished his first cup of coffee. The marginal cost of legal discovery is trending, unstoppably, toward zero.
Ditto consulting.
Ditto wealth management.
Think about a software company. A team of expensive engineers in Silicon Valley used to spend weeks building a new feature. Now, a single engineer can direct an AI to write, debug, and deploy that same code in an afternoon. The cost of software creation is collapsing. The same story is playing out in marketing, content creation, journalism, and even financial analysis. Any job that involves sitting in front of a screen, processing information, and producing a digital output is on the chopping block.
I was sitting in a Google office last week as they showcased how quickly you can spin up agents. They built a Hollywood studio in seconds.
They summoned:
a research agent (armed with a tool - wikipedia search)
a screenwriter agent to draft the screenplays
a critic agent to give feedback
a casting agent to come up with casting ideas
a box office estimator agent to predict ROI based on script + cast
This isn’t about efficiency gains.
This is a phase transition.
It’s like the discovery of fire, but for intelligence.
The cost of cognitive energy, for the first time in human history, is no longer tied to a human lifespan and a human salary. It’s tied to the price of silicon and electricity. And that price only ever goes down.
This first wave was just the warm-up act. The real shock comes when this cheap cognitive energy gets a body. That’s robotics. For decades, robots have been clumsy, stupid, and expensive, relegated to repetitive tasks on an assembly line. They needed to be programmed for a single purpose in a controlled environment. But when you connect that same hardware to a brain that can see, learn, and adapt in real time, the world changes.
The long-haul trucker who makes a six-figure salary isn’t paid for his ability to turn a wheel. He’s paid to handle the unexpected. A deer jumping onto the highway, a sudden snowstorm in Wyoming, a complex loading dock in Chicago. An AI connected to a suite of sensors can now process all that information faster and more reliably than a human. The cost of moving a shipping container from Los Angeles to New York is about to fall off a cliff.
The same revolution is coming for manufacturing, for agriculture, for construction. Every corner of the physical economy that relies on expensive manual labor is about to be upended by cheap, smart robotics. This isn’t a forecast for fifty years from now. It’s happening right now.
It’s an avalanche of deflation, gathering speed, and it’s going to flatten the economic landscape as we know it.
The Men in the Temple
There’s a temple in Washington D.C. called the Eccles Building.
It’s where the Federal Reserve Board of Governors meets. They’re the high priests of our financial system. Smart people, mostly. They have PhDs from the best schools and a belief, bordering on religious faith, in a two-percent inflation target. Two percent is the magic number. It’s the holy scripture. It means the economy is healthy, people are spending, and the system is working.
Anything less than that, especially falling prices, is heresy. They call it deflation, and to them, it’s the devil. Their textbooks tell them that deflation is a death spiral. If prices are falling, people will delay purchases, waiting for a better deal. Demand collapses, companies go bankrupt, unemployment soars. It’s the Great Depression all over again.
Their entire job, the reason the temple exists, is to make sure that never, ever happens.
Here’s the problem: the priests are preparing to fight the last war. Classic problem. The deflation they fear was born from a collapse in demand, from a sickness in the economy. The deflation AI is bringing is completely different. It’s “good” deflation, born from a surge in productivity. It’s the world of abundance. It means your money buys you more next year than it does today not because the economy is broken, but because technology is making everything better, faster, and cheaper. It’s progress.
But the priests in the temple don’t have a chapter in their prayer book for good deflation. They only have one tool, one response to the threat of falling prices, regardless of the cause. A big, red button that turns on the money printer.
Faced with the relentless, deflationary pressure of AI, they will do what they have always done, but on a scale that will make 2008 and 2020 look like a rounding error. To keep prices rising by two percent a year when the natural tendency is for them to fall by five percent, you have to square the difference. You have to debase the currency at a rate of seven percent, at least. You have to run the printers hot enough to overwhelm the greatest productivity boom in human history.
They will call it quantitative easing. They will call it stimulus. They will call it whatever they need to, but it’s all the same thing. It is a deliberate, calculated policy of eroding the value of your savings to hit a target.
It is a declaration of war on anyone who holds cash.
A war on wage earners, savers… on the people.
It is the reason the McDonagh Family Office exists. Because in a world where the denominator is being systematically destroyed, the only thing that matters is owning an asset whose numerator cannot be changed.
The Anchor
When I first bought Bitcoin in 2013, it felt like a protest. It was a vote against a system that seemed rigged, a system where the consequences of bad decisions were papered over with newly created money. The appeal was its elegant simplicity. No board of directors, no CEO, no marketing department. Just code. And at the heart of that code was a single, inviolable rule: there will only ever be 21 million.
It was a digital anchor in a sea of paper promises. For years, its price was a sideshow, a noisy distraction driven by speculators and news headlines. But its true function was always there, waiting. Waiting for a moment when the world would desperately need it. That moment is now arriving.
The AI-driven deflationary shockwave is the catalyst that transforms Bitcoin from a speculative asset into a monetary necessity. As the central banks of the world crank up their printing presses to fight the tide of progress, every investor, every corporation, every nation will be faced with a simple, stark choice. Do you store your wealth in a currency that is designed to lose value, or do you store it in one that is designed to preserve it?
The argument against Bitcoin has always been its volatility. “How can it be money if the price swings twenty percent in a day?” they ask. It’s the wrong question. They are measuring it against the dollar, a ruler that is itself shrinking, and at an accelerating rate.
The volatility isn’t in Bitcoin. The volatility comes from the frantic, failing attempt of the old system to price this new, fixed reality. Over time, as more capital flees the melting ice cube of fiat currency, Bitcoin’s purchasing power will stabilize. It will become the fixed point around which the chaotic world of fiat currencies revolves.
We will see Bitcoin rise from a medium of exchange, to a store of wealth and then it will transcend further to become the unit of account.
This isn’t about just being a “store of value” like digital gold. Gold has a fatal flaw in the modern age. You can’t easily verify it, you can’t easily transport it, and you can’t send it across the internet to pay for a server in Singapore. Bitcoin is native to the digital, AI-powered economy. It moves at the speed of light, is secured by a global network of computational power, and its scarcity is guaranteed by mathematics, not by a vault. It is the monetary layer for the 21st century, the foundation for a new financial system built on transparency and verifiable truth instead of trust in committees.
The Great Repricing
This leads us to the mission of my family office. The macro tide is clear. The debasement of traditional currencies isn’t a possibility; it’s a mathematical certainty required to fight AI’s deflation. The flow of capital into the one pristine, hard-capped monetary asset is the only logical outcome. The Great Repricing is coming. Every asset, from real estate to stocks to bonds, will have to be re-evaluated against this new, immutable anchor.
But knowing the destination is not the same as navigating the journey. The path from here to there will be a hurricane. There will be gut-wrenching volatility, regulatory crackdowns born of fear, and technological arms races. The surface of the ocean will be filled with 1,000 foot waves of price changes and volume spikes.
This is why the two pillars of my thesis, AI and Bitcoin, finally merge. The same force causing the disruption is also the tool we will use to navigate it. We are not simply buying and holding Bitcoin.
We are building and deploying our own AI systems to capture intelligence and manage our position across Bitcoin, BTC derivatives and the wider ecosystem.
We use them to analyze on-chain data, to model market sentiment, to manage risk through periods of extreme turbulence, and to identify the subtle patterns that emerge when a global monetary system is being reborn. Our AI is designed to be the skilled navigator on this chaotic sea.
I didn’t leave Wall Street to make the same bets as everyone else. I left to find the arbitrage that was hiding in plain sight. For a decade, it’s been this: the world is about to be flooded with infinite, free intelligence, and the central banks will try to fight it with infinite, free money. The only rational response is to anchor yourself to the one asset that is mathematically, provably, and beautifully finite.
The repricing is coming. Are you prepared?
Friends: in addition to the 17% discount for becoming annual paid members, we are excited to announce an additional 10% discount when paying with Bitcoin. Reach out to me, these discounts stack on top of each other!
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I started Wealth Systems in 2023 to share the systems, technology, and mindsets that I encountered on Wall Street. I am a Wall St banker became ₿itcoin nerd, ML engineer & family office investor.
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