Abundant Intelligence and Deficient Demand: A Macro-Financial Stress Test of Rapid AI Adoption

A research paper presents a macro-financial stress test analyzing rapid AI adoption, identifying a critical mismatch between AI-generated abundance and demand deficiency due to economic institutions anchored to human cognitive scarcity. The study finds that high-income earners face the highest AI exposure, potentially triggering explosive crises in $2.5 trillion private credit and $13 trillion mortgage markets through displacement spirals and intermediation collapse.

• →AI adoption creates a distribution-contract mismatch where abundance coexists with demand deficiency due to institutions designed for human cognitive scarcity.
• →Displacement spirals occur when firms rationally substitute AI for labor, reducing aggregate income and demand while accelerating further AI adoption.
• →Top-quintile earners drive 47-65% of US consumption but face highest AI exposure, threatening private credit and mortgage markets disproportionately.
• →AI agents reducing information frictions compress intermediary margins, triggering repricing across SaaS, payments, consulting, insurance, and financial advisory sectors.
• →The study provides eleven testable predictions with falsification conditions to identify when stable adjustment transitions to explosive crisis.