Why the AI Boom Could Affect Your Mortgage, Job and Business

There's been a lot of hype around artificial intelligence, but this week something changed. The Reserve Bank of Australia started talking about AI, not as a technology, but as a reason interest rates might have to stay higher.

That's when AI stops being a story about Silicon Valley and becomes a story about your mortgage. Aaron and I spent this week's Greater Wealth on what it means for the ordinary Australian household: the mortgage, the job, and the business.

In this episode (43 chapters)

1. 0:00Why the AI boom just became a household story
2. 0:48Three rate rises, and a cash rate that may go higher
3. 1:05The RBA names AI and data centres as an inflation risk
4. 1:41How the Reserve Bank actually controls inflation
5. 2:05Headline inflation eased. Underlying inflation didn't
6. 3:01Unemployment hits 4.5%, and WA's hours worked fall
7. 3:51Why AI demand could push minerals and rare earths up
8. 4:32Energy, Venezuela, and the price of power
9. 4:45Chip supply, demand, and Nvidia's outlook
10. 5:18Taiwan, TSMC and the China question
11. 6:04Bringing the tech home, and fairer deals with allies
12. 7:51Globalism is dying. Where is the money moving?
13. 8:28Computing power, grid power, and the upgrade cycle
14. 9:20Australian business investment falls 3.6%
15. 10:15Running a business that now has an AI component
16. 11:50Truck drivers, purpose, and universal income
17. 13:24The agenda behind globalisation
18. 14:09The swing to One Nation, and Secret Harbour
19. 15:48Trump the businessman, and the art of the deal
20. 16:29Failing upwards, and being paid on results
21. 18:51The Luddites, and what actually happened to work
22. 19:53Is universal income the answer?
23. 20:55Red tape, bureaucrats, and businesses leaving
24. 22:28Costs, taxation, and the way out
25. 23:00Live in Perth — Thursday 3 September
26. 23:49The family home as the store of wealth
27. 24:36A home open, and a price that surprised us
28. 25:28Negative gearing, rents, and a generation locked out
29. 26:15"Work hard and you'll succeed" is now a lie
30. 27:07The RBA warns AI data centres are pulling builders away
31. 27:47Two solutions: think entrepreneurially, invest differently
32. 28:39The greatest opportunity facing humanity right now
33. 29:23The banks are rebuilding the financial rails
34. 30:06What to expect on Thursday night
35. 31:03When the banks froze my accounts
36. 32:27Mount St Helens, and the mindset that changed me
37. 34:23What AI makes possible for $120
38. 35:50Five minutes instead of five weeks
39. 36:39Why "by hand" becomes the luxury
40. 37:17Don't wait until the pain is great enough
41. 38:04Seeing the wind before it hits
42. 38:52Financial education that doesn't bore you
43. 39:40Step into your life purpose

What actually happened

Your mortgage: why AI is now an interest-rate story

Most people don't think about how the Reserve Bank works, so I explained it on the show. "If it's running too hot, it'll raise interest rates to slow people down from spending." When it wants to speed things up, it cuts them.

Now add AI. Data centres take enormous investment, power and construction work, and all of that adds demand to an economy that's already stretched. As I put it: "if the AI is influencing inflation, where does that leave us as an economy, which has already been running hot at the moment?" For anyone with a mortgage, that's the link: more pressure on inflation means less room for the rates to come down.

And the headline numbers can mislead. Inflation may ease on paper while households still feel it at the checkout and the bowser. "So in other words, the headline improved, the household pressure is remaining."

Where the money is moving

AI changes where money goes as well as how much it costs. It takes a great deal of power, and the countries leading it want secure supplies of minerals and rare earths. "I think the demand by AI is going to push some minerals and earths up in price."

Australian businesses spent heavily upgrading their computing for AI, then pulled back. But as I said, "where's the money going? It's not disappearing. It's just being redirected to another area." The question for every Australian is where it's moving to, and whether you're positioned for it.

There's a trade-off closer to home too. Building data centres takes builders. On the show I put it simply: "you're not going to be building homes if you're building data centers."

Your job: it goes to people who use AI

The big concern for most Australians is whether they'll still have a job. Our answer on the show: "we've been arguing they're not going to lose their jobs, but the jobs will go to those who know how to use artificial intelligence."

That means upskilling, and it means a new job for every business owner. "They're also managing an AI component to their business." Deciding how people and AI work together is now part of running a company.

Aaron raised the human side: what happens to truck drivers, and to the purpose people get from work, when vehicles drive themselves? And is a universal income the answer? My view: "universal income, do I think that's the solution? No, I don't think that's the solution. Do we already have a form of it? Yes, I think we do. It's called the pension and it's also called unemployment benefit." The real answer is productivity and creativity, and AI can give us both, "if you control it, if you're its master and not its servant."

Your business: two years, or seven weeks

Here's the part that excites me. For twelve years I wanted a website I couldn't have. "I've been able to create the website I wanted, you know, 12 years ago, but didn't have the expertise available to me to utilize because I'm not an IT programmer." With an IT developer it would have taken about two years. With AI, I've "done it in seven weeks," for about $120.

Aaron had the same experience from his years in motorsport, where sponsorship proposals used to need artists, designers and a lot of money. "I can do that in five minutes now." And there's a flip side for the craftspeople: as more things are made by machine, work done by hand becomes the luxury.

Two solutions, and a mindset

When Aaron put me on the spot for solutions, I gave two. "One, I think people have to start thinking far more entrepreneurially." And two, people need to consider the investments the new economy is adapting to, because behind the scenes "the banks are changing the financial system."

Underneath both is mindset. I learned it standing at Mount St Helens in my twenties: the forest still flattened decades after the eruption, and right beside the crater a busy tourist centre making a living from the disaster. That's the mindset: turning an adverse event into an opportunity.

The trouble is that most people wait. "People don't change because the pain's not great enough. I'm saying, why don't you start changing before the pain becomes too great?" Yes, there is change, "and within the change is opportunity." So look ahead and ask, as I did on the show: "Where's the wind going? Let's set our sail there."

For me it was never about the money in the bank. "I don't get excited by numbers in my bank account. I get excited by freedom." Freedom is what lets you work on your life purpose.

This is general education, not financial advice.

Three questions to ask this week

1. If interest rates stayed where they are for two more years, what would that mean for my household?
2. What have I wanted to build for my business that I assumed was too expensive?
3. Am I waiting for the pain to be great enough before I change?

If the second question has an answer, the free masterclass shows what's now possible.

Education only. Nothing here is personal financial, tax or legal advice.