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Your Power Bill Rose 10% in Two Years, and a Fed Official Just Voted to Raise Rates Because of Data Centers · Minds, Bodies, and Terawatts

• 0:00
  [Host] This is Minds, Bodies, and Terawatts, the show where abundance turned up on your power bill first. CNBC reported on August twelfth that the AI buildout has walked into the Federal Reserve's inflation fight.
• 0:12
  [Guest] Bureau of Labor Statistics data landed that morning. Household electricity prices rose ten percent in the two years through July. Overall prices rose six point two percent.
• 0:22
  [Host] So the machines that are supposed to make everything cheap made the most basic thing in my house cost more.
• 0:29
  [Guest] For now, yes. Sam Altman wrote on his blog recently that intelligence too cheap to meter is well within grasp. The meter is running the other way.
• 0:39
  [Host] How is that the Fed's problem and not just a tech story?
• 0:43
  [Guest] Because it showed up in a vote. On July twenty-ninth the Federal Open Market Committee held rates steady, nine to three. Three regional bank presidents wanted a hike.
• 0:54
  [Host] And one of them put a reason on the record.
• 0:57
  [Guest] Neel Kashkari at the Minneapolis Fed. His written dissent says the massive investment in data centers has added a new demand element to the high inflation Americans are experiencing.
• 1:08
  [Host] Translate that. A Fed official says data centers are a reason to raise my mortgage rate?
• 1:14
  [Guest] The buildout is real demand competing for real electricity, and the central bank has one tool for demand. It lands on your car loan, not just your power bill.
• 1:24
  [Host] I read that dissent too. Most of Kashkari's list is supply shocks. The pandemic, Ukraine, the trade war. Data centers are the last item on it.
• 1:34
  [Guest] Fair. Data centers did not cause five years of elevated inflation. They are the newest ingredient, and the only one somebody chose on purpose.
• 1:43
  [Host] How much money are we talking about?
• 1:45
  [Guest] Goldman Sachs Research estimates American spending on the buildout hits five hundred eighty billion dollars this year.
• 1:51
  [Host] Presumably that eventually buys productivity that pays it back.
• 1:55
  [Guest] Eventually is doing a lot of work there. The Census Bureau's Business Trends and Outlook Survey asks firms whether they used AI to make their goods or services in the prior two weeks. Fewer than one in five say yes, and those yes answers cluster in firms with two hundred fifty or more employees.
• 2:14
  [Host] So the corner bakery pays the same kilowatt-hour as the hyperscaler that outbid it.
• 2:20
  [Guest] Because electricity is priced collectively. Capital gets raised privately, and the cost gets spread across every meter on the grid.
• 2:27
  [Host] My dishwasher is co-signing a loan for a GPU cluster it will never be allowed inside.
• 2:33
  [Guest] And the cluster does not send you a quarterly report.
• 2:36
  [Host] Who is advising the Fed on whether that trade is worth it?
• 2:41
  [Guest] Chair Kevin Warsh put Stanford economist Charles Jones on a task force on AI and the economy. Jones is on leave at Anthropic. Marc Andreessen is on it, predicting hyper-deflation.
• 2:52
  [Host] An AI investor and an economist on leave at an AI lab, advising the Fed on whether AI is inflationary.
• 2:59
  [Guest] Warsh had already picked a side. He wrote in the Wall Street Journal last November, before he was confirmed, that AI will be a significant disinflationary force. Three colleagues just voted against him.
• 3:11
  [Host] The displacement story has been wrong before, though.
• 3:14
  [Guest] Geoffrey Hinton predicted a decade ago that radiologists would be obsolete in five to ten years. Their numbers grew instead. AI took a slice of the reading, and the rest of it, talking to frightened patients, turned out to be the job.
• 3:29
  [Host] So nobody knows the timing on your job either. What we know is that the bill is collective and the upside is not.
• 3:38
  [Guest] So far the only dividend is a rate hike. Patrick Deglon calls that default the Star Wars path, elite capture winning by arithmetic because nobody had to choose it. More on who ends up holding the bill, at unscarcity dot ai. The book is on Amazon, the audiobook is on Spotify. This has been Minds, Bodies, and Terawatts.