At Barron's Mohamed El-Erian: 'AI Is In a Rational Bubble'
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Nov 20, 2025 
In this engaging conversation, economist Mohamed El-Erian shares insights rooted in his experience as CEO of Gramercy Fund Management. He discusses the dual-edged sword of AI, highlighting its productivity boost while cautioning against potential job losses. He also addresses the dollar's weakening status and the Federal Reserve's delicate balance between inflation and employment. El-Erian calls for strategic policies that adapt to changing economic dynamics and emphasizes the role of geopolitics in shaping investment strategies.
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Dollar Losing Its Safe-Haven Status
- Global investors are taking US corporate exposure while hedging the dollar, signaling reduced confidence in the dollar as a pure reserve currency.
- They favor US corporates but short policy risks and explore gold as an alternative hedge.
AI's Productivity Promise Depends On Firms
- AI is a general-purpose technology that can deliver a massive productivity upgrade needed for debt, growth, and inequality challenges.
- The upside depends on firms enhancing labor, not simply using AI for cost-minimizing displacement.
Use AI To Enhance, Not Replace, Workers
- Companies should focus on labor enhancement when deploying AI rather than just cost-cutting through displacement.
- Firms that retrain and augment workers will reduce backlash and capture more long-term value.