Earlier this year, financial services company Block cut 40% of its workforce in a single round of layoffs.

It escaped many people's attention because it happened just two days before the outbreak of the Iran war, which overshadowed it.

Here's the key part of Block CEO Jack Dorsey's announcement:

"We're not making this decision because we're in trouble. Our business is strong, gross profit continues to grow. But something has changed. We're already seeing that the intelligence tools we're creating and using paired with smaller and flatter teams are enabling a new way of working, which fundamentally changes what it means to build and run a company. And that's accelerating rapidly."

It was an astonishing example of how the artificial intelligence (AI) productivity shock is already here… and accelerating faster than most people can comprehend.

Block is using AI to become radically more productive… doing more with less and increasing its margins as a result.

Dorsey could have made the cuts gradually, but that would have demoralized the remaining employees and caused the company to act inefficiently, upsetting shareholders. Instead, he chose to make the cuts all at once rather than stretch the process out.

The markets seemed to agree with Dorsey, as Block shares surged nearly 25% after the shock announcement.

Block was just the beginning.

PayPal, Meta, and Coinbase have all announced significant AI-related workforce reductions following Block's announcement.

PayPal plans to cut 20% of its workforce—nearly 4,800 employees.
Meta is laying off 10% of its staff, around 8,000 employees, as it reallocates resources toward an "AI-first" structure.
Coinbase is reducing headcount by 14%, or approximately 700 employees.
I think there's an excellent chance this trend snowballs from here.

We could soon see AI automate millions of white-collar jobs.

What will happen to these people?

How will it affect the political landscape?

What is going to happen to their mortgages, car loans, credit card debt, student debt, and other liabilities?

How will the US government deal with the lost tax revenue?

All of this could have enormous consequences for financial markets and the debt-ridden fiat currency system.

This is not some theoretical issue in the distant future. It is happening right now.

AI and its effects have not escaped the notice of the Federal Reserve.

Kevin Warsh is now the new Chair of the Fed. He is a major proponent of lower interest rates and monetary stimulus to counteract the effects of AI.

In other words, Warsh is essentially signaling that he will debase the currency in a misguided effort to offset AI's deflationary effects. The problem is that the effects of AI are going to be so profound that the level of currency debasement Warsh would have to engage in would be staggering.