The disagreement began on September 25, 2026, when Bill Ackman criticized the Federal Reserve's decision to raise interest rates by 25 basis points. Ackman suggested that high demand for AI resources is inelastic, meaning increased borrowing costs may fail to curb spending, potentially triggering an inflationary spiral.
Cathie Wood responded on September 29, 2026, arguing that current interest rate hikes reflect real economic growth rather than inflationary pressure. During the October ARK In The Know session, she noted that the 10-year Treasury yield is currently at its median level since 1790.
Wood highlighted that AI inference costs have decreased by 99.99% annually at constant performance levels. She cited the growth of OpenAI's revenue run rate from $20 billion to $70 billion as evidence that lower operational costs are driving significantly higher usage.
Additional data points in the debate include a 5.7% growth in the US money supply without corresponding inflation, and the fact that 90% of global data center financing is allocated to the United States. Wood characterizes the potential economic outcome as benign deflation.
