It's an interesting dynamic for sure. The scenario you're describing would likely have enormous economic volatility.

Offsetting the deflationary pressure from a major technological advancement will require extremely artificially low interest rates. That's going to cause wild misallocations throughout the economy.

At the same time, the technology itself will be causing major disruptions throughout the economy, so the search for equilibrium will likely involve wild swings.

One of the things that the past few years of supply chain disruptions has made clear is that the enormous regulatory burden on our economy has made it very rigid, so it's not going to be able to smoothly adjust to new conditions.

That's a recipe for shortages, bankruptcies, mass layoffs, etc.

Ultimately, that kind of volatility in the underlying economy is not great for the fiat currency residing on top of it.