This means there is still a long way to go this decade. Right now, the Central Banks around the world are at about $30 trillion. It puts us about a quarter of the way to the level required throughout this decade. In fact, there is a chance this number grows to $150 trillion.
Many people are having their heads explode at this one. However, this amount is REQUIRED and not an option. By the end of this article you will see what we mean.
Lessons From Over-Populationists
Do you remember this? Take a look at YouTube and you will see a number of videos talking about the threat of overpopulation to the planet.
Many of these videos were from the early part of this last decade like this one.
This was the mindset. In fact, we heard this over the past 50 years. Projections were that the planet would hit 11-14 billion people. Many theorized we could not house that many.
There were some voices who were calling these projects overexaggerated and the entire idea nonsense. It was time to leave the 1970s where this idea originated from.
So what happened?
Over the last few years, people started to realize that many countries were facing the exact opposite problem: falling populations. For the last couple decades, the world watched Japan struggle with this issue. However, much of Western Europe, South Korea, Russian, and Canada quickly found their fertility rates dropping.
The situation culminated with China's first population decline in over 70 years (even though the government claims that has a slight increase). Also, a number of researchers claim the fertility rate is actually 1.08, close to South Korea as opposed to the 1.6 put forth by the government.
Suddenly the world's largest populated nation was facing the fastest aging population in the history of the planet. This altered the entire outlook for the global situation.
Now, people who espouse the over-population line are nearly laughed at. They simply are holding onto an old idea that dates back decades.
Inflationists like Peter Schiff are in their glory right now. For the first time, we can see noticeable inflation. They take to the talk shows and online articles espousing how we are now on the path to hyper-inflation. Of course, they have been tooting the same horn for decades, without much success.
What is interesting is that it took a perfect storm to get it. This was a once in a lifetime opportunity for them. Of course, it took shutting down much of the global economy, commodity disruption due to ag, mining, and drilling closures, and a stoppage of global trade. Hence, products did not travel freely around the world, forcing consumers to pay for higher priced good.
At the same time, people were locked home with nothing to do. Many still had money coming in and it was burning a hole in their pocket. Since going out to eat three times a week was not an option, people decided to spend. Home modeling, car sales, and other durable goods were ordered. It is estimated that orders for these products pulled forward two years worth of business.
Hence we have a front end loaded economy. Retailers suffered due to the entire global supply chain shutting down which meant they did not want to be without product. Orders went through the roof just trying to fill the shelves. As the supply chain reopens, which is happening now, the products will be arriving.
The question is will the demand still be there. As people get their fill, they are not going to head back for more. Certain industries such as automobiles are stacking up due to chip shortages so it looks like they have great demand. That might be skewed because of the supply issue. Once they start to roll those vehicles out, will they find the overproduced?
Age Of Hyper-Deflation
Many are predicting the economy will slow. This has happened coming out of every recession since the 1960s. When the bottom hits, we often emerge due to stimulus which is a jolt for the economy. However, after that wears off, things head south, usually bringing more stimulus. This dance happens 3 times in total before the economy starts to head up for good.
We are likely seeing the inflationists last stand forever. Once this inflationary cycle is processed through, it is over likely for good. The next era is something that most are ill-prepared for.
The age of exponential technological growth is upon us. This is going to carry us through the 2020s and into the next decade. By 2035 much of our world will be different due to technology. We can already see some of what will cause that impact.
This is just a quick list:
- 3-D printing
- Autonomous Vehicles
- Renewable Energy
- Climate Controlled Farming
- Image Recognition
- Ubiquitous Internet
- Advanced Teleconferencing
There are dozens of other in the fields such as bio-tech and the material sciences.
All of us heard of the exponential growth curve. Here is one for technology:
This is a simple illustration of what we are going to see over the next couple decades. We already know that we can do things using less time than 20 years ago. Technology does that for us.
Now here is the vital point: technology by its very nature is deflationary. Technology drives the cost of things down.
Hence, if we are on an exponential technology growth curve, we are also on an exponential deflationary curve. As technology skyrockets as it passes the elbow, probably around the middle of the decade, we will see deflationary pressures accelerate. The percentage of the economy already affected by this is growing each year.
Many feel that inflation is a bad thing. They get upset when the cost of housing goes up. With what is coming, just wait until the cost of housing goes down and see how you feel about it. Many believe it is a good thing until the realize they have no job to pay for the house.
Technology is going to obliterate jobs. Again, people find this is hard to believe looking at present numbers but it is an accelerating situation.
Here are two articles found with a quick search. We do not have to go far to find how rapidly automation is entering.
This same story is being told all over the world. We only need to look at Japan over the past 30 years to see what it is like to live in that environment. No worries though, everyone will see it by the end of this decade.
Technology is a hungry bear. It takes a lot of money to feed it. Think about all the funding required to produce what we already use on a daily basis. Just look at the above list of technologies and try to estimate how much money is needed to feed that.
For example, it is estimated that the Internet of Energy will cost $1.75 trillion in the United States alone even with solar energy costs declining by 89% in the last decade. Then we have hundreds of billions in satellites and associated rocketry.
Many talk about asteroid mining because of the quadrillions that are estimated in raw minerals. However, there is something closer to home that could goes below: sea mining. The Chinese just completed a trial of a 1,300 meter seabed floor by a deep sea mining vehicle. There is a price tag of a few hundred billion once everyone starts rushing into it.
Think this is foolish, check out this map with the estimated mineral deposits. We are looking at trillions of dollars there.
Information technology traditionally deflated at a rate about 30% per year. This is a number that is likely going to increase due to artificial intelligence. Nobody is quite sure what rate we are moving at but the next video should give an idea of how things are moving.
This is an AI system that translates natural language into code. Here we see it designing a video game.
So much for the learn to code idea.
By 2030, the idea of hyper-inflation will be as out-dated of over-populationism is now. What was a commonly held belief a decade ago is now being proven obsolete.
By the way, aging populations around the world are also deflationary. They people are going to be contributing less to the economies over the next two decades while requiring a lot more in the way of social services.
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