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Drew

I follow KG's logic and stop worrying about oil prices and the energy descent. Now I remove the worry of an asteroid surprise. Unfortunately KG's logic makes him pessimistic about life extension. Rats, Drew

Kartik Gada

Hello Drew,

That's right. Another thing to keep in mind that we must all be extra careful not to die in automobile accidents over the next 10-12 years, because after that, a lot fewer people will die from that. It will be very unfortunate to be among the last few who die that way.

To be clear, life extension up to 100 will be possible for more proactive, informed, and health-conscious people (it won't be just an effortless physical revamp that people go out and buy). But anything past 100 is what I say is very unlikely.

Igor Bloodscene

David Sinclair's work is very promising. https://lifespanbook.com/

Geo

Now we just need to worry about a Carrington Event.

Kartik Gada

Geo,

True. An event such as the 1859 magnetic storm would be very problematic to modern society even as it would have had no impact at all on 1859 society.

A small such storm might force the world to make the grid more robust.

But solar flares and asteroids are not mutually exclusive, of course.

Now, on asteroids, when one examines the impact from 66 million years ago (a 10 km asteroid), such an impact in the 16th century might have killed off 99.999% of all humans. Maybe only eskimos and desert dwellers could have survived, as those are the least dependent on plant life. It would be interesting to see a simulation of that.

Geo

"In its World Oil Outlook, OPEC said that demand for its oil may only reach 32.8 million barrels per day (mb/d) by 2024, a figure that is substantially lower than the 35 mb/d from last year’s estimate. Demand is still expected to grow in non-OECD countries going forward, but OPEC admitted that demand may peak in the OECD in 2020."

This is stunning news.

The cause appears to be production outside of OPEC (Brazil, U.S. shale), and declining demand in the OECD.

Peak oil is not going to mean what everyone thinks it means.

What happens next is going to be ugly - a monetization race to the bottom. If I think demand will be trending ever downward, then oil in the ground, today, will be likely worth less tomorrow. It, and all the associate infrastructure, is a depreciating asset. Better to pump and sell what I can today, than wait for tomorrow when it might be worth less. So countries with oil are going to open the taps and sell as much as they can now. And that will drive the price down. Which will panic them into selling even more, and so on. No one wants to be left with an empty bank account and oil still left in the ground, they want to sell down to the last drop.

But on the flip side, oil getting cheaper means gas prices declining, which makes electric cars less competitive. But I think we have passed that hurdle - climate change, air pollution etc. are all valid reasons for electrifying. And electric cars are more or less competitive, and could become even cheaper going forward.

It is going to be a fascinating 5 years.

Kartik Gada

Geo,

Not only that, but the US is now a net exporter of oil (not merely refined petroleum products, but oil outright).

https://4.bp.blogspot.com/-584u6ww1Md8/XcF85LA5CeI/AAAAAAAAzWs/pmVVJBFqFGwJ4UHcU9XfBvJ9lejRSZa2wCLcBGAsYHQ/s1600/TradeDeficitSept2019.PNG

Further falls in oil price cannot do much to delay EVs. The fall from $100 to $55 already delayed it enough, and a further fall to $40 will do little, what with all the gasoline taxes.

Remember that battery density improvements are much faster than that and can no longer be overtaken by price declines in oil, as we saw from an earlier ATOM AotM :

https://www.singularity2050.com/2018/12/atom-award-of-the-month-december-2018.html

agimarc

The most valuable thing from asteroids and comets will be ices - water and otherwise. If you can get off-planet water, you end up with propellant, something to breathe, something to grow plants with, and most importantly, radiation shielding (think about a 10' thick shield on all sides).

Enabling technology will be reactors in space. Might be going that direction with the Gen IV reactor push.

There are some who believe that the hydrocarbon shells on bodies from the outer system (tholins that turn them reddish) are the functional equivalent of kerogens (think petroleum and its byproducts). Cheers -

Kartik Gada

agimarc,

True. But humans living in space en masse is much further off, and may not ever happen at all, mainly because space exploration through AI is thousands or millions of times cheaper.

Plus, only comets have the requisite ices. NEO asteroids have little in the way of ice.

But, yes, if one wanted to create a lake on the Moon, steering a comet to gently land there and melt would be the best way.

HB

Kartik,
“Further falls in oil price cannot do much to delay EVs. The fall from $100 to $55 already delayed it enough, and a further fall to $40 will do little, what with all the gasoline taxes.”

The taxes and political central planning means that there is a strong regulatory component to the disruption of electric vehicles. The ATOM is thus severely distorted in the energy sector. As for the taxes they will simply migrate from gasoline to electro-mobility. It will be very hard, almost unheard of, for an established tax to disappear. It’s almost like trying to roll back entropy. The tax will simply change target. Come to think of it, it is already happening. In many (green) California localities the cost of the supposedly plentiful new electricity as supplied by utilities is a punitive $0.35-$0.40 per kWh. That is, charging a 100kWh electric vehicle to get roughly 300 miles of travel costs $35-$40 of electricity which is about what you would spend to drive a midsize gasoline sedan the same distance in a less green state.

Left to its own devices the electric-mobility industry may one day deliver great solutions. But for the time being, it is all severely distorted by an almost religious mentality whereby the more humans are inconvenienced the better the planet feels. This distortion hurts the ATOM exponent — and, most importantly, those countries that abstain from it will beat the conservation reactionaries to the singularity. It all becomes extremely foolish when one considers that most of the distortion pressure is predicated upon the religious futurology that humans, in a hundred years, will suffer as a result of climate change. In other words it is a religion based on specific predictions regarding the state of a post-singularity humanity! Quite asinine in my view if one considers the singularity a near certainty. Come to think about it, even a much more conservative scenario whereby humanity simply develops at an average mere 4% rate annually, no singularity, no growth acceleration, no-nothing, still makes us fifty times more wealthy and powerful (yes that is 50x=5000%) than we are today in the next century. Given just that, what foolish human would dare predict the state of humanity in the next century, much more so a prediction of suffering due to a 2-3C temperature increase. Apparently the anti-capitalist “Church of Futurology and Later Day Warming” does. In the race to the singularity, coercive collectivism seems to be our most severe handicap.

agimarc

Kartik -

Per John Lewis at least two decades ago, fully half the NEOs (and all the Earth orbit crossers) are inactive comets, high in percentage of ices. It gets better, as the line between comet and asteroids tends to blur a bit. There is at least one asteroid with an observed tail. There are comets that don't have a tail at all. I think we are going to find they are all variations on the same theme. The one constant is that the more we look outward in the solar system, the more water ice we find, which is VERY good news.

There appears to be substantial water ice on the southern lunar pole. Also substantial deposits on the poles of Mercury. The closer we look at Mars, the wetter it gets. And the asteroid belt may be swimming in water ice. Cheers -

Kartik Gada

agimarc,

The further away from the sun everything is certainly more icy. Callisto has the same volume as Mercury, but only one-third the mass (i.e. ice instead of metals).

But I doubt that NEOs have much ice, being this close to the sun. Comets start to get tails even further than 1 AU, and the Moon (also 1 AU) has very little surface ice.

https://en.wikipedia.org/wiki/File:The_image_shows_the_distribution_of_surface_ice_at_the_Moon%27s_south_pole_(left)_and_north_pole_(right).webp

Steering a comet into the Moon is the answer. The asteroid belt may have good amounts of ice at 2-4 AU.

Kartik Gada

HB,

Most EV buyers are not doing it for environmental reasons. They are doing it for cost and convenience.

Remember that over 3% of world vehicles sales are now EVs. More importantly, battery technology is improving rapidly (see the earlier ATOM AotM article for a chart).

It is true that governments will find ways to tax every aspect of EVs (and some have already), but that won't obstruct it from gradually replacing ICEs. Remember, my timeline for the four-pronged disruption is 2032.

HB


They may, but a non insignificant portion of what EV buyers perceive as cost and convenience is regulatory favoritism. It is the market distorting favoritism of getting the $7500 electric vehicle subsidy, the cuddly privilege of driving in the commuter lane, the registration fee (see annual tax) favoritism etc. Because according to the church of futurology and later day warming they will prevent human suffering due to climate change in a post-singularity world. This regulatory distortion hurts the ATOM, and the mentality that “electric vehicles seem poised to dominate, therefore we might as well help them along with legislation” is the classic fallacy of centralized industrial policy. But people never learn. The future belongs to those nations than make the fewer such mistakes. They will be the ones to reach the singularity first.

Geo

HB- exactly.

If EVs are the future, are inevitable, make logical sense, then why do we need to do a blessed thing to make them happen from a legislative viewpoint? Also the futility of these actions is quite comical - We cannot afford to have a significant fraction of the total number of cars get free parking, charging, registration, or government rebates. We know, with 100% certainty, that these policies cannot be economically or morally maintained above a small fraction of total EV market penetration. So why bother at all? EVs will have to stand on their own.

Kartik Gada

Yes, there should not have been any government subsidy. Thankfully, it is mostly depleted now (Tesla is well past the maxiumum allowed cumulative quota) so the sales are with far fewer such distortions. There is a slight YoY dip in unit sales, as a result of the marketplace adjusting. There is still 2017-2019 biannual growth.

Remember, the government can't just create a market unless it was imminent anyway (i.e. the government can speed it up by a year, but not more). The Concorde was subsidized for 27 years (1976-2003), only for there to be no supersonic passenger airline even now in 2019. We will finally have it in the 2030s, which is the same timeframe as it would have been had the Concorde never existed.

Far better is if government vehicles (such as the 800,000 police cars and 210,000 mail trucks) go electric because it is cost effective.

Geo

Well said, Kartik.

To put it another way, the government can help create technology via research, but it is terrible at creating markets for that technology.

The Tesla situation is funny in retrospect - the government wanted to create an EV market. So they demanded that each manufacturer sell a small number of EVs. Which didn't make any sense - cars are cheap when made in volume, and small batches would lose money and have little incentive to be designed well. But they made the EV certificates tradeable. So Tesla decided to make one EV that would basically generate certificates for all the other car makers. So Tesla grew, but mostly because they were consolidating the regulatory demands for all car makers. And other car makers ignored electric cars because the small volumes required in the regulations would cost a fortune to build.

Now Tesla's special status has expired, and the traditional car makers must now make their own EVs. And Tesla was forced to expand, because the huge source of revenue for the certificates was about to go bust. So I might argue, the expiration of the EV requirement for Tesla has actually created the recent expansion in the EV market. An expansion the program suppressed for several years.

One might note that had the government not made EV certificates tradeable, Tesla likely would not exist in its current form - instead there would be multiple car companies with EVs, and we would be much further along in technology due to competition. Heck, we might be much further along the curve of EV adoption as well - traditional car companies would have been advertising EVs this whole time.

Kartik Gada

Going simply by the problem of oil imports, America ironically has far less need for EVs than most other parts of the world.

Europe, Japan, China, India, and South Korea, by contrast, have far more to gain from EV diffusion. Where oil is imported, gasoline is $7/gallon or more, and electricity is 220V is a place far more suited for EVs than the US.

HB


Indeed countries with shorter commutes and strong oil import dependencies have the most natural incentives to electro mobility. However one thing that suppresses this is that many of these “green” countries have also instituted punitive rates on electricity. For example, electricity in Germany is almost 40 cents per kWh. Charging your Tesla to get 300 miles costs you $40, a non insignificant amount given the other inconveniences (mostly time) associated with charging. These punitive electricity rates, which are exclusively due to taxes, typically “green taxes”, are unlikely to go away. A tax is almost like entropy, impossible to roll back once a significant amount of citizens and bureaucrats start feeding from it. If anything, electricity rates will continue to go up under the current mentality. Once most cars electrify then there will be no competing energy sources for motorists to escape to and electricity prices will be free to rise even further. The goodies we, ourselves, keep checkmarking at the ballot box will have to be paid somehow — with staff like people working at the DMV acting as the monopoly intermediaries.

Don’t get me wrong. The ATOM is a formidable and ultimately unstoppable force. But there will be a tremendous difference between the true free market societies that ride and steer the ATOM and those statist societies that will be dragged along kicking and screaming. Europe is almost certainly in this latter category. The US is still a toss, but may not be for long. There’s just too many Americans that seem to retroactively resent their separation from the mother statist continent across the Atlantic. That transition is not reversible.

Geo

Well, the taxes on electricity go to pay wind generators and solar farmers subsidies. And they shut down all the nuke plants and have no plans to build more. So we are subsidizing one thing to reduce emission, banning another which increases emissions, and demanding a third which would reduce emissions, except for the previous two actions.

Likely they'll pass another law mandating the purchase of electric cars. Or perhaps a subsidy, where they tax electricity to make people buy more EVs.

Someone should tell these idiots the market always wins. Want to make electric cars happen, reduce emissions, and grow your economy rapidly? Make electricity cheap and plentiful. There are multiple ways to do that.


Kartik Gada

It is amazing to me that Germany got rid of nuclear, and ramped up solar (which is not suitable at that latitude anyway). It is absurd.

Wind could become a major percentage of Germany's energy, but not enough to completely avoid nuclear.

Geo

It's baffling nonsense. And the Germans, otherwise, are so commonly sensible.

Imagine making electricity very cheap. In fact build a bunch of very low cost EV charging stations. Millions of people would buy electric cars. You could make the electricity in super efficient natural gas power plants, and still reduce overall emissions substantially. Add some wind, solar, nuclear,and hydro and you are waaaaay ahead of the game.

Drew

It is strange. Does anyone know a good analysis of France's nuclear program? Were they able to standardize enough to have a low cost of production? Otherwise until the promised reactors in a shipping container (or built in a shipyard) roll out, all of the commercial reactors keep running into regulatory and non-standardized building costs that seem to keep their costs quite a bit higher than other sources. As electric cars get cost and range competitive with internal combustion cars, there may be drive for more electrical sources, but it doesn't seem like nuclear has been standardized enough to be an easily rolled out commodity yet. In the US, we have plenty of natural gas for cheap electricy but you would think other countries with out that domestic source would be more focused on nuclear.

Kartik Gada

The fear from the Fukushima disaster is what caused Germany to overreact. Old disasters like Chernobyl keep coming up. But still, it is easy to keep reactors away from populated areas, since so much electricity demand is now in datacenters that need not be in cities.

Geo

France is the largest exporter of electricity in the world, and makes around $3 billion a year selling electricity outside the country. plus having the lowest electricity costs in Europe. And among the lowest per capita emissions.

https://www.sciencedirect.com/science/article/pii/S0301421516300106

One of the better papers I have read recently.

Nuclear is extraordinarily sensitive to escalating costs due to regulatory delays. Imagine borrowing $15 billion to build a reactor and being told construction will take an additional 5 years due to legal nonsense. At 8% interest that adds $5.4 billion to the cost.

Imagine the same size natural gas power plant. $700 million. The 30 year cost might be exactly the same as a nuke plant, but a 5 year delay is just $250 million more - not good, but acceptable. The big cost is fuel, and you basically pay as you go, avoiding interest altogether. If the nuke plant and the natural gas plant could both be built without delays, and the nuke plant ran 60 years, it would be very much cheaper. But the greens know the game, and work very hard to bankrupt nuclear through these delays and horseplay. Most politicians and the public are not smart enough to figure it out. So they win. Even if it is total nonsense - you could have much more, cheaper, and less polluting energy with nukes than anything else.

Drew

Thanks for the link, it supports that standardized and non-delayed nuclear plants would be an affordable source of power, so even less need to worry, though we can mourn lost opportunities. Drew

Palamas

Guys,

What impact do you think a (world) war would have on the tech process towards what you label the "singularity"?

Can institutional demise due to corruption and confiscatory tax policies create a new paradigm for the world? Or will it just shift activity to consolidated centers of people (Far East?) that are more hospitable to entrepreneurs and continued technical efficiency?

Finally, Kartik, what do you think went wrong in your 2017 prediction of the economy having a crisis moment? Any new thoughts on how long it'll be put off until?

Thanks.

Geoman

"What impact do you think a (world) war would have on the tech process towards what you label the "singularity"?"

Accelerate it? Hard to say. Traditionally wars accelerate technological development and deployment. But with the specter of NBC weapons, perhaps not. Certainly mass manufactured AI with killer drones would likely win any conventional war. I also feel war sometimes "clears the underbrush" in society = removing obstacles to rapid advancement and change. https://www.youtube.com/watch?v=TlO2gcs1YvM

"Can institutional demise due to corruption and confiscatory tax policies create a new paradigm for the world?" Long term secular demise is usually only corrected via a crises of some sort. Look at something simple like implementing a VAT tax in the US. Vastly more efficient, yet what are the odds it will be implemented? Imagine the thousands of accountants out of business. Imagine laying off 90% of the IRS. The savings from a VAT tax are part of the problem - the inefficiencies represent people's jobs.

"Or will it just shift activity to consolidated centers of people (Far East?) that are more hospitable to entrepreneurs and continued technical efficiency?" Nope. they have their own institutional problems.

"Finally, Kartik, what do you think went wrong in your 2017 prediction of the economy having a crisis moment? Any new thoughts on how long it'll be put off until?"

I can answer if you don't mind. Trump. Trump got elected, and made changes extending and expanding the period of prosperity. Lots of reasons NOT to like him, but reducing and eliminating regulations, tax cuts, better management of trade relationships, etc. have all been positive. He's likely added $1 trillion to the economy since his election in real growth. The shocking thing is how simple it was to accomplish. He's not some economic genius...he just followed the standard prescription and formulas for accelerating economic growth. That is what is so sad - the pseudo socialist pinheads are literally impoverishing people with their silly notions. We know this. It is proven over and over. Their ideas literally kill people. yet her come the socialists again. Sorry, the democratic socialists. As if that makes the slightest difference. And they will push their silly, anti growth policies. And when things crash insist on draconian measures to MAKE them work. And then we slide to tyranny and economic stagnation.

Kartik Gada

Geoman,

That is correct. Trump came in, and put through a few small economic changes. He also attacked the Federal Reserve directly, which delayed their insane rate increases, and eventually pressured them into not just reversing QE, but restarting it.

So now, even 3 years later, we are not on the edge of recession, even though we really were in October 2016.

Imagine the thousands of accountants out of business. Imagine laying off 90% of the IRS. The savings from a VAT tax are part of the problem - the inefficiencies represent people's jobs.

The thing is, a strong job market like this one is when such a change could be made easily, since the displaced people will find new jobs.

Geoman

But it is also exactly the time when no one sees the need to save any money on anything. We don't need to save money by implementing the VAT, so why bother with the pain of it? Part of the reason such sensible changes often get indefinitely differed.

Social security could have been corrected at almost no pain 20 or 50 years ago. If we had enacted George Bush's modest plan all would be well. Each year goes by, the crises gets closer, and the pain gets larger. By 2034 we will slash benefits by at least 21%, or raise payroll taxes by 31%. That's for workers who are today 50 years of age.

Kartik Gada

Geoman,

That is why ATOM DUES is the only solution left (recall that it was meant to start with SS as the sleeve), both for SS and a whole host of other Fiscal and Economic problems.

H.B.


I think it is naive to hope that VAT would come as a SUBSTITUTE to existing taxes. If VAT comes, and there’s a serious chance it will, it will come IN ADDITION to existing taxes. That will essentially cement our evolution into a low growth European style state where the state absorbs half of GDP, with commensurate impact on decreased personal motivation, loss of worldwide competitiveness and a European style trajectory to decline, and re-absorption into the worldwide middle incomes within three to four decades. Talk of VAT, and hopes that somehow a revenue neutral VAT implementation will be achieved is what makes me keep my bags packed. The story of VAT is the story of European decline, one of the tectonic world changes and rearrangements that are unfolding on the world stage in our current era.

Make no mistake. If VAT comes it will be IN ADDITION to existing taxes. There may be a brief introduction period where the VAT displaces some taxes, but the displaced taxes will quickly return. When you give the state monopoly a new revenue stream you would have to be quite naive to think that you can go back. VAT will start as a small additional tax, to then quickly grow into the double digits, as it has in every place where it was ever implemented.

As almost all states constantly try to expand and grow the share of the economy they control, VAT becomes necessary because of the Laffer curve. There’s only so much tax to be extracted out of rich people before they start hanging around the golf course or retire early to the Caribbean, so to speak. So if a state wants to expand to absorbing beyond thirty to forty percent of GDP, it becomes necessary to bring the middle and lower classes more into the revenue stream, and VAT is the most effective way to do so.

As people vote themselves more and more unearned goodies from the common trough, VAT comes to eat the very middle and lower classes that grew the state to such proportions in the first place. Democracies thus become inefficient low growth states, weakness compounds and soon the lofty democracy falls to otherwise less efficient authoritarian regimes as they find the Erdogans, Putins and Jinpings at their gates. This cycle repeats. However, as we move closer to the singularity (or even just by virtue of accelerating exponential growth) the frequency of this cycle will continue to increase. Entire country, or even entire continental ascents and declines that once took centuries will now complete in a few short decades. Hence keep your capital mobile and your bags packed.

Geoman

Your argument is that governments will screw up a VAT? Of course they will. They screw up everything. I was interested in it only for efficiency - it would cost our country vastly less to collect a VAT than anything else. That money saved, in the hundreds of billions, would be split between the government and the public. I'm also interested in making taxes as flat as possible. The only point of complexity is to hide thievery.

I wonder if we could have a VAT that adjusts automatically each time the government increases spending. That is to say deficit spending is not allowed at all. For the first time the citizenry would be actively engaged in watching the government spending, and interested in reducing it. And since a VAT applies to everyone, there would no longer be winners and losers in the government spending sweepstakes. We'd all be losers.

There would be no question about how this or that program would be paid for - we'd raise the VAT. We could calculate how much each change would cost each and every one of us before the votes for the increase are even implemented.

H.B.

Maybe, but with nothing else short of a constitutional amendment that was based on a balanced budget and forbid all other forms of taxation other than VAT. But we would probably need a VAT of around 40% to support all existing government activities. Would make the population more aware of what it means to have a government that consumes 40% of GDP (or 46-54% in Europe).

Palamas

KG,

What's the new prediction? Can the Trump policies buy more than a year? For the record, I'm saying 2021-22 is when a big dip takes place, perhaps not the cataclysm, but a big hit to the market or economy enough to worry the boomers even more about the retirement so few have savings for.

Geoman, of course, weigh in --- have at it.

Geo

Well...the business cycle says a downturn is inevitable. And we certainty seem overdo.

BUT

As I have said before we are starting to enter "the rapids" We are accelerating toward the singularity. We have been for some time, but the gain in speed was small - now it is becoming noticeable, large, and somewhat alarming.

By 2025 every major car company in the world intends to have 20-40 models of EV on the road. We are building SMRs in Idaho. In Texas they have built a natural gas power plant with full carbon capture - in 5 years they will be building them around the world. We could have self driving vehicles.

Will the Hong Kong protest succeed? Will we have a trade deal with China? Will Iran break out? Will Brexit happen? Will the fed continue quantitative easing, or try and roll back?

Will Trump get re-elected? If not I expect an immediate crash, which will be made worse if Warren or Sanders is elected.

I look at what the economy is doing right now, and look at all the drags on the economy, and I'm amazed. What if those drags - impeachment, North Korea, trade wars, middle eastern wars, etc. were removed? Imagine an extra full point of economic growth. That is an extra $200 billion compounded annually. Imagine low energy prices...forever. Imagine Trump with a Republican congress. Imagine student loan debt being massively reduced.

Honestly, if the budget deficit were fixed, I'd say we were in the dream economy right now.

So...I honestly don't know. In the rapids the gyrations of the economy are likely to be wide. The old economic rules will not apply. Overall it will be hard to deflate.

There will be massive cash out of baby boomers from the stock market and real estate markets. Or not. As long as they are making money, maybe they let things ride. If they let things ride...who knows?

Part of the bid up on the stock market is the simple fact we are becoming very wealthy - and there are fewer and fewer productive uses for all the wealth accumulated. I've said before that one concern I have is we reach a consumptive limit - we can't grow more because we can't consume any more.

I feel pretty confident predicting single events. But the economy is the interplay between and among all those events. if just one thing were changing I could predict the impact. But everything is changing. At different speeds, and they are all interfering with each other.

So....I'm going to say ...no downturn. Maybe a slight slowdown...but Trump will be re-elected, and sign a trade deal with China. Energy prices will remain low. Iran will have too many other problems to make trouble for us. Brexit will happen, and GB will join NAFTA. Boomers will keep their money in the game. Low unemployment will become a fixture. Inflation will remain low.


Kartik Gada

Geoman,

That is correct. Plus, now it seems that the ATOM has trained the Central Banks of the world (including the most unenlightened, the US Federal Reserve) to do more QE whenever there is a correction, they might have effectively greatly reduced all stock market corrections greater than 20% (which we have not had in 10 years).

Also, by 2020, we are starting to get into the steeper part of the gradient - the rapids, as you call them. The difference between 2017 and 2020+ is the steepness of the gradient and whether it still allows the traditional definition of recessions. For example, a trendline deviation as severe as the Great Depression, today, just cannot last longer than 2-3 years barring extreme government mismanagement. If the US won't print money, China will print enough for both.

Bad governance can mess up anything, but it seems the Central Banks are being unwillingly fused into a status quo of perma-QE, which is what should happen.

Drew

So lower (including negative) interest rates all around until there is either a crash in confidence in a monetary system or a central bank starts distributing money directly to the populace aka ATOM dues. Drew

Geo

The ATOM finds a way around, under, and over every obstacle, including the central banks, and including the standard rules of economics. As it gets bigger, the time frame for it's overcoming of a problem becomes ever shorter. And the more direct the solution is - in the past the ATOM would go around obstacles. But that takes time.
It is starting to get big enough to just bash through them.

If you think about capitalism as an auction for a limited supply of goods and services, what happens when the supply of goods and services begins to become unlimited? What if the supply of labor is like the supply of air? Building a rocket to the moon, do we cost in the price of the air the technicians building it will consume?

Clean water. Right now we are deploying atmospheric water generators in poor areas - basically a solar panel and a device that makes clean water. Free water. unlimited. You might say, well it is not really free. Someone is buying the device. Which is true, but who is paying for it, and who is getting the water? The cost is so trivial that NGOs are giving them away. Their money comes from charitable contributions or from endowments. Which is to say, the NGOs didn't earn the money either. It was a trivial expense to some wealthy philanthropist, or the earnings from the stock market, which can be traced right to the ATOM.

66% of all crude oil in the U.S. goes to gasoline and diesel. In 5 years, 50% of cars sold will likely be electric. Imagine in 10 years cutting crude oil usage by a third. Then another 20% in the next 10 years. And imagine halving the number of cars on the road due to self driving and car sharing.

What will be the consequences of...all that? I'm not talking far future here, I'm talking the next 20 years. In 2025 there will be hundreds of EVs to choose from on the road by every major manufacturer. Tesla is awfully close to full self driving.

I think it is better to think of the ATOM as a growing, living organism. It must feed. But what does it eat? Inefficiency and waste. Disorder. And as it gets bigger it eats bigger and bigger things. Traffic jams are wasteful. Parked cars are wasteful. Pollution is wasteful. People without water are wasteful. The ATOM plans to eat those and so many more examples.

We will colonize the moon and mars in the next 30 years because doing so will become a trivial expense to our economy. And the ATOM must feed - at some point converting the wasteful existence of every barren rock in the solar system will be necessary to keep it fed.

Drew

I have long argued that space colonization will not occur for economic reasons but because it will be "cool", or if you will, as a luxury good. It was a little early to do a Mars mission paid by advertising, but that or one paid by a billionaire's spare cash is coming soon.

Geo

"...but Trump...sign a trade deal with China."

I literally wrote that the day before China announced a trade deal with us...Talk about quick turnaround on a prediction.

I think they were hoping to wait Trump out. But a) It doesn't look like he is going anywhere, and more likely than not Democrats have signed their death warrant with this impeachment fiasco. b) Each day that passes they need this deal, more than the U.S. does. Hong Kong protests have hurt them deeply, and they weren't in that good of economic shape anyway. They need this deal, now, and not in 2 years from now.

Drew

The Bezos divorce seems fairly friendly, but it is easy to imagine a version in which she spends her half of the Amazon shares putting someon e on Mars via Musk just to spite him.

Geo

Your divorced wife decides to move to mars? And this is bad because...?

If I were Bezos I'd build her the rocket.

HB


Since the discussion seems to have shifted to the much more immediate future, I’m wondering whether anyone would like to share any thoughts on how to remain solvent until we get to the singularity...

More specifically, to put my money where my mouth is, I see highly inflated assets, especially US securities. For example, in the US stocks are trading at CAPE ratios of 30. Yes, 30! Even if that proved sustainable it is still equivalent to a meager 3% return on a very risky and volatile asset. And bonds also have dismal returns compared to their risk.

In my view, sustaining such valuation levels would require unfettered capitalism in the best of cases. Instead, not only are we straying further and further from high growth free market capitalism, but we are actually entertaining the political plan to irreversibly cement the US on a path to European style (sub)growth in 2020.

I have thus personally started shifting assets outside the US (no, not into Europe of course) where valuation ratios are half the US level and economic growth rates (the fundamental force, the wellspring of asset growth —really) are higher. I think that it would be unwise to wait for the serious possibility that someone like Elizabeth Warren may be polling close to majority by next spring. It may already be too late by then. With valuations so inflated a high polling socialist may be enough to prick the valuation bubble a little earlier than it would otherwise burst on its own. And ironically this would enhance the chances of the socialist being elected.

Besides, even if Trump gets re-elected, he does not really represent free market capitalism anyway. While much better than politicians who want to go the irreversible low growth European way (arithmetically deterministic path to decline) Trump is still comfortable with trillion dollar deficits which will also lead, eventually and irreversibly, to European levels of taxation, with VAT and everything else that allows a state to milk both rich and poor so that it can consume 50-60% of GDP while the nation grows at one third the world average. That is a terrible fate heading into the singularity.

The fact that this is not discussed (at least openly) amongst financial circles, but also the population in general, tells me there is a great distortion and discord between opinion and reality. And so it is time to get out of the distortion bubble.

I have described my out of the US approach to a few acquaintances. I often get the comment that it is absurd to shift investments to, say, Russia or Communist China because I’m concerned that America is watering down its capitalism. In my view, the authoritarian shortcomings of China seem to have already been priced into their asset valuations as they trade at CAPE ratios of around 15. Similarly with places like Russia which is trading at CAPE ratios of 7.

This is consistent with other geographical tectonic rearrangements in the ideological arena. Where does one feel freer in the end? In a place like Russia, China or Dubai where you cannot demonstrate in the street but the authoritarian state only harvests 20-30% of your vitality? Or in a place like France where you can demonstrate every weekend, even naked, but the French people by democratic decree take 50-60% of your vitality every day — day in day out? Month after month, year after year for the rest of your life, and your descendants’ ?

I don’t have time to convince the general population of the simple all encompassing arithmetic of compounding growth. By far, compounding growth will be the almost sole determinant upon which future prosperity depends on, whether one is currently rich or not. This dependence of future prosperity levels on growth is especially true in our modern high growth environment, and even more so in an accelerating growth environment. The dearth of traffic on this website — one of the few ones that recognize the all encompassing force of exponential growth — proves my point of mass ignorance on the impact of exponential growth on their future prosperity standing in the world. The masses seem to be delusional, so I’m taking evasive action now, rather than hope that somehow the Europeanization of America into a low growth stalemate will not happen.

I know this is not a financial blog and I don’t want to highjack it, so let me know if it this is straying too far. On the other hand, this is one of the few unique places where immediate finances can be discussed in terms of the singularity, or let’s just say more generally accelerating exponential growth, the one factor that will most dramatically affect our future and that of our descendants. And, as I said above, it is quite important to stay solvent going into the singularity. I have a hunch that it will make a big difference how one approaches the event horizon.

I’d like to summarize the fundamental societal dynamic change being triggered by the ATOM in our age: Technology and human advancement creates enormous power. We, as humans, are becoming orders of magnitude more powerful than we were even just a century ago and the trend is accelerating rapidly, especially when looked on a historical time scale. Power creates leverage and that creates inequalities. Yes, inequalities if outcome. At the same time exponential growth becomes the dominant and life transforming factor in prosperity for everyone regardless of wealth status. Those societies who want to impose equality of outcome will suppress this most important factor of prosperity: exponential growth. This is what will separate looser from winner jurisdictions in the 21st century. Under already rapid — and accelerating — exponential growth, in fifty years we are likely to see jurisdictions that today we laugh at rise to the top, by orders of magnitude, and we will also see once lofty technological hubs being surpassed by orders of magnitude.

In summary, for now, Geographic mobility seems to be the main determinant for personal success in the immediate to mid term future. This is true for capital mobility as well as people mobility. Now “if” (or “when” if you are a determined sungulitarian) growth accelerates to breakneck pace then who knows what will happen. It’s way behind the prediction horizon; for me at least.

Geo

As I said, I believe the ATOM has a ravenous hunger for inefficiency. It is literally what it was built to consume. And with each meal, The ATOM grows larger, and the next thing it consumes must be even bigger to satiate it. Eventually it will consume the biggest targets of all - education, health care, and the government.

U.S. securities are inflated because 1) they are safe and 2) there is no where else for the money to go. Where outside the U.S. can you shift assets? Options are certainly limited.

For the U.S. deficit, I have advocated an investment program where government agencies would be "pensioned" off the books permanently. For example, the USGS budget is $860 million. Given them $18 billion in an endowment, with 5% each year spent to maintain the agency. Do this agency by agency, each year, until the size of the federal government begins to match its income. There are great many agencies that could be pensioned off in this way - the services to the public continue, but the on-going expenses do not. The employees are no longer federal employees and no longer receive federal pensions - they go to a 401K program like everyone else. They are a non-profit.
They are given brief mission statements for the USGS it might be "exploration and evaluation of the mineral resources of the U.S.

Just work through the system, shedding agencies and expenses. PBS, NASA, the VA, the entire departments of energy and education. That is how you cut the government, by spinning off a lot of their duties permanently into charitable foundations.

Russia and China seem to be poor investment choices. Personally I like South America, absent Venezuela. I'd say invest in an emerging markets fund and be done with it.

Thing is I like where I live. I like my house, my friends, my family. So instead of staying mobile, I plan to hunker down - pay off the house, the cars, everything, including all my kids student loans, and get them pretty well financially set. Solar panels and batteries, and an electric car. Have all my assets in hard to find (and tax) investments. I figure to have this all accomplished in the next six years - it is all coming together quite rapidly. I, and my children, will be entirely debt free by 2025. And I live is a no income tax or sales tax state - there are a few of those. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming have no personal income tax.

At that point, retire. I can live quite comfortably on a very small income because my total expenses are essentially zero - just food, minimal taxes and insurance. My house has been fully modernized, and is energy efficient. Keep my reportable income low, and I avoid most income taxes. Should be able to ride out just about anything. I also have duel Canadian citizenship, but I very much doubt that escape hatch will be needed.

So I would say that is another strategy - eliminate all personal debt, move to a low tax locale, minimize expenses, and minimize reportable income.

Kartik Gada


As I said, I believe the ATOM has a ravenous hunger for inefficiency. It is literally what it was built to consume. And with each meal, The ATOM grows larger, and the next thing it consumes must be even bigger to satiate it. Eventually it will consume the biggest targets of all - education, health care, and the government.

Yes! I would add construction as a fourth industry. It is taking a long time given the magnitude of the inefficiency, but cracks are appearing.

HB


Yes, sure, but one cannot rest complacent in that ultimate optimistic outcome. How does one position himself/herself in that prospect? The ATOM ate communism and national socialism too. But so many people did not fare well in that feast. Some did not even come out alive. I’m not criticizing the lack of specific suggestions. These are hard problems. But being ATOM aware we might just have earned a useful advantage (though most of the credit for that goes to Kartik).

Geoman,
Yes I hear you on Emerging Markets. But that seems like an awfully small basket to put most of your eggs into. The US equity market is as big as the rest of the world’s combined. Now part of that is quite likely the fact that the US market is so bubble inflated. I have a hunch that about thirty percent of US valuations are bubble. But when it bursts it may over correct and we may see bigger dips. Worse, much worse, the upheaval is likely to unleash political actions that amount to outright confiscation. We have heard narratives justifying these actions in the past: “You don’t have any money because the Rothschilds took it all. Storm their banks and take back your money”. We may just see a more modern version of that. In other words, it might not be as simple as waiting for the eventual rebound, as in past US crises. That is what I mean when I say that the probability tail of Weimar Republic scenarios is fatter than what most people estimate. Especially in the US where people have never experienced such events. But as the US loses its moral uniqueness and the American masses start thinking more as the rest of the world, so will American history resemble more and more the rest of the world. Including advanced nations going through Weimar Republic scenarios, or just 1-1.5% growth for four decades in our more modern times.

Drew

Hi HB, I'm following a similar course to Geoman. If a good professional or entrepreneurial opportunity takes you elsewhere in the world, great. But if you are looking at long term security/growth, no one knows which areas are going to be hit the most or grow the most so in that sense you should stay among friends and family rather than being alone somewhere else during a crisis. Yes, US equities are valued higher, but that does also reflect that fact that even with our issues, they are safer than others. Diversify if you can, but being in Singapore, Costa Rico or Warsaw is not guarantuee that things will be better for you if a stronger repeat of 2008 comes around. As so many areas are dependent on the US economy/customer spending they may be even worse off when US demand falls.

Geo

HB - there is no escape. The is no sure investment. And because of the nature of the singularity, whatever I say today may not be true tomorrow.

What I suspect you'll find with your stay mobile strategy is you can't be mobile enough. The singularity will chase you around the world and back again. Running costs time and money, and has an opportunity cost as well. And you have to think of your friends and family as a means of further diversification. Lone wolves don't last long in lean times.

It's why I think staying put is a good defense, and most especially, greatly reducing day to day expenses. My wife and I easily clear $180k a year, but within 5 years I'll bet we could live quite comfortably on $60k. That is a lot of slack in the line, allowing for quite a bit of tossing on turbulent seas. Investments - diversify as much as possible, and don't bother trying to chase trends. Spread enough money around and something will likely be in the right slot at the right time.

Remember also that the ATOM is eating inefficiency. While your investments may do poorly, it is unlikely that your costs will increase all that much. In fact the two are related - it is hard for a company to make huge profits when the market is technologically deflating. But that technological deflation is to your benefit as a consumer.

Stay healthy, stay fit, have a lot of hobbies, and don't be ashamed of having to work anywhere doing anything.

And really, there are relatively few dark lights on the horizon of the U.S. The budget deficit, pension debt, and perhaps a real estate bubble. But there are plenty of reasons to be optimistic - energy costs are likely to decline, the environment is cleaner, population growth is slowing, war is ever less likely. Not saying things can't and won't get wrong, but each day the risk is less.

Kartik Gada

In general, equities will continue to pull away from bonds and fixed-income investments, just because the historical relationship between equities and bonds is broken. The ATOM has destroyed bonds as an investment vehicle, and rightfully so.

Recall this article from 3.5 years ago, that continues to be true :

https://www.singularity2050.com/2016/07/bond-yields-continue-to-confirm-atom-revelations.html

Palamas

Kartik,

Isn't the [supposed] low inflation (doesn't take into account energy and housing, as Rick Rule would tell you) more due to Mr. Koo's explanation of Japan's balance sheet recession now happening in the USA, and around the world, because of paying down debt and not taking loans thereby lessening the velocity of money and stifling inflationary pressures?

Couldn't one argue that it isn't ATOM, but rather central banks that don't want to admit there are cycles, so they keep lowering rates to prop up equities markets for demographic and political factors = boomers are broke and reliant on this? Central banks are, and it's more because of debt and central planning issues, not technology, as I see it.

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