More ATOM Proof Piles Up

We are very near to being able to declare absolute victory on the ATOM thesis.

Remember that March 15, 2020 really was the 'Netscape Moment' in Economics.  The US Fed Funds rate, which was the only major rate in the world that was foolishly high at that point, went from 1.5% down to 0% (permanently), and trillions in new monetary creation commenced.  As of August, the four major central banks are at +35.3% on a year-over-year basis (source : Yardeni). 

Meanwhile, the US 10-yr Treasury Note languishes at 0.7% yield, the weighted average yield of all high-grade 10-yr Sovereign Bonds worldwide is at approximately 0.00%, and oil remains below $40/barrel even now, while the tech-laden Nasdaq 100 continues to make new all-time highs.  What more proof is required, that monetary creation a) does not cause inflation up to a pretty high annual rate of creation, and b) this creation finds its way into technology, to produce more technology?  

Now, we get the benefit of probing were the ceiling of the monetary creation gradient might be.  I have maintained in the ATOM publication that 16-24% was the optimal rate of increase (based on my own proprietary research about the depth of technological density and acceleration), with a lower number resulting in insufficient inflation and the higher number causing brief inflation.  Now, we happen to see a 35.3% net YoY increase.  This is well above the band I specified above, but it also follows a period of slack, which means the CAGR over the last several years is still well below the 24%/yr upper bound.  

If the current YoY increase is in fact an overshoot above the optimal zone, there will be a very brief blip in the CPI.  This will cause the disgruntled inflation hawks and PhD Economists to emerge from the woodwork to point out how 'the entire ATOM thesis is wrong'.  They will be suitably embarrassed yet again, since the blip will be very brief once the trendline of 16-24% catches up.  As we can see from the second chart, the CPI is just not having it.  

Nor is the Goldman Sachs Commodity Index, which represents worldwide prices of all commodities (oil, gold, natural gas, silver, coffee, etc.).  It is down a whopping 60% from its 2010 levels, despite all the QE.  Even this index does not represent the accurate scale of commodity deflation, since I contend that computational power, storage, and bandwidth should all be commodities in this index (as volatility already is, despite not being a physical form).  Inclusion of these components would reveal a faster as well as more accurate deflationary picture.  This trend can only continue and accelerate through the 2020s and beyond.  

Also note how large the base of cumulative monetary action now is.  As we see from the chart, the YoY dollar amount is $7 Trillion, and this is just for the four largest central banks (which amount to 85% of all monetary creation).  Just to stay at 16% YoY growth for the next 365 days, another $4.3 Trillion has to be done.  

As I said in June :

I said elsewhere that the decade of the 2010s had $23 Trillion of cumulative QE worldwide.  The PhD Economists of the world, who have predicted 100 of the last zero bouts of hyperinflation, still believe QE is an aberration and assume that the cumulative QE will be reversed (i.e. that the 2020s will have -$23 Trillion of cumulative QE).  I claim the opposite, which is that under both ATOM principles and the Accelerating Rate of Change, the 2020s will see about $100 Trillion of QE, and that this will move towards sending cash directly to people (rather than the esoteric bond-buying that comprises of QE today, which inevitably concentrates the benefit of this monetary creation in very few hands).  

Does anyone doubt that the 2020s will in fact see $100 Trillion of QE?  The first eight months of 2020 are certainly on track for that trend.  That means it is also on track for a greater diffusion of future monetary creation.  The current channels are super-inefficient, super-saturated, and frankly, one could scarcely devise a better way for all new monetary creation to go just to the wealthiest tech billionaires while average people get nothing.  

Furthermore, while bad governance can destroy anything (and this sort of new safety net actually increases the level of bad governance, as the penalties are delayed), the fact that the central banks of the world reacted so quickly means that a number negative economic phenomena might very well be in the past.  For example :

i) There may never be a traditional recession again, based on the technical definition of a recession, which is two consecutive quarters of negative 'Real' GDP.

ii) There may never again be a stock market correction so severe that the S&P 500 remains over 10% below its all-time high for a full calendar year.  

iii) The S&P 500 may never again go more than three years without making an all-time high.  Remember that dividends (about 1.7%/yr) also exist.  

Points ii) and iii) above prove that the equity index, rather than gold, is the true safe haven.  The gradient of progress in the modern era is just too steep for the multi-year recessions of the past to happen anymore barring the worst governance.  The divergence between the performance of gold vs. that of the Nasdaq 100 over the last decade is extreme.  

The proof is piling up.  The Economics PhD ivory tower cannot continue their denial forever, as they already are in the dustbin of history.  Yes, most recent articles here have been very similar, but remember that we are in the midst of a seminal historical turning point that almost no others have caught on to yet.

Update : For those worried about Money Supply, note that M1 has increased 42% YoY, and M2 about 24%.  This is at a level where even I thought there could be inflation, since M1 is the most liquid and rapidly-circulated pool of money.  Such inflation could happen, but has not happened yet.  

If big increases in even M1 have not caused inflation (still TBD), then the case for ATOM-DUES is even stronger, as one of the last few unknowns has been exposed as a non-event.  

 

Related ATOM Chapters :

2 : The Exponential Trendline of Economic Growth

4 : The Overlooked Economics of Technology

 

 

 

 

 

Comments

[Drew]

Because so much of the stock market is psychological and governmental, I'm not as confident about it's unbreakability. As an example, if income taxes are removed or even lowered to match capital gains taxes, much of the focus on stock values instead of dividends will change. Admittedly, it will take some time for executive compensation to change to reflect that.

Demographically, we may also see the great boomer drawdown on their savings rather than passing it as an inheritance.

That said, it is still the one-eyed king in the land of the blind. Drew

[Kartik Gada]

Drew,

The US boomer drawdown is not large relative to total world capital. A number of people who spent their careers predicting this all said that 2016 or 2017 was the tipping point. Most such analyses missed the major point that they were acting as if the US is the entire world. Remember that Europe and Japan have even higher average ages than the US, so the bulk of the world effect this was going to have has already been borne.

Dividends, while good, are unlikely to rise much, since tech companies are specifically priced for growth potential, are are growing as a structural percentage of the entire index. Now, this percentage may have many corrections. But still. The obliteration of Sovereign Bond yields also makes it harder for dividends yields to rise, even if dividend tax rates were to lower.

Also remember that subsequent stock market corrections will also serve to armtwist the Fed into more direct cash for people, since their existing methods keep getting weaker and more saturated. Each correction forces them one more step in the right direction, from what we have seen each time.

[Geoman]

Good stuff Kartik.

Something that is hard for people to imagine - commodities are just atoms and energy. Some atoms are rarer than other, resulting in cost discrepancies. But all the atoms we really need are fairly cheap. Iron and aluminum, for example, are literally dirt cheap.

What the ATOM does is make the collection, transportation, and transformation of these atoms and energy into useful products much cheaper. The fracking revolution is a good example - it was a direct function of the information age - the first shot across the bow of the ATOM destroying commodity prices. But every other commodity is poised to undergo their own fracking style revolution. It may be space mining, it may be seafloor mining, it may be advanced extraction methods reducing costs, improved recycling, less waste, or better exploration. The ATOM is going to systematically attack each commodity and crash their costs.

The consequences are going to be profound - the Tesla Model 3 costs around $40k in 2020. In five years that same car will cost $20k - the price will be falling a few thousand per year. That is a very reasonable trend line for the price, and is based on the anticipated decline in battery prices that Tesla themselves have predicted, over the next 5 years.

And naturally it will be a much better car in nearly every way, safer, longer range, faster, self driving, more features. In fact many of the new features will simply be additional software, that can be added at almost zero cost.

By the by - my August electric bill was....$30, $17 of which was a utility connection fee. $13 for actual electricity. I actually used more than I did last year. My bill is normally around $130 a month. My solar panels are cutting my need for electricity by a huge amount. 10 year payback on the installation, 25 year warrantied life cycle. Another ATOM improvement. And no worries for the utility - what I don't use they will sell to charge up EVs at night.

[Geoman]

Just as another random thought - COVID19. The vaccine in development is going to achieve two unprecedented things:

1) It will have been developed and distributed more rapidly than any vaccine has been in the history of the world. Remember, in January of this year the virus was identified. Having a working vaccine within in year is nothing short of miraculous. Especially for a coronavirus. The average time to develop any vaccine is 10-15 years.

2) The mechanism used to create this vaccine is novel, and can be replicated for other viruses. Things we've never had a vaccine for.
The entire approach and machinery for this vaccine will remain in place after COVID19 is a distant memory. It will be a permanent benefit to mankind.

There is a pattern here, in case anyone is interested.

1) A societal problem crops up. A virus, pollution, resource shortage.

2) The ATOM (which is really just an narrow focus emergent superintelligence) swings into action to resolve the problem.

3) Problem solved.

4) The next problem that comes up gets solved even faster, and then the next, until...there really aren't any more serious problems challenges or concerns. 10 years becomes one year, becomes 3 months, becomes a week, becomes, problem? What problem? It will be a certain sign of the singularity.

Think about this - when was the last time an oil tanker ran aground and spilled all its cargo? When was the last time an airliner crashed due to mechanical issues? these things...hardly even happen anymore. And it is not because there are fewer ships, or less air travel.

It's why I don't worry much about global warming. In 10-20 years, tops, it will be all over, without too much pain and suffering, at a negligible cost to the world economy. Colonies on the moon and Mars? Why not - if we want them they will be available at negligible cost.

[Kartik Gada]

Geoman,

Those are brilliant observations.

As commodities are atoms and energy (and information), the scope of what can become a commodity also continuously expands. That is why I say that computing power, storage, and bandwidth are also commodities. When a low-tech product like an incandescent bulb is replaced with a high-tech product like an LED, there was innate commoditization of the very concept of converting electricity to light. On account of becoming high-tech, exponential progress was irreversibly inserted where it previously did not exist. The same goes for taxis vs. Uber, etc.

There is a pattern here, in case anyone is interested.

All true. Remember how, in addition to the 'peak oil' example, how the asteroid impact threat also 'went away', without anyone noticing. We now have mapped all NEOs of size, and have confirmed that nothing big is going to hit anytime soon (which was a complete unknown until 2000 or so; any day could have been a big impact in theory).

https://www.singularity2050.com/2019/11/atom-award-of-the-month-november-2019.html

Think about this - when was the last time an oil tanker ran aground and spilled all its cargo? When was the last time an airliner crashed due to mechanical issues? these things...hardly even happen anymore. And it is not because there are fewer ships, or less air travel.

All very true. It has been 21 years since a car of mine broke down while driving, forcing me to call a tow truck.

But bad governance is rising to fill the gap. See California. New billionaires created every week, yet the governance is so bad that things they knew how to do 60 years ago are now lost knowledge (such as forest management and fire prevention). That is why the ATOM is set to clash with government more directly, and early parts of that have already begun.

[Sylvain]

I don't understand how increasing the money supply could create wealth.
My common sense and my austrian background both tell me quite authoritatively that this is non-sense.
That a money supply increase simply means a redistribution of the wealth, not additional wealth.
But I'd really like to understand this viewpoint that somehow increasing the money supply each year by 20% or 30% does create wealth: could someone point me to some article that explains this viewpoint?

[Kartik Gada]

Sylvain,

Read the ATOM publication :

https://atom.singularity2050.com/

If money supply increases without inflation while many products have deflationary price declines, then obviously wealth has increased.

Most formal schools of economic thought have no accounting for, or grasp of, technological effects, so it is harder for formal economists to grasp relative to laypeople.

[Geoman]

Sylvain,

Technology is deflating the cost of goods and services, rapidly. For example, say you want to buy a set of tires. They cost $200 today, but next year they cost $150. Next year you save $50, or, in other words, you are $50 richer than you would have been, right?.

Now say this is happening to everything all at once.

What if we simply monetize this rapid deflation? Say, the tires cost the same as the year before, $200. But we give people $50.

Nothing has changed, right? If the tires cost less and you save $50, or the tires cost the same and we give you $50, it makes no difference.

Overall deflation is bad for economies. Worse than inflation. So to keep prices stable, we simply print the savings and distribute it to everyone to spend as they please. Printing money causes inflation when the supply of money is chasing a limited supply of goods and services. But if the goods and services are increasingly available, printing money does nothing. It just serves to control the price deflation that would be occurring.

We are entering a period when deflation is going to get more and more powerful, pervasive, and ubiquitous. Such technological deflation creates the Osborne effect, which is very bad for economies. the DUES idea is just a mechanism to combat that.

[Geoman]

Kartik - I agree - one of the most important commodities is information.

And it is strange how the government is seemingly getting worse as the ATOM expands. My theory is that the government is falling further and further behind the world - they is simply a misalignment between the government and reality.

How many stories do you read about this or that government agency still using computers from the 1990s to process important data? It is not just that their technology is out of date, the very structure no longer serves the needs of the community. They are 19th century inventions trying to manage a 21st century world.

Looking at just the fire situation - they made a mistake in 1935 when the government instituted its 10AM - all fires must be put out by 10AM. The compounded that with stopping timber harvesting in the early 1990s. these decision were bad. Fine, people make mistakes. the real problem is the government is soooo slow to recognize and correct those mistakes. It is just not nimble enough to correct the worsening problem. It operates on old data, using old tech, with old decision making processes....

[Kartik Gada]

Note that the US, being as large as it is, could only do a DUES, and manage a phase-out of income taxes, over a 10-year managed process, if it were to hypothetically start now (which of course it is not).

But a smaller country, like Canada, could just do it immediately in one shot. Even better for the smaller country is the Sovereign Venture Fund.

For political reasons, ATOM-DUES won't actually happen until the 2030s. I say that here at 4:30 :

https://youtu.be/1XC41SQqEpg?t=265

[Kartik Gada]

Geoman,

Among other directions of technological disruption of government, it will soon be very easy to simulate the direct, secondary, and tertiary effects of new laws and regulations. Plus, it will be easy to see which best practices of one country might work in another.

Governments will resist this, of course, because inefficiency and make-work jobs as a form of favor-peddling are they only framework they can think in. However, a small country will do this, setting the process in motion. This sort of simulation engine will also reveal that California had a better forestry policy 60 years ago, for example.

Among other things, sentences for standard crimes should be relatively uniform across all advanced Western economies. At the moment, punishment for certain crimes varys a lot.

[Drew]

Another government worry - no representation without taxation. If wealthy governments become "extractive" in that they get their wealth from something else instead of taxation - printing anti-deflationary money instead of oil in this case - why should they pay attention to the people and instead the rulers may fight among themselves on how much of the share of this wealth they can get. Drew

[Kartik Gada]

Drew,

That will always happen. But note how in the ATOM publication, I mention that this will force closer competition between nation states, since they are all drawing from the same pool of technological deflation.

Even the most frugal of fiscal hawks will be tested, but the best-governed states will pull ahead quickly. Add to that the fact that more and more services can be automated for a 95-99% cost-savings. Above and beyond the 'make work jobs' factor, many jobs in the government bureaucracy does work that no longer exists in the private sector on account of automation and productivity-enhancing technology.

[Fatcat]

Hello Kartik,
Are the the statements in the article strong predictions or just possibilities?

I think that despite the apparent ineptitude the governments are getting more efficient. It is just that they lag the efficiency of the private sector. On top of that the governments are reactive not proactive. And are slow to change. That was OK when the world was more static. It probably was even good as it was bringing stability and predictability.

[Kartik Gada]

Fatcat,

I don't think governments are getting better at all. A more productive private sector leads to more undeserved tax revenue for government, which conceals their mistakes.

The productivity of the private sector vs. the governance sector (in the US) is perhaps the highest gap it has ever been.

Small countries are another matter. A small, advanced country cannot afford to have bad governance, so they can't drift this far.

[Geoman]

"It is just that they lag the efficiency of the private sector."

And to clarify, as the private sector moves faster and faster the gap between the efficiency of the private sector and government grows ever wider. As the gap grows wider, the government is increasingly unable to manage the private sector. They don't even understand it.

[Kartik Gada]

Geoman,

This is where we might get the collapse of some governments. That is why it is essential, in the US, for some states and cities to go bankrupt. That might in fact save the rest of the country.

Also, there is immense upside for a small, high-tech country to decide that it wants a super-advanced, highly efficient government. Capital will flow in, and competitive pressure will emerge in the sovereign governance sector.

[Palamas]

Gentlemen,

Drew and Sylvain get at major weaknesses in your arguments. The main reason why they are right and you (think you are right but aren't) are blustery about this is that, I will state quite frankly, you don't understand QE. I know you are going to dislike me more and argue, but it's apparent. Go ask Steven Van Metre or Lacey Hunt, or better, read their work, watch their interviews. MONEY SUPPLY IS NOT INCREASING. The Fed balance sheet is, and we are swapping active money creation on the private sector for a non-exchangeable or usable set of reserves bank X gets at the Fed. QE has been destroying money and will cause more insolvencies, destroying it further, which will cause greater USD loss of coinfidence - but first the USD will rise and it has been.

You really need to study the mechanics of QE because you do not understand what's going on with it and are declaring victory in your thesis. You might be right about certain things but it will be for the wrong reasons, I can already tell. If the Fed directly sends USD to the treasury for UBI or whatever, that absolutely will start an inflationary move, but until QE is changed to that paradigm, it will not (for many reasons). That will require a change in the Federal Reserve Act. Don't like me? I'm just telling you what Lacey Hunt and Van Metre already know, which very few people are aware of, including. So you are welcome for my critical analysis being a thorn in your side.

Geoman (how are you buddy) ... here's another crack at keeping you honest, you said,

"1) It will have been developed and distributed more rapidly than any vaccine has been in the history of the world. Remember, in January of this year the virus was identified. Having a working vaccine within in year is nothing short of miraculous. Especially for a coronavirus. The average time to develop any vaccine is 10-15 years.

2) The mechanism used to create this vaccine is novel, and can be replicated for other viruses. Things we've never had a vaccine for.
The entire approach and machinery for this vaccine will remain in place after COVID19 is a distant memory. It will be a permanent benefit to mankind."

I love you assume this will be a working vaccine. It's almost laughable, since you have no basis to make that claim. It's marketing through and through. And if you take it, you are a fool - but you guys like to make tons of tech assertions based on your hope and dreams, it's borderline a religion for you guys, I've noticed. Quickly, SARS/MERS/coronavirus X don't have a vaccine because not only do they not really work or are bad for you, they are not needed. Period. This is race to the bottom in terms of central planning and marketing with the fake money largesse that is the modern day food fight until the US government collapses due to budgets becoming nearly all debt servicing, soon.

The mechanism is not at all novel, it's a bunch of nothing for political purposes, just like the coronavirus itself is. Geoman, you're better than this, stop with the Obama HOPE strategy, you are too smart for that.

[Kartik Gada]

I normally don't respond to Palamas' comments, since he is usually wrong yet keeps asserting that he is 'correcting us' and 'keeping us honest', while never owning up to his incorrect assertions. Somehow, more knowledgeable commenters don't feel inclined to grandstand about how much they know.

But lest anyone think his points have merit, I have to point out the massive error in his crowning conclusion.

He wrote, in all caps :

MONEY SUPPLY IS NOT INCREASING.

On the contrary, M1 has risen 42% YoY, and M2 has risen by 24%. That is the steepest increase in money supply ever :

https://futurist.typepad.com/.a/6a00d83452455969e2026bde968229200c-pi

Hence, nothing could be further from the truth than Palamas' statement. This is an instance where 'nothing could be further from the truth' is not even an exaggeration or figure of speech. This is approaching Dunning-Kruger implications.

which will cause greater USD loss of coinfidence

Given that all major Central Banks are printing in tandem, this is also false. The US is not the only country in the world that is printing, which means there is no relative 'currency damage'. Japan has printed a vastly higher percentage of its own GDP than the US has.

[Fatcat]

Just my 2c here. Some vaccine in the sense of"any" can be developed very quickly if using a living virus. If you can attenuate it and infect in a place that is unusual for the virus your could mount an immune response without too much damage to the host. 18th century technology used for smallpox in Ottoman Turkey.

Now if all this has to provide a lasting immunity with very few adverse side effects it becomes a completely different story, of course

[Palamas]

Kartik, you didn't address the facts at hand, namely, the mechanism currently of "QE". Japan did the same thing, yes, and it just shelved reserves and caused a lost generation. Yet they have different laws that would enable direct payments if need be. We don't have those ... yet.

Please, tell me what assertions of mine are incorrect? I don't think I've made any of note that you have shown to be wrong. Mostly, I believe that's due to the fact that I am correcting the incorrect ways that you are looking at a few situations. And let me point out that I don't do that for every topic, just a few, because you are correct on quite a few as well.

QE enables the Fed to take on assets and pay for it by ... putting more in the reserve account of the banks selling them the treasuries (for example). They CANNOT touch this money. And if you are aware of Richard Koo's work, you'll also note that in balance sheet recessions, just like Japan's, no one takes on new debt (the only way new money is created in all of these systems) in aggregate, no matter what the interest rate is. Why? They are too busy paying down debts from being over leveraged = no new money creation.

Sorry, you don't understand QE. Don't worry, very few do, and it's the same reason why they were wrong for over a decade now that inflation has not been increasing to any significant degree. The Fed jawbones so that people will take loans, and uses tricks of psychology to try to get people to take new debt and spend, by suggesting they are creating inflation. But as we have seen, they do no such thing. Since you can't counter this, I suggest you go look up Lacey Hunt and Steven Van Metre. But I'm sure you know more than they do, too.

There is a sovereign debt crisis, internationally. Even you can't deny that. And win war breaks out (China will start it after Trump is re-elected) it'll be all the more tenuous.

[Kartik Gada]

Palamas,

Kartik, you didn't address the facts at hand,

But I did. You claimed, in capital letters :

MONEY SUPPLY IS NOT INCREASING.

To which, I proved that money supply has increased a lot. In the last 10 years (during which the bulk of QE was done), MZM increased five-fold. M2 increased four-fold. See figures 3 and 4 over here, for indisputable proof :

https://www.yardeni.com/pub/gms.pdf

As your primary, central claim is catastrophically wrong, and you doubled down on it even after I corrected you, it is unlikely you can grasp subsequent points that build on it.

Plus, your other points implicitly assume that the US is the only country in the world. Most other central banks are printing money in one form or the other, and the US is not the highest by any absolute or proportional metric. Why would the US have a currency crash in relation to other countries?

You also fail to account for technology as a factor at all. If QE were as you describe, it would not be exponential, and could have started 40 years ago. This is why you can't explain why commodities have crashed in price, while tech equities have outperformed all other asset classes.

As a result, you don't have any predictions. That is an extremely important component of any alternative thesis, certainly one that says the ATOM is wrong.

At least you are correct (by accident) that inflation does not happen. You ought to debate PhD Economists, most of whom think hyperinflation is imminent (a claim they have made for a decade) because of QE. You are a better match for them.

[Palamas]

No, it is because I am saying in the REAL WORLD it does not "increase the money supply" in the way you and others think it does - even though M2 is increasing (your metric and why you say I'm wrong and stupid). Again, the truth is that you don't understand QE. Please see

https://stevenvanmetre.com/2020/05/15/why-qe-does-not-work/

So take a few steps back and think about what I'm saying, really think about it, not project on me your non-nuanced view and please, just try to realize what I posit is that technically the numbers we call money creation (M2) are going up but it IS NOT creating money in any way that would cause inflation. Quite the contrary.

Furthermore, I don't deny that technology causes deflation. I would prefer to call it efficiency, but I'm still ok with calling it deflation. The point is that your conclusion is not correct because you do not understand QE. If QE is not effectively causing inflation by truly increasing money supply and velocity, and is rather destroying money instead of creating it, your whole appeal to tech deflation is irrelevant. Let me state this, yet again: QE is effectively eliminating real money, productivity and the possibility for inflation from the economy, so you CANNOT infer that tech has to do with the lack of inflation. QE is doing that on its own!!!

I can explain those and make predictions, and I will, go ahead and ask me (each sector might take a while to explain). I'm not necessarily saying ATOM is wrong, I think the degree to which you state it is going on is where we disagree.

Your last paragraph is getting at it. They have thought hyperinflation is imminent for 10+ years. They are clearly wrong. Again, they are wrong because it's actually deflationary, as debt is long term deflationary, as are debt based economies, especially with QE. That means you can be correct about your tech deflation ... but it is impossible for you to KNOW.

And yet you are sure, which is why I'm here, because it is impossible for your to hold that position when things like QE are going on, which are far more impactful and manipulative than futurist hopes and religious sentiments.

[Geoman]

Palamas,

Given you have previously admitted your knowledge of medicine is essentially zero, I might wonder aloud at your persistence in pontificating on such issues.

I am assuming the vaccine will work because every reputable scientific and medical establishment, including the CDC and various pharmaceutical companies, says it will. I don't know it will, how could I? I suppose they could all be wrong, but "but something could go wrong" is not exactly deep thinking, and remains an unnecessarily assumption.

"It's borderline a religion for you guys." Pure nonsense. We take the best science has to offer, and go from there.

"SARS/MERS/coronavirus X don't have a vaccine because not only do they not really work or are bad for you, they are not needed."

Whether we NEED a vaccine is beside the point. We could certainly endure COVID19, without one, as we have endured any number of communicable diseases throughout history. Most of which we endured absent any alternative. You miss the point entirely...again.

"The mechanism is not at all novel, it's a bunch of nothing for political purposes."

As a non-medical professional, perhaps you'd like to explain how it not novel? Obviously you thoroughly understand the technology being used, and how it differs from previous successful vaccines? No? Not a clue? Perhaps your time would be better spent reading, with less time writing about topics you have no particular expertise in. Or maybe you could give us a short list (likely a very short list) of things you do actually know something about, so we may have fruitful conversations going forward?

[Geoman]

It occurs to me that Palamas is extremely unlikely to do any of his own research. So here goes...

Companies are developing a COVID19 vaccine utilizing a entirely new technology called messenger RNA (mRNA). An mRNA vaccine contains a synthetic version of the RNA that a virus uses to form proteins.

Traditional vaccines, such as for flu or measles, activate the immune system by injecting people with “attenuated” forms of the virus, or a virus that scientists have killed but whose viral proteins can still stimulate immunity. To make a normal vaccine, scientists typically grow a weakened form of the virus and test which parts of the virus successfully elicit antibodies. This can take four to six months in the case of the annual flu vaccine. With a brand-new virus, the vaccine-making process can stretch into years or even decades. Large-scale testing of a new vaccine, while necessary to assure safety, also takes time.

The advantage of mRNA vaccines is that it takes you literally days to make a new vaccine. Meaning you can go right to testing, cutting out years of work and reducing vaccine development costs by orders of magnitude. They have been working on this method for 30 years. They were just perfecting it when COVID19 hit, so this is its first widespread test.

But yeah, all just politics.

[Kartik Gada]

Palamas,

Again, the flaws in your premise are :

i) You said, in all caps, that money supply is not increasing, yet I showed you that it has risen 5x in 10 years, and 43% in just the last 12 months. If increases in M1 and M2 are not money creation, you have to indicate where the disappearance happened to match the rise of M1 and M2.
Since you have not, that alone crushes your pretense of having the chops to discuss this.
ii) If QE fails to cause inflation for reasons outside of technology, as you claim, it could a) have been done 40 years ago, and b) it could be done in 10 times the volume of now, without inflation. There also would be no exponential gradient.
iii) No answer for why even long-term rates have fallen, and why the commodity prices are being crushed exclusively through technological sources.
iv) You have no predictions, which is the bare minimum that you would have to present to have an alternate thesis that is better than the ATOM, and we would have to wait for those predictions to come true.

Plus, the sources you link actually agree with me, and not you. I am the one who says buying Treasuries and MBSs is long past the saturation point and causes moral hazard, and cash sent directly to people (printed by the Central Banks) is the future. I don't think you understand the sources you cite.

Separately, you go on to say :

"It's borderline a religion for you guys."
"than futurist hopes and religious sentiments."

This from the person who ignores rock-solid evidence that disputes his central claim, and makes no predictions.

Plus, this tone of argument is proof that your position has no factual depth to it.

Perhaps you would be happier fighting the PhD Economists who still think hyperinflation is imminent. They are even further from your position, so you should go focus there.

[Geoman]

Seems like Palamas has fled the scene.

Years ago you predicted that significant money creation could occur without causing inflation, because technology is causing persistent, and ever increasing deflation.

Current events seem to increasingly support this theory.

The ATOM attacks all residual store of value, eventually deflating everything, including gold. Commodities, one by one will be targeted. As one commodity falls to the ATOM, it will only increase the pressure on the remaining stores of value.

How can gold get much much cheaper? Well, we could extract gold from seawater. There is between 0.1 and 2.0 mg per ton, depending on location, making it uneconomical to extract using any current technology. However, there are actual plans afoot for phyto harvesting of metals from plants. https://www.miningreview.com.au/phyto-mining-commercially-viable/ Such a system could be developed for kelp to extract gold.

But an easier path might be simply harvesting metals from asteroids. A small 10-meter S-type asteroid contains about 650,000 kg (1,433,000 lb) of metal with 50 kg (110 lb) in the form of rare metals like platinum and gold. M-type asteroids are rare but contain up to 10 times more metal than S-types. A class of easily recoverable objects (EROs) was identified by a group of researchers in 2013. Twelve asteroids made up the initially identified group, all of which could be potentially mined with present-day rocket technology.

But if only rockets were cheaper. Wait, they are. Prices per kg to orbit have bene falling quickly. Elon Musk is saying his new rocket, starship, could reach orbit for $2 million per flight. Falcon 9 delivers up to 22,800 kilograms to LEO for a launch price rack rate of $62 million. That leads to a cost of $2,719 per kilogram. Imagine that being $250/kg. Mining the moon and asteroids? Why not?

There are several other avenues...the point of the ATOM is that it doesn't attack these things in one way - it attacks them in several ways, only one of which needs to work.

How about one of the most traditional store of value, property? Have you looked around downtowns lately? My company is paying a great deal of money for Class A office space no one has visited in six months. There is a LOT of real estate that is about to come onto the market, driving down prices. How much of that will be coverted to apartments and condos?

And of course, we expect some time for there to be a revolution in construction, and ability to build more, better faster. Be it printed homes, or prefab pop up construction.

People imagine property being a safe haven for value. That is going to be found to be increasingly untrue.

[Kartik Gada]

Geoman,

Certainly. Regarding Gold, remember that drones have greatly reduced the cost of prospecting in super-inaccessible areas, such as the Yukon.

Launch costs are falling exponentially, but this is compounded with the ever-shrinking size of electronics. A 1-ton supercomputer from the 1990s is now 500 grams in an integrated unit. Hence, the cost of launching an unmanned craft like Voyager 1 and 2 has fallen due to both launch costs per kg, as well as computing density per gram.

If you combine the two, into a metric of 'launch costs per unit of computing power', the cost has fallen by a factor of billions from the 1970s to present. Hence, it is a matter of time before they figure this out and send thousands of probes in all directions, vs. just one probe to a planet as has been the norm until now.

How about one of the most traditional store of value, property? Have you looked around downtowns lately?

Office space, particularly in expensive urban locations, has cratered. Since this compounds with the retail apocalypse that was already ongoing, housing supply, even in NYC and SF, will no longer be scarce. Twice as many people could now live in Manhattan since so much less office space is needed.

[Geoman]

Coupled with another trend I have been noticing - the slow death of the stock market.

Stocks were a way for a company to raise money for ventures they couldn't afford themselves. Banks didn't want to loan (too risky), so they sold shares of the company to investors.

Stocks continued as a mechanism for monetization - going public meant you could cash out the founders.

But increasing I have noticed companies going "public" and selling "shares" - but really seeking investment from a very small number of very rich private entities. SpaceX for example is a private company. Some of it is owned by people outside of Musk, but no one really knows who. Google and Fidelity own 10%.

This leaves this potential wealth generating outside of any avenue where the general public can invest and benefit.

Stocks, bonds, commodities (say, when is the last time you heard someone say the word "famine"? Think hard), and property are going to slowly (or rapidly) become worth a lot less money in the future. It seems like they are deflating along with everything else.

At some point a DUES like solution may become a necessity.

[Kartik Gada]

Geoman,

True, but there are innovations that are fractionalizing private companies in a way, enabling at least accredited investors (which in 2020, is almost everyone) to buy into big private companies (with minimums of just $100K or so). This costs vastly less than being public on the Nasdaq, but has the advantage of no short sellers and no non-accredited investors. A $100K minimum is a lot more than a public company, but vastly less than private VC-type investing.

As we both know, ordinary people (the bottom 99%) should only be in indices anyway, such as the S&P 500.

Lastly, remember that a lot of 'smaller' private tech companies ($1B to $5B market cap) just get acquired by the big guys. That is another reason to just be in SPY or QQQ.

Sovereign Bonds, however, are dead for ATOM reasons. Corporate and Muni bonds will still exist, but have terrible returns relative to equities.

If the three stock market predictions I made in the original article hold, then the equity index really is the safe haven, as even corrections are at least partially corrected before very long. Being 20% overvalued is still just being under two years ahead of itself.

[Jay]

I don't know about stocks, I am doing great in OKTA and ZM.
Fidelity Global Tech Fund also seems to do well, but my iShare Automation & Robotics are frustratingly slow.
But in general I think you can cash in with futurist subjects in the stock market

[Drew]

I bought and read _The Price of Tomorrow_ to see what other futurist takes on deflation were out there. Disappointing, but did clarify one benefit of KG’s DUES approach. Booth has the concern of many economic analysts that it is taking more and more debt to create growth and he assumes we’ll work out some soft of societal accord to transform to accept a deflationary future.

My realization (probably late to the party) is that if increased debt has been necessary for growth, because debt is how we currently create money to keep the economy growing, than DUES is more transparent because it goes straight to the money creation without creating an overhang of debt and privileging those with access to cheap credit.

Both versions will lead to increases in the stock market as money in play looks for opportunities, so I don’t think equity price increases will work as a good measure of how the economy is doing.

The book starts with the reasons for future deflation, but then has a middle part that is conventional TED talk political and psychological thinking and then concludes that we need to work out a way to live with a deflationary economy so I can’t recommend it even as something to hand to someone to introduce them to the concepts we discuss.

[Kartik Gada]

Drew,

Thanks. I am familiar with Jeff Booth's thesis, from summaries that others have sent me.

While it is good that he brings more light to accelerating deflation, his solution will not work, for the reasons you mentioned. Too much of the economy is already debt-oriented (mortgages, etc.), and to reorient the whole thing is not possible. Plus, if the entire system was made deflationary, no one would invest in anything either. He erroneously thinks that QE would destroy the currency, which is untrue since all major countries are doing it simultaneously.

Plus, since his book came out almost 4 years after mine, and he has followed me on Twitter since before then, he almost certainly read the ATOM first.

DUES is the only thing that is fully transparent and truly fair.

[Geoman]

I do despair about DUES.

A crony government will see this as just another opportunity for the rich to skim off even more money. Oh, they'll make up some reason why the government must spend the money wisely and fairly, awarding fat contracts to their friends and buddies.

The simple and honest method of distributing the deflationary windfall will be corrupted. They'll just take it all, thank you very much.

In my dreams I imagine a SpaceX Starship returning from the asteroid belt with 50 tons of gold. It lands at Fort Knox. The treasury immediately retires some of the national debt - paid off with gold backed certificates. The next ship arrives a day later...with another 50 tons. And so on.

[Kartik Gada]

Geoman,

They'll just take it all, thank you very much.

But that is the whole point, since that is what is going on now. With DUES, there is transparency on what was given, and it was equal to all adult US citizens. What people still fail to understand is that the current process is the most unequally disseminated. Almost no other method could be worse. Those who oppose DUES even after seeing the connection to deflation usually have not looked at what is currently being done, and how hyperconcentrated the printing currently is.

Of course, the eventual concentration of wealth will mirror what it is now, but that is because the below-average people just spend what they get. But that is not the fault of the rich. Plus, the financially illiterate still keep getting new DUES payments.

paid off with gold backed certificates. The next ship arrives a day later...with another 50 tons. And so on.

Yes, and such a supply increase causes massive deflation, which requires more QE, which ought to be transmitted via DUES.

[Drew]

What Geoman talks about is what I think the difference between DUES and MMT is, I think an article clarifying their similarity and differences would be useful. It will probably still be deficits and MMT on the way to DUES, but getting the idea out there may speed the transition. I've also thought you could brand DUES as the robot/automation tax, even though it is money creation, not a tax.

[Kartik Gada]

Drew,

Yes, you are right. I think of it more as a 'negative tax rate', even if it is an amount sent back with no bearing on the recipient's income. Otherwise, that is the most accurate description.

A robot/automation tax was already proposed by Andrew Yang, but it was an actual tax with no relation to QE or deflation, so I have to be distinct from that too.

[Palamas]

Geoman, you first. You are an intelligent poster, but that last one you made on me had absolutely made up positions attributed to me, as well as my character. It was quite odd, in fact. I never said I wasn't a medical professional, I'm among the most highly trained in the nation. I have credentials that of course you won't believe, so I won't bother posting them for privacy reasons as well. But of course, those in themselves mean nothing. I just found it weird that you claim to know more than I do about medicine and your first way of achieving this was creating a false narrative about who I am and what I know.

I already made a prediction that the coronavirus vaccines will cause major side effects in the trials on the guinea pig population who allows it, and do any research you want, they have. I know this because we already tried to make them last time, and they did the same thing. But apparently you can't or don't want to read my posts or predictions, yet again. So keep your eye on when another article or study comes out again on how the coronavirus vaccine isn't that effective (never have been greater than 50%) and have far more side effects than most other vaccines. Again, influenza isn't even needed for healthy people. It's basically forced pharma purchasing; I'm surprised sharp, cynical and critical guys like you don't know that. Don't be blockheads about this because you think I'm your enemy --- which I am not --- be convinced because this is obvious and right up your alley, both with the way you think in general about things and corrupt governments, as well as because of the evidence.

Regarding QE Kartik, or with inflation/deflation, you treated many topics that are complex and I can and will make predictions. But those depend on understanding when the Federal Reserve Act is suspended so that inflation can actually take place. You keep ignoring that the debt economy is deflationary. You keep ignoring that tech is naturally (gladly) deflationary in some ways alongside, but that certain things have absolutely been inflated (health care, homes, universities, etc). The problem is that QE ends up shelving "created money" to a non-touchable status on the Fed balance sheet with member banks that can't touch it, and no one wants to lend to crappy (indebted) borrowers. No effective money creation, which is the only way debt economies CAN create money.

Read that last paragraph 3 times.

I am around, because I like you guys, but I can't post all the time because I like to try to make some money before it runs out, PE or the admins get more of it off my back. Especially after I trained for all those years to become the subspecialist physician that I am, having paid hundreds of thousands and countless hours, weekends, and holidays to get where I am. But yeah, I guess I'm lying about that too.

[Kartik Gada]

Palamas,

You keep ignoring that tech is naturally (gladly) deflationary

Ignoring? That happens to be the primary topic of this entire website.

in some ways alongside, but that certain things have absolutely been inflated (health care, homes, universities, etc).

The CPI bundles all this into one, so we can measure the aggregate level of inflation. If you had any basic knowledge of the subject, you would know this, and realize that cherrypicking a sector (and conflating 'universities' with 'education') is folly.

Read that last paragraph 3 times.

I did, and continue to see that you just don't understand the subject matter at all. Money supply is up massively, as official sources show. Your claim that QE 'never circulates' also fails to explain why the stock market, particularly tech stocks, keep rising.

Plus, you still have no predictions, nor does your 'theory' account for why this is possible now rather than 40 years ago. What you claim is being done could have been done 40, 80, or 200 years ago even.

[Geoman]

Palamas,

I had previous guessed you were a Greek doctor, then you told me, "I see that Geoman thought I wasn't a natural born citizen (I am in the pure sense)...let alone being a medical professional of the highest level."

Translation to normal human speak, you are saying you are an native born American (who nonetheless seems to have poor English skills) and not a doctor.

Now, you say you are actually a doctor. Whatever. The problem, my friend, is entirely at your end.

You think other people are wrong, because you often don't understand the language. One example is you frequently characterize other people as saying exactly the opposite of what they actually said, or creating straw man arguments that nobody said.

Also, there are subtle clues to American born native English speakers can pick up on - weird sayings you are using that don't translate literally into English. For example, "I just found it weird that you claim to know more than I do about medicine and your first way of achieving this was creating a false narrative about who I am and what I know."

The tip off is "first way of achieving this". This is English as a second language stuff. No native born person writes like this. Your posts are festooned with such markers.

Anyhow, I was just being kind to you. Cutting you some slack. It is not a major source of disagreement - I don't really care about your background or language skills. But if you have a problem with English, just say so. Then we could account for it when the conversation goes off the rails, and maybe get it back on track. Or you could be aware that perhaps you are reading something the wrong way, or that people are reading your posts in a way they shouldn't.

Otherwise people just assume you are being rude, contrary, making strange attempts at humor, or don't know what you are talking about. I'd prefer to avoid that type of miscommunication.

[Palamas]

Geo, I think you are mistaking "poor English skills" for something that goes on quite commonly in back and forth (written) conversations over this type of medium. What's weird is that a foreigner isn't going to be able to create the sentence I just wrote. You have it stuck in your head that I don't know what I'm talking about, that I am not a doctor, and that because you don't see things completely eye to eye with me, I must be deficient in some way (not American, can't speak English, lies about being a doctor). It's really low level stuff. I won't mention it again, but I have higher achievements academically than any of you on this board, and I don't pound my chest about it - but I'm just laughing because I'm as blue blood in university credentials as any of you, am a physician, and somehow you think it's ok claiming that I can't even speak English. Yet, I still remain a Natural Born Citizen in the truest fashion according to our Constitution.

Let's just cut to the chase and also have some fun here, guys. What predictions would you like me to make? Perhaps that will be more enjoyable, and provide for a better back and forth.

Love,
Your favorite fake unintelligible doctor

[Kartik Gada]

Palamas,

but I have higher achievements academically than any of you on this board,

Unlikely. I actually teach at Stanford, and others here have similar attributes, but I digress.

The more important thing is, you said :

What predictions would you like me to make?

Well, if anyone has to tell you what predictions to make, that is already a fail, given the arrogance with which you claim that you are 'correcting us' and 'keeping us honest'.

But since you claim that 'money supply is not increasing', 'inflation will eventually arise', and don't seem to see technological progress as a factor at all, perhaps you can put forth some specific predictions, with dates of demonstration, around those.

[fatcat]

a possible nominee for the next years AtoM awards: SpaceX Starlink public beta begins. For now it is too early say what will be the impact on GDP and world economy but for sure it will make remote working from the sticks viable.

[Geoman]

Regarding Spacex, I have been intrigued by something.

Billions of dollars have been spent straightening fiber optic lines. This is because people who utilize those lines can get information slightly faster, then can have computers buy and sell commodities and stocks before news has been widely disseminated. It has been described as basically picking up gold coins off the floor - once you are faster you get all the money. This is how Bloomberg made his billions. https://www.forbes.com/forbes/2010/0927/outfront-netscape-jim-barksdale-daniel-spivey-wall-street-speed-war.html#3400ea17741a

In theory, the Star link formation could transmit information, point to point, faster than fiber. Meaning someone with the right set up could trade even faster than someone with access to the high speed fiber network. This advantage is really apparent over long distances - Tokyo to New York, Or London to Shanghai.

In theory, Spacex would make billions from trading via this network. but the real money lies in selling access to the network - every player will have to pay for access to stay in the game.

I think offering rural broadband is a nice goal, and will make some money, but I suspect the real money is in this type of exclusive access to the network. Such a network could take in billions $ per year of pure profit. In fact it might be the most profitable space enterprise ever conceived. And naturally Musk is likely aware of the opportunity - in fact it seems like just the sort of thing he might do.