Predictions 2017 – Be Ready

It’s all going to go rather quickly from here. We list our predictions for 2017 and beyond as crisis presents both opportunity and danger.

Political confidence and will eroding in the USA and other liberal democratic countries. In the US, economic confidence will start to fail as the new Trump administration starts rolling out its agenda. That could happen as early as March 2017 but most likely will not be felt until later in 2017. When political confidence fails, economic confidence falls soon after.

2017-18 is all about the coming shocks. Building on Brexit and the US presidential elections in 2016, markets are setting up for surprises. So called ‘black swan events’ always have tell-tale warning signs before they actually happen. A combination of factors are coming together to create the so called ‘perfect storm’.  At the heart is the implosion of global markets that has started and cannot be stopped. While this may be slow at first, it will pick up speed over the next few years.

We see inflationary forces gathering in the US and the potential for this to get out of hand quickly is real. We believe inflation in the US will jump quickly above 4% and has the potential to run up as high as 10%. So in 2017 we have the bursting of this massive interest rate bubble that is the result of a decade of unfettered easy monetary policy. The immediate effects of this should quickly be felt in stock markets, commodities and real estate and in the longer term, the broader economy itself. In effect, with its own particular flavours, our current situation is identical to the ‘Roaring 20’s’. The set up for a last gasp spike in stocks exists before the plunge. If however, the weight of uncertainty continues to build, then that spike could be nipped in the bud leading to the next big downturn.

The US Federal Reserve is always playing catch up to the market. It will not be able to respond quickly enough to the sudden jump in official inflation rates. This will have a disastrous effect on US and global interest rate markets. The Fed will be unable to reign in money supply quickly enough to correct the torrent of money that has flooded the system over the last decade.

The effect is like holding a big ball underwater then letting go. The decade of artificially low interest rates will ‘normalise’; i.e., move toward market value and this has the potential to cause major eruptions in every other asset class.

And then there are the political shocks. The wave of reaction that was Brexit and Trump will continue into 2017 with French and German elections. Rising nationalism and disgust with the political elites will see Merkel gone and the right brought to government in France. The EU will continue to blunder from crisis to crisis and we can expect with certainty other nations to begin their exit process.

In the US, Trump is busy getting his agenda off the ground. Some of his ideas have merit such as deregulation (always a good thing), downsizing US federal government and lowering corporate taxes. Many of his ideas however threaten future economic viability. In particular, the threat of trade sanctions against China, Mexico and Germany risks a global collapse in trade. Bastiat, the 18th century French economist summed it up nicely by saying when ‘goods stop crossing borders, boots start marching’.

Trump and Russia is another political flash point. We anticipate that Trump will use that relationship to build trade, especially around oil while strengthening domestic oil production and weakening reliance on middle eastern oil.

Fortunately we don’t have to worry too much about major wars in the immediate future. War risk will only emerge after a prolonged economic downturn (at least 13-50 years away). The risk over the next 10-15 years in the US is civil disruption and violence. Trump’s presidency will have finished long before but the consequences will still be being played out a generation or two later.

One fact worth observing is that most liberal democratic governments are broke. Politicians have squandered the seed capital of their nations. We will see two things occurring. Firstly, the grab for cash by governments will continue to escalate. And the erasure of cash as a payment medium will accelerate. Secondly, governments will move to sell off any available assets to maintain the status quo. If the economy holds on for another year or two, watch the asset sales.

For now, the status quo will remain unchanged even though a new era of uncertainty and political chaos lies before us. Real, lasting meaningful change will not happen until after 2028 or 2032. Around then an important political 50 year cycle low will occur and then the US will emerge with a new destiny and a renewed sense of self.

In 2017 however, liberal democratic nations will see increasing segmentation of the left – right spectrum into smaller segments and more diverse viewpoints. The polarization occurring in liberal democratic countries will continue to deepen in 2017 before any easing occurs. In the US, Trump serves as the perfect focal point for this polarization and civil unrest and disturbances may very well break out this year. In the US we see the accumulation of decades of bad policy and a deteriorating social mood is threatening the very fabric of the US. For 2017 we do not see individual states seceding but civil disturbances that turn violent and later we will see risk civil war.

Since the 1930’s we have witnessed the growth of US Presidential Executive Orders. Since Ronald Regan Executive Orders have been used more extensively. Anticipate Trump to exceed that of Obama (275 orders) by heavily relying on Executive Orders over the life of his presidency. This is important as it further breaks down the separation of powers of government and moves government towards an imperial style of governance by Trump who is already isolated, like an emperor.

Along with the demise of cash as one of the last privacy barriers to fall, liberal democratic principles continue to crumble. Another aspect of liberal democratic government being eroded slowly and surely is the separation of powers of government. Politicians’ need to be seen to be doing something, namely creating legislation. The separation of powers between the executive, legislature and judiciary has become increasingly imbalanced against the judiciary. Soon that imbalance will extend to the legislature as the role of executive order escalates.

Depth of prevailing social mood is already at cross purposes. A soaring stock market in 2017 along with a surging economy and disenfranchised people on both sides of the political spectrum is a perfect set up for the down phase of what we call the ‘Industrial Revolution Cycle’. This is part of the topping process of a cycle of human endeavour that began in 1783. That downward phase we expect to last some 38 to 62 years. At this stage our view is leaning more towards the 38 year time span. It will be steep and deep. This is based on technical considerations before the next cycle of growth gets underway. The key point is the setup has already been underway for a long time now and we are merely on the receiving end of this progression. Despite the hubris of politicians and bureaucrats who believe they control nations and economies, the cycles of endeavour continue to unfold bringing eternal change.

Ultimately there will need to be some sort of release of pressure before any normalization of political environments. Expect upsets is the modus operandi. If the violent moves predicted, starting in 2017-2018 occur in markets this would align well with our forecasts. Typical events that might bring about such political and economic shifts include Presidential declarations involving other countries (trade wars, trade treaties, embargoes), political assassinations, new alliances EU breakdown.

All of this takes place in an environment of failing political and then economic confidence. Behind that, the social mood of the people of great nations will turn dark and inwards. An end of an era is taking place. This will translate into stock market tops as they finish their last upward phases.

Here are some of the market predictions we make for 2017:

US Stock Markets

As early as March 2017 we will see the final tops in US stock markets. This completes a long term trend and cycle top that started in 1783. The roll over process has been underway fro some time now and could still however take months to years to complete. This is typical of major tops and is often accompanied by a lot of confusing cross current activity. We discuss this long term trend in our lead article The End of the Long Game 2009 – 2018 

They are rallying on expectation that Trump will lead the economy to new levels of prosperity. Supporting this idea we see forecasts of Dow Jones at 25,000, 33,000 and even 55,000 reflecting the emerging bullish mood for US economic prospects. These kind of calls only ever occur when sentiment is skewed and it never ends well.

Small cycles driving the 8 year stock market are due to make a top in March 2017 and has had an excellent history going back over the last 50 years. Cycles have their own rhythm however and they do go out of sync from time to time. Another scenario calls for several months of consolidation (Feb – May)  in US stocks before moving up in a surge not dissimilar to the 1929 stock market peak. Obviously this would extend the stock market top and evidence of inflation and Trump’s policies having a positive effect would enable this path. We rate this path with a higher probability at this time. A smart strategy might be if you saw DJIA 21000, 22000, 23000 it might be prudent to take the money off the table.

We anticipate the next 8 years starting in 2017 to be a down phase for all asset classes including shares.

US Dollar

Accompanying stock we will also see a top in the US dollar. At time of writing we estimate a 25% probability of the US$ having already peaked. There is often a ‘right fit’ to a market and one more major spike on the US$ would complete that ‘right fit’. If we get this spike then we could see EurUSD to 1.00 – 1.03, GbpUSD to 1.10 – 1.00, AudUSD to 0.50 – 0.60 and Yen move to 125 – 140. If however, then anticipate the EurUSD moving to1.60, Yen to 80, GBP to 1.60 and AUD to above 1.10 as the next major long term trend gets underway.

Gold

Gold is still completing a major consolidation phase. We see gold hovering between US$1180 – $1300 for several months before moving up to around the US$1500 – $1535. Following that comes a solid move down to below US$800. Typical targets include US$770 and $450 before the next long term uptrend begins.

Australian Stock Market

The ASX SP200 will begin its long slide to below 3000 this year. Note this could come as a divergent action to US stock markets as Australian economic risk to weighted more to Asia.

Longer Term

We will not see oil prices rise above US$140 per bbl before 2065. A new era is dawning where cheap, abundant, low polluting energy is available.

Over the next 25 years we will see people die of starvation because of crop failure caused by a cooling climate. In that same time frame we will see climate change as an issue in the minds of the public disappear.

US Presidential Election Comment

All the elements are in place for a political meltdown with the coming election. The circumstances of this election are very similar to the Brexit vote that caused an earthquake.

Consider:

  • There is a large disenfranchised portion of the US electorate.
  • Establishment seeks to maintain the status quo.
  • Widespread disgust at both presidential candidates.
  • Media is holding a heavily biased standpoint on the outcome of the election result.
  • Financial markets are coiling in preparation for a large move based on the result.
  • Fears of vote rigging, mudslinging by both candidates, the focus is on personalities rather than issues leaving a gridlocked political system.

Most of these points were present in the Brexit vote.

The underlying social mood is one pointing to a political meltdown. If Trump wins, Democrats have rumored to be plotting some sort of nullification of the election result. It is also unacceptable to the establishment that Trump would win as he has threatened to tear down the status quo. If Clinton wins, all the corruption scandals will be brought before the courts and her presidency will be mired by political, legal & criminal scandals.

The social environment is volatile and ripe for serious political disruption as people seek to express the powerful social mood that has been building for several years. We consider the election will serve as the catalyst for the start for a political meltdown lasting many years. Following in quick attendance will be the subsequent loss of economic confidence.

We still predict a spike to the upside following the election – being the last gasp of the stock markets. This will be followed in 2017 by a surge in inflation and a devastating shift in US interest rates.

All of this is characteristic of a major top that is forming in economic, social and political terms. It is akin to the rise and peak of an empire. We are witnessing a major turning point in history and a completion of a long term cycle of human endeavor. This is covered in our main article theme the End of the Long Game 2009 -2018.

72 common things ten years from now not existing today

72 Stunning Future Things 1

How many things do we own, that are common today, that didn’t exist 10 years ago? The list is probably longer than you think.

Prior to the iPhone coming out in 2007, we didn’t have smartphones with mobile apps, decent phone cameras for photos/videos, mobile maps, mobile weather, or even mobile shopping.

None of the mobile apps we use today existed 10 years ago: Twitter, Facebook, Youtube, Instagram, Snapchat, Uber, Facetime, LinkedIn, Lyft, Whatsapp, Netflix, Pandora, or Pokemon Go.

Several major companies didn’t exist a decade ago. Airbnb, Tinder, Fitbit, Spotify, Dropbox, Quora, Tumblr, Kickstarter, Hulu, Pinterest, Buzzfeed, Indigogo, Udacity, or Jet.com just to name a few.

Ten years ago very few people were talking about crowdfunding, the sharing economy, social media marketing, search engine optimization, app developers, cloud storage, data mining, mobile gaming, gesture controls, chatbots, data analytics, virtual reality, 3D printers, or drone delivery.

At the same time we are seeing the decline of many of the things that were in common use 10-20 years ago. Fax machines, wired phones, taxi drivers, newspapers, desktop computers, video cameras, camera film, VCRs, DVD players, record players, typewriters, yellow pages, video rental shops, and printed maps have all seen their industry peak and are facing dwindling markets.

If we leapfrog ahead ten years and take notice of the radically different lives we will be living, we will notice how a few key technologies paved the way for massive new industries.

Here is a glimpse of a stunningly different future that will come into view over the next decade.

All of these items were replaced with smartphones!
All of these items were replaced with smartphones!

3D Printing

Also known as additive manufacturing, 3D printing has already begun to enter our lives in major ways. In the future 3D printers will be even more common than paper printers are today.

1.    3D printed makeup for women. Just insert a person’s face and the machine will be programmed to apply the exact makeup pattern requested by the user.

2.    3D printed replacement teeth, printed inside the mouth.

3.    Swarmbot printing systems will be used to produce large buildings and physical structures, working 24/7 until they’re completed.

4.    Scan and print custom designed clothing at retail clothing stores.

5.    Scan and print custom designed shoes at specialty shoe stores.

6.    Expectant mothers will request 3D printed models of their unborn baby.

7.    Police departments will produce 3D printed “mug shots” and “shapies” generated from a person’s DNA.

8.    Trash that is sorted and cleaned and turned into material that can be 3D printed.

How long before you own the next generation VR headset?
How long before you own the next generation VR headset?

Virtual/Augmented Reality

The VR/AR world is set to explode around us as headsets and glasses drop in price so they’re affordable for most consumers. At the same time, game designers and “experience” producers are racing to create the first “killer apps” in this emerging industry.

9.    Theme park rides that mix physical rides with VR experiences.

10. Live broadcasts of major league sports games (football, soccer, hockey, and more) in Virtual Reality.

11. Full-length VR movies.

12. Physical and psychological therapy done through VR.

13. Physical drone racing done through VR headsets.

14. VR speed dating sites.

15. For education and training, we will see a growing number of modules done in both virtual and augmented reality.

16. VR and AR tours will be commonly used in the sale of future real estate.

Flying/Driving Drones

Drones are quickly transitioning from hobbyist toys to sophisticated business tools very quickly. They will touch our lives in thousands of different ways.

17. Fireworks dropped from drones. Our ability to “ignite and drop” fireworks from the sky will dramatically change both how they’re made and the artistry used to display them.

18. Concert swarms that produce a spatial cacophony of sound coming from 1,000 speaker drones simultaneously.

19. Banner-pulling drones. Old school advertising brought closer to earth.

20. Bird frightening drones for crops like sunflowers where birds can destroy an entire field in a matter of hours.

21. Livestock monitoring drones for tracking cows, sheep, geese, and more.

22. Three-dimensional treasure hunts done with drones.

23. Prankster Drones – Send random stuff to random people and video their reactions.

24. Entertainment drones (with projectors) that fly in and perform unusual forms of live comedy and entertainment.

Our driverless future is coming!
Our driverless future is coming!

Driverless Cars/Transportation

Driverless technology will change transportation more significantly than the invention of the automobile itself.

25. Queuing stations for driverless cars as a replacement for a dwindling number of parking lots.

26. Crash-proof cars. Volvo already says their cars will be crash-proof before 2020.

27. Driverless car hailing apps. Much like signaling Uber and Lyft, only without the drivers.

28. Large fleet ownership of driverless cars (some companies will own millions of driverless cars).

29. Electric cars will routinely win major races like the Daytona 500, Monaco Grand Prix, and the Indy 500.

30. In-car work and entertainment systems to keep people busy and entertained as a driverless car takes them to their destination.

31. In-car advertising. This will be a delicate balance between offsetting the cost of operation and being too annoying for the passengers.

32. Electric car charging in less than 5 minutes.

Internet of Things

The Internet of things is the network of physical devices, vehicles, and buildings embedded with electronics, software, sensors, and actuators designed to communicate with users as well as other devices. We are currently experiencing exponential growth in IoT devices as billions of new ones come online every year.

33. Smart chairs, smart beds, and smart pillows that will self-adjust to minimize pressure points and optimize comfort.

34. Sensor-laced clothing.

35. “Print and Pin” payment systems that uses a biometric mark (fingerprint) plus a pin number.

36. Smart plates, bowls and cups to keep track of what we eat and drink.

37. Smart trashcan that will signal for a trash truck when they’re full.

38. Ownership networks. As we learn to track the location of everything we own, we will also track the changing value of each item to create a complete ownership network.

39. Self-retrieving shoes where you call them by name, through your smartphone, and your shoes will come to you.

40. Smart mailboxes that let you know when mail has arrived and how important it is.

Full-body physical health scanner!
Full-body physical health scanner!

Health Tech

Even though healthcare is a bloated and bureaucratic industry, innovative entrepreneurs are on the verge of disrupting this entire industry.

41. Hyper-personalized precision-based pharmaceuticals produced by 3D pill printers.

42. Ingestible data collectors, filled with sensors, to give a daily internal health scan and report.

43. Prosthetic limbs controlled by AI.

44. Real-time blood scanners.

45. Peer-to-peer health insurance.

46. Facetime-like checkups without needing a doctor’s appointment.

47. Full-body physical health scanners offering instant AI medical diagnosis, located in most pharmacies

48. Intraoral cameras for smartphones for DYI dental checkups.

The future of computers is the mind!
The future of computers is the mind!

Artificial Intelligence (AI)

Much like hot and cold running water, we will soon be able to “pipe-in” artificial intelligence to any existing digital system.

49. Best selling biographies written by artificial intelligence.

50. Legal documents written by artificial intelligence.

51. AI-menu selection, based on diet, for both restaurants and at home.

52. Full body pet scanners with instant AI medical diagnosis.

53. AI selection of movies and television shows based on moods, ratings, and personal preferences.

54. Much like the last item, AI music selection will be based on moods, ratings, and musical tastes.

55. AI sleep-optimizers will control all of the environmental factors – heat, light, sound, oxygen levels, smells, positioning, vibration levels, and more.

56. AI hackers. Sooner or later someone will figure out how to use even our best AI technology for all the wrong purposes.

Unmanned aviation is coming!
Unmanned aviation is coming!

Transportation

Future transportation will come in many forms ranging from locomotion on an individual level to ultra high-speed tube transportation on a far grander scale.

57. Unmanned aviation – personal drone transportation.

58. 360-degree video transportation monitoring cameras at most intersections in major cities throughout the world.

59. Everywhere wireless. With highflying solar powered drones, CubeSats, and Google’s Project Loon, wireless Internet connections will soon be everywhere.

60. Black boxes for drones to record information in the event of an accident.

61. Air-breathing hypersonic propulsion for commercial aircraft. Fast is never fast enough.

62. Robotic follow-behind-you luggage, to make airline travel easier.

63. Robotic dog walkers and robotic people walkers.

64. Ultra high-speed tube transportation. As we look closely at the advances over the past couple decades, it’s easy to see that we are on the precipices of a dramatic breakthrough in ultra high-speed transportation. Businesses are demanding it. People are demanding it. And the only thing lacking is a few people capable of mustering the political will to make it happen.

Miscellaneous

As I began assembling this list, a number of items didn’t fit well in other categories.

65. Bitcoin loans for houses, cars, business equipment and more.

66. Self-filling water bottles with built-in atmospheric water harvesters.

67. Reputation networks. With the proliferation of personal information on websites and in databases throughout the Internet, reputation networks will be designed to monitor, alert, and repair individual reputations.

68. Atmospheric energy harvesters. Our atmosphere is filled with both ambient and concentrated forms of energy ranging from sunlight to lightning bolts that can be both collected and stored.

69. Pet education centers, such as boarding schools for dogs and horses, to improve an animal’s IQ.

70. Robotic bricklayers. With several early prototypes already operational, these will become common over the next decade.

71. Privacy bill of rights. Privacy has become an increasingly complicated topic, but one that is foundational to our existence on planet earth.

72. Hot new buzzword, “Megaprojects.”

72 Stunning Future Things 9
The safer we feel, the more risks we take!

Final Thoughts

There’s a phenomenon called the Peltzman Effect, named after Dr. Sam Peltzman, a renowned professor of economics from the University of Chicago Business School, who studied auto accidents.

He found that when you introduce more safety features like seat belts into cars, the number of fatalities and injuries doesn’t drop. The reason is that people compensate for it. When we have a safety net in place, people will take more risks.

That probably is true with other areas as well.

As life becomes easier, we take risks with our time. As our financial worries are met, we begin thinking about becoming an entrepreneur, inventor, or artist. When life becomes too routine, we search for ways to introduce chaos.

Even though we see reports that billions of jobs will disappear over the coming decades, we will never run out of work.

As humans, we were never meant to live cushy lives of luxury. Without risk and chaos as part of our daily struggle our lives seem unfulfilled. While we work hard to eliminate it, we always manage to find new ways to bring it back.

Yes, we’re working towards a better world ahead, but only marginally better. That’s where we do our best work.

Source: http://www.futuristspeaker.com/business-trends/72-stunning-things-in-the-future-that-will-be-common-ten-years-from-now-that-dont-exist-today/

The Structure of Collapse: 2016-2019

Charles Hugh Smith writing on his blog Of Two Minds:

The end-state of unsustainable systems is collapse. Though collapse may appear to be sudden and chaotic, we can discern key structures that guide the processes of collapse.

Though the subject is complex enough to justify an entire shelf of books, these six dynamics are sufficient to illuminate the inevitable collapse of the status quo.

1. Doing more of what has failed spectacularly. The leaders of the status quo inevitably keep doing more of what worked in the past, even when it no longer works. Indeed, the failure only increases the leadership’s push to new extremes of what has failed spectacularly. At some point, this single-minded pursuit of failed policies speeds the system’s collapse.

2. Emergency measures become permanent policies. The status quo’s leaders expect the system to right itself once emergency measures stabilize a crisis. But broken systems cannot right themselves, and so the leadership is forced to make temporary emergency measures (such as lowering interest rates to zero) permanent policy. This increases the fragility of the system, as any attempt to end the emergency measures triggers a system-threatening crisis.

3. Diminishing returns on status quo solutions. Back when the economic tree was loaded with low-hanging fruit, solutions such as lowering interest rates had a large multiplier effect. But as the tree is stripped of fruit, the returns on these solutions diminish to zero.

4. Declining social mobility. As the economic pie shrinks, the privileged maintain or increase their share, and the slice left to the disenfranchised shrinks. As the privileged take care of their own class, there are fewer slots open for talented outsiders. The status quo is slowly starved of talent and the ranks of those opposed to the status quo swell with those denied access to the top rungs of the social mobility ladder.

5. The social order loses cohesion and shared purpose as the social-economic classes pull apart. The top of the wealth/power pyramid no longer serves in the armed forces, and withdraws from contact with the lower classes. Lacking a unifying social purpose, each class pursues its self-interests to the detriment of the nation and society as a whole.

6. Strapped for cash as tax revenues decline, the state borrows more money and devalues its currency as a means of maintaining the illusion that it can fulfill all its promises. As the purchasing power of the currency declines, people lose faith in the state’s currency. Once faith is lost, the value of the currency declines rapidly and the state’s insolvency is revealed.

Each of these dynamics is easily visible in the global status quo.

As an example of doing more of what has failed spectacularly, consider how financialization inevitably inflates speculative bubbles, which eventually crash with devastating consequences. But since the status quo is dependent on financialization for its income, the only possible response is to increase debt and speculation—the causes of the bubble and its collapse—to inflate another bubble. In other words, do more of what failed spectacularly.

This process of doing more of what failed spectacularly appears sustainable for a time, but this superficial success masks the underlying dynamic of diminishing returns: each reflation of the failed system requires greater commitments of capital and debt. Financialization is pushed to new unprecedented extremes, as nothing less will generate the desired bubble.

 Rising costs narrow the maneuvering room left to system managers. The central bank’s suppression of interest rates is an example. As the economy falters, central banks lower interest rates and increase the credit available to the financial system.

This stimulus works well in the first downturn, but less well in the second and not at all in the third, for the simple reason that interest rates have been dropped to zero and credit has been increased to near-infinite.

The last desperate push to do more of what failed spectacularly is for central banks to lower interest rates to below-zero: it costs depositors money to leave their cash in the bank. This last-ditch policy is now firmly entrenched in Europe, and many expect it to spread around the world as central banks have exhausted less extreme policies.

The status quo’s primary imperative is self-preservation, and this imperative drives the falsification of data to sell the public on the idea that prosperity is still rising and the elites are doing an excellent job of managing the economy.

Since real reform would threaten those at the top of the wealth/power pyramid, fake reforms and fake economic data become the order of the day.

Leaders face a no-win dilemma: any change of course will crash the system, but maintaining the current course will also crash the system.

Welcome to 2016-2019.

Source: http://www.oftwominds.com/blogjune16/collapse6-16.html

Greatest Risk

Martin Armstrong writes:

The greatest crisis we face is the destruction of liquidity that government is causing by their hunt for loose change. Their desperate need for money is tearing the world economy apart at the seams. Even in Europe, the attempt to force a political union upon people by denying them the right to vote is ripping apart the cooperative connections established following World War II with the Treaty of Rome. The forced monetary and political union in Brussels undermines what they were trying to create – European Peace.

Source: http://www.armstrongeconomics.com/archives/35078

Books and longreading: a farewell to Prometheus

By Andrey Mir writing for Human-As-Media:

Book reading as fire usage: What is more important, the result or the process?

Long reading was previously considered a way of transferring knowledge. But nowadays linear reading is becoming much shorter. The culture of information consumption is changing, along with the format of knowledge accumulation, transfer and perception. At the emotional level this is seen as cultural degradation.

But do we really need long texts for storing and transferring knowledge? Maybe it is nothing more than an old habit?

In his book The Gutenberg Galaxy: The Making of Typographic Man, Marshall McLuhan analyses a quotation from Geoffrey Chaucer according to which the status of a student in the 14th Century was gauged by the number of books he has… written. In fact, the “books” the medieval students “wrote” were notes of what their professors said. The more summaries a student made, the more highly educated he was considered. Real books were very expensive, and so the cheapest way to have a book in the prepress era was to write down what wise men said or copy wise thoughts from other [written] books. Books were the product and the certificate of one’s diligence. Universityvstudentsvstillvtake notes during lectures.

When the first books were printed, professors denounced their appearance as the degradation of education. McLuhan mentioned that professors were horrified: Imagine that students no longer need to take down notes because they can buy a book instead! They denounced this as the desecration of knowledge. It was impossible to imagine that one could acquire knowledge without spending long hours writing down every word the professors said, but simply by buying a book. Nowadays it’s like downloading a research paper from Google instead of going to a library for reference material.

In fact, you can get as much knowledge by reading a printed book as by writing down what your professor says, but quicker and in a different way.

This could be a side effect of the progress of civilization: You get the same result in a simpler way. The best example is fire and the way we use it. It is said that the use of fire is what distinguishes men from animals. Mowgli from The Jungle Book may be weaker than some animals, but he is stronger than all of them because he can handle fire. The fire which Prometheus gave to the people contrary to the gods’ will allowed the human race to rise above all others on Earth.

Today we hardly ever use open fire in our life. We don’t use open fire to warm ourselves or to cook food. Ancient men would be outraged to see that we get fire by clicking a lighter. They believed that this sacred procedure should be preceded by two days of ritual dancing and the whispering of incantation to a heap of twigs. Omitting this process was simply not the done thing, but now it is, this disregard for open fire does not cause a culture shock because its gradual withdrawal from our life took a long time. Thousands of years passed from the time when lives depended on fire to the era when people see open fire several times a year and hardly ever use it.

So culture could be said to represent the long hours of a solemn ritual involving twigs and sparks. Culture grows out of the trouble we take to acquire a desired technology. Culture is the gap between a need and its satisfaction. Technology is narrowing this gap, and in the process it affects culture, or at least culture as it was understood in the past, culture that was associated with long rituals. That’s what causes the feeling that we have lost the fundamental essentials.

But what if long reading is like making fire: no longer necessary? What if we can get a comparable result quicker, which is very important, considering the uppermost importance of time?

New forms of packaging knowledge were created by multimedia and journalism, the first profession to face the digital challenge. Moreover, social media now offer super-fast and super-simple ways of information acquisition and transfer which the long text cannot rival. The long text and thick books are still seen as attributes of the intellect and knowledge. But statistically, the new synthetic format, which can be described as fast’n’fun because it does not have a permanent carrier, is rapidly winning the battle with the long text for people’s time and attention.

In the past, the long text had the monopoly on conveying a meaning primarily for technical reasons. When information is transmitted through physical media such as paper, it is easier to systematize and store in the form of books (scrolls are a different matter; the use of scrolls or books for transferring information predetermined the path of civilization’s development).

The print-era man can easily visualize an average book, a “thin” book (an entertainment book or magazine) and a “thick” book (which is usually an intellectual book the meaning of which is difficult to understand). “Thick” volumes were the most valuable kind of books. This content hierarchy showed that valuable content was inaccessible for ordinary people (“thick” books were expensive and difficult to read). In other words, the value of the long text supported the monopoly of palaces and temples. Monopoly on the long text equaled monopoly on power.

These technical parameters gave rise to the idea that the long text/book is a sacred object. At the everyday level, this implied that thick books contained important information. This can explain the awe for the long texts. Because of the books’ format, education was a long and difficult process, and so the long text also symbolized the diligence of those who manage to read books through to the end. Diligence and the ability to focus one’s attention on any particular subject for a long time are important characteristics of the value hierarchy of the hard-copy era.

But technology has moved forward. Everything has become fast’n’fun, but the sanctity of the long text continues to govern our behavior and opinions.

The focus on the long text of the print era is waning. The multimedia are reviving the audiovisual perception of life that was prevalent in the prepress era, though at a higher level of development. Audiovisual information and even long stories are now easier to store and propagate, something which the prepress people could not do and which we learned to do thanks to the invention of paper and books.

The transition period will not be easy. There will be an inevitable loss of knowledge due to the change of formats and carriers. Not everything that could be put in the long copy can be transformed into the fast’n’fun format. Will anyone even try? The new language of culture is being used to produce a new meaning rather than to convey the past knowledge. Long reads will become like Latin, the dead language of classical knowledge.

People will find it difficult to accept this change, because for the past 5,000 years the humankind used the long text as the main carrier of knowledge. But progress logically moves towards simplification. Evolution is not a mountain you climb, but a vortex that sucks you in. You can and must resist this. I would even say that it is the duty of all people of the long-copy era. But any efforts to do so will be in vain. Books will survive as part of the vintage fashion and an element of elite consumption. But they will lose – they are already losing – their role as the main carrier of knowledge.

In a more distant future, the gadgetization of the human body will lead to the creation of a third signal system, the elements of which we can see in the growing interactivity in infographics, visual semantic objects, augmented reality, and the like. And then it will not be the word that will be the semantic carrier (actually, the word is a rather awkward intermediary between the mind and the meaning), but the directly induced emotion or sensory perception of the semantic object. Our future is being created in the experiments with induced perception at 4D and 5D cinemas, not to mention cognitive interfaces.

Is there a place for books in this future? Now Prometheus has given people a device connected to the web.

Source: http://human-as-media.com/2014/05/16/books-and-longreading-a-farewell-to-prometheus/

Era of Transparency & Accountability Beginning for Politicians

An era of transparency & accountability is beginning for politicians.

Very shortly the U.S. Congress will shortly vote to make Economic Impact Assessments (EIAs) a mandatory part of every executive rule or regulation passed with an annual economic impact of $100 million or more (REINS Act SR226 & HR 47).

Elsewhere the rise of right wing politics in the EU and UK is forcing scrutiny on politicians and bringing them to account. In many democracies it may become mandatory to attach economic impact assessment statements to each piece of legislation  If this trend reaches an extreme we will see calls to have politicians and government unable to raise any debt. given their track record however, maybe this is not such a bad thing.

The Australian state of Queensland election is also forcing the incumbent Premier Newman to adopt transparency and accountability principles. We anticipate transparency and accountability will become the new fashion for liberal democratic governments over the next 3-5 years.

The ‘political hubris bubble’ is finally beginning to burst. Social mood is swinging into action and voters are acting on their long held distrust of politicians. Firstly they exercised their democratic privilege to put several governments into ‘hung parliament’ balances (UK, USA Australia) and now they are beginning to hold them accountable. The days where politicians can promise, over-commit and overspend is coming to an end.

12 Emerging Trends that Everyone Missed at CES

Futurist Thomas Frey blogs :

Every year that I attend CES in Las Vegas I reach a point of sensory overload. It’s not just from all the people, lights, noise, and smells, but an overload of product strategies and emerging trends for the coming year.

With everything from R2D2 showing up outside the convention center, to meeting celebrities on the showroom floor, or coming face-to-face with a Paul Bunyan-sized electronic game-playing running shoe by Sketchers, or walking into a booth full of the coolest Chinese technologies ever made but not being able to talk to anyone because they don’t speak English, it’s not possible to describe all the sensations a person will experience at an event like this.

Everyone will experience CES in their own unique way, and the impressions they walk away with will help define their understanding of the world to come. Big time decisions are being made by the impressions made here.

As events go, it’s one of the largest in the world, attracting a record 170,000 people, including 45,000 from other countries. Out of 3,600 exhibitors, 375 of them were startups, with special attention being paid to them in an exhibit area called Eureka Park.

In so many ways, CES sets the tone for the global economy, with tens of thousands of private meetings being conducted in the background forcing more deals to be cut in a shorter period of time than virtually any other event on the planet.

Walking across the exhibit floors is quite a mind-expanding experience. Since I tend to use a radically different set of lenses to experience this show, I walked away with some rather unusual perspectives.

For this reason I’d like to mention twelve of the trends that everyone seemed to have missed at CES.

CES in 1967

History of CES

The first CES was held in June 1967 in New York City. It was a spinoff from the Chicago Music Show, which until then had served as the main event for exhibiting consumer electronics. The event had 17,500 attendees and over 100 exhibitors; the kickoff speaker was Motorola chairman Bob Galvin.

Competing for a while with CES was and event known as COMDEX, a computer expo held at various locations in the Las Vegas Valley, each November from 1979 to 2003. In 2001, the show was sold to Key3Media, a spin-off of Ziff Davis. Reeling from the 2000 economic downturn, Key3Media went into a Chapter 11 in February 2003 making that years show the final chapter in COMDEX history.

As a result, the Consumer Electronics Show has consolidated both COMDEX audiences with their own to make it the standard bearer for new product launches in consumer technology.

12 Emerging Trends that Everyone Missed

It’s easy to report on all the new technology that made its debut at CES. However, the more interesting stories, at least in my mind, are the less obvious shifts in business that can be derived from reading between the lines.

After spending a few days digesting everything, here are a few key observations about the world ahead.

 

Empty casinos at CES

1.) Traditional Gambling Usurped by Video Games – Even though the gambling industry is trying to tell the world it’s fine, the numbers simply don’t add up. In its 2013 State of the States report, the American Gaming Association reported that 39% of people age 21-35 spent time in casinos, with 90% saying they planned to return. Around the same time, a survey of 3,000 young adults in 16 markets in the Northeast found that only 18% of those under 35 had visited a casino in the past year.

At CES, I walked through dozens of major casinos along the strip and never once did I see a casino operating at more than 15% capacity. The biggest event of all in Vegas and the number of empty seats could fill several giant football stadiums.

However there could be a light at the end of this tunnel of gloom. Since young people would much rather play fast-action rapidly-advancing video games, and gambling laws for slot machines and roulette tables haven’t changed much since the 1950s, the best option may be to build large video game tournament centers and allow people to bet on the action, similar to betting on college basketball.

If casino owners in Vegas were to pick up on this idea, and you heard it first here, major hotels throughout the city could be retrofitted into a video game tournament centers, where every major title from Call of Duty, to Middle Earth, Bayonetta, Wolfenstein, and Destiny would have annual competitions. Las Vegas could once again reclaim it’s position, only this time with a new kind of gambling that appeals in a huge way to today’s young people.

2.) Formation of the Underground Economy for Flying Drones – Flying drones are hot! With over 100 exhibitors at CES showing off the latest in drone tech and the FAA saying the whole industry needs to hold tight until sometime in 2017, the only direction this industry can possibly go is underground. 

Yeah, theres something very ironic about a highly visible industry involving flying objects creating an underground economy, but since the FAA doesn’t have an enforcement division, and since the operators will soon be miles away from where the machines are flying, it becomes a low risk crime.

That, coupled with a drone industry that is progressing at an exponential rate, while the FAA is still operating with a linear progression mindset, means that we’ll be seeing the equivalent of policemen blowing whistles running down the street trying to stop hyper jet drones flying at 2,000 mph in less than two years.

3.) First Generation Mood-Casters – The Internet of Things had a huge presence at CES as well as vendors offering every kind of Smart Home tech imaginable. The one thing both of these emerging industries has in common is their quest to make life more manageable for everyone.

But here’s the problem. Everyone is different.

So while giving people have access to 10,000 options for controlling the lights in their house or giving them streaming access to a million new songs, video games, or TV shows may sound appealing, all these decision points adds more stress to a person’s day, not less.

There is, however, a solution – Mood-Casting.

If every smart device were able to tap into the mood of people it came into contact with, it could easily make the decisions for them. The good news is that much of today’s wearable technology is giving off the signals necessary for these devices to instantly fine tune their decision-making processes.

For example, if a person walked into a room and the lighting was too harsh, sensors could read common stress indicators and keep making changes to the brightness, color, and intensity until it reached an optimal level.

Mood-Casters could be used to play the perfect music while working out, driving, or trying to relax. Every fire in a fireplace could be altered in both color and brilliance to match the desires of those nearby. Restaurants could adjust the smells in their dining rooms until they were optimized for guests on a moment by moment basis. (i.e. people may prefer a different smell while eating appetizers as opposed to eating dessert.)

Health tech everywhere at CES

4.) The Rise of the Healthcare Circumventionist – Healthcare is a hierarchical industry with doctors firmly entrenched on the top rung. It is also one of the world’s most lucrative industries. The entrepreneurial community knows this and has been plotting for years to find ways to tap into these revenue streams.

Doctors, in general, are not a big fan of the hundreds of medical devices coming out of the woodwork that are designed to circumvent their authority.

They’re even less of a fan of the big data analysts, who have never once studied medicine, that are telling them what to do.

In just a few years, many people will be switching from going in for a “medical checkup” to having a “health analytics screening.”

With hundreds of new entries into the emerging wearable tech industry coming out of the woodwork, in just a few years, most people will be able to make their own diagnosis before ever setting foot in the doctors office. The piece that entrepreneurs will have the greatest difficulty prying away from doctors is their ability to write prescriptions. But that too is destined to be undermined with technology work-arounds.

Have you met your virtual self?

5.) Becoming One with My Virtual Self – Every time I look at the Internet through the rectangular screen on my desk I wonder what it would be like to have a screen 10 times bigger. Better yet, what would it be like to eliminate the screen altogether.

In many ways, CES has been this ongoing competition to see which big industry player can cram the most TVs into their exhibit space in the most interesting fashion. Seeing more than a thousand 4K TVs integrated into one massive 40’ high video wall is impressive to say the least.

The days of “observer based” television is on the verge of being replaced with immersive VR, and eliminating the limitations of the viewing screen is only the first of 10,000 steps towards having the observer integrated into the entertainment experience.

Recent studies have shown that VR users can feel like they’re part of what’s happening just by being able to view they’re own hands. Viewable hands will lead to other viewable body parts, as well as friends, pets, and other non-real characters.

Just as 3D television is now loosing its annoying glasses, over time, virtual reality will loose the goggles and be blended into our real life experiences, with an entirely new genre’s of entertainment entering the fold.

6.) Smart Things Vs Smarter Things – In much the same way toy companies began giving a voice to every fuzzy and plastic creature in play land, companies are finding it increasingly easy to make intelligence the differentiator in virtually every new product.

With everything from connected toothbrushes, to smart heated insoles for your shoes, belts that automatically readjust themselves, and helmets that autocorrect their venting system to keep a person’s head cool, the Internet of Things is providing wireless intelligence and connectivity to everything we interact with.

At the heart of the Internet of Things is a micro sensor industry where every new kind of sensor will create an entire new industry, and the sensors themself are becoming exponentially cheaper, smaller, and more ubiquitous.

Projections show the world breaking the trillion sensor barrier in less than 10 years, and the 100 trillion sensor milestone around 20 years from now.

Sensors are meaningless if not connected to other parts of the “anatomy,” and that’s where MEMS (microelectronic mechanical systems), very small machines, come into play. MEMS are the devices that power everyday things like the Pebble Watch, smart light bulbs, and real-time blood-sugar monitors.

Even though the amount of “intelligence” being added to devices today is still primitive, the trend is towards a universe where devices become aware of changes made by other devices and respond accordingly.

Technologies like Intel’s button-sized Curie device is a step toward integrating far more processing power into wearable tech and its field of sensors.

All this integration is setting the stage for the emerging operating system battlefield.

The OS battles have already begun

7.) The Emerging Operating System Battlefield – In general terms, an operating system is the software operating in the background that manages hardware and software resources and provides a set of common services to make everything run better.

Today’s most common operating systems include Android, iOS, Linux, and Microsoft Windows. Each one has its own feature set that makes applications easier to build and more uniform.

The need for new types of operating systems became apparent when smartphones started entering the picture a decade ago.

As smart technology begins to enter nearly every field, the need for new operating systems has never been greater, and companies are racing to fill the void.

To give you some examples, the operating system for driverless cars will be distinct and different than the operating system for flying drones. At the same time we are seeing a need for separate operating systems for smart homes, the Internet of Things, wearable technology, health tech, learning tech, and robots.

Every unique operating system will have its own unique privacy and security issues, industry standards, language biases, and feature sets.

Those who control the rules of the game will have a huge advantage over everyone else. The OS wars are still in their infancy, and most of the winners will be decided over the next five years.

Portable 3D laser scanner from Z Corporation

8.) Molecular-Level Scanners to Drive Tomorrow’s 3D Printing Industry – The 3D printing world is gaining lots of attention, but often lost in the shadows is a rapidly developing scanning industries with capabilities few ever imagined.

Not only will future scanning technologies be able to scan shapes with nano-scale precision, they will be able to parse exacting details of materials used in every molecule-thick layer of the object being scanned.

This means that someone will eventually be able to scan a smartphone, and with a multi-material 3D printer, reproduce the entire device in exacting detail.

For bio-printing, this means a person that has their finger cut off can have a replacement one printed and surgically connected in a way that few, if any, will know the difference.

IntelliPillow

9.) Shapeshifting Smart Products – When I first saw the IntelliPillow, a shapeshifting sensor-driven pillow that automatically knows when you’re sleeping on your side or back and adjusts itself accordingly, it reminded me of the columns I wrote on smart shoes and smart car seats over a decade ago.

The three things that the human body interacts with the most in life are the chairs we sit in, the shoes we walk in, and the beds we sleep in. People will pay dearly for any technology that can optimize any of these three friction points.

Using sensors to monitor layers of pressure, and either expanding gels or air systems to compensate for the changing conditions, shapeshifting products are destined to be all the rage in the coming years.

Bang & Olufsen ‘BeoSound Moment’

10.) Touch-Responsive Surfaces – As I came across the Bang & Olufsen ‘BeoSound Moment’ device, I realized I was looking at the world’s first touch-sensitive wood interface.

Extending far beyond glass touch screens of the past, touchable wood opens the door for any number of other touch sensitive surfaces like rock, stone, tile, or even concrete.

But who says we need to confine our thinking to hard surfaces. Will we be creating touch-sensitive carpets, leather, clothing, and upholstery? The answer will soon be an unequivocal yes.

11.) 3D Printing Combined with Robots Paves the way for Large Scale 3D Sculpting & Design – When 3D printing goes mobile, it opens the door for an entirely new kind of design and architecture.

If we can imagine a 3D printer that drives over, refills its tank with material, drives back and precisely extrudes the material into place, you’ll begin to understand the potential here.

Now, consider 100 or 1,000 mobile printers, either mounted on ground based or flying drones, working in swarms to build an entire building. That day is not too far off.

Most large structures of the future will be built this way. This will include everything from cruise ships, to baseball stadiums, hospitals, bridges, skyscrapers, hotels, apartment complexes, and giant sculptures.

Gone are the days of constrained thinking. Tomorrow’s mobile 3D printer technology will unleash a world of creative possibilities unlike anything we’ve ever imagined.

12.) The Massive Growing Need for Micro Colleges – Every new technology creates a need for more training. Very often it ends up being niche learning that takes place in-house with existing employees. But we’re also seeing a growing refinement of industries driving the need for huge new talent pools that currently don’t exist.

Whether its virtual reality, specialized 3D scanning, 3D printing, mobile apps, Internet of Things, flying drones, or reputation management, the need for tech-savvy fast-to-adapt talent pools is growing, and growing quickly.

This is also an area where traditional colleges have missed the boat. Their attempt to put everything into a 2-year or 4-year framework has left the largest untapped opportunity ever for short-term full-immersion courses that help workers reboot their career.

The rapid growth in coding schools such as our own DaVinci Coders is only a tiny slice of a much larger Micro College pie that will get created over the coming years.

Final Thoughts

In the futurist world, trends are often based on loose signals derived from a few key data points and overlaid on some future timeline.

The trends I’ve described above are a combination of empirical evidence, past observations, industry research, and a fair amount of conjecture on my part.

In many cases, the 1+1=3 formula I use comes from a Situational Futuring technique I’ve been developing over the past few years.

There is great value in this line of thinking because it unlocks possibilities, and more importantly for both individuals and businesses, it can unlock key competitive advantages in a world where differentiation is always a hard fought battle.

As always, I‘d love to hear your thoughts. Please take a moment to weigh in on these and other topics that you find interesting.

Source: http://www.futuristspeaker.com/2015/01/12-emerging-trends-that-everyone-missed-at-ces/

The Satori Generation

Roland Kelts writing for Adbusters:
A new breed of young people have outdone the tricksters of advertising.

ONO KEI

This article appeared in issue #113, now available in our Blueprint for a New World Series Box Set.

They don’t want cars or brand name handbags or luxury boots. To many of them, travel beyond the known and local is expensive and potentially dangerous. They work part-time jobs—because that is what they’ve been offered—and live at home long after they graduate. They’re not getting married or having kids. They’re not even sure if they want to be in romantic relationships. Why? Too much hassle. Oh, and too expensive.

In Japan, they’ve come to be known as satori sedai—the “enlightened generation.” In Buddhist terms: free from material desires, focused on self-awareness, finding essential truths. But another translation is grimmer: “generation resignation,” or those without ideals, ambition or hope.

They were born in the late 1980s on up, when their nation’s economic juggernaut, with its promises of lifetime employment and conspicuous celebrations of consumption, was already a spent historical force.  They don’t believe the future will get better—so they make do with what they have.  In one respect, they’re arch-realists. And they’re freaking their elders out.

“Don’t you want to get a nice German car one day?”—asked one flustered 50-something guest of his 20-something counterpart on a nationally broadcasted talk show.  The show aired on the eve of Coming of Age Day, a national holiday in Japan that celebrates the latest crop of youth turning 20, the threshold of adulthood.  An animated graphic of a smiling man wearing sunglasses driving a blonde around in a convertible flashed across the screen, the man’s scarf fluttering in the wind.  “Don’t you want a pretty young woman to take on a Sunday drive?”

There was some polite giggling from the guests.  After a pause, the younger man said, “I’m really not interested, no.”

Critics of the satori youths level the kinds of intergenerational accusations time-honored worldwide: they’re lazy, lacking in willpower, potency and drive.

Having lectured to a number of them at several universities in Tokyo, I was able to query students directly.  “We’re risk-averse,” was the most common response.  We were raised in relative comfort.  We’re just trying to keep it that way.

Is this enlightened, or resigned? Or both?

Novelist Genichiro Takahashi, 63, addressed the matter in an essay 10 years ago.  He called the new wave of youth a “generation of loss,” but he defined them as “the world’s most advanced phenomenon”—in his view, a generation whose only desires are those that are actually achievable.

The satori generation are known for keeping things small, preferring an evening at home with a small gathering of friends, for example, to an upscale restaurant.  They create ensemble outfits from so-called “fast fashion” discount stores like Uniqlo or H&M, instead of purchasing top-shelf at Louis Vuitton or Prada.  They don’t even booze.

“They drink much less alcohol than the kids of my generation, for sure,” says social critic and researcher Mariko Fujiwara of Hakuhodo. “And even when they go to places where they are free to drink, drinking too much was never ‘cool’ for them the way it was for us.”

Fujiwara’s research leads her to define a global trend—youth who have the technological tools to avoid being duped by phony needs.  There is a new breed of young people, she says, who have outdone the tricksters of advertising.

“They are prudent and careful about what they buy. They have been informed about the expensive top brands of all sorts of consumer goods but were never so impressed by them like those from the bubble generation. We have identified them as those who are far more levelheaded than the generations preceding them as a result of the new reality they came to face.”

The new reality is affecting a new generation around the world.  Young Americans and Europeans are increasingly living at home, saving money, and living prudently.  Technology, as it did in Japan, abets their shrinking circles.  If you have internet access, you can accomplish a lot in a little room.  And revolution in the 21st century, as most young people know, is not about consumption—it’s about sustainability.

Waseda University professor, Norihiro Kato, points to broader global phenomena that have radically transformed younger generations’ sense of possibility, calling it a shift from “the infinite to the finite.” Kato cites the Chernobyl meltdown and the fall of communism in the late 1980s and early 90s; the September 11 terrorist attacks in the early 2000s; and closer to home, the triple earthquake, tsunami and ongoing nuclear disasters in Japan. These events reshaped our sense of wisdom and self-worth. The satori generation, he says, marks the emergence of a new “‘qualified power,’ the power to do and the power to undo, and the ability to enjoy doing and not doing equally.  Imagine a robot with the sophistication and strength to clutch an egg without crushing it.  The key concept is outgrowing growth toward degrowth.  That’s the wisdom of this new generation.”

In America and Europe, the new generation is teaching us how to live with less—but also how to live with one another. Mainstream media decry the number of young people living at home—a record 26.1 million in the US, according to recent statistics—yet living at home and caring for one’s elders has long been a mainstay of Japanese culture.

In the context of shrinking resources and global crises, satori “enlightenment” might mean what the young everywhere are telling us: shrink your goals to the realistic, help your family and community and resign yourself to peace.

What Takahashi called “the world’s most advanced phenomenon” may well be coming our way from Japan. But this time it’s not automotive or robotic or electronic. It’s human enlightenment.

Roland Kelts is a half-Japanese writer based in Tokyo and New York. He is the author of the bestselling JAPANAMERICA: How Japanese Pop Culture Has Invaded the US, and a contributor to enlightened media worldwide.

The Preeminence of Scientists

Watching the movie Interstellar, one couldn’t help noting the preeminent status scientists have attained as they explain various scientific concepts to the audience. Its as if they have taken their rightful place amongst the gods and other acclaimed mortals. Hubris has lifted them to iconic status as they work to overcome the many problems faced by humanity.

The very making of a movie about scientists signals a change of trend may be near at hand. Scientists face many challenges in their search for truth. Not just with their research but with the need for scientific protocol, impartiality, accurate reporting of data, peer review, the need for funding and competing for funding, the role of government, academia, corporations, conflict of interests, ethics etc, etc.

Art often reflects life and society. Social and artistic events like this also reflect the deep unconscious processes operating inside the minds of people. Just as we have seen the rise and fall of individuals and groups of people, often in a frenzy of social ebullience, so Interstellar may mark a turning point for the acclaim scientists have earned and the hubris our society has bestowed on them.

 

Gold Update 31/10/2014

Gold today broke the critical US$1180 level confirming our view that it will continue to move down to our forecast level of US$1109 before the next major upmove begins.

On examining our forecast we have reason to widen our long term forecast. The anticipated low may happen between US$1080 to US$1109. At US$1080, gold will have experienced a 50% retracement of the entire bull market from 1999. At this level it represents a short to medium term buying opportunity lasting 1-2 years.

If we are able to confirm a low point around this level we will update accordingly. Our long term forecast suggests a rally off this low followed by a swift and subsequent decline to our long term forecast of US$770 before the next major advance gets underway.

It’s simple. If we can’t change our economic system, our number’s up

By George Monbiot

It’s the great taboo of our age – and the inability to discuss the pursuit of perpetual growth will prove humanity’s undoing
'The mother narrative to all this is carbon-fuelled expansion. Our ideologies are mere subplots.'
‘The mother narrative to all this is carbon-fuelled expansion. Our ideologies are mere subplots.’unga Photograph: Alamy

Let us imagine that in 3030BC the total possessions of the people of Egypt filled one cubic metre. Let us propose that these possessions grew by 4.5% a year. How big would that stash have been by the Battle of Actium in 30BC? This is the calculation performed by the investment banker Jeremy Grantham.

Go on, take a guess. Ten times the size of the pyramids? All the sand in the Sahara? The Atlantic ocean? The volume of the planet? A little more? It’s 2.5 billion billion solar systems. It does not take you long, pondering this outcome, to reach the paradoxical position that salvation lies in collapse.

To succeed is to destroy ourselves. To fail is to destroy ourselves. That is the bind we have created. Ignore if you must climate change, biodiversity collapse, the depletion of water, soil, minerals, oil; even if all these issues miraculously vanished, the mathematics of compound growth make continuity impossible.

Economic growth is an artefact of the use of fossil fuels. Before large amounts of coal were extracted, every upswing in industrial production would be met with a downswing in agricultural production, as the charcoal or horse power required by industry reduced the land available for growing food. Every prior industrial revolution collapsed, as growth could not be sustained. But coal broke this cycle and enabled – for a few hundred years – the phenomenon we now call sustained growth.

It was neither capitalism nor communism that made possible the progress and pathologies (total war, the unprecedented concentration of global wealth, planetary destruction) of the modern age. It was coal, followed by oil and gas. The meta-trend, the mother narrative, is carbon-fuelled expansion. Our ideologies are mere subplots. Now, with the accessible reserves exhausted, we must ransack the hidden corners of the planet to sustain our impossible proposition.

On Friday, a few days after scientists announced that the collapse of the west Antarctic ice sheet is now inevitable, the Ecuadorean government decided to allow oil drilling in the heart of the Yasuni national park. It had made an offer to other governments: if they gave it half the value of the oil in that part of the park, it would leave the stuff in the ground. You could see this as either blackmail or fair trade. Ecuador is poor, its oil deposits are rich. Why, the government argued, should it leave them untouched without compensation when everyone else is drilling down to the inner circle of hell? It asked for $3.6bn and received $13m. The result is that Petroamazonas, a company with a colourful record of destruction and spills, will now enter one of the most biodiverse places on the planet, in which a hectare of rainforest is said to contain more species than exist in the entire continent of North America.

Almost 45% of the Yasuni national park is overlapped by oil concessions.
Yasuni national park. Murray Cooper/Minden Pictures/Corbis

The UK oil firm Soco is now hoping to penetrate Africa’s oldest national park, Virunga, in the Democratic Republic of Congo; one of the last strongholds of the mountain gorilla and the okapi, of chimpanzees and forest elephants. In Britain, where a possible 4.4 billion barrels of shale oil has just been identified in the south-east, the government fantasises about turning the leafy suburbs into a new Niger delta. To this end it’s changing the trespass laws to enable drilling without consent and offering lavish bribes to local people. These new reserves solve nothing. They do not end our hunger for resources; they exacerbate it.

The trajectory of compound growth shows that the scouring of the planet has only just begun. As the volume of the global economy expands, everywhere that contains something concentrated, unusual, precious, will be sought out and exploited, its resources extracted and dispersed, the world’s diverse and differentiated marvels reduced to the same grey stubble.

Some people try to solve the impossible equation with the myth of dematerialisation: the claim that as processes become more efficient and gadgets are miniaturised, we use, in aggregate, fewer materials. There is no sign that this is happening. Iron ore production has risen 180% in 10 years. The trade body Forest Industries tells us that “global paper consumption is at a record high level and it will continue to grow”. If, in the digital age, we won’t reduce even our consumption of paper, what hope is there for other commodities?

Look at the lives of the super-rich, who set the pace for global consumption. Are their yachts getting smaller? Their houses? Their artworks? Their purchase of rare woods, rare fish, rare stone? Those with the means buy ever bigger houses to store the growing stash of stuff they will not live long enough to use. By unremarked accretions, ever more of the surface of the planet is used to extract, manufacture and store things we don’t need. Perhaps it’s unsurprising that fantasies about colonising space – which tell us we can export our problems instead of solving them – have resurfaced.

As the philosopher Michael Rowan points out, the inevitabilities of compound growth mean that if last year’s predicted global growth rate for 2014 (3.1%) is sustained, even if we miraculously reduced the consumption of raw materials by 90%, we delay the inevitable by just 75 years. Efficiency solves nothing while growth continues.

The inescapable failure of a society built upon growth and its destruction of the Earth’s living systems are the overwhelming facts of our existence. As a result, they are mentioned almost nowhere. They are the 21st century’s great taboo, the subjects guaranteed to alienate your friends and neighbours. We live as if trapped inside a Sunday supplement: obsessed with fame, fashion and the three dreary staples of middle-class conversation: recipes, renovations and resorts. Anything but the topic that demands our attention.

Statements of the bleeding obvious, the outcomes of basic arithmetic, are treated as exotic and unpardonable distractions, while the impossible proposition by which we live is regarded as so sane and normal and unremarkable that it isn’t worthy of mention. That’s how you measure the depth of this problem: by our inability even to discuss it.

Twitter: @georgemonbiot. A fully referenced version of this article can be found at Monbiot.com

Source: http://www.theguardian.com/commentisfree/2014/may/27/if-we-cant-change-economic-system-our-number-is-up

 

50 Reasons We’re Living Through the Greatest Period in World History

By Morgan Housel for Motley Fool

I recently talked to a doctor who retired after a 30-year career. I asked him how much medicine had changed during the three decades he practiced. “Oh, tremendously,” he said. He listed off a dozen examples. Deaths from heart disease and stroke are way down. Cancer survival rates are way up. We’re better at diagnosing, treating, preventing, and curing disease than ever before.

Consider this: In 1900, 1% of American women giving birth died in labor. Today, the five-year mortality rate for localized breast cancer is 1.2%. Being pregnant 100 years ago was almost as dangerous as having breast cancer is today.

The problem, the doctor said, is that these advances happen slowly over time, so you probably don’t hear about them. If cancer survival rates improve, say, 1% per year, any given year’s progress looks low, but over three decades, extraordinary progress is made.

Compare health-care improvements with the stuff that gets talked about in the news — NBC anchor Andrea Mitchell interrupted a Congresswoman last week to announce Justin Bieber’s arrest — and you can understand why Americans aren’t optimistic about the country’s direction. We ignore the really important news because it happens slowly, but we obsess over trivial news because it happens all day long.

Expanding on my belief that everything is amazing and nobody is happy , here are 50 facts that show we’re actually living through the greatest period in world history.

1. U.S.life expectancy at birth was 39 years in 1800, 49 years in 1900, 68 years in 1950, and 79 years today. The average newborn today can expect to live an entire generation longer than his great-grandparents could.

2. A flu pandemic in 1918 infected 500 million people and killed as many as 100 million. In his book The Great Influenza, John Barry describes the illness as if “someone were hammering a wedge into your skull just behind the eyes, and body aches so intense they felt like bones breaking.” Today, you can go to Safeway and get a flu shot. It costs 15 bucks. You might feel a little poke.

3. In 1950, 23 people per 100,000 Americans died each year in traffic accidents, according to the Census Bureau. That fell to 11 per 100,000 by 2009. If the traffic mortality rate had not declined, 37,800 more Americans would have died last year than actually did. In the time it will take you to read this article, one American is alive who would have died in a car accident 60 years ago.

4. In 1949, Popular Mechanics magazine made the bold prediction that someday a computer could weigh less than 1 ton. I wrote this sentence on an iPad that weighs 0.73 pounds.

5. The average American now retires at age 62. One hundred years ago, the average American died at age 51. Enjoy your golden years — your ancestors didn’t get any of them.

6. In his 1770s book The Wealth of Nations, Adam Smith wrote: “It is not uncommon in the highlands of Scotland for a mother who has borne 20 children not to have 2 alive.” Infant mortality in America has dropped from 58 per 1,000 births in 1933 to less than six per 1,000 births in 2010, according to the World Health Organization. There are about 11,000 births in America each day, so this improvement means more than 200,000 infants now survive each year who wouldn’t have 80 years ago. That’s like adding a city the size of Boise, Idaho, every year.

7. America averaged  20,919 murders per year in the 1990s, and 16,211 per year in the 2000s, according to the FBI. If the murder rate had not fallen, 47,000 more Americans would have been killed in the last decade than actually were. That’s more than the population of Biloxi, Miss.

8. Despite a surge in airline travel, there were half as many fatal plane accidents in 2012 than there were in 1960, according to the Aviation Safety Network.

9. No one has died from a new nuclear weapon attack since 1945. If you went back to 1950 and asked the world’s smartest political scientists, they would have told you the odds of seeing that happen would be close to 0%. You don’t have to be very imaginative to think that the most important news story of the past 70 years is what didn’t happen. Congratulations, world.

10. People worry that the U.S. economy will end up stagnant like Japan’s. Next time you hear that, remember that  unemployment in Japan hasn’t been above 5.6% in the past 25 years, its government corruption ranking has consistently improved, incomes per capita adjusted for purchasing power have grown at a decent rate, and life expectancy has risen by nearly five years. I can think of worse scenarios.

11. Two percent of American homes had electricity in 1900. J.P Morgan (the man) was one of the first to install electricity in his home, and it required a private power plant on his property. Even by 1950, close to 30% of American homes didn’t have electricity. It wasn’t until the 1970s that virtually all homes were powered. Adjusted for wage growth, electricity cost more than 10 times as much in 1900 as it does today, according to professor Julian Simon.

12. According to the Federal Reserve, the number of lifetime years spent in leisure — retirement plus time off during your working years — rose from 11 years in 1870 to 35 years by 1990. Given the rise in life expectancy, it’s probably close to 40 years today. Which is amazing: The average American spends nearly half his life in leisure. If you had told this to the average American 100 years ago, that person would have considered you wealthy beyond imagination.

13. We are having a national discussion about whether a $7.25-per-hour minimum wage is too low. But even adjusted for inflation, the minimum wage was  less than $4 per hour as recently as the late 1940s. The top 1% have captured most of the wage growth over the past three decades, but nearly everyone has grown richer — much richer — during the past seven decades.

14. In 1952, 38,000 people contracted polio in America alone, according to the Centers for Disease Control. In 2012, there were fewer than 300 reported cases of polio in the entire world.

15. From 1920 to 1949, an average of 433,000 people died each year globally from “extreme weather events.” That figure has plunged to 27,500 per year, according to Indur Goklany of the International Policy Network, largely thanks to “increases in societies’ collective adaptive capacities.

16. Worldwide deaths from battle have plunged from 300 per 100,000 people during World War II, to the low teens during the 1970s, to less than 10 in the 1980s, to fewer than one in the 21st century, according to Harvard professor Steven Pinker. “War really is going out of style,” he says.

17. Median household income adjusted for inflation was around $25,000 per year during the 1950s. It’s nearly double that amount today. We have false nostalgia about the prosperity of the 1950s because our definition of what counts as “middle class” has been inflated — see  the 34% rise in the size of the median American home in just the past 25 years. If you dig into how the average “prosperous” American family lived in the 1950s, I think you’ll find a standard of living we’d call “poverty” today.

18. Reported rape per 100,000 Americans dropped from 42.3 in 1991 to 27.5 in 2010, according to the FBI. Robbery has dropped from 272 per 100,000 in 1991 to 119 in 2010. There were nearly 4 million fewer property crimes in 2010 than there were in 1991, which is amazing when you consider the U.S. population grew by 60 million during that period.

19. According to the Census Bureau, only one in 10 American homes had air conditioning in 1960. That rose to 49% in 1973, and 89% today — the 11% that don’t are mostly in cold climates. Simple improvements like this have changed our lives in immeasurable ways.

20. Almost no homes had a refrigerator in 1900, according to Frederick Lewis Allan’s The Big Change, let alone a car. Today they sell cars with refrigerators  in them.

21. Adjusted for overall inflation, the cost of an average round-trip airline ticket fell 50% from 1978 to 2011, according to Airlines for America.

22. According to the Census Bureau, the average new home now has more bathrooms than occupants.

23. According to the Census Bureau, in 1900 there was one housing unit for every five Americans. Today, there’s one for every three. In 1910 the average home had 1.13 occupants per room. By 1997 it was down to 0.42 occupants per room.

24. According to professor Julian Simon, the average American house or apartment is twice as large as the average house or apartment in Japan, and three times larger than the average home or apartment in Russia.

25. Relative to hourly wages, the cost of an average new car has fallen fourfold since 1915, according to professor Julian Simon.

26. Google Maps is free. If you think about this for a few moments, it’s really astounding. It’s probably the single most useful piece of software ever invented, and it’s free for anyone to use.

27. High school graduation rates are at a 40-year high, according to Education Week.

28. The death rate from strokes has declined by 75% since the 1960s, according to the National Institutes of Health. Death from heart attacks has plunged, too: If the heart attack survival had had not declined since the 1960s, the number of Americans dying each year from heart disease would be more than 1 million higher than it currently is.

29. In 1900, African Americans had an illiteracy rate of nearly 45%, according to the Census Bureau. Today, it’s statistically close to zero.

30. People talk about how expensive college is today, but a century ago fewer than one in 20 Americans ever stepped foot in a university. College wasn’t an option at any price for some minorities because of segregation just six decades ago.

31. The average American work week has declined from 66 hours in 1850, to 51 hours in 1909, to 34.8 today, according to the Federal Reserve. Enjoy your weekend.

32. Incomes have grown so much faster than food prices that the average American household now spends less than half  as much of its income on food as it did in the 1950s. Relative to wages, the price of food has declined more than 90% since the 19th century, according to the Bureau of Labor Statistics.

33. As of March 2013, there were 8.99 million millionaire households in the U.S., according to the Spectrum Group. Put them together and they would make the largest city in the country, and the 18th largest city  in the world, just behind Tokyo. We talk a lot about wealth concentration in the United States, but it’s not just the very top that has done well.

34. More than 40% of adults smoked in 1965, according to the Centers for Disease Control. By 2011, 19% did.

35. In 1900, 44% of all American jobs were in farming. Today, around 2% are. We’ve become so efficient at the basic need of feeding ourselves that nearly half the population can now work on other stuff.

36. One of the reasons Social Security and Medicare are underfunded is that the average American is living longer than ever before. I think this is literally the best problem to have.

37. In 1940, less than 5% of the adult population held a bachelor’s degree or higher. By 2012, more than 30% did, according to the Census Bureau.

38. U.S. oil production in September was the highest it’s been  since 1989, and growth shows no sign of slowing. We produced 57% more oil in America in September 2013 than we did in September 2007. The International Energy Agency projects that America will be the world’s largest oil producer as soon as 2015.

39. The average American car got 13 miles per gallon in 1975, and more than 26 miles per gallon in 2013, according to the Energy Protection Agency. This has an effect identical to cutting the cost of gasoline in half.

40. Annual inflation in the United States hasn’t been above 10% since 1981 and has been below 5% in 77% of years over the past seven decades. When you consider all the hatred directed toward the Federal Reserve, this is astounding.

41. The percentage of Americans age 65 and older who live in poverty has dropped  from nearly 30% in 1966 to less than 10% by 2010. For the elderly, the war on poverty has pretty much been won.

42. Adjusted for inflation, the average monthly Social Security benefit for retirees has increased from $378 in 1940 to $1,277 by 2010. What used to be a safety net is now a proper pension.

43. If you think Americans aren’t prepared for retirement today, you should have seen what it was like a century ago. In 1900, 65% of men over age 65 were still in the labor force. By 2010, that figure was down to 22%. The entire concept of retirement is unique to the past few decades. Half a century ago, most Americans worked until they died.

44. From 1920 to 1980, an average of 395 people per 100,000 died from famine worldwide each decade. During the 2000s, that fell to three per 100,000, according to The Economist.

45. The cost of solar panels has declined by 75% since 2008, according to the Department of Energy. Last I checked, the sun is offering its services for free.

46. As recently as 1950, nearly 40% of American homes didn’t have a telephone. Today, there are 500 million Internet-connected devices in America, or enough for 5.7 per household.

47. According to AT&T archives and the Dallas Fed, a three-minute phone call from New York to San Francisco cost $341 in 1915, and $12.66 in 1960, adjusted for inflation. Today, Republic Wireless offers unlimited talk, text, and data for $5 a month.

48. In 1990, the American auto industry produced 7.15 vehicles per auto employee. In 2010 it produced 11.2 vehicles per employee. Manufacturing efficiency has improved dramatically.

49. You need an annual income of  $34,000 a year to be in the richest 1% of the world, according to World Bank economist Branko Milanovic’s 2010 book The Haves and the Have-Nots. To be in the top half of the globe you need to earn just $1,225 a year. For the top 20%, it’s $5,000 per year. Enter the top 10% with $12,000 a year. To be included in the top 0.1% requires an annual income of $70,000. America’s poorest are some of the world’s richest.

50. Only 4% of humans get to live in America. Odds are you’re one of them. We’ve got it made. Be thankful.

Source: http://www.fool.com/investing/general/2014/01/29/50-reasons-were-living-through-the-greatest-period.aspx

Check back every Tuesday and Friday for Morgan Housel’s columns on finance and economics. Contact Morgan Housel at mhousel@fool.com. The Motley Fool has a disclosure policy.

Western Poverty 21st Century Style

“Today,” Matt Ridley writes in his book The Rational Optimist, “of Americans officially designated as ‘poor,’ 99 per cent have electricity, running water, flush toilets, and a refrigerator; 95 per cent have a television, 88 per cent a telephone, 71 per cent a car and 70 percent air conditioning. Cornelius Vanderbilt [ 19th century American tycoon, businessman, and philanthropist who built his wealth in railroads and shipping] had none of these.” ~ Maudlin Economics

Just sayin’.

The (Social) Recession Is Real

Charles Hugh Smith comments on the “social recession” via his blog:

Is something that isn’t measured (for whatever reason) still real?  In economic terms, if it isn’t measured, it doesn’t exist. That explains why the nation can be mired in a 5-year social recession that goes unrecognized and unexamined.

If we base our either/or assessment of whether the U.S. economy is in recession on statistics such as the gross domestic product (GDP), we conclude the economy is “growing” tepidly and therefore cannot be in recession.

But suppose this “growth” is concentrated in the top 5% of the populace, the thin slice whose incomes are still rising while the household incomes of the 95% are continuing to decline (down 7% since 2009 when adjusted for inflation). If the top 5% are earning and spending more, that could push aggregate “growth” into the positive even as the financial situation of the lower 95% continues to decline.

That’s only one facet of statistical legerdemain:  “median” or “average” doesn’t tell us much about how the bottom 95% are doing if income/wealth inequality is extreme. 

Even more intriguing is to ask, “what statistics are not even collected?”  For example, what percentage of student loans are used as a substitute for income, i.e. used to pay basic living expenses? Anecdotally, there is plentiful evidence that a great many people are signing up for one class at the local community college in order to get a student loan that they will use not for education but to live on.

This could part of the reason why student loan defaults are soaring.

Is an economy of people obtaining student loans they have no way to service as the only available means to get enough money to keep themselves off the street a healthy economy?  What yardsticks would we use to measure a social recession, i.e. a recession in opportunity, income and lifestyle?

Correspondent B.C. recently sent some statistics on housing and the Millennial Generation’s jobs/work/earnings prospects. 

Age 20-34:

Headship rate: 36% (percentage who are heads of households)

Full-time employment: 44%

Unemployment: 8-13%

Persons per household: 2.72

Participation rate: 76% (the number of people who are counted as participating in the economy)

How many people 34 and under qualify for a non-subsidized home mortgage?  That is, how many qualify under traditional rules (income = 3 to 4 X mortgage payments, 20% down payment in cash, etc.) Is an economy in which people in their 30s cannot afford to buy a house a healthy economy, a non-recessionary economy? 

Clearly, using broad (and easily gamed) yardsticks of “growth” do not measure social recession or the health of the economy in terms of affordability, income, opportunity, economic mobility, etc. for the lower 95%.

Just as clearly, the U.S. has been in a social recession since 2008, if not earlier.  Creating “growth” by boosting income/wealth inequality via speculative credit bubbles  is not widespread or healthy growth.  It is merely statistical legerdemain.

Three books speak to the financial rot at the heart of the current “growth” and the decline of opportunity and upward mobility for the 95%:

Down the Up Escalator: How the 99 Percent Live in the Great Recession

Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America

After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead

Source: http://www.oftwominds.com/

The Real Economic Discussion

It Looks Like Everyone Owes Bernanke A Big Apology … Since the day the rally began in early 2009, basically they’ve always been wrong. The economy since the bottom has been characterized by steady, underwhelming improvement, and the only time the market has dived has been during periods when it looked like the economy might falter (most notably right after the 2011 debt ceiling brouhaha) … So if the aforementioned crowd is the loser, then the winner is Bernanke. – Business Insider

 Dominant Social Theme: Central banking works, and Bernanke works best.apology1

Free-Market Analysis: This is a revealing editorial in Business Insider because it shows more clearly than most what the deeper issues are surrounding Bernanke – and the worldwide discussion regarding his strategies and preferences.

The discussion is really about the efficiency of central banking itself. It’s not a question of getting the policy right but of advertising the triumph of a particular central banker who, more than many, has staked his reputation on the idea of central banking as an academic as well as professional discipline.

This is in line with the technocratic elements of modern monetary management. Ben Bernanke and now the Bank of England‘s Mark Carney are supposed to be examples of the modern money technologist, people who combine public relations savvy with vast analytic skills that allow them to make wise decisions on behalf of all who participate in commerce and trade.

What this article seeks to establish is that Bernanke has been misunderstood, and that his policies, much maligned, have worked well. Here’s more:

At every turn, he’s been slammed by hawks of various feathers. In 2011 it was the inflation hawks who mocked him for saying that inflation was “transitory” and that the Fed needed to stay the course with easy policy. He was right. Inflation was transitory.

Lately it’s been the deflation hawks, talking about how Bernanke is making a wild mistake, hinting at a QE taper roadmap, and yet, risk assets like stocks have gotten through this period fine, and despite fears of disinflation there are signs of wage strength, signaling that once again, price weakness is likely to be “transitory.”

The economy is far from perfect. Unemployment is still too high. And a good argument could be made that the Fed ought to have been far more aggressive this entire time, starting in 2008. But the U.S. stands out around the world for having the strongest of the major economies (arguably the strongest economy period, as emerging markets crumble) and those who fret the loudest about inflation or deflation have generally been proven wrong. Bernanke wins again.

This defense of Bernanke strikes us as wrong-headed on a number of fronts. First of all, inflation is monetary; price inflation is a secondary phenomenon. While the article states that inflation is transitory, this only reveals a misunderstanding of what inflation is. There is plenty of money trapped in the system that will begin to circulate over time – trillions, actually. To write that inflation is transitory is to ignore the money that has already been printed.

Does the US really have “one of the strongest economies” in the world? Just the other day, we reported on government-released statistics that indicated tens of millions of US citizens who want jobs are out of work. Many jobs in the US are now either gray- or black-market – or if they are formally acknowledged are temporary ones.

The US is generally acknowledged to be in an ongoing Great Recession. So why the spirited defense of central banking and Ben Bernanke? Because, we would propose, central banking is a fundamental dominant theme of those globalists that use their control of money printing to bankroll a huge number of other internationalist strategies. Central banking is to be defended at all costs.

And so it will be. Whether it is the careful positioning of Mark Carney as the first movie-star central banker or the careful repositioning of the Bank for International Settlements as a more “transparent” and therefore more valid institution, we can see the powers-that-be making great efforts to ensure that central banking is seen as valuable and necessary.

Of course, the main problem with central banking is that it is not forward looking. No group of good, gray men, no matter how handsome, affable and scientific, can ever figure out how much money an economy will need in the future. Only the Invisible Hand of competition utilizing marketplace money – subject to competitive forces – can do that.

That’s why these sorts of articles in defense of central banking are so deeply dishonest. Those writing them are often business journalists who would insist that they are pro-competition and believe in the capitalist system of marketplace innovation.

Conclusion: Just not for money.

Source: http://www.thedailybell.com/29361/The-Real-Economic-Discussion

Confession Time: Money Printing Enthusiasts Should Admit The Obvious

Submitted to Zerohedge by F.F.Wiley via Cyniconomics blog,

Imagine a football coach who hasn’t caught onto the game’s complexities and continues to run the same play – call it a fullback dive – over and over. When I read calls for more monetary stimulus, I feel as though I’m listening to that coach’s brethren in the economist community.

These economists argue that the Fed should simply ramp the money supply higher and higher for as long as some economic statistic – GDP is a popular one – remains below a targeted outcome. Dive, dive, dive, punt and repeat.

There’s an important difference between football and economics, though.

One-dimensional approaches are quickly exposed in football, whereas economies don’t yield clear and timely verdicts on whether policies are effective. There are far too many moving parts to prove cause and effect in a way that everyone can understand and agree. Therefore, bad economic policies persist for a long time before they’re finally found out, and this may be the best way to describe the last 100 years or so of America’s economic history.

With regard to today’s passion for extreme monetary stimulus, once again there’s no scoreboard to tell us whether the Fed is leading us to victory or defeat. Money printing cheerleaders can deny unintended consequences of the Fed’s actions, for two reasons:

  1. Some of these effects aren’t directly observed. For example, we know that misallocation of capital occurs when free market price signals are suppressed, but the misallocation is impossible to measure. Also, the public doesn’t actually see the Fed’s odious wealth transfers to banks even as these transfers put smiles on traders’ faces on POMO days.
  2. Other effects won’t materialize for some time. For instance, zero interest rate policy (ZIRP) and quantitative easing (QE) make it easy for politicians to delay action on long-term fiscal challenges, but government debt can grind higher for years and years before the repercussions become clear to all.

Are the clouds beginning to part?

On the other hand, there’s one policy flaw that’s becoming more difficult to deny. The flaw is this: Much of the incremental growth achieved through extreme monetary stimulus is merely borrowing from the future. In other words, some of the growth that would have accrued in, say, 2015 or 2016, has instead been brought forward to, say, 2012 and 2013.

This approach of bringing future growth into the present defies the old-fashioned goal of achieving “long-run sustainable growth.” It’s one of the ways that interventionist policies can fail. Central bankers claim to deliver stability when in fact they’ve simply borrowed from the future. Rather than reducing volatility, we find later that they’ve increased it.

Half of the last four U.S. recessions followed this pattern; the 1981-82 and 2008-09 recessions were both explained by severe payback for several business cycles’ worth of short-term policies.

Where’s the evidence that policymakers are again borrowing from the future?

Well, it’s been hard not to see it in the past few weeks. For starters, it’s become even more obvious that today’s positive wealth effect is tomorrow’s negative effect. The higher that asset prices are artificially lifted, the faster they fall when prices revert toward underlying fundamentals.

In the same vein, economists are learning a lesson (once again) in the importance of market psychology. I recently shared this telling excerpt from a March interview with former hedge fund manager Stanley Druckenmiller:

Do you know what guys like me are going to do when they sell the first bond out of $4 trillion? And don’t think that letting the bonds run off isn’t selling. That debt has to be refinanced. If you just let all the bonds run off, that is still $4 trillion in selling … What do you think the markets are going to do when they figure out the exit?

For comments like this, Druckenmiller was ridiculed by Fed supporters who should have instead tried to learn from him. Not only was his warning prescient, but he may have understated the potential for asset prices to reverse direction, since falling prices over the last month had nothing to do with the Fed selling securities. The Fed merely signaled that the pace of security purchases would be ever so carefully tapered, and that was enough to trigger a major liquidation.

In my opinion, the clearest way to interpret the past month’s events is with a popular analogy – the one with the Fed as a drug pusher and the economy as an addict who needs ever higher doses to get the same high. It’s hard to see market reaction to tapering in any other way. And by using the monetary drug to the point where $85 billion in monthly security purchases is a bare minimum to keep markets happily stoned, policymakers compromise their future effectiveness.

Wealth effects have stalled out or reversed, mortgage rates have jumped over a percent , banks are laying off  refinancing specialists, and countless types of carry trades are being unwound . Potential future growth has once again been sacrificed for the present (or recent past).

A step in the right direction

Refreshingly, one prominent advocate of aggressive monetary stimulus concedes some of these points. While writing on Marginal Revolution about the Chinese credit crunch, Tyler Cowen discussed the Fed’s part in creating imbalances that are currently being unwound:

Note that a lot of the cheap credit has been funneled through a dollars mechanism … The relevant lever here seems to have been U.S. interest rates, I am sorry to say.

And then he took the mea culpa further in a post titled, “Krugman and I were both wrong about the Fed and interest rates. He acknowledged that “[t]he low rates really have been an artifact of Fed policy, at least to a much higher degree than many of us had thought.

Cowen also backtracked on his earlier disinterest in the whole topic of “bubbles” (see here ), noting that “[e]merging markets tanked on the Fed communication, and so we have indeed been exporting bubbles through a ‘reach for yield’ mechanism.

With a full dose of truth serum, the money printing lobby might admit to being wrong on other points as well, such as their argument (made by some) that stocks would benefit from a back-up in bond yields if it occurred.

And how about the Fed’s theory that the size of its balance sheet determines its effect on asset prices, with the pace of purchases being relatively unimportant? This belief in “stock” rather than “flow” effects seems incredibly naïve to many in the investment and blogging communities, as pointed out repeatedly by Tyler Durden of Zero Hedge. Ironically, the recent market sell-off shows that the truth may be not one but two derivatives removed from the Fed’s typically simplistic model. The stock of the Fed’s security holdings continues to grow as the flow gushes on, but markets corrected on plans for nothing more than a gradual reduction of that flow.

Unfortunately, we’re unlikely to see many more admissions like Cowen’s. Most policymakers and pundits just don’t operate that way.  More commonly, these folks follow Larry Summers’ mantra that you should never admit mistakes (as discovered by Ron Suskind in researching his bestseller, Confidence Men ). Paul Krugman, for one, came up with a new narrative this week without bothering to acknowledge the failure of his old one (which seems to explain Cowen’s confession on his behalf). Cowen should be commended for not only adjusting his views to new information, but confessing prior errors.

Ben Bernanke also admitted some confusion, but that’s about as far as he went. In last Wednesday’s press conference, he allowed that the FOMC was a “little puzzled” by the sharp rise in bond yields that it prefers to see lower, not higher.

It remains to be seen just how badly the FOMC misunderstood the potential effects of its policies. June could prove to be a blip in long-term upward trends for both stocks and bonds. But the blip is already large enough to demonstrate that some of the apparent benefits of ZIRP and QE are at the expense of future economic performance.

Put differently, we’re having some problems with the fullback dive, with the opposition getting well used to it and adjusting strategy accordingly. Some pundits foresaw these problems, and others not so much, but everyone should at least acknowledge that they exist.

More links

Recent events also put a dent in the simplistic idea that current policies should be continued until we achieve a “self-sustaining recovery.” I’ve questioned economists’ theories about self-sustaining growth in several posts, including this one . For more recent articles that touch on the same topic, I recommend this post by Detlev Schlichter and also Peter Schiff’s perspective on tapering .

Source: http://www.zerohedge.com/node/475739

Daniel Hannan Destroys The 3 Unquestionable Myths Of Our Crisis

Zerohedge presents:

The past and present bailouts of each and every bank (and ‘important’ industry) will, one day, be seen as a generational offense is how MEP Daniel Hannan begins this thoroughly British demolition of the three critical myths surrounding the crisis, that despite market optics, we are still living through. From the idea that capitalism has failed (it has not in his view, it has been ravaged by political pandering), to the crisis being caused by lack of regulation, and that greed is the single-driver of the mess that we remain in; Hannan suggests in a brief but extremely eloquent debate that there is a world of difference between being pro business and pro market as he destroys any semblance of credibility that the political (and elite) class has echoing a young Ron Paul in his thoroughly libertarian free-market sensibilities.

Daniel Hannan | Occupy Wall Street Debate | Oxford Union

Source: http://www.zerohedge.com/news/2013-01-26/daniel-hannan-destroys-3-unquestionable-myths-our-crisis

The World in 2030 Won’t Look Anything Like You Think

None of those things happened. North Korea remains mostly unchanged today — except for its nuclear program, which perhaps poses more of a threat than ever. Not only did the 2008 financial crisis stall most economic growth in the Western world, but personal incomes have largely stagnated as well. Finally, while precision weapons did make the wars in Iraq and Afghanistan less costly in some respects, neither war could be considered small. Few would argue those were examples of a new, high-tech way of fighting.

The U.S. National Intelligence Council’s (NIC) report is supposed to help leaders understand how the world is changing. But its style of analysis has gotten a great deal wrong. So it’s with some skepticism that we should regard the latest release of the NIC’s forecasting report, Global Trends 2030: Alternative Worlds (GT2030).

Unlike previous reports, the GT2030 report tries to account for predictions made in previous versions. What it doesn’t do is grapple with the serious flaws in its overall approach. While some of this year’s predictions are worthwhile, the report fails to account for how badly this same process has served previous reports.

The Global Trends reports tend to be two-sided. They offer specific, big claims that are almost always wrong on the one hand, while smaller, more vague observations about how the world is slowly changing tend to be more accurate on the other. In this sense, NIC predictions read like a Fareed Zakaria book: the really interesting parts that matter never turn out to make sense, while the very obvious things are written about so broadly they can’t help but be right.

This year, GT2030 predicts that “Asia,” defined broadly, will surpass the combined economic and military might of the Europe and the United States. If the rise of a multipolar world doesn’t seem very new, that’s because it was the thesis of Zakaria’s most recent book, The Post-American World , written in 2008. In it, Zakaria predicted that the U.S. would experience a relative decline as other countries, particularly those in East Asia, catch up.

That the United States will be “first among equals” in the future isn’t a terribly fresh prediction for NIC to make, but it does have the virtue of being likely. Similarly, the claim that the BRIC countries (Brazil, Russia, India, and China) are not unified by ideology and are focused on their regional power bases is also likely to be true.

The report does have an important role to play, though. In being published by the NIC, it enjoys immediate credibility among policymakers and politicians — the ones responsible for making important decisions about the planet’s future. The broad trends GT2030 identifies are happening right now, and it is vitally important our leaders understand those trends and try to adapt to them. When GT2030 writes, for example, about conflicts over access to water and the challenges posed by climate change, it’s not exactly breaking new ground — but those are both critical issues that leaders need to understand.

But ultimately, what do these sorts of reports accomplish? The NIC is hardly the only group that publishes studies about future trends. There is an entire industry devoted to futures studies: their acolytes, called futurists, give PowerPoint presentations and write books about how the world will change in the future. I used to work for one: Alvin Toffler, who wrote a groundbreaking book in 1970 called Future Shock . His book, four decades after the fact, remains a fascinating artifact: his description of “information overload” (a term he invented) rings especially true in an age of Twitter and Facebook, but his description of cities running out of oxygen, and disposable clothing made of paper, sounds a bit silly.

Futures studies work best when they’re vague and build upon current trends to their logical (and often extreme) conclusion. Along the way, they usually play into their intended audience’s hopes and fears: economic collapse, infinite growth for the middle class, Malthusian predictions of food crashes, and a belief in the fundamental know-ability of what is to come.

At the same time, any specific prediction in these texts will almost invariably be wrong. And that limits how useful they can ever be beyond a limited scope of activity. It is rare to see government officials or even corporate executives making long-term plans based on a vision of the future laid out in these studies. You just won’t hear someone saying, “We should do this because of GT2030.”

That doesn’t mean this sort of study is useless. The GT2030 report is important for how it’s changing the process and trying to encourage adaptive thinking about the future. It helps leaders understand not just the current trends (which can change on a moment’s notice, in the way the 2008 recession undid all the previous predictions of forever-growth), but also how to be flexible enough to adapt to rapid change.

Leaders should look at reports like GT2030 and think about how they can evolve current institutions to be more adaptable and flexible in the future. It seems odd to think that the decentralized world GT2030 describes is going to be met with institutions that were designed in the 1940s.

Related Notes

Association of Professional Futurists – What Is A Futurist?What is a Futurist? A professional futurist is a person who studies the future in order to help people understand, anticipate, prepare for and gain advantage from coming changes. It is not the goal of…

Strauss–Howe generational theory – Wikipedia, the free encyclopediaStrauss–Howe generational theory From Wikipedia, the free encyclopedia The Strauss–Howe generational theory, created by authors William Strauss and Neil Howe , identifies a recurring generational cycl…

Source: http://www.theatlantic.com/international/archive/2012/12/the-world-in-2030-wont-look-anything-like-you-think/266108/

News Spot (with Future Implications) 9/11/12

# Chinese President Hu Jintao on Nov. 8 set a new target for economic growth, saying that the country should double its 2010 gross domestic product and per capita income for urban and rural residents alike by 2020, Xinhua reported. The goal is to make China’s development much more balanced, coordinated and sustainable, Hu said.

# British Prime Minister David Cameron and German Chancellor Angela Merkel met for an hour in London on Nov. 7 for an “open, warm and friendly” talk about the EU budget Nov. 7, the prime minister’s office said, BBC reported. Cameron said before the meeting that the EU budget should be frozen or cut, while Merkel believes an increase is necessary. Officials said discussions on the issues between the two leaders would continue.

# Spain continues to present impossible ideas to deal with its impossible economic situation. The country currently has just €37 billion in cash available. It somehow plans on buying €60 billion worth of bad bank assets. Spain has five regions requesting bailouts leaving just €3 billion in funds available for any other regions that face a shortfall (there will be more). Spanish banks continue to draw over €400 billion from the ECB… up from €300+ in June. And on top of this, the country needs to raise €207 billion next year while keeping rates low (http://gainspainscapital.com).

# The US re-entered recession in June 2012. They are now facing the fiscal cliff again with the threat of tax hikes hitting in early 2013. We also have $16 trillion in debt and are running our fourth $1+ trillion financed by the US Federal Reserve which bought over 70% of all US Treasury issuance last year (http://gainspainscapital.com).