Bloomberg reports on Ben Wattenberg’s book “Fewer“. This long term trend appears to have the academic rigor of reliable thinking, but the global financial impact is dwarfed by another long-term global population trend toward free markets.
Generational decreases in total population are occurring at a slower rate than the growth rate of the number of people living in free market societies. The number of people who are participating in the global economy has increased by 3 billion since 1990, and the shrinking population effect is negligible relative to trends of that magnitude.
For investors, this probably means that global consumption will continue to increase even if the population as a whole may slowly decline.
Yes. Deficits cause inflation.
National debt is one of the most important factors that determines the value of the US dollar and international confidence in American investments. With extensive history and other nations as examples, we clearly see that as the debt gets bigger, we will risk higher inflation, not be able to buy as many foreign goods, and see less international interest in our stock markets.
This fiscal year’s $477 billion deficit (Oct 1, 2003 – Oct 1, 2004) is the largest in US history.
Although the level of deficit is the largest in history, it is not the largest when measured as a percentage of GDP. The current deficit is about 4.3% of GDP. This is high by historic standards, but has been exceeded in 6 of the fiscal years since 1962.
Data source: http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0
If you are wealthy
We all like tax cuts that put money into our pockets today, but these tax cuts impact income, not wealth. Inflation, on the other hand, is a tax on wealth. If you are wealthy, then inflation will cost you a great deal in terms of spending power. You will be pushed into equity investments because fixed income and cash are hurt by inflation and rising interest rates. If you would be hurt by inflation, then deficits are your enemy.
If you are in debt
Inflation decreases the value of wealth and debt. Those who have money can buy less with it, and those who are in debt find it easier to pay off. This discounting of old wealth makes the “real” distribution of wealth less concentrated. It brings us all closer to each other by bringing us all closer to zero. If you are in debt, then inflation will reduce the burden, making it easier to pay off. If you are in debt, then inflation and deficits are your friend.
ZDNet reports that Infineon Technologies is weaving sensors, processors, and supporting systems into fabrics. They see near-term applications in entertainment, communications, health care and security. I like that they say: “The further evolution of our information society will make everyday electronic applications ever more invisible and natural”.
For each of us, perception is reality, and drives our behaviors and investments. The media have strong influence over the perceptions of communities, and this drives the net investments of time and money in a community.
It is this net investment of time and money that dictates changes in the economy and the community. So those who produce the information that change perceptions can manipulate the reality of the growth of the community. Is a relationship this general something that we want to foster in our own community? Will it lead down the best path for humanity? A major manifestation of this relationship is the growing value of media. Those who control the media can manipulate the users of it by biasing the information flow. Biases often manifest themselves in analysis and selection of content. It is no wonder that the latest tulip bulb incident centered around the technology and media industries that helped to create that boom-bust. Where would we go if we were not biased? Given all the info and allowed to weigh it as we see fit, we would all more independently perceive the world. The range of individuality would increase, while the volatility of consumer confidence over time would fall because correlations in idiosyncratic confidence levels would fall – affecting every cyclical market. If there is such thing as a risk premium, then people are willing to pay to reduce volatility and are effectively indicating that lowering volatility of cyclical markets would be a good thing.
Is religion succumbing to media as the primary influence in the populations’ perceptions of self and community? And if so, are we replacing one set of biases with another? The most important reason to avoid biases is that they possibly influence decisions away from what is right or best. And the development of the community is optimized when large numbers of unbiased (and rational) individuals participate in decision-making.
We are naturally transitioning toward an environment where individuals have more control over their information. The internet is a strong influence on that process. As the barriers to entry continue to fall in the media space, we will have more and more access to varied information. As this happens, we will see new tools arise that allow us to filter, select, and interpret our information. This is an important process in the evolution of our society, and is a necessary step in the transition toward fairness and truth.
As communities overlap more and more, the unanticipated toxins that destroy cultures have a greater likelihood of spreading to other cultures.
When the Roman Empire poisoned itself with lead, for example, it destroyed a large culture, but not everyone. When the plague killed 1/3 of the world’s population, it even impacted the economic prosperity of Africa as the limited trade routes fell apart. If today’s aspartame (or any other component of our environment) were to cause damage to our evolutionary viability, it would vastly destroy the population of the world. Coke, for example, sells to just about every corner of the globe. As this occurs with more foods, drugs, medical procedures, manufacturing byproducts, and societal norms, we increase the likelihood of breaking the chain of humanity.
- It may make sense to restrict the propagation of new products at some point in order to protect populations from negative ramifications. It also seems wise to maintain different food and drug administrations in different countries as long as there is unpredictability in long-term implications. The responsibility of the food and drug administration will become more and more important as similar ingredients become a part of the diet of larger and larger part of the population.
Chemical, biological, nuclear, nano-, and genetic weaponry is increasing in effectiveness. It will be possible in the next decades to produce agents that will kill all life with genetic code that matches any set of very specific genetic or other criteria.
- This is really scary to me. I don’t know how to stop it. Similar to the way that software viruses and anti-virus software battle for dominance, new weapons and the protections against them will battle for dominance… in this case, with lives on the line. Over time the technology for constructing microscopic, cheap, and effective weapons will become more accessible. Columbine has the potential to be much worse. Assassination could be as easy as sending a nanoterrorist or finding a hair and releasing an airborne virus with a single target. It makes me think something that rarely crosses my mind: that the government should enforce involvement.
Posted in Economics, Freakonomics, Personal, Public Policy, Science, Tech, The Future
Tagged consumerism, international trade, politics, society, trends
The weight of value in the goods and services that make up commerce will shift toward the intangible. This includes media, communications, rights, and information services, primarily.
Communities will be based on areas of interest, discussion, belief, and informational interaction, rather than physical proximity and race. Individuals will be members of many unrelated communities.
Community sets may overlap in telling ways when looking at large numbers of people. This data might be used for suggesting additional community associations and interpersonal relationships with shared interests.
Markets and marketing will be based on these communities.
Posted in Economics, Freakonomics, Investment, Psychology, Public Policy, Tech, The Future
Tagged consumerism, globalization, politics, society, technology, trends