The next twenty years are going to be completely unlike the last twenty years. | Hacker News Reader

The next twenty years are going to be completely unlike the last twenty years.

captaink.blogspot.com

34 pointssinzone50 comments

This feels a little too gold-buggish for me in parts. Fiat money and fractional-reserve banking are quite separate things: fractional-reserve banking was common even with gold currency. Unless an intrusive government regulation outlaws people from accepting deposits and lending them back out, and even further, from issuing promissory notes, it will continue to happen even in a gold-standard economy, because full-reserve banks are less attractive, both to owners and depositors, except in crises, of which our memories are short.

Gold supply also has over the past 100 years or so inflated at a low exponential curve that looks much like a compounding curve, because the annual production has been increasing roughly in line with the total amount in existence (from 400 tons/yr in 1900 to 2500 tons/yr today). It's compounding with a low rate, around 1%-2% over most of that period, but nonethless the money supply inflates, and continues to inflate faster in absolute terms year to year (with some dips now and then).

actually they are connected. with a gold standard banks that run FRB risk actual bank runs. with a fiat system the government (fed) can provide unlimited backing so instead of a bank run the fed would print money, causing inflation (see the Savings and Loan crisis of the 80's). your buying power decreases in exchange for socializing the risk of bank runs.

one of the reasons austrians bug me is their insistence on 100% reserve banking even though a cursory examination of history reveals that there is market demand for FRB. sure, demand would certainly be lower than it is now if there was no "lender of last resort" fed subsidizing risk, but it would still exist. most people care about 100% safe investments.

however the austrian criticism that banks who mismanage their funds should be allowed to fail is spot on.

Yeah, there's more scope to maneuver in a fiat-money system; I was mainly objecting to what seemed to be the suggestion that under a gold standard FRB and the money multiplier somehow wouldn't exist. It seems that some people in this group want to somehow mandate that everyone conduct their transactions by literally exchanging gold coins in bags. But the people with that viewpoint tend to also be libertarians... how, consistent with libertarianism, can the government prohibit private individuals from exchanging pieces of paper saying "I owe you 5 ounces of gold", and force them to physically exchange the 5 ounces of gold instead? But if the government doesn't force them to physically exchange the gold, you have a money multiplier, and, in effect, privately minted fiat currency. And the related bubbles and crashes would also exist, as they have for centuries.

well....

http://unqualified-reservations.blogspot.com/2008/09/maturit...

I was under the impression that there has been a variety of opinions concerning fractional-reserve banking in the Austrian School. While Rothbard was fervently opposed to it and Mises was hostile to it, I know that Hayek, at least, believed a fractional-reserve banking system to be necessary for an efficient economy.

it seems to me like the vast majority of modern austrians are basically rothbardians.

This is mostly bunk. I'm not going to go through the whole thing, but I'll take the third video as an example:

First, the graph the author has drawn obviously isn't exponential. The graph is too flat and rises too quickly, but it certainly is scary. Second, global population growth is declining, and going towards zero. In some East European countries it's already negative. Third, this has already been discussed by Thomas Malthus back in the 70's and dismissed.

This looks like someone who doesn't quite grasp the complicated machinery of economy, people and energy and tries to explain it using pocket philosophy.

  ...has already been discussed by Thomas Malthus back in the 70's and dismissed.

Not sure which Malthus you mean. In 1770, he was only 4 years old, and by 1870, he was dead...

Ah yes, sorry for that. I was mixing Malthus up with the Club of Rome that revived his ideas and published the limits to growth. (http://en.wikipedia.org/wiki/Club_of_Rome)

Thanks for catching this :-)

So I'm just curious for someone who was around, but how similar were the last twenty years to the twenty years previous to that?

Single biggest thing: no Cold War.

Go watch Threads:

http://www.imdb.com/title/tt0090163/

and if you aren't old enough, consider that people lived with this kind of threat for decades.

Indeed: for around 6 decades we had a determined adversity who was dedicated to destroying us by any means possible in every realm ... and we weren't used to dealing with that sort of threat.

And by some time in the '50s "the bomb" made that threat immediately existential (bomber or missile flight time) ... it's hard to describe what living under that was like.

"we had a determined adversity who was dedicated to destroying us by any means possible in every realm"

Of course, that was the view the Soviets also had. Although they were an "evil empire" I don't think they actually had anyone in power actively campaigning to start a war, which did happen in the US. The Soviets were largely dangerous because they were so very afraid and (by the 80s) had senile leaders - look at the near disaster of Able Archer 83.

Of course, that was the view the Soviets also had. Although they were an "evil empire"

Yes, this.

At the Museum of communism in Prague, there is an exhibit that talks of how the people in the eastern bloc were kept in a state of terror of the imminent threat of the American Weapons of Mass Destruction. Which was quite plausible, since the Americans had already nuked one country. Of course, this threat served political ends of damping down domestic dissent and disloyalty. Draw your own parallels.

we had a determined adversity who was dedicated to destroying us by any means possible in every realm

-sigh- Someone hasn't learned yet.

In the 30s??? I think not.

They started effective war on the West in general and the US in particular no later than that. (A war doesn't have to be "hot" to be a war.)

Maybe they "were largely dangerous because they were so very afraid and (by the 80s) had senile leaders" ... but perhaps they should have thought of that before starting and sustaining a generations long war?

Moving out of the Lenin-Stalin eras, was Khrushchev, who actually ordered Soviet subs to use nuclear tipped torpedoes on the US Navy "so very afraid"?

(I should point out that the last comment was WRT the Cuban Missile Crisis, and Khrushchev's "adventurism" (or whatever) in it and the lead up was the grounds for purging him from office.)

I kinda meant in terms of technology but yes, the coldwar is a good point.

how similar were the last twenty years to the twenty years previous to that

Kinda not. Computers, IT, internet and mobile phones were just starting to change the way that everyday people did things in the 1980s. They really got going in the 1990s. The cold war and the USSR ended about then. The thing is, change is coming faster now than it did in 1990. And it's not slowing down.

It frustrates me when energy consumption is used as a proxy for growth. That was probably true during industrial periods when manufacturing was the key economic producer, but isn't education and time more important now? Of course energy is still important to that, but to take a simple example - I can build a web store much more quickly now than I could 15 years ago thanks to the advent of frameworks, and indeed I don't need to build one myself as I can use an already developed one. My time can now be spent developing novel things.

Whew, I don't really know. If you visit the Peak Oil website and get beat over the head with the list of things that are made from or depend on oil, like paint and plastics, most transportation, even feeding the world depends heavily on natural gas fertilizers, not to mention diesel in the tractors, you'll see that are so many things we consider necessities which can't be replaced by photons racing down a fiber-optic cable.

I'm not trying to argue that energy/oil isn't important for growth. I think its that I see the argument so often that growth is the same as consumption, when it's not - it's the creation of value, not objects.

Oh sure. A good analogy for me would be swimming up stream. Even if the outbound tide of Peak Oil is draining our wealth, technological advances can stem that tide.

A lot of people would agree with you in 2001, or better said, before 2001, then the .COM bubble happened.

I didn't watch all the videos, but I didn't see anything about War.

It seems to me that if you read between the lines that the next 20 years wont be like the last 20 years because there will be no War.

Sadly I think we need to overcome the small human need to destroy each other before we need to worry about almost everything in this blog post.

The video on inflation covers how war has significant inflationary effects, but obviously focuses on the economics and not the morality of it.

I was thinking on how Wars fund many technological break thoughts and more often improves the economy. Where would the internet be without War? DARPA anyone?

If there were no war in the world tomorrow, millions would go out of work.

I'm sorry, this is a dangerous and wrong line of thinking. War's primary purpose is to destroy economic output. You win by eliminating your opponent's ability to produce the goods and services that enable them to engage you.

You are correct that world peace would result in massive layoffs. However, those millions of newly unemployed people would now be free to do other, more productive work.

World peace would be the most beautiful and perfect example of creative destruction in the history of economics.

I am not claiming it's the right way to think. I am pointing out realistic facts.

Your assumption that these people would be free to do other more productive works is counter-intuitive, as you are assuming that people who fight Wars want to do something else.

My original observation still stands, that the blog context appears to disregard the positive influence that war has on economy as well as the negative.

I think you misunderstand me. If war was eliminated, people who fight wars would have to do something else, regardless of their feelings on the issue. That thing would necessarily be more economically productive, because war is a net drag on the global economy.

If you wish to debate this, then you'll need to prove that in aggregate, war is economically productive. That's a difficult argument to make, and likely to be empirically false.

For a more robust explanation, check out the "parable of the broken window": http://en.wikipedia.org/wiki/Parable_of_the_broken_window

If I recall well the argument, the whole point about war is that it serves as a counterbalance against the problems that perpetual growth brings.

It is never truth that the war is economically productive. But the destruction of capital that comes as a side effect of war keeps inflation on check (monetary inflation defined as money growing faster than the tangible economic output; not price inflation, which is one result of the former).

Besides that, while it might be a net negative economic event, War puts lots of public money in some chosen private pockets. So there are always people lobbying to get into conflict in a perfectly rational way.

I am not sure my intent was to debate it per se, but to identify with my personal opinion in relation to yours.

However, from where I stand the cold war spurned on the space race, millions was spent by either side on the space race. Technology and the economy surrounding it grew as a result. Perhaps that is not true?

The world, for the next twenty years, is going to be dominated by black swans, and a whole lot of them.

Hopefully it's mostly good black swans, not bad one.

If we don't get the good ones, we'll get the bad ones.

Yes, and also why the Singularity is such a silly idea.

We are not racing to utopia, we are racing to disaster.

This is not what the word "Singularity" means. See http://yudkowsky.net/singularity/schools.

Think of it. We are blessed with technology that would be indescribable to our forefathers. We have the wherewithal, the know-it-all to feed everybody, clothe everybody, and give every human on Earth a chance. We know now what we could never have known before -- that we now have the option for all humanity to make it successfully on this planet in this lifetime. Whether it is to be Utopia or Oblivion will be a touch-and-go relay race right up to the final moment.

Buckminster Fuller

Unfortunately we have no technology to manage (or enlighten) 6 billion irrational human beings.

EDIT: And so... variations on the Tragedy of the Commons march on.

Do all who believe in the idea of the Singularity think it will be a utopia? I thought most just think it will happen.

I'm rather fond of Charlie Stross's account of a singularity in his book "Accelerando":

http://en.wikipedia.org/wiki/Accelerando_%28novel%29

From this I believe that we can predict that a singularity may not be a utopia or a dystopia but it will almost certainly be mind warpingly weird.

I really like Accelerando, too. But it sounds a bit too reasonable; business as usual, with neither Heaven nor Hell.

The human mind accepts better living conditions as self evident really fast and forgets all previous situations. We lack historical insight -- from the viewpoint of two-three centuries ago, we probably live in a good approximation of Heaven.

-- There is no widespread hunger. (Locally, one year in seven had a bad harvest and lots of people died with many children getting brain damage).

-- The child mortality is much less than 20-30%. Enough said.

-- We have antibiotics. We know about cleanliness for operations/childbirth -- and can stop pain during them.

-- We are rich and most everyone can have education, music/art access and only work 8 hours a day.

-- Social equality. Just 160-170 years ago in my country, it became illegal to beat your employees...

-- Modern dental care.

-- Etc.

Even in most of the world's under developed countries, they have it much better than we had just ten generations ago.

Edit: I'm not arguing against "weird". I am arguing that utopia and/or dystopia is more likely than we would guess naively.

Edit 2: To nitpick and give a reference to my last claim (that was irrelevant for my point):

I've seen data for up to 30% children dead before 5 years of age in Scandinavia for poor farmers (that is, most everyone), around 200-250 years ago.

From the reference: "In 2007, there were 37 countries in which at least 10% of children under five died, down from 41 in 2006. All were in Africa, except for Afghanistan."

http://en.wikipedia.org/wiki/Child_mortality#Highest_rates_i...

It's a race between utopia and disaster. And the outcome is likely to be a bit of both. Famines and plagues; and robots on Mars and Titan

Fair enough.

F-ing hate doom-ers. I have ONE word for you:

Y 2 K

Remember? The world was gonna end. Fsssssssssssssssssss...

In 2005 we were told that PeakOil was supposed to happen before 2010. Guess what?!

Global Warming! Global Warming!

Yes, the system goes through crises, but then things change, wrong get righted and life goes on. No, the world is probably not gonna end. And if does, the fact that I won't hear you whining anymore will almost make up for it.

What do you think Y2k would have looked like if there hadn't been a serious date-format conversion effort?

But THERE WAS an effort and it WAS successful. That is my point: everything that comes our way, humanity WILL deal with it.

We did in the past and we will do again in the future. The probability for doom, while not zero, is extremely low, due to our flexibility.

Crisis will always happen, things will always change. That is not in question. It's foolish to just brush everything off and say 'we will be fine, the system will correct itself'. The system will certainly always correct itself, but it's possible to happen upon a crisis that hits so fast, or a sneaky crisis a long time in the making (and requiring too long to fix), that the wrongs cannot be righted before catastrophic damage occurs. (And by catastrophic I mean not a market crash or whatever but nation-, society-, race-, or world-ending)

So you agree with me: crisis and solutions. Nobody said "brush everything off". On the contrary I said that solution will be searched & found.

As for "catastrophic damage": yes they are possible (even an asteroid hitting earth. But what are THE ODDS of us not figuring out a solution in time? Even lower than those of the event occurring in the first place, and thus practically negligible.

>But what are THE ODDS of us not figuring out a solution in time?

What? If the right size celestial body were heading for the earth there wouldn't be much we could do about it. There are a great deal of things that can happen that we would be utterly powerless to stop.

Given that, there is no point worrying about such things. If such a thing ever does happen, I'll probably be gone by then anyway.

Exactly. Thank you.

Ah, I interpreted your comment to mean that what ever happens we will be smart enough to solve it. I agree that worrying about things utterly beyond our control is senseless.

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