Which topic(s) would you most like to see covered more on this site?

Hi Mike,

"$10,000,000 in 2100."

"Which looks an awful lot like inflation to me."

Yes, it probably looks like inflation, because the number is so high. But all those numbers are "year 2000 dollars". So they are adjusted for inflation to year 2000 dollars. The exact technical term is "Geary-Khamis" year 2000 dollars...also called year 2000 international dollars. They are essentially what numbers one would get if one adjusted for inflation that occurs between the year 2000 and the prediction years for all the countries of the world. Wikipedia's article on Geary-Khamis dollars is here:

en.wikipedia.org/wiki/Geary%E2%80%93Khamis_dollar

Hi Grover,

Yes, I'm pretty sure of myself. (Isn't Chris Martenson? ) (Isn't everyone on the Internet?)

But I'd like for *you* to come to your own conclusion that an average wage of $4,800 per hour is possible. So the first question I have to start you on your journey is, "What creates wealth?"

I previously gave two hints: "What is the per-capita GDP of all the birds on this planet?" And "What is the per-capita GDP of all the chimpanzees on this planet?"

I'll give you another hint about the answer to the question, "What creates wealth?"...Julian Simon wrote a book titled, "The Ultimate Resource". To what was he referring?

Best wishes,

Mark

P.S. Oh! I should have read further in your comments before replying. (I do that too often. ) You wrote: "Either everything is automated and nobody has employees..." You're so hot, you're on fire.

But before you can convince yourself that that situation could come to pass, you need to think about what Julian Simon meant by "The Ultimate Resource.' (And then ask yourself, if you don't know already, "Who is Ray Kurzweil, and what does he say about computer intelligence?"

Hi Grover,

My snarky/flippant comments were not meant to offend. My main point was that, if you come to an opinion on your own, you're much more likely to confident in its correctness. I understand that time is precious, but if you ever get time, you'd be spending the time well if you read (at least the first parts of) Julian Simon's "Ultimate Resource 2" and Ray Kurzweil's The Singularity is Near.

Julian Simon's point is that human ingenuity is the source of all wealth. Not oil or energy. Not ecosystem health. Only human brains create wealth.

Ray Kurzweil's point is that computer intelligence is increasing exponentially. (Actually "double exponentially"...that is, the doubling times are actually decreasing.) Ray Kurzweil's prediction is that computer hardware capable of roughly the same number of calculations per second as a human brain--roughly 20 petaflops, or 20 quadrillion calculations per second--will be available for $1000 by the 2020s. And a computer with the same computing power as all 7 billion humans on earth...or 7 billion times 20 quadrillion calculations per second...will be available for $1000 by roughly 2050.

That will almost certainly create economic growth much more spectacular than any growth that has previously been seen in history. Here are world per-capita GDP growth rates for various 5-year periods in recent history:

Time Period.........Annual Per Capita GDP Growth (%)

1600-1650.......................0.12
1650-1700.......................0.18
1700-1750.......................0.16
1750-1800.......................0.18
1800-1850.......................0.87
1850-1900.......................1.65

1900-1950.......................1.76
1950-2000.......................2.83

Here were my October 2004 predictions for the decades of this century:

2000-2010................3.0
2010-2020................3.5
2020-2030................4.5
2030-2040................6.0
2040-2050................8.0
2050-2060...............11.0

I think the *average* per-capita GDP growth rate for this century will be 7% per year (although it will be much slower than 7 percent in the first decades, and much faster than 7 percent in the final decades. A growth rate of 7 percent per year means a doubling every 10 years, which means that the current world per-capita GDP of about $10,000 per year will increase to about $10,000,000 per year (2 to the 10th power increase) by 2100.

Best wishes,

Mark

P.S. Some answers to your questions:

1)  If we rely on machines to do all the work, where does the energy to power them come from? -->By the 2030s, there will be robots with roughly human intelligence that will take roughly the same amount of energy to think and move and do things as humans. Except that the robots can rely on electricity, where we are much less efficient, in that we need to convert food to energy.

2)  "If everyone is rich, is anyone rich? What difference do a few zeroes make?"-->Whether the world per-capita GDP is $1 million or $10 million doesn't make any difference. And even $1 million versus $500,000 versus $200,000 makes very little difference. What I'm saying is that, before this century is done, money will be rendered irrelevant, in the sense that no one at the end of the century will ever have to work a day in their lives.

P.P.S. All these predictions can be completely destroyed if the intelligent robots that we will produce in this century want to harm us (ala, The Terminator). Or there is a global thermonuclear war, and we never get to the point of making robots as intelligent as humans.

Mark,

Thanks for providing a synopsis of the books. I appreciate that you took the time to explain it. The theory is just about what I expected - (my words) that we'll have continual exponential growth in a finite system. Nonetheless, there were some gems that I didn't expect!

I'll agree that material goods are potential wealth that need human intervention to be realized, but human ingenuity without action isn't wealth. It takes a combination to actually procure wealth and the most clever have the opportunity to realize the most wealth from the resources available. Eventually the edge of the petri dish confounds even the most resilient bacterium's dream.

Moore's Law continues at a doubling every 18 months. I haven't seen that the time has dropped, but I haven't been watching it closely. Look at the energy consumed by the computing industry. Can this continue forever? Actually, most of the advances in technology and science are achieved by a very small percentage of the population. At the rates you've shown, the computing power will exceed humanity's real total much sooner.

I heard (on NPR) a physicist saying that with 2.3% annual growth in energy consumption (current growth rate,) we'll be using 10,000 times more energy in a mere 400 years. (The math is correct.) That level of energy consumption will be enough to heat up the earth to the point that water will boil at sea level. Fortunately, I won't be around to see the results. It does point out the folly of extrapolating infinite exponential growth.

Your math is correct; however, it would be interesting to see how the energy usage has grown over these time frames. I'd imagine that the growth rates are quite similar. Since you're using GDP as the measure, have you discounted for the inflationary effect of fiat currency? My experience with the last decade has been one of increases in nominal terms, but stagnation in real terms. Is this last decade an anomaly or a harbinger of future trends?

If wealth is merely human ingenuity, I see how you arrive at your projections. The mining, harvesting, manufacturing, and transportation will still take energy.

If money is irrelevant, what will be used to allocate scarce resources? What incentive would there be to do anything?

I agree. I suppose that we can build computers that can do our worrying for us. Wouldn't that be a relief? ;-)

Grover

ABSOLUTELY....  I don't care how quickly computer speed/capacity is rising, the fact that it takes a quarter of a ton of fossil fuels to make one is what really matters.

Had we never had fossil fuels, we would never have had computers, no matter how ingenious you think we are.....

Mike

AMERICANS WAKE UP! I knew all along that we were in deep trouble, but your book just made everything crystal clear. Thank you for taking the time out of your life to do this for all Americans. Now, how can we make everyone see this? And how can we get the people up on the hill to start implementing changes to save this country? I would start with the government and the natural gas infrastructure. The government needs to work within their means,  its time to start making cuts. It will be a painful process, but it has to happen. Ron Paul has been preaching this for years and everyone just laughs him out of the room. It would take someone like Ron to change this country, but no one wants the pain that comes with change. The pain is coming and your book shows us the facts. I look at my children and grand children and wonder, what will they have to endure through their life? It's scary. Wake up America.....

Money is a claim on wealth...

Money is a measure of wealth. So we're in basic agreement there.

...which is composed of natural resources...

This is directly contradicted by a simple look at the top 20 richest people in the world, from the Forbes 400 list. One sees, Bill Gates, Larry Ellision, Paul Allen, Sergey Brin, Larry Page, Steve Ballmer. All those guys are *software* guys. The "natural resources" they deal in are electrons.

...and what we make from them.

Yes, but it's not just things. In fact, the world is "dematerializing." A cell phone has more computing power (both processing and memory) than a computer that took up a whole room in 1970.

If you double the amount of money while production stays the same you have merely decreased the value of money by ½. 

That is by definition true. But production doesn't "stay the same." This can be seen in computers and electronics. It's funny to me to watch a show like Seinfeld or Friends, and to see the brick-like cell phones that they used. And no video screens on them. No Internet.

And if you are stranded in the desert without water and food, then all the money in the world will not save you.

If I have all the money in the world, I have a satellite phone (rather than a cell phone) and I can just call to have a helicopter come get me. Note that less than 50 years ago, satellite phones didn't even exist. And 80 years ago, credible helicopters didn't exist.

Human ingenuity is the ability to do more with resources.  But the resources are the fundamental source of all wealth.  Without them you will die as you think your ingenious thoughts.

Your statements can be reduced to an absurdity by substituting "oxygen" for "resources." (After all, oxygen is a resource.) Oxygen is the fundamental source of all wealth. Without oxygen, we would die.

Or substitute "food." (Food is also a resource.) Food is the fundamental source of all wealth. Without food, we would die.

You need to take a hard look at the Crash Course book.

I have a better idea, which is what was originally suggested. There was a desire to find "Interviewees that disagree with Chris." I'm such a person. "Peak Prosperity" will be viewed with much amusement 20+ years from now.

The historical reality is that world per-capita GDP growth was never faster in any 50-year period than from 1950 to 2000. And it's almost certain to be at least as fast from 2000 to 2050 as it was from 1950 to 2000, and to be even faster from 2050 to 2100. (Barring takeover by terminators, or global war.)

I'm really surprised that you didn't answer these questions.

There's only so much time in a day.

Since you're using GDP as the measure, have you discounted for the inflationary effect of fiat currency?

As I've written already, all my predictions are in year 2000 Geary-Khamis dollars. So they're adjusted for inflation to the year 2000.

My experience with the last decade has been one of increases in nominal terms, but stagnation in real terms.

I don't know where your "experience" comes from, but the Indexmundi website has these values for increases in *real* (i.e., adjusted for inflation) world GDP. All values except 2009 were positive, and most were 3 percent per year or greater.

After I reread your statement, I see that you think growth will be much slower than 7 percent in the first decades. Why would it be slower to only speed up in the future?

It's very simple. The human brain is the source of all wealth. Therefore, if the number of human brains increases dramatically, wealth will increase dramatically. On my blog, I calculate the number of "human brain equivalents" (HBEs) added by personal computers every year.

In 2000, only about 100 HBEs were added. In 2010, only about 10,000 HBEs were added. In 2020, about 50 million HBEs will be added. In 2030, about 100 billion HBEs will be added. (In that one year!) In 2040, it will be 1 QUADRILLION HBEs added. *That's* why economic growth will accelerate dramatically.

Quite honestly, I suspect that you're confusing inflation with wealth.

I've had multiple courses in economics at the university level, including a course in Money and Banking. I know the difference between economic growth and inflation.

OK, let's get technical and precise: Money is a "store of value." Do you agree with characterization of money?

No.

The only value money has is what is written on the banknotes because we agree that's what they're worth... that's the whole premise of WHY the future will be different, money will be worth nothing......

I grow most of my food.  In a post crash situation, you may be hungry and I might not.  If I barely have enough to feed me and mine, you can offer me all the money in the world for my food, and I wouldn't accept it....

Now, offer to work for me to increase production so we may all eat...... and I'll consider that.  I value your labour far more than your money.

Mike

Mark

The rise in world GDP is the result of gains in a few “advanced” economies.  They also have a corresponding rise in debt, which has been doubling in shorter and shorter periods as Chris has shown.  This growth in debt outstripped the rise in income and GDP for decades until it became unsustainable, resulting in the present problems.  Easy credit created an illusion of prosperity, allowing us to spend more than we made.  The growth in GDP was not real

GDP itself is also an illusion.  The way it is calculated includes government spending.  So a government can tax its citizens more, and spend the money, and behold – GDP has grown!  Nothing more was produced, but the GDP number is larger.  US government spending is about 25% of GDP.  Add state and local government and I think the number is around 40%.

What’s worse, the same effect can be created when the government spends more than it takes in.  When the US federal government had a $1.5 Trillion dollar budget deficit in 2009 that was 10% of GDP.  It has run 8% or more in each of the following three years.  We are left with an accumulated debt of almost $16 Trillion, that now exceeds our GDP.  We certainly are not wealthier than we used to be with a smaller GDP and a much smaller debt.

Human ingenuity is one of our most valuable assets, but it has to be based on real data.  The virtual world of computer geeks is good place for dreamers who can apply their thinking to concrete problems.  It is also a hothouse for illusionary thinking when it is not grounded by a solid understanding of the wider world.

Once again, the map is not the terrain.

Travlin

Oh really?  So then tell me, what's a Frenh Franc worth?  Or a Deutsch Mark?  Or a Drachma?

What in fact caused that hyperinflation was.....  DEBT!  That the debt was caused by war is irrelevant.  John Maynard Keynes described the situation in The Economic Consequences of the Peace: "The inflationism of the currency systems of Europe has proceeded to extraordinary lengths. The various belligerent Governments, unable, or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance."

This is rubbish.....  you're just guessing.  There was no war at all in Zimbabwe.  What really happened is that Mugabe took the farms off the white farmers and the replacements had  no idea how to run a farm, food production collapsed, and because farming was Zimbabwe's main "resource", its money lost its resource backing.

REALLY?  Like the VietNam war maybe......?

That's not what a lot of people are saying.....  there's talk of martial law in the US all over the blogosphere, and personally, I wouldn't discount a revolution against the elites in your country....

Ever heard of the petro-dollar?  The USA became the world's most powerful nation because it was blessed with more resources than ANY other nation at the beginning of the 20th Century, not least oil (but also coal in huge amounts, squillions of acres of deep topsoil, the Mississipi, gold, and did I mention oil?).  US oil won the war.  On the back of this and Great Britain having been stripped of its superpower status post WWII, the US dollar became the global reserve currency.  It wasn't until the 1960's when Saudi Arabian oil was discovered and the US' own production had reached the edge of the peaking point that Russia started to threaten the US' status of world's greatest power......

Ah.......  more inflation caused by oil...  how odd.

MarkBahner wrote:

I grow most of my food.  In a post crash situation, you may be hungry and I might not.  If I barely have enough to feed me and mine, you can offer me all the money in the world for my food, and I wouldn't accept it....

Yes, and if I offered you all the gold in the world for your food, you might not accept it. But how realistic is a situation where the U.S. economy is so destroyed that a person who produces food won't accept any amount of money for that food?

VERY.  You can't eat food or gold.  And if no one makes cars or iPods or smart phones what will you buy with gold and money?

MarkBahner wrote:

I have seen no realistic scenario on "Peak Prosperity" for why this or any time in the near future will be a time of "peak prosperity." As I've pointed out several times, the whole of world history in the 300 years is that every 50-year period has seen a growth in the rate of per-capita economic growth.

Funny that..... it's the exact same 300 years that saw the growth in fossil fuels useage!  Coal first, then oil and gas.

MarkBahner wrote:

That is, the world per-capita GDP has not simply been growing exponentially, it's been growing what Ray Kurzweil would call "double exponentially". That is, the world per-capita GDP has not simply been doubling at a constant rate, it's been doubling in shorter and shorter amounts of time.

THAT my friend is caused by INTEREST RATES.......  we keep telling you that the GDP has to continually grow so more money can be printed to pay the interest on past debts, meaning more money has to be printed, meaning more growth, more money etc etc .... and debt HAS to grow faster than actual production, and the end result is...  EXACTLY WHERE WE ARE NOW...!

In fact if you can't understand THAT, there's no point us arguing any more...

MarkBahner wrote:

Now, offer to work for me to increase production so we may all eat...... and I'll consider that.  I value your labour far more than your money.

What I would really do (being an engineer) is to build/identify/procure a device that would help you increase your production by even more than just my labor.

A device powered by what?

Mike

Travlin,

The rise in world GDP is the result of gains in a few “advanced” economies. 

A quick look at the numbers shows that this is clearly not the case. Brad DeLong estimates the following values for per-capita GDP (the "preferred" column in his paper). All values are in year 1990 dollars:

1700: $164

1800: $195

1900: $679

2000: $6539

http://delong.typepad.com/print/20061012_LRWGDP.pdf

One can see that, even in the year 1900 (let alone 1800 or 1700) the per-capita GDP was much, much lower than in 1990 or 2000. Go to the year 1990 on this Wikipedia page:

http://en.wikipedia.org/wiki/List_of_countries_by_past_and_future_GDP_(nominal)_per_capita

You can see that even such countries as Angola, Guatemala, Philippines, Bolivia, and Honduras have per-capita GDPs higher than $679 in 1990. In fact, for the countries with available data, 101 countries have a per-capita GDP higher than $679 in 1990.

And for all the countries with available data in 1990, only Sierra Leone, Tanzania, Malawi, Haiti, Cambodia, Vietnam, and Sudan have per capita GDPs *less* than the world per capita GDP in 1800.

Hi,

I don't understand. If the velocity of money is too low, just about everyone would say that more money should be printed, pronto.

Thinking that monetary policy is going too fundamentally change the structure of the economy is the insanity of our day. Its like trying to do work by pushing on the end of a string.

The ideas that you hear over and over again, the mantras of our day, are that you should let your money work for you and that people with lots of extra cash are job creators.  These are hallucinations of a society that has overdosed on to much cheap energy.

If you want to test the idea out, leave a hundred dollar bill on your desk at work and go fishing. When your colleagues call to ask where the heck you are, tell them that your money is working for you so you don't need to come in and see what happens.

Money does not create value, had working people do (remember that word work?).  The brilliant creative hard working people that create jobs need to create enough cash flow to pay employees, by materials produce a product or service of value and pay back their investors.

What is the skill of an investor?  He has to be just bright enough to identify a smart hard working person that he can make a buck off of.  What is the investors job?  Ride the back of the hard working job creator to make sure he doesn't give up or pull the rug out as fast as he can when it looks like things are going south.

Are regulations a problem? No if the,re not set up to favor entrenched special interest, do create a fair and level playing field, do create the rule of law, don't encourage short term gain for a few individuals that externalizes the costs to the rest of society.

Are taxes a problem? No, not if you actually get something of value back for what you pay rather than benefiting entrenched interests that hate any meaningful competition.

What if there were no investors around, I would bet you that the hard working real job creators would figure something out, boot strap the company, work locally at a smaller scale.  Things may develop more slowly, but they would also be a lot more stable and sound.

In a way we are all to blame, cheap energy has got us all longing for the "something for nothing" lifestyle, where our work consists of making a morning call form our pool side to check in on our "investments". When we all dream of rewarding and meaningful work rather than wealth, we'll forget what the term "monetary policy" even means.

rayne -

You may have already seen this, but if not, it's a good place to start to frame your baseline.  From there, many of your questions become clearer and tracking down the answers is a little easier than, for example:  "How do I build food or energy resiliency?"

Good luck.

Self Assessment:  http://www.peakprosperity.com/act

The problem I have where I live is that even if I wanted to organize, and I have tried - for instance - organizing the simple "Neighborhood Watch Program" there isn't much interest because 1/2 the folks here are renters, 1/4 of the folks are elderly that can hardly defend themselves and don't want to make waves, and the other 1/4 just want to be 'left alone'.  That puts me as the lone wolf in my own community.

So, my wants is a resource to find out where are the neighborhoods or communities in the United States that are doing exactly as "The Crash Course" seems to recommend - having coops for food markets, establishing a network of community based trades/skills, etc - but have been doing it all along because it somes naturally to the people living there?

Would be a good guy to interview, someone who has a possitive vision for the future, seems in keeping with Chris' current thinking.

It has been a year, I have listend to all the podcasts and read all the articles. However all interviews at CM are with people who are on the same wave length as the Audience of PP and Mr Martenson. It would be great if we have our norms challanged.

Example:

http://armstrongeconomics.com/2013/02/18/how-all-markets-move-gold-is-no-exception/

Mr Armstrong gives some very good reasons why gold will not go up in the near future. I would really like to see Mr Armstrong and Mr Martenson argue about this on a podcast. It would give us time to pause and think if our strategies still make sense even in face of ideas who contradict them.

G

Sounds like you missed the invocation of the Bitcoin interest group here;

http://www.peakprosperity.com/group/bitcoin-interest-group

We are crowdsourced here ... and I have been talking about Bitcoin for a few months now..  so while Chris may not have had a guest on who talked about Bitcoin, we have had many a spirited debate about it on various threads.  Who says you have missed the wave anyway?  If 0.1 Bitcoin is the new (1) Bitcoin.. maybe 0.01 will be it in another year?  Why do you think the opportunity is now missed?  The average Joe still has no idea what a Bitcoin is... just like the average Joe still does not know what a fiat dollar is, nor why he or she may want to own some Gold.  We are literally the one-in-a-thousand. 

You may have missed the first stage bull for Bitcoin and/or Gold at this point, but it does not mean there won't be a stage II where mass recognition happens.  I think Kuntsler did a pretty good job of laying out what that might look like in his piece this morning;

    http://kunstler.com/blog/2013/04/that-dreadful-day.html

I think the Federal Reserve and its TBTF cronies will succeed in driving the price of gold down, perhaps as far as the $1350 range, for a while (a moment, let's say). But by the time it gets there they will have completely wrecked the economies they pretend to represent, and driven many citizens into penury. Now, consider that hyperinflation is always a rather sudden phenomenon. When it comes on, it comes fast and hard, by the day and then the hour. The Fed and its handmaidens will not be able to control it when it happens, because it will spring from all their previous actions, including the concealment of the loss of value of the dollar via manipulation of the gold and silver markets - and Ben Bernanke can't pretend that his helicopter is a time machine. There will be no going back to undo what he's already done. That's the point where you will see the price of gold very quickly head toward $3,500 or even $10,000 and beyond, depending on the damage done and the oafishness of the political response. QE to infinity really translates into dollar wreckage to infinity.