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

Adam Taggart
By Adam Taggart on Sun, Jul 29, 2012 - 12:50pm

A wide range of topics are covered on Peak Prosperity. Are there particular ones you would like to see us focus on more? Or new ones you'd like us to start covering?

Let us know your thoughts in the Comments below. We're deliberately keeping this very open-ended, to allow the community here to highlight for us what it's most interested in.

cheers,
Adam

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140 Comments

MarkBahner's picture
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All predicted values are adjusted for inflation to year 2000 $

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

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Minor details

MarkBahner,

I wanted to see what exactly the term meant so I tried to follow your link. The link takes you to a Peak Prosperity page that does not exist. This link will take you to the page you suggest:

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

It doesn't much matter how you label the money unit. When the average wage is $10,000,000 per year, and the average year has 52 weeks at 40 hours per week or 2080 hours per year, the average wage becomes $10,000,000 / 2080 hrs = (approx.) $4,800 per hour. What kind of business could you operate where you had employees earning anywhere near $4,800 per hour and you were selling products at year 2000 prices? Either everything is automated and nobody has employees, or you know a way to suspend the laws of economics.

You seem pretty sure of yourself. Would you care to explain how this can be accomplished?

Grover

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No, you explain how the average wage can be $4,800 per hour

Hi Grover,

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

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. wink) You wrote: "Either everything is automated and nobody has employees..." You're so hot, you're on fire. smiley

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?"

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Mark, Trite response from you

Mark,

I don't like it when people are playing that game you're playing. I don't have the time or intention to read that book. Why don't you give us all the abridged version in your own words? If you make it sound interesting enough, I'll pursue it further. I'm not holding my breath.

If we rely on machines to do all the work, where does the energy to power them come from? If everyone is rich, is anyone rich? What difference do a few zeroes make?

I'm a little slower than most on this site. If you answer as glibly as you did last time, don't expect a response from me.

Grover

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No offense intended.

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.

 

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Practical 401k options

More practical advice on how to navigate 401k options converting to cash etc. 

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Energy is the dependent variable

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!

MarkBahner wrote:

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.

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.

MarkBahner wrote:

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.

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.

MarkBahner wrote:

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.

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?

MarkBahner wrote:

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.

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

MarkBahner wrote:

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.

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

MarkBahner wrote:

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.

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

Grover

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Wrong......

MarkBahner wrote:

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.

I hate to tell you, but when I see Julian Simon's name in print......  my eyes glaze over.

Humans are very good at exploiting fossil fuels.

End of story.

And if we're so clever, how did we ever screw up this badly?

Mike

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Hi Grover,   The theory is
Hi Grover,
 
The theory is just about what I expected - (my words) that we'll have continual exponential growth in a finite system.
 
"Continual exponential growth" of what? Of wealth. Of course wealth can grow infinitely. Why wouldn't it be able to grow infinitely? Wealth is not a physical thing.
 
If you have a room full of people, and gave them all a $5 bill, and then took away that bill, and gave them a $5000 bill, they'd be a thousand times wealthier. But the only phyiscal difference between their two states would be the president on the bill (Lincoln versus Madison) and the number zeros after the five.
 
What do you think wealth is? I'll tell you what it is...it's the ability to do things one desires. For example, if you or I needed surgery that costs $2 million, we'd be out of luck. (I would, anyway.) But to Bill Gates, it would be nothing.
 
Do you really think there is something that would make a world where everyone had a net worth of, say, $5 million, not work?
 
Look at the energy consumed by the computing industry. Can this continue forever?
As I pointed out on my blog, the energy required per computer calculation is coming down at a rate such that a computer with the capability of a human brain (20 quadrillion instructions per second, or 20 petaflops) should take the same amount of energy as a human being in approximately 23 years.
 
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.)
The math is correct. It is *not* correct that the current annual growth rate in energy consumption in the U.S. is 2.3 percent. The physicist is Tom Murphy. U.S. energy consumption has not be growing at anywhere near 2.3 percent per year for almost 40 years now. I and many other people have pointed out his mistake (or misrepresentation).
 
 
 
It does point out the folly of extrapolating infinite exponential growth.
What it really points out is that even intelligent people like you are subject to confirmation bias. You heard something on NPR. You took it as true, and didn't bother to check it, because it tended to confirm what you thought you already knew about the world. But Tom Murphy failed to mention that U.S. energy growth grew by 2.9 percent from 1650 to approximately 1975, but it has NOT been growing substantially since then. (In fact, the energy use per capita in the U.S. has declined since 1974.)
 
If wealth is merely human ingenuity,...
Human ingenuity is not wealth. Human ingenuity is the *source* of all wealth. Wealth is the ability to and have what one desires.
 
The mining, harvesting, manufacturing, and transportation will still take energy.
Yes, mining, harvesting, manufacturing, and transportation take energy. But there's no evidence that, if world per capita GDP increases by a hundred-fold (to $1 million dollars per year) that the amount of energy required for mining, harvesting, manufacturing, and transportation will increase by a hundred-fold. In fact, there's abundant evidence that the energy for those things will NOT increase 100-fold. Why would the amount of energy for harvesting (for example) ever increase by more than a factor of 3 or 4? In fact, why couldn't the amount of energy for food production in 2100 be less than it is today? Ditto for mining. It's likely that most metals in 2100 will come from recycling metals that are already above-ground. Or even that non-metal composites will have largely replaced metals.
If money is irrelevant, what will be used to allocate scarce resources?
If people are wealthy, most resources are not very scarce. You'd have to name some resources that you think will be scarce before I could come up with a reply.
 
What incentive would there be to do anything?
Why does Bill Gates run his foundation, and Warren Buffet run his company? Because they enjoy what they do. For the things that nobody enjoys (e.g. taking out the garbage, cleaning the bathroom) there will be robots.
 
 
 
 
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The world is not a virtual reality game

MarkBahner wrote:

Of course wealth can grow infinitely. Why wouldn't it be able to grow infinitely? Wealth is not a physical thing.

If you have a room full of people, and gave them all a $5 bill, and then took away that bill, and gave them a $5000 bill, they'd be a thousand times wealthier. But the only physical difference between their two states would be the president on the bill (Lincoln versus Madison) and the number zeros after the five.

What do you think wealth is? I'll tell you what it is...it's the ability to do things one desires.

Human ingenuity is not wealth. Human ingenuity is the *source* of all wealth. Wealth is the ability to and have what one desires.

Mark

The fundamental flaw in your argument is that you don’t realize the map is not the terrain.  Money is a claim on wealth which is composed of natural resources and what we make from them.  If you double the amount of money while production stays the same you have merely decreased the value of money by ½.  And if you are stranded in the desert without water and food, then all the money in the world will not save you.  Your failure to understand these points renders all your arguments invalid.

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.

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

Travlin

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Travlin wrote: Mark The

Travlin wrote:

Mark

The fundamental flaw in your argument is that you don’t realize the map is not the terrain.  Money is a claim on wealth which is composed of natural resources and what we make from them.  If you double the amount of money while production stays the same you have merely decreased the value of money by ½.  And if you are stranded in the desert without water and food, then all the money in the world will not save you.  Your failure to understand these points renders all your arguments invalid.

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.

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

Travlin

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

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We're getting close

Mark,

You answered some of my questions. You are right that I heard Tom Murphy say that with 2.3% growth ... and I assumed that we were using 2.3% more energy each year. I'll give you that point. I'm really surprised that you didn't answer these questions.

Grover wrote:

MarkBahner wrote:

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.

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?

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? Did you think this would happen before the decade started, or just as a convenient way to explain the real slowdown that occurred?

Quite honestly, I suspect that you're confusing inflation with wealth. I agree that inflation has no limit.

Grover

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Wake up America

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.....

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Coal And Oil Boost GDP

Mark, Travlin, Mike:

Gail Tverberg, an actuary and a respected voice on finite resources, has a new article out.

While talking about external energy and how humans need it, she also mentions how growth of energy plays a role in GDP growth. The whole population growth and energy-slave idea...

Humans Seem to Need External Energy (August 17, 2012)
"If we look at the long term, we can see that the really big increases in GDP growth (that is, over 1% per year), all came after 1870. That was about the same time that energy growth started ramping up over 1% as well, because of the growth in coal usage. (Of course, economists who have only looked at GDP growth since World War II would consider GDP growth of 1% very low. They would prefer GDP growth of 3% or more a year.)"
http://ourfiniteworld.com/2012/08/17/humans-seem-to-need-external-energy/

So as we go down that peak oil downslope...

Poet

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Natural resources are not the source of all wealth

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.)

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Natural resources are not the source of all wealth

MarkBahner wrote:

Money is a claim on wealth...

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

Oh NO we are not......!  Money is a measure of DEBT.  All money is loaned into existence.  There is a big difference between a claim, and a measure.  YOU just don't understand it. You need to take a hard look at the Crash Course book.

MarkBahner wrote:
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.

Actually, I'd LOVE to see that.  Chris would NAIL you.........!!

Oh and Bill Gates' money wealth?  it's called wealth transfer.  People who own windoze computers are in debt, their money was loaned into existence, and they gave it to Bill for his crap software....!  See, the world is full of stupid people, and the smart ones take their money!

Mike

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I'm really surprised that you

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.

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I wrote:   Money is a measure
I wrote:
 
Money is a measure of wealth. So we're in basic agreement there.
Damnthematrix responds:
 
Oh NO we are not......! Money is a measure of DEBT. All money is loaned into existence. There is a big difference between a claim, and a measure.
OK, let's get technical and precise: Money is a "store of value." Do you agree with characterization of money?
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OK, let's get technical and

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

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"Worthless" money is not a plausible premise ("worth less" is)

The only value money has is what is written on the banknotes because we agree that's what they're worth...

Yes, just like gold is only worth $1650 an ounce, because we agree that's what gold is worth.

...that's the whole premise of WHY the future will be different, money will be worth nothing.

And this "whole premise" is based on what? My point is that it is based more on religious conviction than logic, science, and history.

Throughout history, there are very few cases of a currency becoming "worth nothing." Some examples that come to mind:

1) The Confederacy in the U.S. Civil War. The Confederacy lost the war, so their government could no longer back their currency.

2) The Weimar Republic hyperinflation. Largely due to WWI reparations mandated by the Treaty of Versailles, the German government started printing vast sums of money.

3) The recent hyperinflation in Zimbabwe. I don't know the details, but war(s) in the Congo were certainly a part, and it's obviously extraordinarily bad government. One component has to be that the government of Zimbabwe was no longer truly democratic when the hyperinflation occurred.

So in all three cases, war was a significant component. We can pretty clearly rule out the U.S. government *losing* a war, in the same manner as the Confederate government, or the German government in WWI. And we can also pretty easily rule out the idea that the U.S. government will no longer be a democracy (with completely fraudulent elections, no freedom of speech or of the press, etc.). So where are historical parallels for the idea that U.S. money will become "worthless"?

Now, if you wanted to say, "worth less" there's abundant evidence for that. The double-digit inflation of the 1970s is a good example. But as unfortunate as that was, it didn't even come close to collapsing the U.S. economy.

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?

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. 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.

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.

And this is the whole history of human economics, going back even more than 300 years. Human minds identify new ways to do things that increase wealth. This process hasn't slowed down. It's speeded up. And it's very reasonable to expect that it will speed up to almost unimaginable rates even within the next one to three decades.

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Again, the map is not the terrain

MarkBahner wrote:

… 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. 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.

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

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MarkBahner wrote: As I've

MarkBahner wrote:

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.

Aha!  So they're NOT adjusted for FUTURE inflation.......

MarkBahner wrote:
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.

You think you do.......  but WE don't!!  If you think we'll all be billionaires by 2050, where will all that money come from if it isn't printing presses?

Mike

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MarkBahner wrote: Throughout

MarkBahner wrote:

Throughout history, there are very few cases of a currency becoming "worth nothing."

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

MarkBahner wrote:
Some examples that come to mind:<SNIP>

2) The Weimar Republic hyperinflation. Largely due to WWI reparations mandated by the Treaty of Versailles, the German government started printing vast sums of money.

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."

MarkBahner wrote:
3) The recent hyperinflation in Zimbabwe. I don't know the details, but war(s) in the Congo were certainly a part, and it's obviously extraordinarily bad government. One component has to be that the government of Zimbabwe was no longer truly democratic when the hyperinflation occurred.

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.

MarkBahner wrote:
So in all three cases, war was a significant component. We can pretty clearly rule out the U.S. government *losing* a war

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

MarkBahner wrote:
And we can also pretty easily rule out the idea that the U.S. government will no longer be a democracy (with completely fraudulent elections, no freedom of speech or of the press, etc.).

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....

MarkBahner wrote:
So where are historical parallels for the idea that U.S. money will become "worthless"?

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......

MarkBahner wrote:
Now, if you wanted to say, "worth less" there's abundant evidence for that. The double-digit inflation of the 1970s is a good example. But as unfortunate as that was, it didn't even come close to collapsing the U.S. economy.

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

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Year 2000 dollars means adjusted for inflation to the year 2000

Aha! So they're NOT adjusted for FUTURE inflation.......

Sigh. This is getting a bit tedious. If numbers are reported or projected in 2000 Geary-Khamis dollars, that means they are adjusted for inflation to the year 2000.

Just as an easy example (though probably not realistic)...suppose the world-wide inflation rate is approximately 3.5 percent per year. That means prices double every 20 years.

So my values in 2000 Geary-Khamis dollars were:

2000 = $7,200

2020 = $13,000

2040 = $31,000

2060 = $131,000

2080 = $1,000,000

2100 = $10,000,000

If the were not adjusted for inflation to year-2000 dollars, the values would be:

2000 = $7,200

2020 = $13,000 x 2 = $26,000

2040 = $31,000 x 4 = $124,000

2060 = $131,000 x 8 = $1,048,000

2080 = $1,000,000 x 16 = $16,000,000

2100 = $10,000,000 x 32 = $320,000,000.

You think you do....... but WE don't!!

That says more about you than me.

If you think we'll all be billionaires by 2050, where will all that money come from if it isn't printing presses?

My prediction is that the world per-capita GDP (in year 2000 Geary-Khamis dollars) will be approximately $60,000. That hardly means "we'll all be billionaires". But it does mean that world per-capita GDP will have grown by approximately 4.4 percent per year from 2000 to 2050. That's well above the average growth from 1950 to 2000 of 2.83 percent per year.

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Rise in world GDP: not just from advanced countries

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.

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Rise in world GDP

Shhhh…It’s Even Worse Than The Great Depression

In Open Thread on Sunday, August 19, 2012 at 12:25 pm

http://acrossthestreetnet.wordpress.com/2012/08/19/shhhh-its-even-worse-...

According to Wikipedia, Narcissistic personality disorder (NPD) affects one percent of the population and has little to do with looking at yourself in the mirror.  It has a lot to do with unrealistic fantasies of success, power and intelligence.   Some NPD sufferers become cult leaders or mass murderers, the rest become  economists and policy-makers.   Despite having a highly elevated sense of self-worth,  narcissists have fragile self-esteem and  handle criticism unpredictably, so let’s keep this to ourselves….

 Velocity of money is the  frequency with which a unit of money is spent on new goods and services.   It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling).  In a healthy economy, the same dollar is collected as payment and subsequently spent many times over.  In a depression, the velocity of money goes catatonic.  Velocity of money is calculated by simply dividing GDP by a given money supply.  This VoM chart using monetary base  should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face:

In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression.  Hard to believe, but the guy who made a career out of Monday-morning quarterbacking the Great Depression has already proven himself a bigger idiot than all of his predecessors (and in less than half the time!!).  During the Great Depression, monetary base was expanded in response to slowing economic activity, in other words it was reactive  (here’s a graph) .  They waited until the forest was ablaze before breaking out the hoses, and for that they’ve been rightly criticized.  Our “proactive”  Fed elected to hose down a forest that wasn’t actually on fire, with gasoline, and the results speak for themselves.  With the IMF recently  lowering its 2012 US GDP growth forecast to 2%, while  the monetary base is expanding at about a 5% clip, know that velocity of money is grinding lower every time you breathe.

The Fed’s refusal to recognize the importance of velocity of money quickly goes from idiotic to insidious.  Here’s a question:  If I give you 50¢ and as a result of that transaction, you owe me $1.00, what interest rate have I charged you?  Obviously, I’ve charged you 100% interest and I don’t give a rat’s ass about you or your kids.  I’m pure evil and you’re pure stupid.  But believe it or not, this kind of master-slave  arrangement isn’t enough to satisfy a true narcissist.   The narcissist needs to be exalted for his actions, no matter how unjust. 

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Money velocity too low? Print more money.

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.

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Physics 101

MarkBahner wrote:

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.

Conservation of momentum states that dp1/dt = -dp2/dt

What about the energy input required to move that now increased mass of money to maintain or increase velocity?

It's a rhetorical question.....

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Monetary Policy

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.

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Help with local research

When I first started looking into personal resiliency I was overwhelmed. I felt like I needed to rip out all of our landscaping to put in fruit trees, get solar panels, start storing water, etc. These are good things to work on but I needed help prioritizing where to start. Assessing my family's individual situation would have been helpful. For instance, we can literally walk to the nearest hydro power plant so maybe solar panels should be further down the list.

A checklist of where to start when assessing one's local area would be good. How to evaluate your watershed, how to choose a CSA, how to find where your power is coming from, etc.

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Suggest starting here.....

rayne wrote:
When I first started looking into personal resiliency I was overwhelmed. I felt like I needed to rip out all of our landscaping to put in fruit trees, get solar panels, start storing water, etc. These are good things to work on but I needed help prioritizing where to start. Assessing my family's individual situation would have been helpful. For instance, we can literally walk to the nearest hydro power plant so maybe solar panels should be further down the list. A checklist of where to start when assessing one's local area would be good. How to evaluate your watershed, how to choose a CSA, how to find where your power is coming from, etc.

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

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Catherine Austin Fitts

Has Chirs ever interviewed her? I would love to hear that conversation.

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Getting an Inactive Community Engaged

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?

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Transition Towns

Honestly, I suggest a Transition Town initiative. These are the people who have moved the most.

http://www.transitionus.org/

And their official initiatives (groups):

http://www.transitionus.org/transition-towns

The one closest to me has hosted Nicole Foss of The Automatic Earth, puts out a monthly newsletter by e-mail, does garden tours, eco-this and that workshops, etc.

Poet

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David Korten

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

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Best Countries

A great question!

From my personal experience and selecting the Republic of Panama, was to Start With Why?

by answering that question and definging my values, priorities and purpose requirements, I was able to think and act critically wihtout emotion and wishful thinking. I broke thinks into Big Rock topics first. For example, political, infrastructure, safety-security-stability, government type, city, countryside, culture, langauge, economic, proximity, entrepreneurship opportunity, investing, terrorism threat, etc.

For me, I chose Panama because it had the highest ratings of any country I studied in the Americas. Europe is a mess, Asia is to far, New Zealand is difficult to enter and very expensive, etc.

Hope that helps a bit

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One year had passed! Since I passed this suggestion...

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

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gemel
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We need more contrarian views

Did we miss the bitcoin wave because we are too focused on our own internal convictions without cosnidering the internal convictions of others ?

OK, bitcoin is synthetic and goal is real, however the two are very similar in some aspects. We need to challange our beliefs and if we keep on our pedestale we will miss the boat.

I repeat '' Bring in Contrarian talkers in off the cuff, articles and podcasts''

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Gemel

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.

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Jim H
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Gemel

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.

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