I’m often called the “muddle-through guy.” When I consider opposing scenarios or opinions, I figure reality will be somewhere in between. That’s right more often than you might suspect.
So, let’s consider two seemingly conflicting ideas.
- Major economic pain is coming.
- We have a bright, prosperous economic future.
Can both of those be right? I think so.
Last week, I explained why the current recovery may continue for a couple more years.
Here I’ll talk about some technological trends that I believe will drive economic growth in the next decade or two.
Change Is Accelerating
No one on Earth had a smartphone until 2007. That first iPhone, revolutionary at the time, was primitive compared to even today’s low-end models.
Back then, could you have imagined those little devices would have the staggering impact we now take for granted? Probably not.
In the next decade, we’ll see multiple inventions bring even greater changes. The impact won’t be obvious instantly, but the change will come. By 2030, they will be as ho-hum to us as smartphones are today.
It may not even take that long. Technological change is accelerating, as is the speed at which new inventions are adopted.
Software and information can spread at lightspeed on the internet. While 3-D printing will let manufacturing capacity grow faster and more widely than we’ve ever seen before.
Put simply, the kind of change, magnitude of change, and rate of change will all likely speed up considerably in the coming years. It will be a roller-coaster ride.
The Mathematical Reason for Accelerated Change
Google and Facebook are in a race to make wireless internet available to every part of the earth.
Google will use what is known as high balloons and Facebook is working on solar drones. Both technologies are viable, it will simply be a matter of which is the less expensive and more workable.
By 2025, wireless voice and data networks will be available to every human on the earth. By the middle of the next decade, Wi-Fi will be essentially free or at negligible cost. Seriously.
That means three billion more people will be connected to the internet. If 0.0001 percent of those three billion people (or merely 30,000) create a major new technology or business idea, that will accelerate the pace of change and make life better for all of us.
Give them access to the internet and AI, stand back, and watch what happens…
Demographic challenges lie behind many of our economic problems. And the #1 demographic challenge is aging. Specifically, too many of us aging at the same time and not doing it very well.
The resulting health problems both cost money to treat and may remove us from the workforce. This is going to change for and that is exactly where biotechnology is taking us.
My friend Patrick Cox writes about this extensively. He believes, as do many top scientists we both know, that we are only a few years away from stopping aging. And in some quite profound ways, actually reverse it.
We already see it in animal studies. Elderly mice exposed to these new treatments regrow their hair, gain muscle mass, see and hear better, and even regain their sexual vigor.
Of course, humans are not mice and the research is ongoing. In fact, it is making progress because the Japanese government (which faces major demographic headaches) is removing many bureaucratic hurdles that slow down progress. Some treatments could be available there as soon as two or three years from now.
If it works in Japan, other countries will follow quickly because it will be in their own financial self interest.
Recently I heard someone say banks are now essentially technology companies.
So much lending now happens in the capital markets and “shadow banks” that the legacy banks are mostly service providers. They process payments, hold assets in custody, and provide the financial system’s necessary plumbing. Old-style “banking” is on the way out.
You know what Amazon has done to the retailing industry? Banks may be next. Check this amazing graphicfrom CB Insights.
In short, Amazon has ways to deliver many of the services we presently get from banks. So where exactly is that line between technology and banking? It’s hard to say and getting harder.
Blockchain-based cryptocurrencies are slowly finding their place in the financial system, too. I’ve been a Bitcoin skeptic—and it may yet give way to some other currency—but this isn’t fool’s gold. The technology has real advantages that will change the industry.
When I see people like John Burbank and Mark Yusko essentially go “all-in” on blockchain, staking their careers, reputations and hundreds of millions of dollars on something so new to most of us, I sit up and take notice. Something is happening here.
All of these and other remarkable changes are going to happen in the next few decades. They will be hard to notice as they unfold. But their impact will change our lives for good.
And those changes are going to be extraordinarily powerful investments, if we get there at the right time and place.
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Sharp macroeconomic analysis, big market calls, and shrewd predictions are all in a week’s work for visionary thinker and acclaimed financial expert John Mauldin. Since 2001, investors have turned to his Thoughts from the Frontline to be informed about what’s really going on in the economy. Join hundreds of thousands of readers, and get it free in your inbox every week.