Is Deflation Actually The Key To An Abundant Future?
Dr. Buckminster Fuller once said that when change went invisible, the speed of that change would increase exponentially—what he called accelerating acceleration.
In his lectures, Dr. Fuller talked about the pace of technology and how we were “entering the world of the invisible.” To him, technology was advancing so rapidly that many people were blind to it…and would be blindsided by it.
He was worried that millions of people would not see quickly enough the changes technology brought to the world and that they would, as a result, be put out of work by technology and inventions that operate well outside their vision.
He said, “You cannot get out of the way of things you cannot see moving toward you.”
Today, you must be able to keep up with the pace of change in technology. This starts with understanding that we live in an age where information is a powerful currency and knowledge is money.
This is the foundation for having the speed to keep up with change.
The idea of job security due to AI, artificial intelligence, is finished. It’s gone.
In the Information Age, the fast eats the slow. In order to survive, you must be able to think and adapt at the same speed of information.
Anyone can get wealthy because everyone has access to the same information via the Internet—and in many ways, they can manipulate that information to benefit them.
(For example, some readers have made 260% gains on this election play in as little as one month…)
It’s simply a matter of who can think the most creatively and act most quickly upon the information available to them.
Industrial Age Vs. Information Age
While many people would attribute the beginning of the Industrial Age in the 1800’s with the rise of factories, I actually think of it as beginning in 1492 with Columbus.
When Columbus struck out to find the New World, it was to find new sources of valuable resources such as oil, copper, tin, and rubber. During this time the value of real estate shifted from growing crops to providing resources. This led to the land becoming even more valuable.
And three classes emerged: the rich, the middle-class, and the poor.
Today, we are in the Information Age, where information leveraged by technology and inexpensive resources like silicon, produce wealth.
This means that the price of getting wealthy has gone down. For the first time in history, wealth is available to just about everyone.
There are now four groups of people: the poor, the middle-class, the rich, and the super-rich.
The truth is there are many ways to get rich in the Information Age, and plenty of people are.
In a “phase transition,” if you were standing in water it would look like water.
It continues to look the same, look the same, look the same, look the same, and then it turns to ice, and without you realizing it, now it suddenly looks totally different.
Today, technology is the same. It goes from the unseen to the seen, and it is driving efficiency at a rate that is staggering. People don’t realize it, and worse it’s not measured in our economy. That technology causes prices to fall, and those falling prices are deflationary.
Predictably, as technology has driven prices down, the Fed is printing money and trying to keep the prices going up.
All that people see are housing prices rising, food costs going up. They don’t see technology’s efficiency, and it’s only because we’re manipulating markets.
A classic example of phase transition in technology is the story of Kodak.
In 2012, Kodak filed for bankruptcy. For years they had ruled the photography world, but now they were failing. Why? In the face of the rise of digital photography, Kodak failed to keep up with the growth and pace of technology. They thought they were too big to fail.
Unfortunately, they were not.
In fact, the worst part is that Kodak had invented digital photography years earlier and could have easily been first to market. Instead, they sat on the technology because they were afraid of cannibalizing their core business of physical photography.
They are now a shell of who they were, and the only ones cannibalizing their core business are other companies who saw the potential of digital photography.
Why Didn’t Kodak See That?
Kodak couldn’t see what was happening because they didn’t understand that technology was – and is – moving so fast that it changes business entirely.
The same thing happened to Blockbuster. Most of us laugh today because we have made it through the transition.
Here’s the point. That’s the same thing that The Fed is missing. And that’s the same thing all governments are missing. By trying to manipulate the markets, the Fed is actually driving us off the cliff faster because you can’t solve the debt problem with more debt.
If governments stop manipulating, we would have a deflationary depression and all the debt would be reset. That means cash would go up in value.
Deflation would make the cash worth more, but asset prices would fall a predicted 85-90% everywhere.
Work Less, Pay Less
If the Fed let capitalism work today instead of intervening, asset prices would fall. For example, if I have a house worth $100,000, that means it would drop to $20,000, approximately.
Now, I know people who will say, there’s no way that this could happen – but if you just realize how much money is stimulating the economy and artificially propping up asset prices, you’d realize that if we let deflation happen, our dollar would be worth more and the average person wouldn’t have to work so many hours to pay for over-inflated assets.
Amidst the gloomy economic news, there is hope for you. We live in an age where wealth is abundant and accessible by everyone—including you. But you have to be financially educated to be able to process and leverage it.
Information is the single greatest asset of this era. In previous ages, you owned factories, cattle ranches, gold mines, oil wells, or skyscrapers to be rich. In the Information Age, information alone can make you very rich.
You don’t need tangible resources like land, gold, or oil. The young entrepreneurs who created Facebook and YouTube have proved that.
With just a few dollars, some information, and the leverage of technology, these 20-year-olds have become billionaires.
Editor, Rich Dad Poor Dad Daily