Location 140:

Our economic systems were not built for a world driven by technology where prices keep falling. They were built for a pre-technology era when labour and capital were inextricably linked, an era that counted on growth and inflation, an era where we made money from scarcity and inefficiency. That era is over. But we keep on pretending that those economic systems still work.

Location 150:

Every so often, we learn something new that rewrites all of what we have come to know and trust. In those moments, our foundation of knowledge crumbles—and with it, many of the beliefs that we have built on top of it. Those transitions are hard because we do not easily let go of our beliefs.

Location 247:

Governments and central banks will do almost anything to stop deflation. Inflation targets, set at typically 2 percent, are public elements of their mandates, with a blend of ever-increasing, wild ideas to keep inflation going. Any real growth that the world has seen is only because of an unprecedented spending spree fuelled by easy credit and debt that masks what is really happening underneath.

Location 269:

The mirage of growth today is nothing more than a debt-fuelled spending binge.

Location 270:

Debt-fuelled spending is not always bad. Often, debt can be used to grow wisely by funding smart long-term investments. A business that takes on debt to invest in automation gains more leverage against its competitors and can pay back that debt with a better return to the business in the future thanks to that automation. But when a business continues to spend more than it earns, or invests its debt in things that do not provide an economic return, the debt becomes a weight on future growth as current dollars need to be allocated to pay the servicing cost of the interest or payments.

Location 278:

Is it any wonder that the biggest movers in financial markets today are betting not on the growth of companies but instead on the direction of central bankers and governments with regard to monetary policy? On one side, we have this incredible deflationary force driven by technology, and on the other side, we have a force trying to stop it. That force is a money printing machine.

Location 294:

What no historical record of previous debt crises could show is the incredible deflationary force of technology. It is different from historical transitions like the Industrial Revolution, and moreover, it has only barely started. Most of the deflation is still in front of us. That deflationary force, combined with a global market where all state actors need to drive growth and higher paying jobs in their own economies, sets us up for a future without precedent.

Location 368:

It wasn’t housing itself that caused the 2008 bubble. If it hadn’t been housing, it would have been somewhere else that easy credit was flowing to. The continuing rise of debt that cannot be paid back was at the heart of the housing crises and will be at the heart of the next crisis.

Location 377:

A financial system based on credit is just an exchange of money today for money later. I give you dollars today and temporarily lose the utility of my money in exchange for having more later. You have the inverse: the benefit of more money today and less tomorrow as you pay back the loan with interest.

Location 384:

There are four components that make up GDP:6 Consumer spending or personal consumption (C) Investments (I) Net exports (X) Government spending (G) The mathematical formula to calculate the components of GDP (Y) is simple: Y = C + I + X + G. GDP comes down to the interplay of those four components.

Location 390:

Higher-income countries typically rely on consumer spending as a primary driver of GDP growth, while lower-income countries are more likely to depend on net exports. These inputs compete against each other: for example, in countries with higher incomes, consumer spending naturally increases, but because their jobs pay more, their exports to other countries are disadvantaged by being more expensive.

Location 396:

China runs a trade deficit with the United States, meaning that the United States imports more from China than it exports.

Location 398:

Here is how the balance between the two countries actually works out. Almost 70 percent of the United States’ GDP is made up of consumer spending; in China, consumer spending makes up only about 30 percent of GDP. In China, incentivizing production requires keeping lower wages (relative to the world), tax incentives for production and distribution, and investments in automation to achieve production that allows their exports to win on a world market.

Location 401:

Conversely, to support consumer spending at 70 percent of the economy, the United States requires relatively higher wages, high credit creation with low interest rates (debt to finance that increased spending), and lower taxes.

Location 410:

A growing consumer class in China could very well help lift world economies, but for that to happen, Chinese workers will need to be paid more. And if American workers want to sell to China, they’ll have to earn less.

Location 422:

China has been buying US government debt as a consequence of trade. It now has more than $1.1 trillion of US reserves and tops the global list of US Treasury bond holders.

Location 426:

But China cannot reasonably stop buying government bonds without collapsing its own economy, because then interest rates would move much higher in the US and cripple consumer spending, which would then collapse China’s economy. It’s a feedback loop in interconnected economies.

Location 448:

If it takes ever-increasing credit growth to achieve economic growth, how are our economies any different from a Ponzi scheme? A Ponzi scheme creates an illusion of profits because it pays early investors with investments from later investors. Even though the scheme is a fraud, it can look like a good business in that early investors talk about how great their returns are. Because it requires more and more capital to pay out investors, it continues until new investors at the bottom of the pyramid slow down enough to stop paying out earlier investors, which brings the entire system down. At what point does debt slow enough to bring the entire system down?

Location 460:

Isn’t currency founded on trust in the value of that currency? And doesn’t that mean that by setting inflation target rates, governments have a stated goal of eroding that trust?

Location 505:

Countries often devalue currency to help their export markets. But in a globally connected world with many countries driving each of their own national interests and jobs, this makes less sense. Other countries trying to compete for the same scarce jobs devalue their currencies to keep their economies from collapsing. This race to the bottom on currencies only serves to further push up global asset prices.

Location 532:

Let’s imagine for a moment a world where the central bankers decided to let the banks fail, something that many say should have been the right course—capitalism actually calls for such a cleansing. At the end of 2008, there are no bailouts. No quantitative easing. It’s not a difficult thought experiment. Asset prices collapse. Loans on those assets become non-performing. Most of the banking system collapses. Only the best loans can be repaid. Many people are wiped out as the collapse destroys all who took unnecessary risks. Some of those are you and me and pensioners, people who misunderstood the risk we were taking with some of the exotic investments that we were told were safe. As well, many more are wiped out because of the lack of liquidity in the system, meaning that some investments deemed safe also fail. This result might produce a depression so severe it would make the Great Depression look like a walk in the park. But in that environment, hard dollars would explode in value and those who had savings and cash would pick up extremely low-priced assets and mispriced deals and make their fortunes.

Location 543:

Monetary easing and artificially low interest rates have been a grand experiment played out on the world stage without full consideration of the downstream effects. For the wealthy and those with assets that have been artificially boosted, that experiment has played out well.

Location 544:

If we’re being honest with ourselves, much of the wealth and privilege that we enjoy is not from our ingenuity or hard work, but because the governments of the world decided to print money.

Location 547:

Meanwhile, those without assets find themselves on a treadmill that is moving ever faster—and unable to keep up.

Location 552:

So, as the market celebrates ever more stimulation from governments and stocks and housing continue to rise higher, the market should also “celebrate” the dislocation of our societies.

Location 558:

A market where government reaches in to decide who wins or loses is nothing more than crony capitalism, where wealth is not created by the value you create and the risks you take to get there but by a political system that rewards its insiders. And for every person on the winning side of that decision, there are many others on the losing side. Their costs of food, shelter, gas, and healthcare are rising because their cash and wages are less valuable.

Location 673:

This is why perseverance plays such an important role in entrepreneurship. If the windows that open are small, it is more likely that successful entrepreneurs are early, not late, which requires them do whatever it takes to keep their businesses going until the market arrives.

Location 740:

Network effects are very different from the economies of scale which traditionally drove power. Through economies of scale, the bigger a company was, the more buying power and leverage it had to squeeze out competitors. In contrast, a network effect exists when the value of a product or service gives more value to each user as the number of users increases.

Location 832:

you are either the platform or the arbitrage on the platform. In the long term, there is no in-between.

Location 849:

It is not the debt itself that acts to undermine capitalism. It is the act of stabilizing an economy through socializing the losses when faced with a collapse that undermines capitalism’s own institutional framework.

Location 860:

Monopolies that have flourished for a long time are often overturned very quickly because they fail to recognize an impending transition. Tipping points can come from anywhere and can come quite suddenly, often with little warning of the cascading effects. But what happens when, instead of the monopoly being a business or a small part of an overall economy, the monopoly is our entire interconnected economic system? Our way of making money and our inflationary bias? Put the lagging GDP growth with illusionary asset inflation, plus an impossible-to-maintain rise of debt, against a backdrop of technology growing at an exponential rate, and the phase transition starts to come into focus.

Location 907:

After all, in long periods of stability, most of the alternative views prove false and the experts are often right in dismissing them. But in times of great change, the beginner’s mind has the advantage. Without the same fortified foundation of knowledge, the beginner’s mind asks why with the intent to discover the answer and not to defend a previous reality. It is one of the main drivers of the creative destruction process. The expert’s position is one of the key factors to be creatively destroyed.

Location 1238:

All of these wonderful technologies make many things easier and cheaper. They increase efficiency and decrease costs, which means they are deflationary. They also remove the need for people to do many things—in other words, they get rid of jobs. If there is no net job creation globally (more global jobs created than destroyed), the inflationary system that we have relied on for commerce throughout history cannot continue.

Location 1241:

By any measure, the only thing driving economic growth is easy credit and debt. If the only way to keep growing is through the addition of more and more debt that cannot be repaid, can we honestly say that we have an economic system that still works?

Location 1243:

It turns out that technology isn’t the only thing that is exponential. The only way to keep our economies growing and combat the effect of that exponential technology under the existing system is to allow debt to rise exponentially as well.

Location 1249:

It took $185 trillion of debt to produce about $46 trillion of GDP growth over the last twenty years. The growth rate would likely have been negative without all of that stimulus. How much so is impossible to tell. Asset prices would be far lower as well.

Location 1259:

With the incredible amount of debt today, slowing growth or asset price deflation would create a brutally negative feedback cycle where things unwind very quickly. Quite plausibly, to keep driving growth against an exponentially increasing technology deflation, global debt could become a number so high that the only way out is to hit the reset button. The truth is we have probably already passed that point at which a complete reset is required. Our technology boom will cause another kind of boom.

Location 1368:

42 percent of the world’s coal plants are already running at a loss, and it costs 35 percent more to keep existing coal plants running than to build new renewable energy generators.34 If these numbers are true, due to economic realities and competition, the days of coal as a source of energy are numbered.

Location 1383:

solar is the one that has the potential to exceed (by a large margin) the amount of energy needed for our world. As Jeff Tsao of the US Department of Energy and his colleagues Nate Lewis and George Crabtree explained, “Though wind has significant extractable potential, its technical potential is much less, in large part because much of its power resides geographically over the relatively inaccessible deep oceans. The same is true for solar, but because its extractable potential is so huge, its land-based technical potential remains large.”37

Location 1409:

Some developing countries may actually be at an advantage with respect to energy. Developing countries could avoid an entire infrastructure buildout to support energy, similarly to how millions of miles of telephone poles were not needed in Africa or Asia because of cellular technology, or how much faster China’s ecommerce adoption grew than the United States’ because they didn’t have the existing infrastructure of retail stores to slow it down.

Location 1451:

The timing may still be uncertain, but the trend towards abundant renewable energy is not. That trend will bring with it a complete disruption to our existing energy infrastructure—and every one of the jobs that goes with that inefficiency. That can be a great thing for all of humanity... if we let the natural course of deflation take hold. For if we allow that to happen—instead of holding onto an inefficient system in order to pay higher prices for energy and keep now-irrelevant jobs—we will not need the jobs because we can get all the energy required for nearly free. We might be able to adjust to earning less money if everything we need costs less. That’s an important if.

Location 1460:

it is as easy to overestimate the impact of exponential growth in the early doubles, as it is to underestimate it in the later ones.

Location 1507:

our brains are imperfect storage devices. They do not remember events exactly as they happened. Instead of remembering only the facts, we remember events through our own biases, filters, and emotions.

Location 1546:

Some of the biggest revolutions in science actually come from small refinements of existing theories.

Location 1558:

In a world that seems more divisive with each passing day, it is worth remembering that intellectual debate to find better answers is the goal of science and the very thing that has allowed great leaps forward for mankind. To quote Karl Popper again, “True ignorance is not the absence of knowledge, it’s the refusal to acquire it.”46

Location 1562:

humanity’s ability to understand our world has seemed to change overnight on the evolutionary scale. Remember, our brains have been almost the same for around 300,000 years, but we’ve had the printing press for just under 600 years.

Location 1567:

The more information there is, the more correction it needs—but the same exponential growth of technology that allows this explosion of information also allows exponentially improved error correction: a sonic boom of information and knowledge, with our computers getting further and further ahead of us.

Location 1594:

We rarely hear information in exactly the same way the person sending us the information means it; instead, we attach our own emotion to the information and often change the message as a result.

Location 1694:

We all misremember. As our brain consolidates information from all of our senses from short-term to long-term memory, it generalizes and looks for existing patterns to connect to new information, filling in gaps where necessary.

Location 1698:

What you remember is tied to other memories or thoughts to reinforce your own narrative. Each moment you experience something new, it is combined with previous information. Because it is impossible to store all of that information, you either subconsciously or consciously are choosing what is important and what deserves attention. Some of that information moves to your working memory, where you hold it for reasoning and decision-making.

Location 1705:

Because our senses are constantly bringing in a staggering amount of new information and the storage capacity of our brains is limited, our brains simplify what we store to only the most important parts. If information seems to match our own mental model, we encode it that way. In simplifying, some vivid details are lost or melded with other memories to create something that might not be entirely accurate. That storage uses our own filters of past experiences to remember things that look similar to what the brain associates with the new memories.

Location 1711:

Patterns can be seen without knowing that you’re seeing them. Because those patterns are now committed to your unconscious, conscious energy is freed up for more important moves or decisions, as any elite athlete and many others will tell you about a state of flow.

Location 1716:

The world that we each see and therefore experience is very different from what others see and experience. Our minds look for things that match our own sense of reality and then continually build on those patterns—rarely questioning their validity or value. We don’t actually hear or perceive what others “say” in the way they mean it; rather, we “hear” them through our own filters of previous information encoding. Computers are not bound by that thinking.

Location 1731:

as it stands, humans are far better at generalizing than computers—better at taking a pattern from one domain into another. Human beings, for now, are still vastly superior to computers in applying learning from various different fields as analogues to new fields. The computer program that beat Lee Sedol at Go cannot drive a car, and the one that drives a car cannot win at Jeopardy! Today’s machine learning consists of narrow AI. But if narrow AI could beat humans in those specific domains as long as they had enough information, what if a narrow AI was built in every field? Could enough narrow AIs be strung together to render many of the things that we consider special about ourselves not so special at all? In fact, isn’t that the way that our jobs and economies are built today? Our own specialized knowledge is what we are paid for in our careers, with top dollars going to the “best” or “experts” in specialized domains.

Location 1739:

That race to be the best drives competition and learning, which in itself is often the motivating force driving the long years of dedicated practice to attain mastery. But as computers reign supreme in any given field, the monetary incentive for humans to be the best also falls. Why dedicate your entire life trying to master something that AI can do routinely with far better outcomes?

Location 1747:

The growth of AI is now being measured in months or days, instead of years, decades, or even centuries. Tomorrow it will be measured in minutes and seconds.

Location 1758:

The variety of informational inputs has too many combinatorial outcomes for the human mind to understand properly. Because humans can’t see all the moving parts—there are far too many—we are forced to generalize, and therefore we miss important clues.

Location 1805:

While I agree with the prognosis that in the short term humans are needed to help train and error correct artificial intelligence, it does not appear to me that this is any more than a transition step. We will error correct the machines until they are more “intelligent” than us.

Location 1829:

China itself may have a unique advantage in the artificial intelligence race because of the size of its population and its state control, which could allow data collection at a faster rate. The government could decide to collect and monitor data sets, and citizens would have little say because, unlike democratic countries that need to get voters aligned with large changes that could potentially violate human rights, the government can roll out sweeping changes without asking for permission.

Location 1878:

I, for one, do not worry about artificial intelligence taking over the world one day. It is not that there aren’t risks along the way from misuse or misunderstanding of the new intelligence superpowers. Those risks include some laid out already—like a single country or company dominating artificial intelligence that leaves few people controlling a vast power and the rest of humanity as pawns to that power. But a higher probability is that we extend our brains. Just as books were an extension of our minds that gave us tremendous rise in “intelligence” and the ability to better master our world, the next logical step might be the integration of mind and machine.

Location 1885:

These things are true: 1) error correction is at the heart of all of our “intelligence”; 2) information is growing at an exponential pace; 3) that information is being transferred to computers that can gain knowledge and correct errors faster than human brains can; and 4) Every one of our jobs is a function of our intelligence.

Location 1888:

If every job is a function of our intelligence, as computers beat us at intelligence, how could any job be safe? These facts lead to very predictable social disruption because our entire economies are designed around jobs and far fewer will be needed to run our societies. This will lead to an inevitable rise of division and polarization if we continue to mask the fundamental issue. Can we—with our machines—learn how to solve it in time? Can we step forward and accept a new era of abundance?

Location 1981:

the out-group homogeneity bias, where we believe people in other groups all act the same while our group is more diverse. And while it is easy to read these once and move on, we all are subject to them, which means that the stories that we live and tell ourselves are largely based on how we have encoded our previous experiences, which might not be about the facts but how we have interpreted them.

Location 2115:

In a world where abundance is possible, it is a flawed system that gives rise to extreme inequality. The output of that inequality will lead to a negative feedback loop of more extremism. That tribe or group mentality will in turn give rise to leaders who, instead of uniting us, divide us further using simple “us versus them” narratives. They become believable, potentially generationally believable, with severe consequences for us all. A butterfly effect where seemingly small things gradually cascade into very big things.

Location 2240:

A strategy like cooperation wins until such time as it becomes dominant. Then it is exploited by a selfish or defecting strategy to win for a time by taking advantage of the dominant strategy. At times, even though it feels unjust, the cheaters win. Over time, though, if enough cheaters win, they find themselves isolated and exposed and they are then in turn exploited by cooperative strategies that then rule the day. The process continues to repeat upon itself over and over. This ebb and flow of the right strategy for the right time is a constant in our lives, back and forth like the changing of tides.

Location 2281:

The data is clear in companies, where the cost of not investing in the future is death, but what about some of our biggest institutions that we do not allow to fail? Specifically, the ones like education, healthcare, government. Wouldn’t those institutions suffer from the blind spots that allowed technology to change the game for leading companies? And if those institutions are larger, doesn’t it make sense that they would be more stuck in the status quo model of delivery, and therefore at greater risk? The difference is that our own governments and institutions define the rules by which we all play the game. If they are the most unlikely to see how those rules need to change or have the courage to take the bold leadership that is needed, we could all be frogs boiling in a pot, not realizing that the heat is being turned up until too late.

Location 2298:

Economic dogma gives us a false choice from frameworks built for a time before technology, when the world operated differently. Not seeing any other option, we lock into one economic framework or another and defend our position at all costs. And as positions becomes entrenched, we become blind to potential solutions that could save us, just like Kodak missing the digital camera.

Location 2327:

A day will come, probably sooner than later, when we realize that the only thing driving our economies is the explosion of debt. If governments need to run huge deficits with extremely low interest rates for fear of growth failing, even in economies that are running at near full employment, imagine how the debt and deficits explode in a recession or depression when the economy falters.

Location 2359:

By cementing in a dual class society, we only ignore the underlying structural change that caused it in the first place. Ignoring that underlying reason is likely to create even more division.

Location 2400:

Complexity makes us prone to error. As the number of assumptions in coming up with a hypothesis increases, the chances increase that one or more of those assumptions are wrong.

Location 2403:

What if, instead of trying to stop deflation at all costs, we embrace it? As technology spreads, deflation happens at the rate it should. Deflation becomes something celebrated because it means that we are getting more for less. We allow ourselves to accept abundance. Along that continuum, as technology removes jobs and fewer overall jobs are needed, prices will keep falling, allowing those who lose jobs a way to share in the benefit of technology abundance without massive transfers of wealth. If technology-driven price declines continue to the point of something becoming free, we let that happen, too. People will no longer have to be on an endless treadmill to pay for things that are constantly rising in price. As hard as that might be for us to accept, because it is such a radical change to the way things are today, it seems to me that it is the only real choice we have.

Location 2430:

Governments and central banks exert tremendous influence on their economies and citizens with their ability to control money supply. It is not likely that they would voluntarily give up that control to a new world currency that is unable to be manipulated.