Jason Hartman discusses deflation and presents opposing ideas about government approaches to deflation and the benefits it may or may not have for investors. He continues the discussion with the founder of Build Direct and author, Jeff Booth. Jeff talks about his latest book The Price of Tomorrow, Why Deflation is the Key to an Abundant Future.
Jason Hartman 00:54
Welcome to Episode 1479 147 Nine. I have a question for you. Do you think deflation is good or bad? Now, if you’ve been listening for the last 15 years, or maybe the last 15 months, or maybe the last 15 weeks, you are probably going to say it’s bad, because Jason told me so. But not necessarily. Things are always a little more complicated than they seem right? Well, deflation seems good. In a way, prices go down, meaning the standard of living goes up, and the higher the standard of living, but better, right. If we can buy more with our dollars, then that is a good thing. And that is true. However, most economists would argue and they got some decent evidence for this argument, but our guest is going to disagree with that. Today our guest disagrees. So it’s going to be interesting to hear his side of the story. Remember, I always am giving you opposing viewpoints. Yes. I’m like anybody else, just like Bill Gates, just like Jerome Powell? Just like trumpster. Just like Joe Biden, the idiot. Well, I don’t know if you could say Trump is that much smarter either. But, yeah, he’s smarter than Joe Biden. Come on. Trump is smarter than Biden. If there was an IQ test, that’s an easy win. But I don’t know Trump. He says some things that just don’t make any sense. It’s
like, shut up, stop talking.
Jason Hartman 02:36
Donald, you really can tell that he has aged because when I see old interviews of him old clips that they play, you know, like him with Oprah from years ago. He’s like a sharp guy, but now he just I don’t know. He says some. He says some things that just like why did you have to say that? And you’re probably thinking, well, Jason, that applies to you too. Okay. Maybe it does. Anyway. What are we talking about there see, senior moment? Yeah, most economists would argue that beef ation is a very dangerous thing. Why is that because it causes people to postpone decisions. And if you want to keep the economy going, you don’t want people to wait till later you want them to buy today, because that increases the velocity of money. And part of the thing that is a a measure of a healthy economy is, of course, the Phillips curve, which I’ve taught you about many times. And that’s the the target, if you will, between the unemployment rate and the inflation rate, they try to just perfect this to where they can have low unemployment with a target rate of about 2% inflation meaning the value of your money, they are only robbing 2% annually. And that hasn’t been the case for many, many years. I don’t know might be the case this year actually. No, it’s not the case. at all, food prices are at a 50 year high. And let me tell you, I just went to the store this morning. maskless no mass, but almost everybody in the store was wearing a mask. I didn’t get close to anybody. I didn’t sneeze on anything. What do I need a mask for? You know, I don’t completely disagree with the mask idea. I just think it’s kind of overrated. Like I see these people walking around my beautiful neighborhood wearing a mask. I’m like, I live in a low density suburban. nice neighborhood. Why are you wearing a mask? You’re not coming within 50 feet of another person. You think it’s just the nerve gas. The Sarah nerve gas is floating through the air and you’re going to die. I mean, really. I can see some places where you should wear a mask. I get it. Walking around outside of Let me tell you this. There’s this old guy. I probably shouldn’t say that because I’m going to be an old guy before he But anyway, there’s this old guy. Hey, he’s a wise man. He’s older, you know, you should respect and revere that not say it as though dismissive, so I apologize for that. Actually, that was not the right thing to say that’s like something Trump would do. But then again, Biden. He eats his foot every time he talks. I mean, he’s such an idiot. I caught the guy so dumb. See, there’s a difference between Biden and Bernie Sanders. Bernie Sanders is just delusional. He’s actually not as dumb as Biden. But anyway, it’s a whole thing. Okay, get back on track, Jason. So there’s this guy, this mature gentleman, and he rides his electric bike in the morning around my neighborhood. And when I’m out walking the dog, I see him on his electric bike. He’s probably under the delusion that he’s actually getting exercise. He has goggles, and a mask, not the kind of mask that you know is made for bike riding or something. The kind of mask that’s a medical mask like for Coronavirus, apparently, he’s riding his bike. And a couple times I’ve crossed the street in front of him. I’m walking the dog crossing the street, and I swear to you, this guy stops his electric bike, the delusion of exercise. It’s um, Florida is flat as a pancake. Okay. You do not need an electric bike in Florida. Okay, unless you’re just using it for transportation, not under the delusion that you’re getting exercise. Okay, so anyway, he stopped his bike. 45 feet short of me crossing the street. 45 feet I kid you not. That’s four and a half stories. Now of course, that’s an estimated distance. Only my laypersons estimate. I did not measure it. Because if I got close to him, he probably would have freaked out. I mean, folks, are we going a little bit Nuts as a cultural I think we’re getting a little nutty. I mean, hey, we’re out rioting and protesting and that’s nutty. Listen, protesting is fine with me, but getting violent and stupid and burning down your own city. So the stores never come back and your economy gets worse and worse. Oh, that’s really brilliant, you idiots. I mean, seriously, what kind of idiot does that? You know, I remember in the LA riots in 1992. Rodney King, and those police officers should have never gotten away with that. That was so awful what they did to him. And of course, George Floyd is even more off. Police Brutality is disgusting. No one is in favor of police brutality, except a very, very tiny number of small, awful police officers. And that’s a tiny number. Most police officers great people, they’re risking their lives to protect us. And you know, this whole thing is going to make a lot harder for the good cops to do their job. And there’s going to be a much Smaller supply. I mean, who would want to be a cop nowadays? You kidding me? Who would want to do that job, they’re gonna have to pay them a fortune to do that job. because nobody’s gonna want to do it after this because the one bad apple ruins it for hundreds of thousands of other good cops. It’s really sad. But anyway, so those evil cops that beat Rodney King, they got off. And so the LA riots happened. And I’m thinking like, Why are these morons burning down their own neighborhoods? How dumb could that be? No business is going to ever want to open up in those neighborhoods and investors investing in opportunity zones. Oh, here you go. You know, I you know, I was thought that opportunity zone was just highly overrated in it is because I’m right again. I mean, yeah, there’s a couple little tax breaks, but it’s really not super significant. It’s very complicated to jump through the hoops of it. Anyway, you’ve heard my episodes on that. No. need to go into it. But since everybody’s talking about the awful, awful crime of police brutality, which does happen occasionally when you have 327 million people in a country and you got I don’t know how many police officers probably, how many are there? A couple million. I’m, I don’t know the number. And you’ve got them walk in the thin blue line between crime and chaos and law and order. You’re going to have some bad apples. So police brutality, it’s a thing. But let me give you another term. You know, once in a while we have some bad property managers, some disgusting, crooked property managers. And hey, we got other disgusting crooked people do there’s crooks everywhere you look. There’s crooks in medicine, law, welfare fraud, Medicare fraud, contractors, accountants, I mean, there’s crooks Everywhere you look, you know, buyers and big corporations getting kickbacks. For the agreeing to buy products from somebody, right city councilman, governors, politicians, whatever, you know, they’re all there’s media. There’s tons of media crooks, Wall Street. Don’t get me started. It’s the modern version of organized crime Wall Street, right? Yes, it is. But I’m gonna coin a new phrase. When a property manager rips you off and steals your money. I think we ought to just call it property manager brutality. Yeah, property manager brutality. Next time a property manager or anyone takes advantage of, of you use the word brutality to go with it, because that’s what it is. They’re stealing from you. That’s brutalizing you so awful. Don’t stand for it. Do not stand for and remember, whenever you stand for it, you’re letting them get away with it and someone else is coming after you. And that person is going to get taken advantage of too until you stand up for it and put a stop to And then that person realizes they can just get away with this stuff. That’s the way it goes. All right before we get to the inflation deflation debate or the debate about how good deflation is, that’s what our guests will talk about today, as if we needed a committee. This is why committees don’t make any sense, right? is if we needed a committee to tell us
here it is.
Jason Hartman 11:27
The committee stating the obvious, officially, the National Bureau of Economic Research, the NBR declared that the US economy officially fell into a recession in February, go. I mean, really, we needed a committee for that. Yes, they determined that a peak in monthly economic activity occurred in the US economy in February of 2020. This peak marks the end of the expansion that began in June 2009. The longest expansion in history. 128 months it lasted. And they’ve been tracking cycles back to 1854 1854. And now they tell us we’re in a recession, as if we needed a committee to tell us this. Well, I guess so there’s your committee folks, you got a committee telling you there was a recession. Imagine that. Hey, rents are going down in Los Angeles. I think that’s fitting down 3.3%. And guess what else? The Airbnb prediction that I’ve been making, is now being verified by the mainstream media. Yes, yes. Yes. It is being verified by the mainstream media. And I’m getting to pat myself on the back again and say I was right. I’ll tell you about that later, because we’re running out of time here. All right. If you need us reach out, Jason Hartman calm or one 800 Hartman world We’re here for you. We’re here to guide you through these tumultuous times. But we have something else. We’ve got a webinar coming up. And we’ve got an easier webinar link for you. Don’t try this today, because it may not be working yet, but I’m going to have our tech people set it up. It’ll be up, you know, Wednesday, Thursday, and you can register Jason hartman.com slash webinar, Jason hartman.com slash webinar and our webinar this weekend, will be on the southwest Florida market. Florida is the new Texas in man. There’s good opportunities in Florida. So we will have that webinar this weekend. You can register at Jason hartman.com slash webinar. I probably tomorrow, Wednesday, depending on when you’re listening to this. If you listen right away like so many of you do, and I so much appreciate that. The link may not be working yet. So just check it Wednesday, Thursday and register for our webinar this weekend. On this Southwest Florida market. We will have our local market specialist on there. And we will talk all about those opportunities. very educational. And by the way, this is a nice, short, snappy webinar just over 30 minutes or so maybe 38 minutes or something like that. So it’s it’s a quickie for you. All right, here is our guests. Let’s talk about the virtues, the wonderful things that come with D inflation. It’s my pleasure to welcome Jeff booth. He is the founder and former CEO of Bill direct a technology company that aims to simplify the building industry. He’s founding partner of audio labs, co founder of Abbey invest and Knock knock, and he’s also the best selling author of the price of tomorrow. Why deflation is the key to an abundant future. Jeff, welcome. How are you? Great. Thanks for having me, Jason. And you’re coming to us from one of my favorite cities, Vancouver, Canada, right? It’s pretty beautiful. Yes. Yeah, it is. It’s a it’s a great place. So I have long talk to my listeners, Jeff about how there’s sort of this war of opposing forces, if you will. On one side, there’s technology and globalization, both very much deflationary. And on the other side, there is irresponsible monetary and fiscal policy inflationary, and which one will win? We don’t know yet because the outcome has yet to be known to us. But deflation does make life more abundant. And, you know, if I look around in my own life, I constantly think about it. And I think wow, just everything I buy is so much less expensive than it used to be. And like the economists they use hedonic adjustments hedonic Li adjusted, it’s better and it’s even cheaper if you hedonic Li adjust with the exception of assets, real estate, much more expensive, and you get a lot less A lot less land with your house, etc. So it’s hard to really kind of figure this out, isn’t it?
Jeff Booth 16:05
But tell us about deflation being the key to an abundant future there is no doubt there’s nothing that governments can do long term to stop deflation, nothing. deflation will win short of
Jason Hartman 16:18
can they just print so much money that no matter how good technology is and how much Moore’s law and power the processor you know, doubling every 18 months, no matter how deflationary that is, can they just be so irresponsible in printing Zimbabwe level money and, and prevent deflation? Is it impossible.
Jeff Booth 16:38
So that’s on the way to deflation on the other side of it. Right? But But in the end, fighting deflation is like fighting gravity. When you’re gonna waste a whole bunch of money and you’re not going to fail. You’re not going to stop it in the end. You said it perfectly that you have an opposing force. If you look at the CPI and the things that are inflating health care, education, you Education, the house prices and everything else. All of those are inflating unnaturally, because they’re they have so much money chasing when you have zero rate, interest rate policies. And essentially you’re punishing saving, you’re creating an incentive structure to not save. And you’re creating an incentive structure on the posing to create more depth. in that, in that depth creation 180 $5 trillion of debt creation in the last 20 years to try to grow out of a deflationary environment is actually adds to disinflation, because if you assume you have to pay back the debt at some point to consumer spending has to go down, you’d use growth in the short term, expensive growth in the long term. So that hundred $85 trillion of printing, or debt creation, did boost economies, but it was like pushing on a string, it’s actually only increased GDP globally by 46 trillion. With all about printing. So you can see structurally you have a fabric It takes more and more debt to chase less and less growth. And then we’re at a point where it not just takes it doesn’t just take that it takes bailouts and complete butchering, of any sort of capitalist capitalist system and free markets that we grew up with. So it’s really easy to see what’s, what’s going to come. Okay, so witchery of capitalism, which by the way, I agree with and the pre Coronavirus, we can argue that capitalism and free markets had a chance. Now, I think we are firmly in an era of socialism mmt modern monetary theory maybe, or wellI in 1984. Who knows? I mean, you know, the Austrians you’re just out of luck, folks. So the Austrian economists, the Austrian School, it’s just not happening. What do you mean when you say that you say it’s now in 2008. We had my business in 2008. Banks on the other side of the ocean wouldn’t accept LC a letter of credit because they did. Trust the counterparty risk. And so the global economy effectively stopped is because people didn’t trust balance sheets of different counterparties. And bailing out that system was which really was socialism for the rich kept some our asset prices artificially high and reduced to the value of cash and doing so and set us on to essentially you pay we papered over 2008 that created more divided society, as if you were an owner of assets or stocks, the stock prices went up, when they should have gone down. If you didn’t let that happened if you actually let capitalism clear the market, they should have gone down we should have entered a depression it would have been ugly, but it would have been quick. It would have been quick and people were cash would be the new leaders. Instead, you destroyed the value of cash and you incented use them incentive asset holding and you actually took down the value of savings more. Is it any wonder in a system that works like that? That company is Would not save money for a rainy day. Because if you’re making the money worthless, and you’re going to bail out the system over and over again, then being in cash is the worst thing you can do. So you set up your own demise of because of kind of a perverse incentive system that values depth and asset prices higher to try to get good growth in a deflationary environment.
Jason Hartman 20:22
So when you say you, you mean the government and the central banks all over the world? Yeah. All over the governments and central banks all over the world. Yeah, got it. Okay. Yes, they definitely distort the market. They don’t allow one of the most important things markets do which is known as price discovery. And so they keep kicking the can down the road effectively, right? Because they never want to have pain on their watch. And so they try to just minimize the pain but that has its own consequences, of course. But let’s go into the technology angle and Well,
Jeff Booth 20:54
actually, maybe before you do that, one of the sub chapters in your book is entitled The Ponzi economy, and I would love it if you would elaborate on that for us. It’s connected to what we just talked about the amount of debt created, and at some point, people realize the debt can be paid back, and you reset and the recovery thing to reset, that reset through bankruptcies and depression or it’s reset through essentially debasing currencies and creating hyperinflation, or reset through revolution. Once you’ve passed that when people realize that that can’t be paid back, it can go on for some time like that, well, people don’t realize this, people realize that the debt can be paid back starts to turn into on this last one and the last one in two that gets really hurt. And so, connecting the dots to all of these things, if you just start with kind of first principles on inflation or deflation, they’re not good or bad. They just have different winners and losers, right? deflation makes sure the value of money go up because goods and services go down in relation to To your money. So I don’t see how that’s necessarily a bad thing. Um, inflation is the opposite that makes your assets worth more, because because your money is worth less. Now, if governments to say said instead of we have inflation targets of 2%, they said, We want to destroy your currency at whatever cost, you might have people up in arms. But if you drive inflation into that deflationary environment where it wants to go, asset prices explode in value, that’s what happens. So that’s what you’re seeing. And the owners of those assets become the winners because they own hard assets that have intrinsic values that you’re not it’s not just hard assets, the stock market right now has no bearing to reality whatsoever. Right, right. prices go up in something. So if you have stocks and everything else, they’re kind of shares of companies that people deem valuable. There’s a race to, to hold things that are going to go up because of the stimulus.
Jason Hartman 22:56
You know, it’s kind of interesting when we look at the macro of the Inflation deflation picture. In a way, you could almost argue that deflation causes inflation. And here’s what I mean by that, you know, when all of your consumer products are so inexpensive as they have been getting, I mean, certainly, everything’s cheaper and better than it used to be. Then you have these other asset items where you have consumer deflation and asset inflation, they get more expensive because people have more disposable money with which to invest. The market starts getting flooded with money, it pushes stock prices up, pushes real estate prices up. You know, it’s kind of interesting from that perspective, in a way too.
Jeff Booth 23:40
And if you think about if you let natural price discovery happen, what would it look like the acceleration of COVID on zoo, right? So, company went from 10 million users to 300 million users and in a month and a half. I suspect that when this is over 300 million users isn’t going back to 10 million years,
Jason Hartman 23:59
right? But if Not gonna stay at 300. But it might be at 150 million,
Jeff Booth 24:03
right? And everyone who goes incremental users is less those commercial real estate. Oh, yeah, commercial real estate is there. I mean, the retail apocalypse has been going on for years. But now it’s the hotel Apocalypse, the office space Apocalypse, and who knows what else, you can artificially bail out those industries and keep prices high, right? And then what you’d have to do with in addition to that, is you have to put all of the people left out of society that you can because you enriched the people with those assets, you’d have to pay them more to it so that it can pay rents on those assets. So the amount of wasted money going into something effectively trying to fight gravity is gonna break systems, it’s gonna, it’s gonna break currencies. So
Jason Hartman 24:48
why are governments and central banks so afraid of deflation? If you say that technology is deflationary, which I agree with? And so as globalization, Why fight it, why they’re like, what’s the problem? Why are they fighting it?
Jeff Booth 25:00
Okay, so first let’s go with how deflationary right because it’s actually just started. So if you look at your phone, your smartphone, yep, that was only invented 13 years ago, right? My first phone cost me 1200 dollars. Yeah, my pay.
Jason Hartman 25:12
Hey, I got a better story than you got my first phone cost me 30 $200 it weighed 14 pounds. And it mostly stayed in the car, but you couldn’t take it out and have like this big, huge lunchbox. And I don’t really focus, right.
Jeff Booth 25:25
Yeah, that’s all it did. And now, you know, so then the phone bill was $45 a month base plus 45 cents a minute. There were no calling programs. Yeah, you know, my phone bills used to be $800 a month and adjusted for inflation today that probably be I don’t know. 20 $500. Yeah, my first phone bill was $2,000 in the first month, and then all of those made phone calls. Now, everything on my look at your app screen and it’s all free. So the power you have, we think that it’s isolated just to small pockets of our industry right now, but with a what’s Coming in technology, and I’m on board with lots of companies that are developing this technology with AI where artificial intelligence is going. And what’s what’s happening across the landscape. We’re in the first innings of technology, deflation, not across every that abundance to lower cost. abundance is kids moving everywhere. And there’s a mistake that people make. And they think economics is about value. It is not about value. It’s about scarcity, and things that are abundant or hard to price.
Jason Hartman 26:31
Yeah, I always say it’s about scarcity and utility. Those are the two it’s not just scarcity. It’s also got to have utility.
Jeff Booth 26:37
Yeah, let’s use air as an example the oxygen we breathe the most valuable thing to you, right? Yeah, free. The only place you can charge for air is underwater. So what technology is doing across all of these industries is it’s taking down so it’s taking up abundance and taking down that cost? Yes, that comes at the expense of jobs. So governments are trying to protect jobs. By finding a system and having more jobs, but they’re actually making that whole system more vulnerable by doing so, by adding depth to trying to grow their way out of it. To answer your other question, why is it so deflation so bad? Because if you have that, and you allow deflation, the debt gets more expensive to repay, that can’t be repaired. So you have a, you have a structural change in society, with central banks and governments not realizing it early enough. And having a problems so big, they don’t know what to do with. And so the problem keeps getting bigger at every staff, and that’s what you have. But why there’s business analogues all over the place for this. It’s the same as blockbuster 9000 stores not seeing technology and how fast Netflix emerges because now download speeds could increase and the business changes overnight and blockbusters 9000 stores become a noose around their neck and they think by adding candy aisles and popcorn to the stores, they can change that. There’s a really good analog to what’s happening today, with central banks and governments trying to delay the inevitable.
Jason Hartman 28:09
See, that’s the thing I always say, Don’t bet against the Fed, as much as I philosophically hate what the Fed and governments why not just the Fed, but every central bank is doing, you know, because I think a lot of money, the value of money ought to be dictated by a free market. But it doesn’t matter what I think what matters is that they are the two most powerful entities, governments and central banks, the human race has ever known. And by betting on deflation, you’re bidding against them, because not only is every individual’s debt and every company’s debt, more expensive to repay in a deflationary environment, but also the national debt. And hey, if we want to wipe out our debt to China and Japan and everybody else, then all we got to do is keep inflating and you know, we just pay it back and cheaper dollars. So it’s a pretty good business plan. For them, but you’re saying technology is so powerful that it can’t overcome massive amounts of money creation.
Jeff Booth 29:08
Right, some sort of let’s say you did. Right. And so so just was it yesterday, there was talk about not repaying China are letting local bankruptcies in the bond market collapse cities in the US. What do you think that does to world trade and debt and the debt markets? It explodes, right? Everything changes in an instant. So things that seem like they never change, and change in an instant. At some point. What happened last week in oil was two weeks in an oil is a really good example. I’m sure if you ask most people, they’d say, put your money in oil because you can never lose that negative $37 oil fee for you paid to, again, because it’s abundant, because there’s no place to store it anymore. And it becomes nobody wants it. And so there is going to be a time when people in the bond markets I think actually Probably right now are still going because the dollar is going to get stronger and interest rates are going to go negative. And the dollar is still going to get stronger in spite of that, because the US has the reserve currency, and other countries are failing faster and meeting those dollars desperately, which is creating demand for US dollars. But at some point that’s coming that’s going to break why why does it break? breaks because either us can pay back the debt drives into hyperinflation changes the let’s say, you and I trade together, and I’m in Canada and you’re in the US, and I bought a whole bunch of money from you. And then I decided to pay you back in booth dollars with a different denomination. Will you trade with me again? Or will you want something more secure? Well, here’s the deal. I may not want to trade with you, but I may not have a choice for two reasons. Number one, you may be my biggest customer with the biggest economy and the next part of that is number two. You will Have the biggest military the human race has ever known. And you’re gonna force me to trade with you, essentially, I suspect on both those answers that don’t solve that dilemma, you’ll find if you’re going to trade with somebody, because they’re a big buyer, but they never pay their bills. It seems like a greater fool philosophy. Well, I mean, you know, the us if we’re doing the US China metaphor, right, which I think we are, maybe we’re not, it seems like we are, then, you know, the US pays gets the goods from China pays it back in cheaper dollars. And that’s a pretty great deal for the US. I don’t know why Trump is complaining so much about the trade war, too, you know, that’s sort of a separate kind of issue in a way. But as far as the inflation issue of, you know, buying goods paying them back and cheaper dollars, that’s pretty great deal for the US it is but it’s the same deal for China. It’s actually a good deal China to do what China does is they devalue the currency, so they have cheaper labor to play that game and then the trade wars start because because wait for steel Are jobs because they have cheaper labor because they’re artificially changing the currency. And as they change the currency that value everybody that everybody knows they have to do they have to devalue the currency, money floods out of China into real estate in the US further exacerbating the problem. So you have when you don’t have a base of currency tied to something and every government is printing their own currency, via currencies, you have you have manipulation and pricing everywhere.
Jason Hartman 32:29
Sure, do. I mean, I agree. I’m just saying that the reality is, I don’t know if that game ends very easily. It seems like I can kick that can down the road for a long time. I don’t like it. I’m not saying it’s right. I’m just saying it is, you know,
Jeff Booth 32:41
they might be able to do it, but the cost of kicking the can down the road means asset. So today, what would you do? Let’s play out. Right? In one scenario that’s going to happen and I would say that’s a high probability something. So that is going to at whatever cost bailout markets and they’re going to Because that means that in the short term asset prices explode, real estate explodes higher everything else everybody searches for safe haven of assets gold explodes higher everything else to be able to protect against that happen. Step two of that taxes have to go up significantly to pay back that debt assuming it’s going to pretend to be paid back. Step three is when not and that slows economies and we get here again and so for about is debase your currency. So that’s the path on that and it won’t stop the technology deflation in the end anyways, because technology is marching forward or that doesn’t happen on that and companies go through their countries go through a kind of an orderly unwind. It looks more like a managed it says it looks more like a managed depression. And can you rebound stronger on the other side?
Jason Hartman 33:56
The thing is as much as we might criticize the US for the way they’re handling it. It’s pretty much the game plan of almost every developed country. I mean, you think our debts bad look at Japan, you know, they’ve got 230% to GDP debt. You know, ours is only like 100%. I mean, we’re really good and they don’t have the reserve currency are the biggest military or anything or the biggest economy. So in Japan has a, Japan’s just not going to exist in 70 years. I mean, they can’t if they don’t have immigration or children. You know, if you don’t have any people, you can’t have a country. I don’t know. It’s just a very weird situation. If you have a comment on that, go ahead. But I want to ask you in chapter four of your book, I love talking about self driving cars. But before that, you’ve talked about doubling up. And I’m curious what you mean by that.
Jeff Booth 34:44
So technology, and it’s more than Moore’s Law, Moore’s law, but let’s use Moore’s law as a case of exponential growth. Right. And so whether it moves from Moore’s law to quantum computers or whatever, but let’s see, the Moore’s Law doubles every 18 months to two years, right? And to see that effect, that same effect. It’s in your cell phone and projector forward. Is that tip a doubling up? I think it tricks most people can understand that the pace of change. So if you fold a piece of paper on itself, if you could fold economic folded on itself seven times, but if you could continue folding 250 times that piece of paper, where do we go from here to the sun? And I’ve asked that question to 10s of thousands of people in audiences all over the world, most people guess about two inches. And so what that tells you is not a whole bunch of people really misunderstand the exponential technology, exponential patterns. If you compare that analog with paper folding to the sun, to what’s happening with technology, we are on fold 33 right now, in 18 months, the technology that we see will do so we’re looking backwards and all the deflation that we’ve seen and all the money printing to be able to stop it is looking backwards in the rearview mirror. Looking forward. what’s what’s going to come across society is so staggering and people aren’t prepared for it. There’s nothing governments can do the software because it’s marching forward. And it’s it’s AI is moving at light speed across industry, self driving cars, additive manufacturing, name an industry that isn’t going to see
Jason Hartman 36:14
Gavin. It’s truly amazing. I mean, it really does feel like we are at a hockey stick inflection point in the world of technology. But I try to think back to the past and you know, I’m, I’m a pretty decent history student. Maybe they thought the same thing when the steam engine and the sewing machine was invented, and, you know, every other innovation, you know, everybody thought there’s gonna be unemployment. And then by the way, those things you just mentioned, are unemployment. promoters, to say Certainly, the self driving car may be the most of any of them. So
Jeff Booth 36:46
I don’t know. It’s a quick what you just said, the first time when you fold a piece of paper once or twice, there’s no way you can predict that I’ll go to the sun. No, three times four times you. There’s no way you’d make that today. Same thing happens with technology in the early predictions. There’s a whole bunch of people saying what this is going to do. And then it folds once. And it disappoints, and it creates nothing. Right? It look as there’s no change. And that change compounds on itself and compounds on itself and compounds on itself. We are so now if you take that, that analog, so they said the same thing against electricity, or they said the same thing again, so that electricity was a general purpose technology, that as it rolled into society, it did create deflation, and a whole bunch of wars, its governments together to be able to try to pay i think i think it was Buckminster Fuller, who said, electricity will eventually get so cheap, they’ll just give it away. It’ll just be free. But that didn’t happen. And by the way, maybe that still happens. Right? Maybe Maybe he was just early. Yeah, maybe. Electricity is a bad analog for artificial intelligence. Artificial Intelligence is moving exponentially. And nobody ever thought electricity would be smart instruments which most of the top AI we Researchers believe is we’re on a path to be able to get to every job is a function of our intelligence, which it clearly is. and artificial intelligence has the possibility to be smarter than us. It’s hard to see how logically there’s way more jobs out of that type of technology.
Jason Hartman 38:15
I agree. I think unemployment is definitely a big concern. And I think that might be the need for universal basic income and amazingly, even some of my most Austrian School libertarian friends believe that we are headed quickly toward UBI Andrew Yang was on my show before I interviewed him the presidential candidate who’s behind the the universal basic income concept and it may be coming may be upon us, you know, for sure. What about the laws of energy? I mean, right now we’re in this oil glut market, but that’s kind of a weird anomaly property, but but energy just in general, we were talking about electricity. And for any of this stuff, you got to have energy, anything on them.
Jeff Booth 38:54
There’s a whole chapter on it and kind of and I think we’re still some ways off there still, but solar is now coming. competing for lowest cost energy, and that we’re a long ways off solar contributing goal or energy needs. But the path of reduction, if you looked at the trend on solar cost, whether it is today and project that forward, energy is going to be deflationary as well for economies. And when economies are built with 10% of all economic output is an energy. And if you have an incentive to have cheap energy, your economy does better. It’s what drives cool natural gas oil and drove it drove the military machine to protect that cheap energy. Yes, you and you could argue this, if you have solar that is getting to be the cheapest energy and that continues on a downward trend like it seems to be continuing. That changes economic paradigm across countless industries.
Jason Hartman 39:52
Yeah, it really does. We will see where it goes. Jeff, give out your website and wrap it up with a closing thought. If that wasn’t your closing thought
Jeff Booth 40:02
Are you to follow me
Jeff Booth 40:04
on Twitter, at website’s Jeffrey booth.com. And great talk with you Jason. Thanks good to talking with you too. And thanks for joining us.
Jason Hartman 40:17
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