The new technologies of the 21st century will give the economy a noticeable boost, and the financial crisis, followed by sluggish economic growth, will seem like nothing more than an unfortunate misunderstanding.
Ever since the U.S. real estate bubble burst and the developed world entered a period of slow growth, the Internet has been flooded with pessimistic comments and blog posts, and even the major media outlets have succumbed to panic. In the end, the cumulative effect of the new technological discoveries will be stronger than our gloomy economic forecasts. In this article I will discuss the things that will make the 21st century truly unforgettable for humanity, as well as reveal some short-term factors that could keep the world economy from falling into the abyss.
Solar power will save costs and conflicts
Within the next decade, the cost of producing solar energy will fall to the level of coal power, so we will have another competitive source of clean energy. This will have a significant impact on the economy, political conflicts and the environment. Solar energy, including decentralized fuel cells, will reduce the need to transmit electricity; consequently, it will be cheaper for consumers and companies, resulting in higher costs and faster economic growth. Many political conflicts in the history of mankind have arisen precisely on the basis of resources, in particular energy sources such as crude oil. Solar energy, along with other sources of decentralized energy, is likely to help get rid of this cause for hostility. Thermonuclear power - a large and as yet little-known source of energy. Scientists believe they can put thermonuclear energy production on a commercial footing, and if they really succeed, the world will never be the same again. Just imagine, energy will no longer be an obstacle, a limitation. A lot of new opportunities for innovation would open up.
Biotechnology will change human life
In the 21st century, biotechnology will change people's lives forever. Our ever-expanding knowledge of neurobiology, microbiology, stem cells, and so on, will allow biotechnology to take the human life cycle to new, unimaginable levels. We may be able to get rid of many forms of cancer and other deadly diseases, including chronic ailments. Biotechnology will change the way we think about medicine. Breakthroughs in this field will compensate for demographic problems.
Synthetic biology will revolutionize agriculture
This scientific field will play an important role in the 21st century, helping mankind to feed its growing population. Synthetic biology will allow agriculture to increase production many times over by increasing yields. We will probably be able to synthesize phosphorus (phosphate) and potassium (potash), although Jeremy Grantham, founder of the investment company GMO, thinks this is impossible and prophesies disaster for mankind. But in 1930 we also thought we couldn't get to the moon, but 39 years later the States landed their astronaut there. Also, synthetic biology could create luminous microplants that could be used as light sources, instead of traditional ones; this would help reduce lighting costs.
Robots are the main secret of productivity growth
Income growth depends on productivity growth, which, in turn, is one of the main pillars of economic growth. In the 21st century, robots with artificial intelligence (AI) will infiltrate all areas of our lives, changing them beyond recognition. Robots will clean our homes, build, produce goods without requiring wage increases, provide medical services, and perform military operations. This will help offset the problem of demographics, in particular the increasing proportion of the elderly in the general population. In addition, robots will help developed countries win the battle to keep manufacturing on their territory.
Money in all its forms is undergoing rapid change
Reading Aaron Brown's latest book, Red-Blooded Risk, one is immersed in the history of Wall Street and money itself. It tells the story of how money changes: it comes in physical forms (gold), paper, derivatives, and so on, with each form having its own purpose in the economy. After reading the book, and looking back at the predictions and comments on monetary policy after the Federal Reserve I began my unconventional operations, and I came to the conclusion that people don't understand well the complexity of money and how it interacts with the economy. Derivatives will develop and permeate all corners of Wall Street and Main Street (read Brown's book if you are interested, it is full of arguments), and the market economy will benefit from it. In the digital economy, the main function of money is no longer the preservation of value - the main argument for using currencies backed by gold - but the facilitation of transactions and flexibility - the main reason for the total expansion of paper money. One day cash will disappear from the economy altogether.
World trade has never been so vast, and it is not the limit
The volume of global trade increases every year; never before in the history of mankind have people traded so actively with each other. The revolution in the transport sector, which began along with the industrial revolution, combined with the development of information technology, has created a transparent global economy. That is why large countries now go to war much less frequently; the more active trade is, the more expensive the war will cost a country. World trade is likely to continue to grow in the 21st century as new and emerging regions (South America and Africa) are included.
Wages will not be displaced
There is a graph on the Internet that shows wages in the U.S. as a percentage of GDPBut it leads to erroneous conclusions. Given a number of government-regulated benefits (health care, benefits, and so on), we cannot, on the basis of statistics, say that wages are being displaced. We should not think that in the future we will have only capital and no wages. My analysis provides additional arguments and reasons for the current situation, in addition to explaining why things will change in the future.
The Euro will live a long time
The eurozone economy has so far managed to survive despite the crisis, and many reforms have already been initiated that will strengthen both the currency and the monetary union. The secondary derivatives of many economic indicators have already changed, which is often the first sign of improvement. Exports in Italy and Spain have reached historic highs, and labor costs per unit of output are declining steadily in all peripheral countries, contributing to their competitiveness. People have a short memory, so many Europeans have simply forgotten about currency volatility the pre-European era, and the endless devaluations that prevented real reforms. If anything, the euro is forcing southern countries to make reforms that will ultimately benefit them. The euro will live on, and ten years from now many more countries will be using it.
Low interest rates don't kill banks
In these unprecedented times, low interest rates are often called the weapon of mass destruction of banks. But the banks are doing quite well. Net interest margins for European banks like Deutsche Bank and Danske Bank were 0.84% and 1.14 in 2012, respectively, the same as 10-12 years ago. The fact is that interest margins bottomed out in 2007, but this was due to fierce competition between banks for corporate clients in an era of credit growth. If a zero (or even negative rate), or low interest rate is so disastrous for banks, why in Denmark (the country where the Central Bank set a negative deposit rate), are they still alive?
Do not underestimate the power of capitalization
Many people are pessimistic about the economy and the future because they underestimate the power of capitalization. If in 1982, when the U.S. economy entered its fourth recession in the last 12 years, you said that in 30 years everyone will have all the information in the world-just the push of a button-you would have been laughed at. But now it is, thanks to the Internet, Google, smartphones, etc. Capitalization is like a snowball. You hardly see it at first, but when its speed reaches its maximum, its power increases many times over. All the scientific discoveries of the future will change our economy and improve the quality of life to levels unimaginable today, and, thanks to information technology, the scale of transformation is truly limitless. Will the singularity become a reality? Life will show.
Engineers don't care about the market, and that's a good thing
But if there are all these "horrors" going on in the economy, and politicians are so narrow-mindedly stupid, why aren't we doomed? Because engineers don't care about financial markets or central banks. People who work in finance tend to extrapolate all the bad news received here in the heart of financial markets to the rest of life; we think other people see what we see. But in fact, ordinary engineers don't really care too much about the problems of the world economy. They are thinking about how they will wake up tomorrow morning and come up with something new, like optimizing fuel costs on jets, creating driverless cars to reduce congestion on the roads. Fortunately for us all, their efforts will save the world.
The opinion was voiced by Peter Garnry, head of the stock market department of the brokerage company Saxo Bank