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I agree with this, but for one thing. What makes you think interest rates will rise? Governments set interest rates to combat inflation, caused by wage or pri
by bobm_kite9 11y ago
I agree with this, but for one thing. What makes you think interest rates will rise?
Governments set interest rates to combat inflation, caused by wage or price increase. However, we've had 0 rates for 7 years, and QE to combat deflation.
If you believe (as I do) that the value of the worker is decreasing with time (due to substitutability with technology), it kind of stands to reason that we're not going to see much wage inflation anymore.. doesn't it?
Or, is there another kind of inflation I haven't considered?
- jondubois 11y agoI think the economic value of people overall will decrease (a lot will lose their jobs) but the value of workers (increasingly specialized ones which cannot be replaced by machines) will keep increasing (until they too become replaceable). I think the value of all physical assets will decrease dramatically (due to constant increases in economic productivity). So in effect, those who manage to hold on to their jobs for the longest will be able to accumulate the most wealth in the end. ...Then in an effort to optimize energy consumption, machines will genetically engineer us to require fewer and fewer resources. Until we become amoeba.
- bobm_kite9 11y agoYeah I think I basically agree. I'm not sure about physical assets though. The way to price those is to PV the future cash flows. However, if interest rates are zero, PVs are infinite.. so we need a different approach. Or, if we continue to use PV, then as rates get lower, physical assets increase in price. But yeah, I'm pretty sure the amoeba will have zero-rates.