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The technology roadmap for the next five decades is predictable. For example http://en.wikipedia.org/wiki/Predictions_made_by_Raymond_Kurzweil http://en.wikiped

• nostrademons 16y ago
  Just because Kurzweil's predictions from 1990 were correct doesn't mean that we can predict the future, or even that Kurzweil's predictions for the next 10 years. Think of it this way: lots of people made predictions in 1990 about what the next 10 years will be like. (Some of the ones I remember: that Japan would take over the world, that the American government would fall, that we'd all be watching WebTV, that cars would drive themselves). Simply by chance, somebody is bound to be mostly right. That person will then get lots of media attention for having corrected predicted the last 10 years. But that doesn't mean he'll predict the next 10 years correctly. In fact, if you look at Kurzweil's predictions from 2001 for 2009 (http://www.kurzweilai.net/meme/frame.html?main=/articles/art0275.html http://www.kurzweilai.net/meme/frame.html?main=/articles/art...): He predicted the move to laptops from desktops. He missed the rise of smart cell phones, instead thinking that we'd be using ultrathin tablets and computers embedded in jewelry. He incorrectly predicted a move away from rotating media to solid-state memory (perhaps he was just early, solid state is likely to catch on significantly over the next 5 years - but in servers, which is the one place where he thought it wouldn't catch on). He correctly predicted the rise of wireless. He was dead wrong about the usage of speech recognition technology, which is still too unreliable to recognize more than a few keywords. He missed the rise of international terrorism as a new geopolitical power. He missed the emergence of the U.S. as an aggressor nation that actively declares war on other nations (in fact, he predicted that national wars likely wouldn't exist), but correctly predicted that the U.S. would remain the dominant military power. He incorrectly predicted continued economic growth, particularly in the stock market, which is now below where it was in 2001. Economists still do not believe price deflation is a good thing. The U.S. remains an economic leader, but its leadership has declined somewhat. He correctly predicted the rise of China. He missed the emergence of the EBay/Paypal/Adwords economy, where perhaps a million or more people can now make their living off selling niche products online. He did predict the rise of online transactions, however. He completely missed the growth of social networking as an important cultural force. He incorrectly predicted the development of intelligent assistants, which never caught on. He correctly predicted the download economy, where you pay for an information product and then download it directly instead of accepting a physical copy. If you were to meta-analyze these predictions, there's a pattern that emerges. Those predictions that took an emerging technology that had already caught on with mainstream users and extrapolated it out to pervasiveness tended to come true (laptops, faster computers, wireless, China). Those predictions that took an emerging technology still in the R&D stage and assumed it would catch on usually failed (solid state storage, speech recognition, intelligent assistants). And then inflection points that came out of nowhere obviously were never predicted at all (social networking, AdWords, terrorism, U.S. aggression). The thing is - there are always those black swan events that come out of nowhere. And they tend to be where fortunes are made. Everyone expected laptops to get cheaper, faster, and lighter in 2001, so that was already priced into their market value. Nobody expected that a good portion of our social lives would consist of broadcasting 140 character text messages.
  • barmstrong 16y ago
    That's interesting that Kurzweil predicted deflation would be recognized as a good thing. I was an economics major and never understood the main stream view of economists on that (that it's bad).
    • nostrademons 16y ago
      It gives people an incentive to sit on their currency and hoard it away instead of investing it in productive ventures. Think of it this way: the real interest rate is the nominal interest rate minus the inflation rate. That means that if the inflation rate is negative, people can effectively earn interest simply by sitting on their cash, since it'll be worth more in the future. If people earn interest by doing nothing, what incentive do they have to invest in a potentially risky venture that may make more in the long run, but may also cost them their principal? Deflation biases people towards inaction, because they know that sitting and waiting means their money will be worth more in the future. Inflation biases people towards action - they know their money will be worth less in the future, so they may as well invest in something. The Austrian critiques of monetary inflation are basically right - it does result in bubbles, as people seek higher returns from progressively more risky investments because they know their cash will be worth less. Technically, the mainstream economist view shoots for price stability (0% inflation) and not inflation. But they recognize that they'll never achieve that, so they err on the side of inflation. Mostly, this is because inflation is easier to cure than deflation is. If everybody is biased toward inaction, then when the Fed pumps money into the system to stimulate action, it tends to collect within firms who won't spend it because they expect it'll be worth more in the future. (This is currently a very real problem, as much of the money the Fed injected in 2009 is collecting in banks that are trying to shore up their balance sheets and consumers that are trying to pay down debt.) Each firm always has the option of choosing not to spend the money it's received. All it takes is one firm that wants to hoard, and the money will never circulate within the economy. If you have continuous low-level inflation, however, it can be brought under control simply by reducing the money supply. You can't spend money that you don't have. (Well, you can on a micro-level by borrowing from another firm, but you can't on a macro-level because there's nobody else to borrow from.) So when the Fed restricts the money supply, that reduction filters all the way through the economy, people have less money to spend, and prices drop.