The Hidden War

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The two most powerful forces on earth are locked in an epic struggle, the outcome of which will determine the fate of mankind. It’s human stupidity versus human ingenuity, and the stakes have never been higher.

What reads like a log line for a Hollywood blockbuster film is actually the current state of the world. Governments, corporations, private citizens and everyone and everything in between has borrowed more than they can ever hope to pay back with current technology.

This is nothing new. We borrow money under the belief that we will be more productive with it than the rate of interest we pay on said debt. Unfortunately, that’s not the case right now as US productivity growth has been on its longest losing streak since 1979.

Although real interest rates are negative in the US, so is it that surprising that productivity is also negative?

When you consider that this US economic expansion which is nearing the end of its cycle has operated on zero interest rates the whole time it is even less surprising that investments don’t offer the same returns they once did.

There’s a running joke that the only way we get out of this mess is for someone to invent cold fusion (unlimited free energy). Now that would certainly do the trick, but there are a surprising number of game changing inventions just over the horizon that will change our lives beyond comprehension. Graphene, big data, artificial intelligence, driver-less cars that run on electrons, epigenetics, the list goes on and on.

The question as always comes down to timing. Can technology and innovation deliver us from myopic central banking policy? Over the short term, I have serious doubts. Most of these technologies are years away from significantly impacting our lives meanwhile global credit conditions continue to deteriorate at an alarming rate.

It’s important to highlight this hidden war, because it underscores the vital importance of science and technology in not just forwarding human progress but maintaining social stability and global peace. It is my hope that the future will be determined by those who unshackle us from our past mistakes and not those who bind us with misguided policies.

 

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