Wednesday, July 1, 2015

One more book, Mr. Stockman

On March 14 of this year Gary North published “A letter to David Stockman” in which he identified Stockman’s popular website as providing the reasons and statistical evidence for why “Keynesian economic policies are going to blow up the world.”  North goes on to say:
You are the lightning rod for all of the establishment economists and senior bureaucrats who are overseeing what is going to become the worst economic disaster of modern times. They don't like the criticism. They fully understand that, if what you're saying is true, they are going to get blamed in the media, the textbooks, and the cultural memory for a comprehensive disaster that they personally engineered, supervised, and took credit for when the going was good. 
You are likely to become the John Maynard Keynes of this century. You will be remembered as the spokesman who called attention to the fact that the emperors have no clothes. Keynes served as the chief designer of the fabrics which have clothed the emperors ever since 1936. 
North then suggests that Stockman write a short theoretical work on economic theory, in the spirit of Hazlitt’s Economics in One Lesson, which began with an analysis of Bastiat’s broken window fallacy.  “Central bank policies will shatter a sufficient number of windows to attract the attention of the victims.”

Stockman’s magnum opus, The Great Deformation, while great for its countless historical insights and economic analysis, is a “fat book,” North says.  Hazlitt wrote his little book for the discouraged troops fighting the Keynesian onslaught.  Stockman should do the same for the free market soldiers who will need to provide answers when “the checks stop coming.”

A free-market primer for today’s libertarians

I think North has a great suggestion, David Stockman.  You should write the book. 

But I have a suggestion, too: If you do write the book, please reconsider the necessity of a central bank.

On March 20, 2014, concluding an interview with Mises Institute, you said:
I think the political realities of the situation make the most likely scenario one in which there will be some kind of real financial collapse and disorder that will require a total reconstruction of the system. It’s impossible to say how that will be done, and this may be the chance to go back to a gold standard or to a very sharply circumscribed remit for central banks.
Gold standards have always been under government control.  That’s why they were abused, suspended, and ultimately abandoned in favor of a currency that central banks could inflate at will.  Central banking has always required a close partnership with government.  As Vera Smith pointed out decades ago, central banks are not free market entities.  They always require government sponsorship.  

What would prevent a “sharply circumscribed” Fed from growing to the monstrosity that exists today?  Certainly not the politicians, who can always start another war and declare emergency measures that require an unshackled central bank.  Certainly not the people who leave it up to the politicians to do the deciding for them.

If we are to establish a monetary system that serves the best interests of all market participants, we need currency competition.  Let the best currency win.

With the Fed established as the monopoly supplier of the nation’s money, the door is open for corruption.  As you state in your book,
In spite of the Fed’s design as a passive reactor to the needs of commerce, it got into the public debt business.  The 1913 national debt of $1.2 billion “exploded to $260 billion by the end of the Second World War, and rather than 3 percent of GDP it was now 125 percent.” [p. 199]
Fractional reserve banking is the soft underbelly of central banking.  In his monetary primer, What is Money?, North writes:
It is not surprising that central banks never get shut down or disestablished, not even after they create nightmare hyperinflations. The victims do not recognize the perpetrator: fractional reserve banking.
He adds:
The complexity of fractional reserve banking is enormous. Its processes are deliberately shrouded in mystery. This is why the Federal Reserve resists an audit by an independent government agency — independent of the FED. . .  
To reform central banking is to perpetuate it. To perpetuate it is to accept the fundamental premise of modern economics: money is different. Money is not governed by the same laws of supply and demand that govern the rest of the economy. Money requires experts to administer it. Private contracts are not sufficient. . . . 
Members of Congress are confident that they can buy votes by spending newly created money. They are not confident that this could continue if the public could redeem digital money for gold. Congress buys votes with fiat money. It would find it far more expensive to buy votes with gold coins. What is true of Congress is true of every legislature on earth.
On the issue of central banking I stand with Ron Paul: Get rid of it, and let the market flourish for all participants.

Two weeks after writing his letter to you North published the preface of a book he has been busy writing, based on Hazlitt’s primer: Christian Economics in One Lesson.  Whether he is now following his own suggestion, I can’t say, but I hope it doesn’t discourage you from writing your own text.

North has likened you to the Biblical David in his confrontation with Goliath (paywall) where the role of the giant is represented by Keynes.  While there is a sense in which this is accurate, I believe it is also misleading.  The Goliath you’re confronting is a sham, a purveyor of free lunches, a counterfeiter hiding behind obscurantist jargon.  Your opponent has a glass jaw, and you make that abundantly clear in your Contra Corner columns.

But as North says, you can’t beat something with nothing, and I believe a positive, read-in-one-sitting work from you would be an invaluable resource when the next crisis hits. 

Please consider it, Mr. Stockman.

Friday, May 22, 2015

Death of Moore's Law? Don't count on it

Where a calculator on the ENIAC is equipped with 18,000 vacuum tubes and weighs 30 tons, computers in the future may have only 1,000 vacuum tubes and perhaps weigh 1.5 tons.Popular Mechanics, March 1949

Integrated circuits will lead to such wonders as home computers -- or at least terminals connected to a central computer -- automatic controls for automobiles, and personal portable communications equipment. Gordon Moore, 1965

For centuries, explorers have searched the world for the fountain of youth. Today’s billionaires believe they can create it, using technology and data. -- Ariana Eunjung Cha, April 4, 2015

The phrase “hit a wall” in idiomatic English means to reach a point where progress stops or slows significantly.  Engineers don’t warm up to that phrase very easily.  For an engineer a wall is a challenge, more like a speed bump. They throw their hands up only if they’re being robbed – maybe.  They have little use for the word “impossible.”

Let’s say you’ve written a book on genetics, and as a way of getting would-be readers pumped up you decide to store every word and illustration in your book – table of contents, index, everything -- in DNA.  And not only store it, but retrieve it as well.  And to get your point across about the immenseness of DNA storage someone suggests you write 70,000,000,000 (70 billion) copies of the book in DNA.  Impossible?  Of course not.  Geneticist George Church did it three years ago. 

On April 19, 1965 an engineer named Gordon Moore published an article in which he noted something remarkable about integrated circuits and their components.  Often referred to as a chip, an integrated circuit is a microelectronic device consisting of many interconnected transistors and other components fabricated on a semiconductor wafer, usually silicon.  Without integrated circuits we would have no smartphones, tablets, PCs, Macs, and countless other electronic devices.  “For simple circuits,” Moore wrote, “the cost per component is nearly inversely proportional to the number of components.”

This was the engineering equivalent of striking gold.  With more components not only did you get increased performance (since electrons have a shorter commute), but the cost per component decreased -- at least up to a point.  At the time, chips contained only a handful of components, yet Moore predicted an exponential trend was underway, so that by 1975 “the number of components per integrated circuit for minimum cost will be 65,000.”

This was a bold extrapolation on Moore’s part.  Prior to using integrated circuits transistors and other components were wired together by hand on a circuit board.  A painstaking process, but one that, early on, was less expensive than producing integrated chips.  In 1965 only a few companies were making integrated circuits, and their customers were mostly NASA and the U.S. military.  Add to this the fact that only about 10-20 percent of the transistors actually worked, according to Moore’s recollection.

Yet by 1975 Intel, the company he co-founded in 1968, was preparing to market a memory chip with 32,000 components, leaving Moore’s original estimate off only by a factor of two. 

This progression of a doubling of transistor density every year, later revised to every two years, became known as Moore’s Law.  Higher densities meant increased performance, more useful technology.  Higher densities drove component cost down, deflating retail prices and attracting more consumers.

Bolstered by other technological innovations, 50 years of Moore’s Law has brought us the Digital Age, as Moore predicted.  More precisely, engineers, project managers, and entrepreneurs have innovated, invested and generally dedicated their lives to keep Moore’s Law going.  And consumers eagerly line up for the latest offerings.

How far have we come since Moore wrote his article?  Today’s integrated circuits contain billions of transistors and are fabricated in factories that run in the billions of dollars to build.  Yet the cost per transistor has dropped from about $30 in 1965 (in 2015 dollars) to an infinitesimal amount today.

And the world has an insatiable hunger for transistors.  As one researcher noted,

In 2014, semiconductor production facilities made some 250 billion billion (250 x 10^18) transistors. This was, literally, production on an astronomical scale. Every second of that year, on average, 8 trillion transistors were produced. That figure is about 25 times the number of stars in the Milky Way and some 75 times the number of galaxies in the known universe.

Remember, that’s 8 trillion transistors for every second of 2014.  The flood of transistors has “been the ever-rising tide that has not only lifted all boats but also enabled us to make fantastic and entirely new kinds of boats.”

Though there have been predictions in the past of the imminent demise of Moore’s Law, engineers were able to find ”ways around what we thought were going to be pretty hard stops,” as Moore stated in a recent interview.  But ultimately, there are the fundamental limits of the known world: the speed of light and the atomic nature of materials. 

As Ray Kurzweil has pointed out frequently and which a surprising number of researchers seem to forget, Moore’s Law is a computing paradigm and is the fifth such paradigm since the 1890 census.  All five paradigms have shown exponential growth.  The first four – electromechanical, relay, vacuum tube, and transistor – eventually lost steam and were superseded by a technology previously found only in niche markets, such as the military, or that languished in sparsely-funded research labs.  As a paradigm slows -- no longer progresses exponentially -- more dollars are spent on developing the most promising technologies to replace it.

Going 3D

The semiconductor industry is running out of tricks to keep shrinking silicon transistors.  Right now the smallest size is 14 nanometers, and by 2020 they will need to be five nanometers to keep pace with Moore’s Law.  Is this a wall approaching? 

Not to Samsung.  They’re already building flash memory chips using three-dimensional integrated circuits to achieve performance gains.  Instead of piling transistors side-by-side on a plane of silicon, they’re stacking them, taking up half the space of planar chips.  They’re building hi-rise condos instead of subdivisions with smaller and smaller houses.  More layers means better performance and no more shrinking.  No longer will they have to retrofit multibillion-dollar factories to produce the latest chips. 

IBM is taking a different approach, at least for now. They’re developing transistors built with carbon nanotubes instead of silicon, which they hope to have ready for mass production by 2020. At two nanometers in diameter, the nanotubes, which though seamless resemble rolled up chicken wire, could continue the pace of cramming more transistors onto a silicon substrate.  Based on simulations, the nanotube transistors are about five times as fast as ones made from silicon.

In his magnum opus Kurzweil cites the work of Peter Burke, University of California/Irvine, who demonstrated nanotube circuits operating at 2.5 gigahertz (2.5 GHz).  However, in a peer-reviewed article Burke claimed the theoretical speed limit of these nanotube transistors should be measured in terahertz, where 1 THz equals 1,000 GHz.  (What a boost that would be to my 2.66 GHz MacBook Pro!)

The biggest problem is positioning the nanotubes closely enough together on the chip.  IBM’s preferred approach is to label the substrate and nanotubes with a compound “that would cause them to self-assemble into position.”

Self-assembly of nanoscale circuits would be a world-changer.  As Kurzweil notes, citing the work of researchers at UCLA, having “potentially trillions of circuit components organize themselves, rather than be painstakingly assembled in a top-down process, would enable large-scale circuits to be created in test tubes rather than in multibillion-dollar factories, using chemistry rather than lithography.”

Creating nanocircuits in chemistry flasks “will be another important step in the decentralization of our industrial infrastructure and will maintain the law of accelerating returns through this century and beyond.”

In two decades robots will be in charge

One of the reasons for continuing the exponential development of technology is to eventually turn the task over to robots.  They will eventually graduate and take charge of R&D.  In the 2020s, working with advanced hardware and computational strategies, researchers will make major progress in emulating the human brain.  By 2029 a computer will be able to pass itself off as human under competent interrogation during a Turing Test.

Meanwhile, the inexorable march of miniaturization will make its way into our bodies, including our brains.  Nanobots the size of a red blood cell will enter our bloodstream and augment our intelligence, combining the pattern recognition power of our biological brains with the speed, capacity, and knowledge-sharing ability of our technology.  This should get underway sometime in the 2020s. 

By the 2030s the nonbiological portion of our intelligence will predominate.  Somewhere around 2045 “the pace of technological change will be so rapid, its impact so deep, that human life will be irreversibly transformed.”  Kurzweil calls this period the Singularity.

AI researcher Ben Goertzel thinks the Singularity could arrive much sooner – in 10 years.

Technology will continue to empower us with better and cheaper products some of which will give us the ability to make better and cheaper products. Keynesianism and its Free Lunch Institute known as the welfare state will gradually kill off banks and their governments as we've known them.  Our overlords will not go quietly but there is a better future ahead.

As a hint of that better future I offer this sampling of encouraging developments:

1.    Surgeon Anthony Atala demonstrates an early-stage experiment that could someday solve the organ-donor problem: a 3D printer that uses living cells to output a transplantable kidney. Using similar technology, Dr. Atala's young patient Luke Massella received an engineered bladder 10 years ago; we meet him onstage.

2.    Just like his beloved grandfather, Avi Reichental is a maker of things. The difference is, now he can use 3D printers to make almost anything, out of almost any material. Reichental tours us through the possibilities of 3D printing, for everything from printed candy to highly custom sneakers.

3.    3D printing has grown in sophistication since the late 1970s; TED Fellow Skylar Tibbits is shaping the next development, which he calls 4D printing, where the fourth dimension is time. This emerging technology will allow us to print objects that then reshape themselves or self-assemble over time. Think: a printed cube that folds before your eyes, or a printed pipe able to sense the need to expand or contract.

4.    What we think of as 3D printing, says Joseph DeSimone, is really just 2D printing over and over ... slowly. Onstage at TED2015, he unveils a bold new technique — inspired, yes, by Terminator 2 — that's 25 to 100 times faster, and creates smooth, strong parts. Could it finally help to fulfill the tremendous promise of 3D printing?

Source: The Singularity is Near, p. 66

The chart shows the price-performance of forty-nine computational systems in the 20th century, measured by instructions per second per thousand constant dollars.  (A rising straight line on a log chart indicates exponential growth.) 

Saturday, March 28, 2015

The fall of tyranny, the rise of liberty

Summary: Massive debt is sealing the fate of governments and central banks.  As the cards collapse, radical developments in diverse areas of technology, combined with free market entrepreneurship, will destroy and rebuild the existing social order.   

Trouble begins when bureaucracies replace free markets.  In the U.S., we find money, the lifeblood of the economy, resting in the hands of a board of bureaucrats whose statements the financial punditry spends their waking hours trying to decipher.  What does this portend for the foreseeable future?  Ben Wright, Group Business Editor at The Telegraph, takes us through one possible scenario.

The total value of all global equities was around $70 trillion in June last year, according to the World Federation of Exchanges; meanwhile, the notional value of all outstanding derivatives contracts was more than $690  trillion. It is worth noting that the vast majority (around four-fifths) of all existing derivatives contracts are based on interest rates.

Derivatives are “essentially insurance policies - they are designed to protect the holder from adverse price movements,” such as a change in interest rates.

Let’s say that US interest rates do rise sooner and faster than the market expects. That means bond prices, which always move in the opposite direction to yields, will plummet. US Treasury bonds are like a mountain guide to which most other global securities are roped - if they fall, they take everything else with them. 

Who will get hurt? Everyone. But it’ll likely be the world’s banks, where even little mistakes can create big problems, that suffer the most pain.

Banks are well-aware of this threat and have negotiated interest rate derivatives to hedge their risk.  They bought these derivatives from other banks.

This creates what is known as counterparty risk. Bank A sells insurance to Bank B. But then Bank A gets into financial difficulties (a significant deterioration in their creditworthiness would be enough) and suddenly Bank B isn’t as well protected as it thought it was. . . . 

Clearing houses are designed to deal with one or two counterparties going down. But what happens if more go kaput? The clearing house itself would face collapse, be judged too big to fail and, well, you already know how this story ends.

We do, but where does it begin?

Governments’ silent partner: Central banking

It originates in the wish of big bankers to create a government scheme to protect and amplify their wealth, while promoting it as a necessary corrective to what they say is an inherently flawed free market that suffers from periodic crises.  This is often cited as the rationale for central banking.  The central bank is supposed to eliminate crises by coordinating and restricting the credit expansion (monetary inflation) of its fractional-reserve member banks.  In the event this doesn’t work, the central bank bails out the biggest banks under the flag of “lender of last resort.” 

Most economists consider fractional-reserve banking a sound and ethical business practice.  It consists of giving two people — depositor and borrower —  a claim of ownership to the same thing.  The free market penalizes fractional-reserve banking with bank runs and currency drains from less-inflationary competitor banks.  Historically, bankers resented this.  Governments, always looking for revenue, sided with the bankers and established central banking cartels.  Governments changed money itself from a commodity to something the banks could inflate at will (paper and digits), with another government agency acting as an “insurer” of digital deposits to calm the natives.  (See Rothbard, pp. 134-137)

The counterfeiting cartel called the federal reserve system has survived for over a century.  What would its economic report card look like?  It penalizes savers through deliberate monetary debasement.  It makes honest price discovery impossible.  It has created numerous financial crises, including two devastating ones.  After the crisis hits it finds fault everywhere except home in its Keynesian hunt for causes.  The bought economics profession becomes the barking dogs on the hunt.  Those closely connected to the Fed, such as the government, benefit from the Cantillon Effect

The claim that the economy needs a meddler to execute “monetary policy” is never seriously questioned.  See, for example, FRBNY president William Dudley’s “Lessons Learned” speech given in 2009 at the BIS conference in Basel, Switzerland:

Dudley: If one means by monetary policy the instrument of short-term interest rates, then I agree that monetary policy is not well-suited to deal with asset bubbles. But this suggests that it might be better for central bankers to examine the efficacy of other instruments in their toolbox, rather than simply ignoring the development of asset bubbles. 

If existing tools are judged inadequate, then central banks should work on developing additional policy instruments.

Got that?

Compare his comments to those of Milton Friedman, who Helicopter Ben once lauded for his view that the Fed failed to print enough money to offset price deflation following the Crash:

If a domestic money consists of a commodity, a pure gold standard or cowrie bead standard, the principles of monetary policy are very simple. There aren’t any. The commodity money takes care of itself.  Salerno, p. 356

Friedman expanded on this thought elsewhere:

If money consisted wholly of a physical commodity ... in principle there would be no need for control by the government at all. . . . 

If an automatic commodity standard were feasible, it would provide an excellent solution to the liberal dilemma of how to get a stable monetary framework without the danger of irresponsible exercise of monetary powers.  Salerno, pp. 334-335

Of course, this is not the Friedman Bernanke-the-Keynesian extolled.

All folly must be funded, and the Fed is front and center with its “accommodating” printing press. But the Fed is not just an economic calamity for most of us — it has blood on its hands.  Mostly, it’s the blood of everyday people, the ones who ultimately bail out the big boys involuntarily, with their money and their lives.  Central banking is the pillar of the welfare - warfare state. 

Without the Fed and its cohorts elsewhere, we likely would have had a relatively peaceful twentieth century instead of the record-setting slaughter we experienced.   See David Stockman’s “The Epochal Consequences Of Woodrow Wilson’s War” for details.  See also Wikipedia’s page on the Nye Committee findings or read highly-decorated Marine Major General Smedley Butler’s War is a Racket.

Senator Gerald Nye of North Dakota, Chairman of the Senate Munitions Committee, concluded that “We didn't win a thing we set out for in [World War I]. We merely succeeded, with tremendous loss of life, to make secure the loans of private bankers to the Allies.”

Thanks to Thomas Woodrow Wilson and his warmongering handlers, and the Federal Reserve Act Wilson signed into law, perpetual war has become the norm in foreign policy, as long as the wars are conducted in sufficiently obscure and distant locations so as not to rattle the folks back home.

Keep the names, change the meaning

The Fed has funded a fascist state almost from its inception.  With fascism we get good-old-boy economics in the name of free markets and the erosion of liberty in the name of liberty.  

Keynes became an international hero among interventionists when he published an opaque treatise justifying government control of markets.  In the preface to the German edition of The General Theory (1936), he wrote:

Nevertheless the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of the production and distribution of a given output produced under conditions of free competition and a large measure of laissez-faire.

I agree that his “theory of output” is appealing to totalitarians.  It’s also appealing to totalitarian-lite politicians and economists such as exist the world over.   Little totalitarians’ fingerprints are everywhere we look.

As we’ve witnessed with Assange, Snowden, Manning, and others, those with the courage to expose government wrongdoing are immediately in its crosshairs as traitors.

Crises become an excuse to create more bureaucracies such as the DHS and its subordinate, the TSA.  An airplane ticket serves as a waiver of Fourth Amendment rights.

Surplus war weapons trickle down to domestic enforcement agencies.  The police are becoming indistinguishable from an occupying army, one that’s hostile to locals.

The "national security" mantra means we live by permissions and restrictions.  Kids are prohibited from selling lemonade or shoveling snow without a permit.  If they so much as point a finger at someone in the shape of a gun they can be suspended from school.

Many of these same kids will later be drawn into the military to kill on command for the state, while the alarming suicide rate of young veterans is brushed aside with “concerned” rhetoric.  According to one site, 49,000 veterans killed themselves between 2005 and 2011, more than twice the number of civilian suicides.  

The helping hand of big government always carries a penalty.   Government loans are turning college students into debt slaves — in many cases, unemployed or underemployed debt slaves.

Where there’s perpetual war there’s perpetual spying.  The NSA spies on everyone in virtually everything they do.  As Snowden remarked in a recent radio speech, referring to the Sydney siege and Charlie Hedbo attacks, “[mass surveillance] is not going to stop the next attacks either.  Because they’re not public safety programs. They’re spying programs.”

The government invokes Orwell with the Patriot Act, the Affordable Care Act, and now Net Neutrality, and most people, intellectually stunted from their government school experience, applaud or don’t care.

We can expect more of the same and worse when the next AIPAC- and CFR-approved candidate becomes president.

The trends favor liberty

The above scarcely begins to touch on the disaster the American state and its central bank have created.  For libertarians, matters grow worse with each passing day.  Fortunately, there are two unmistakable trends working in liberty’s favor:  Massive debt and advancing technology.

Technology is ripping a hole in centralized social control and its Keynesian underpinnings, bringing power and freedom to individuals the world over.  

Both Keynesianism and technology are on a cusp.  One is on a road to collapse, while the other is about to kick into high gear. 

On February 25, Boston University economist Laurence Kotlikoff told members of the Senate Budget Committee, “Our nation’s broke, and it’s not broke in 75 years or 50 years or 25 years or 10 years. It’s broke today.  Indeed, it may well be in worse fiscal shape than any developed country, including Greece.”  

Why?  Because the U.S. has a $210 trillion fiscal gap.  How can the government close this gap?  Right now, it would “require an immediate 58.5 percent increase in all federal taxes or a 37.7 percent permanent, across-the-board decrease in federal spending.”

It’s not going to happen.  Congress will kick the can.  Creditors will get stiffed.  Government promises will be broken.  The bill for the Keynesian free lunch will come due, and the government check will bounce.

Where will that leave us?  With a weakened and discredited government, and the bogus Keynesian ideas that supported it, we will have to become more self-reliant.  The cry for the government to “Do something!” will be answered with an echo.  Free markets will emerge where they’ve been suppressed because much of government will be ineffective or no longer exist.  A free market in combination with a revolution in technology will remake our world.

The technology revolution: Subversive and seductive

Unlike other revolutions, the revolution in technology will not end.  It started when someone first used a stick to extend his reach.  It is ongoing, ever accelerating, and reaching into virtually every area of life.  Nor does it centralize power.  As we’ve witnessed with computers, it is radically decentralizing and price deflationary.  

Information technology has been growing exponentially since the 1890 US census.  More technologies have become information technologies, putting them on an exponential growth curve.

The exponential is not easy to grasp.  Futurist and entrepreneur Ray Kurzweil explains why:

1.    Linear growth is steady, while exponential growth becomes explosive.

2.    Exponential growth will always seem linear when viewed over a short-enough time span.

3.    Exponential growth is seductive.  In its early stages it acts like linear growth.  It becomes explosive after it reaches the knee of the curve. Most of us still view the distant future from a linear perspective.

4.    The rate of change is itself accelerating.  We won’t experience one hundred years of technological advance in the twenty-first century; we will witness on the order of twenty thousand years of progress (at the rate in the year 2000).

5.    Many scientists are skeptical of the exponential.  They are trained to be skeptical.  When progress moved along the linear portion of the exponential this was understandable.  We’re at the knee of the curve today in many areas of technology (see chart).

6.    Awareness of exponential phenomena sometimes produces overly-optimistic expectations.  Exponential growth picks up speed over time but it is not instantaneous.  

(From The Singularity is Near, Ray Kurzweil, p. 10)

Kurzweil refers to exponentially-growing technology in various disciplines as the law of accelerating returns.  As he explains: 

It’s the economic imperative of a competitive marketplace that is the primary force driving technology forward and fueling the law of accelerating returns.   In turn, the law of accelerating returns is transforming economic relationships. Economic imperative is the equivalent of survival in biological evolution. We are moving toward more intelligent and smaller machines as the result of myriad small advances, each with its own particular economic justification. Machines that can more precisely carry out their missions have increased value, which explains why they are being built. There are tens of thousands of projects that are advancing the various aspects of the law of accelerating returns in diverse incremental ways.  The Singularity is Near (2005)

The price-competitiveness of entrepreneurship will spread technology in various forms around the globe.  Recent headlines reveal major technology companies working to bring internet service to regions that have been without it, using airborne devices such as drones, satellites, or balloons.  With internet service and affordable devices will come educational opportunities for millions of people who have never had any. 

The massive impact of 3D Printing

Two years ago Allister Heath of The Telegraph wrote about 3D printing and what it will do to our world. 

Remarkably, 3D printing allows actual objects to be designed and created (or “printed”) surprisingly quickly with a computer connected to a printer-like device, using special material (often plastic, but increasingly almost anything) as “ink” and “paper”. With the costs of the machinery nearing mass-market levels, 3D printing is poised to take off, blurring the distinction between digital and physical realms, democratising manufacturing and turning large chunks of the global economy upside-down. . . .  

Making things using one’s own equipment may even become almost as common as cooking one’s own food or uploading one’s own pictures to a social network. . . . 

Given that economies of scale will no longer be so essential, 3D printing will drastically reduce the barriers to entry to start-ups. Anti-trust policy will become obsolete. The influx of new competitors will shake up many industries, just as old oligopolies built around intellectual property have already been smashed.

Choice will have no bounds.  Already, 3D printers can manufacture things like furniture, cutlery, and machine tools, but this is only the beginning.

Far more complex items will become printable, a development which would truly change the world. Anthony Atala, of the Wake Forest Institute for Regenerative Medicine in North Carolina, recently harnessed a 3D printer with living cells as the “ink” to create a transplantable kidney. Even restaurants could be partly automated. Jeff Lipton, of Seraph Robotics, argues that food will be 3D printing’s killer app, and has demonstrated how scientifically precise cakes can be produced, feeding all the usual ingredients into the machine.

This is Joseph Schumpeter’s “creative destruction” in action.  But it applies to more than markets.

Eventually, even governments will be threatened by the 3D printing revolution. In a world of endless choice, who will put up with one size fits all public services and flawed, bureaucratic decision making?

Atomically Precise Manufacturing (APM)

Eric Drexler, the father of modern nanotechnology, sees 3D printing as a precursor to a more exacting manufacturing method he calls Atomically Precise Manufacturing (APM).  Because APM will use common feedstocks instead of scarce materials, its full development will result in radical abundance.

According to Drexler the science of APM is settled.  We are not waiting for some “Eureka!” moment.

We’ve come a long way, and there’s a long way to go, but the road has no gaps, no chasms to cross. . . .  The fruits of [APM] research appear in scientific journals, with more papers published daily than anyone could read.

Zyvex was founded in 1997 with the goal of developing atomically precise manufacturing.  Several of its products had been commercialized by 2007.  Its website describes nanotech in everyday terms.

Todays manufacturing methods are very crude at the molecular level. Casting, grinding, milling and even lithography move atoms in great thundering statistical herds. 

It's like trying to make things out of LEGO blocks with boxing gloves on your hands. Yes, you can push the LEGO blocks into great heaps and pile them up, but you can't really snap them together the way you'd like. 

In the future, nanotechnology (more specifically, molecular nanotechnology or MNT) will let us take off the boxing gloves. We'll be able to snap together the fundamental building blocks of nature easily, inexpensively and in most of the ways permitted by the laws of nature. This will let us continue the revolution in computer hardware to its ultimate limits: molecular computers made from molecular logic gates connected by molecular wires. This new pollution free manufacturing technology will also let us inexpensively fabricate a cornucopia of new products that are remarkably light, strong, smart, and durable.

Eliminating disease and rejuvenating our bodies 

“[Biologically,] we are fundamentally information,” Ray Kurzweil tells us in his movie, Transcendent Man.  “At the core of our ten trillion cells are genes, and genes are sequences of data.  And they evolved thousands of years ago.  Many of them go back millions of years.” 

The software in our bodies is ancient but we’re learning how to change it.  Changing it will revolutionize medicine.

A hybrid scenario involving both bio- and nanotechnology contemplates turning biological cells into computers. These “enhanced intelligence” cells can then detect and destroy cancer cells and pathogens or even regrow human body parts.

Biotech programmers will treat aging as they treat diseases.

Biotechnology will provide the means to actually change your genes: not just designer babies will be feasible but designer baby boomers. We’ll also be able to rejuvenate all of your body’s tissues and organs by transforming your skin cells into youthful versions of every other cell type. . . .   

Already, new drug development is precisely targeting key steps in the process of atherosclerosis (the cause of heart disease ), cancerous tumor formation, and the metabolic processes underlying each major disease and aging process.

Technology and medicine

Advances occur almost daily in a wide range of technologies.  What follows is a random sampling of medical research and applications.

Three years ago researchers at the University of Michigan 3D printed a windpipe that held an infant’s airway open.  It likely saved its life.  Glenn Green, an ear nose and throat specialist, helped develop the device.

The use of 3-D printed devices and body parts is still in its infancy. Cartilage and bone will be the first solutions to reach wide use, Green says, adding there is a "gigantic potential," for the future.

While nanotechnology still has years of research ahead of it, there are some promising developments for the near future. Dr Thomas Webster, the chair of chemical engineering at Northeastern University in Boston, is conducting research that attaches drugs and possibly metals and minerals to nanoparticles that then bind themselves to cancer cells and viruses, leaving healthy cells unharmed.  They’re not at the level of the nanobots in Michael Crichton’s novel Prey that “roamed through patients autonomously hunting down medical problems,” but they’re getting close.

Meanwhile, researchers the University of Manchester have used graphene oxide, a non-toxic material, “to target and neutralize cancer stem cells (CSCs) while not harming other cells.”  CSCs spread cancer within the body and are responsible for 90% of cancer deaths.

Another study using gold nanotubes integrates “diagnosis and therapy in one single system.”

The researchers injected the gold nanotubes intravenously. They controlled the length of the nanotubes for the right dimensions to absorb near-infrared light (which penetrates tissue well) from a pulsed infrared laser beam. 

By adjusting the brightness of the laser pulse, the researchers were able to control whether the gold nanotubes were in imaging mode or cancer-destruction mode.

Lung cancer is the number one cancer-killer in the U.S.  Detection of lung cancer is usually done with an invasive biopsy when the tumor has reached a diameter of 3 centimeters and is often metastatic.  Yong Zeng and his fellow researchers at the University of Kansas have developed a lab-on-a-chip that could detect lung cancer much earlier using a small drop of the patient’s blood.  “In theory,” Zeng says, “it should be applicable to other types of cancer.”  They are continuing research with this goal in view.


Things can always go wrong.  Nuclear war could erupt and wipe out humanity.  Smart robots could take over the world and wipe out humanity.  Terrorists could invent a killer virus that wipes out humanity.  The possible downsides to sophisticated technology are seemingly endless.

But as noted earlier, there are two trends today that are real and visible:  Massive debt and advancing technology.  Follow the implications.  There will be pain, but then recovery and real growth.

There are other facts working in favor of positive outcomes.  People generally want to live long, healthy, enjoyable lives.  Technology is working to make that a reality.  People generally don’t like dealing with bureaucracies, paying taxes, or making war on their neighbors.  Collapsing governments will make this a reality.  

And there are other thoughts to consider.  

The free market is the expression of economic law.  Keynesianism consciously violates it.  Governments the world over have bet the farm on Keynesianism.  They’re about to lose the farm.  

Technology, meanwhile, will continue its accelerating advances, benefiting most people in the process.   The benefits will become increasingly radical, remaking our world.  

It will be a world where killer diseases can be detected and treated quickly at low cost.

It will be a world where aging is more of a choice rather than an imposition of nature.

It will be a world where people can afford to own machines that can make just about anything they want or need from ordinary materials.  Abundance will replace scarcity.  Poverty will cease to exist.

It will be a world in which energy is plentiful and cheap.  War for oil or other scarce resources will be relegated to history.

It will be a world where people are easily connected through technology, where real-time translation software destroys the language barriers that exist today.

It will be a world in which people will be able to get the education they want through digital technologies.

I, for one, look forward to it.