I have become well known in financial circles for doom-and-gloom themes.
That’s mainly because my professional life as a financial writer and analyst happened to correspond with the largest speculative bubbles in history.
As a result, I spent most of my 30s writing about one disaster or another, from the collapse of MCI-WorldCom and the dot-com/telecom bubble to the mortgage/housing bubble to today’s sovereign-debt bubble (which, by the way, is the largest and most dangerous bubble yet – by a wide margin).
Here’s the thing: I’m not a pessimist – not at all.
What I know about human history and the evolution of technology makes me unbelievably optimistic about my future and the future of my children. I have no doubt that the next 25 years will contain the greatest creation of wealth in human history.
All around the world, technology is allowing people to move from the Stone Age into the Computer Age. The growth potential for humanity has never been greater. And I believe it will accelerate.
I’ve been writing for the last year or so about the future of computing – how computers will come to greatly augment human sensory perception and human action. We call the companies involved in this latest expansion of computing “Sensory Masters.” (This video from Google gives you a peek into this new world. And by the way, all the technologies in this video exist right now. This isn’t science fiction.)
These new technologies will continue to change our world at an ever-accelerating pace. They will create demand for additional global bandwidth, computer storage and computer processors – demand we can’t even imagine today.
And I’m helping my subscribers follow the best ways to make money in these trends in our newsletters. So please, don’t ever mistake me for a pessimist.
Now, just because I believe the future will be better than we can imagine doesn’t mean I’m not still very concerned about the finances of the U.S. government. And it doesn’t mean I’m not still convinced the U.S. dollar will lose its status as the world’s reserve currency – a crisis I’ve been calling the “End of America.”
It doesn’t mean I doubt pain and trouble await millions of Americans who still don’t understand the absurd risks our leaders are taking with our financial system.
Anyone with basic math skills should be able to understand that we will never repay our $20 trillion-plus federal debts (if accounted for honestly) – an amount equal to a staggering $175,000 per taxpayer. And that’s only if you treat taxpayers equally, which, unfortunately, in America, we do not. As things stand today, we’re counting on about 10 percent of the population to repay about 90 percent of these obligations.
And that, my friends, will never ever happen. What will happen will be a truly epic financial disaster.
Here’s the worst part: These financial problems have been staring us in the face since 2009. We know exactly what’s causing them – vastly too much debt and not enough savings. But what has changed? Not a thing. The government’s debts continue to grow and grow.
So, how do you reconcile these two views? How can you simultaneously believe that life will get tremendously better and that our government, our way of life and our financial system are all on the verge of an epic, generational crisis?
Simple. That’s the way progress happens.
Progress isn’t uniform. Just consider the 20th century. More people were violently killed in the last century than in all of human history before that point combined.
That 100-year period saw the rise of communism and socialism, two of the greatest wealth-destroying ideas ever planted in the human mind. It saw China, the single-largest ethnic population, succumb to a civil war and spend most of the period locked in a totally senseless, self-imposed isolationism. It saw two World Wars, the Great Depression, Stalin, the Cold War and the “Domino Theory” that sent so many U.S. citizens to die in jungles. And yet …
During the last 100 years, we also saw the discovery of antibiotics – the greatest medical advance of all time. We saw average life expectancy double, from around 30 years to more than 60, globally.
See the point? We expect a financial crisis because we understand accounting and math. But we expect prosperity because we understand history, technology, and progress. There’s no contradiction.
While I believe the sovereign-debt bubble will end badly, huge fortunes will also be made during the next phase of the computer revolution.
But you’re crazy not to take a portion of your capital and invest it in technology businesses that will profit from the tectonic shift taking place in our world today. In 10 or 20 years, they will be 10, 20 or 100 times their current size.
It’s inevitable, just as the automobile revolution was inevitable in the 1920s and the computer revolution was inevitable in the 1970s.