Jerome Powell and the Federal Reserve spent the better part of the last year fighting inflation.
How?
They made it MORE EXPENSIVE for everyday consumers to buy homes, pay off their credit cards or even send their kids to college.
Good thing they waited until the problem was ALREADY entrenched in the global economy.
Nothing they did addressed the real problem — supply chain congestion — because it’s entirely outside their control.
Fortunately, free markets came to the rescue.
Because if there’s one deflationary mechanism everyone underestimates, it’s technology.
And there’s one in particular that could REVOLUTIONIZE everyday life as we know it.
Tech & Deflation
Way back in the Stone Age, some bloke got the bright idea to put a cart onto round wheels.
Suddenly, he could carry far more food and supplies than simply lifting them in his arms.
Thousands of years later, his descendants developed farming, increasing food production a thousand-fold.
The Industrial Revolution transformed combustion into mechanical energy.
With computers came the ability of one person to manage the work of thousands.
At its core, technology enables companies to produce more with less effort, effectively lowering the cost per unit.
But this isn’t a straight shot to the consumer.
Generally, businesses absorb these profits until the tech becomes widespread and competitors start leveraging prices to win customers.
Think about how Dell made a fortune putting together computers. Then, as other companies got into the game, the price of PCs dropped dramatically.
Cathie Wood, a big believer in technology, has been pounding the table on its deflationary pressures.
While she’s been wrong for several years now, things have started to shift in her favor.
We’ve all heard the wonders of generative artificial intelligence (AI).
If you haven’t tried it before, we recommend setting up a free account on OpenAI’s ChatGPT, Microsoft’s Bing or other resources.
Spend a few hours on one of these sites, and you’ll quickly see why everyone is going bananas over the technology.
But will it drop the cost of that chicken wing basket you just ordered?
Not anytime soon.
We see content generators and programmers extracting the most value. Paralegals are in jeopardy, as are general researchers.
Software companies like Meta, Google and Microsoft should manage to hold onto the workforce reductions that they took over the past year, even in the face of growth.
Yes, that’s why many of their stock prices have done SO WELL lately.
Our best guess is we won’t see benefits roll down to the average consumer for 5-10 years once generative AI leads to efficiencies on real goods, whether it’s better asset utilization or even automation.
That might sound simple enough: replace people with robots.
However, it’s not as easy as you think.
Take the case of Stanley Black and Decker’s automated Texas plant.
The company spent $90 million on a world-class facility outside of Fort Worth that would be the envy of all manufacturers. By replacing people with precision machinery, the Craftsman toolmaker wanted to return jobs to the United States.
It was an epic failure.
Some parts of the plant worked splendidly, while others constantly broke down. Incomplete inventories built up. No matter how hard they tried, management couldn’t fix the problems.
Eventually, the plant shut for good.
Some tasks are still too difficult for even the best AI systems.
Snap-On says they used to run on a 100-one ratio of workers to robots in 2010. Now, they’re at eight-to-one. But the CEO acknowledged TRUE AUTOMATION was decades away.
The Technology That Could Change EVERYTHING
George Gilder doesn’t often get excited.
A multi-decade technology investor, he’s watched some of his predictions on everything from semiconductors to iPhones come true.
Yet, he’s been equally skeptical of far more claims made over the years — like fusion power enthusiasts who announce every five years that they are 10 years away from a breakthrough.
However, there’s been one material that’s held his interest for several years now, one with immense promise and potential applications from medicine to space travel.
The problem for years has been production.
Like battery power storage, it simply wasn’t commercially viable to produce the material in mass quantities.
Yet, unbeknownst to most people, this problem has been quietly solved over the last decade.
Most people, that is, except George Gilder.
He’s been watching investments in the nascent industry grow from millions into billions.
Some researchers believe the market for the material to expand at no less than 45% ANNUALLY over the next decade.
And it’s this technology that could change the face of… well… everything we use, making the Fed’s interest rate hikes pale in comparison to the deflationary pressures this material could achieve.
So, what is this wonder material?
