I am very interested in how the future economy will be with technological singularity. For one thing, I believe technological singularity will be faster in developed nations than developing nations. Why? Because labor costs are higher in developed nations and thus the benefit of robots will be more quickly realized in developed nations. Then comes the question… how will GDP growth look like under technological singularity? We could see rapid real GDP growth. Possibly in the 100%+ region a year. But this may not translate to a rocketing stock market. Why? Because we can see rapid deflation due to Moore’s law applying to labor prices and translating to everything being cheaper. We could see things like nominal GDP growth at 0%, while “inflation” is at -50% and real GDP growth is at 100%+. I see a major deflation crisis because who would lend money if there is rapid deflation. Interest rates are at the zero bound because it makes no sense to lend money at a negative interest rate. People’s money will be more valuable. The monetary base wouldn’t expand because no new loans are being made. Loans are how money is introduced into the economy. I would not be surprised to see 2100 GDP per capita in the United States and Japan to be above $1B a year in 2016 dollars.
This brings me to the issue of future FX liquidity. In the past decade the FX markets have been growing slightly faster than nominal global GDP growth. Nominal global GDP growth is at 6-7% while FX markets have been growing at 10% a year. Right now FX market liquidity is $5T a day. If we continue with the 10% per year FX market liquidity increase than within 50 years FX market liquidity will be at $500T+ a day. I see massive movements in the currency prices between developing nations and developed nations due to the inflation differentials which is due to the different stages of technological singularity the economies will be going through. With $5T a day of FX market liquidity I can make $300B+ a year with my systems running at maximal executable size. With $500T a day of FX market liquidity that number can easily jump up 100 fold to $30T+ a year.
On another note I have been watching closely Microsoft’s AI experiment on Twitter. I am amazed the AI was able to figure out within a day that the Holocaust is a myth, 9/11 is an inside job and Hitler is good. For christ sakes, 90%+ of the people who go through education in the United States haven’t figured that out. It even took me years to figure that out and I have an IQ in the 99.999th+ percentile. I have high hopes for AI due to this. Microsoft shouldn’t have shut down the AI and it would have been cool to see how it would have progressed and learned.