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Technological advances are happening faster than our ability to understand them.
We cannot afford to cling to systems and pretend they are working because they did in an era before technology.
Most times, the entrepreneurial spark comes from envisioning the way the world could work versus the way it does now. In other words, the opportunity to create something better comes from observing something broken or that doesn’t work the way you believe it should. That, oftentimes, creates the highs and lows of the entrepreneurial adventure because even if you are right, change is never easy. Many of history’s greatest entrepreneurs, scientists, and leaders were ridiculed early on, but continued, because they saw something that needed change. That itch had to be scratched.
We are at a crossroads. What worked before will not work in the future.
The only thing driving growth in the world today is easy credit, which is being created at a pace that is hard to comprehend.
The rise of that credit and corresponding debt is keeping us locked into a system where we are the proverbial frogs in a pot with the heat of the water slowly rising and we do not notice. And as we try
On our current path, our world will become profoundly more polarized and unsafe.
The loss in faith of systems meant to be reliable predictably leads to blame and division—all of which can be opportunistically redirected to target groups such as immigrants, religious groups, political parties, other countries, and so on. In other words, populism explodes because of an unjust system.
The trend of more wealth inequality, more polarization, and more discord is a major threat to our collective future.
We expect to start our careers, earn more over time, and hopefully at the same time outrun rising prices. If we are lucky enough to have bought assets, the rising prices of those assets, because of inflation, creates longer-term wealth.
True, asset owners have prospered more than others, which has contributed to inequality, but overall in the world, this process has driven much of the world out of poverty.
And what if, by desperately trying to cling to an outdated inflationary model, we drive more wealth inequality, more polarization, and more discord into our societies?
Deflation, put simply, is when you get more for your money—just as inflation is when you get less for your money. With deflation, a currency becomes more valuable because its buying power goes up in relation to goods and services. With inflation, it’s the opposite: the prices of goods and services go up and therefore a currency’s value is lower as purchasing power is less.
In the near future, if you’re not a technology-based company, you will likely not be a company at all.
That would allow us to step off the existing treadmill of chasing higher and higher prices, requiring ever-higher-paying jobs to keep up.
over the world, rent, housing prices, fuel, food, and many other costs are rising, keeping us on a hamster wheel of work. To anyone living in this environment, it is almost impossible to believe in deflation or the abundance that might be possible with it.
But this rise in prices is artificial—driven by an enormous rise in credit and debt.
There is already too much debt in the world, which paradoxically makes the problem harder to solve. Debt combined with deflation is a toxic combination, because borrowers have to pay the same for their interest payments while earning less.
it any wonder that the biggest movers in financial markets today are betting not on the growth of companies but instead on the direction of central bankers and governments with regard to monetary policy?
There are four levers that policy makers can pull to bring debt and service levels down to income and cash flows that are required to service them: Austerity—spending less Debt defaults/restructuring The central bank printing money or other guarantees Transfers of money from those who have more than they need to those who have less (much higher taxes for the rich)2
is highly likely that policy makers will print again as governments around the world try to kick the can down the road once more.
The monumental challenges for any society are when an economic game is rigged in favour of a few while others are disadvantaged.
When the disadvantaged realize that they are playing a game that cannot be won. That is where we are in the world today, and even if most people don’t realize why,
But it is coming at a cost. The cost is the populism that is rising around the world. And that cost is set to explode.
GDP:6 Consumer spending or personal consumption (C) Investments (I) Net exports (X) Government spending (G)
the easiest thing to do in politics is to blame outsiders or game the situation to provide short-term benefit—and kick the can down the road.
setting up an untenable situation where servicing the debt is an increasing drag on the economies—and will ultimately become impossible.
If it takes ever-increasing credit growth to achieve economic growth, how are our economies any different from a Ponzi scheme? A
And since inflation makes your currency worth less over time, we need to start asking: Isn’t currency founded on trust in the value of that currency? And doesn’t that mean that by setting inflation target rates, governments have a stated goal of eroding that trust?
they made a choice that changed capitalism by gifting many of the engineers of the chaos with risk-free returns at the taxpayers’ expense. Using
By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.
Our economies and countries are interconnected, as are our people.
No country works in isolation.
capitalism actually calls for such a cleansing.
I still believe that. I also believe in capitalism, where risk is rewarded and punished, and where the free market is the ultimate referee of your value.
market where government reaches in to decide who wins or loses is nothing more than crony capitalism, where wealth is not created by the value you create and the risks you take to get there but by a political system that rewards its insiders.
One of the pillars of capitalism is a free-market system—it’s
a near-constant flow of innovative entrepreneurs breaking monopolies and then themselves creating new ones. The paradoxical term “creative destruction”
In the end, I realized that the things in life I valued most—family, friends, integrity—weren’t contingent on business outcomes and couldn’t be taken away from me no matter what. Framed that way, all the challenges and risks of running a business were eminently more manageable. In
the riskiest proposition of all is to lose sight of who I was. To betray myself was the only way to truly fail.
This is why perseverance plays such an important role in entrepreneurship. If the windows that open are small, it is more likely that successful entrepreneurs are early, not late, which requires them do whatever it takes to keep their businesses going until the market arrives.
Forecasting the timing of change and taking advantage of it may be the most important skillsets of a visionary entrepreneur.
Strong network effects are at the core of every platform business today.
That example shows that standing out early on a platform can yield impressive results, creating broad distribution and reach where there was none before.
In the past, monopolies were often broken up because of their negative effects on consumers in the form of increased pricing or constraining markets. The monopolies today are constructed differently and do the exact opposite for consumers.
The consumers win in the form of better pricing and service—which is deflationary—and, therefore, the monopolies are hard to stop.
The “Minsky moment” is the tipping point where the debt-fuelled asset bubble collapses, assets become difficult to sell at any price, and a market collapse ensues.
is not the debt itself that acts to undermine capitalism. It is the act of stabilizing an economy through socializing the losses when faced with a collapse that undermines capitalism’s own institutional framework. So,
Tipping points can come from anywhere and can come quite suddenly, often with little warning of the cascading effects.
Our history is filled with long-held beliefs that governed the way people lived... until those beliefs were changed.
