In this video I go through a more recent problem with the quantity theory of money.
The idea of inflation due to "money printing" does not hold true. When we look at technology, it is going to radically alter everything. In short, we are going to need a lot more money.
▶️ 3Speak
I can see how technology is more deflationary now than before. The advancements in Generative AI are quickly affecting jobs and replacing people. I think that even if we have more money, if people lose jobs, then there is no way for them to earn those. Web3 can be the answer, but it will be interesting to see how it can handle massive amounts of users. Apart from that, a lot of things that people can do in Web3, I think AI can do as well. So it will still be a struggle.
Summary:
In this video, Task discusses the Quantity Theory of Money and its relevance in today's economic landscape. He explains how the traditional economic theories of inflation and deflation may not hold up in the face of technological advancements. Task highlights the need for more money circulation in the economy to offset the deflationary impact of technology. He mentions that economists like Milton Friedman, Paul Krugman, and Larry Summers may not fully grasp the disruptive effects of technology on the economy. Task emphasizes the importance of understanding the accelerating nature of technology and its implications for the future. He concludes by suggesting that a significant increase in broad economy money, like stablecoins, is necessary for the evolving economic productivity.
Detailed Article:
Task starts the video by introducing the topic of Quantity Theory of Money, focusing on its flaws and the impact of technology on the economy. He criticizes the traditional notion of too much money leading to inflation, stating that the current shortage of money is a more significant concern due to balance sheet constraints and the deflationary nature of technology.
The discussion delves into how technology drives deflation by reducing the cost of goods and services, ultimately affecting asset values. Task challenges the idea that deflation is entirely beneficial, pointing out the negative consequences it can have on assets like real estate.
He references Peter Diamandis' concept of technology demonetizing, highlighting the misconception that technology always creates more jobs than it destroys. Task presents his own research over the past 25 years to suggest that technology may not necessarily lead to job creation, contrary to popular belief.
The conversation progresses to the role of quantitative easing in combating deflation and how traditional economic metrics may not fully account for the impact of technology on the economy. Task stresses that a significant increase in money circulation, specifically broad economy money like stablecoins, is crucial to counter the deflationary effects of advancing technology.
Task criticizes economists like Paul Krugman and Larry Summers for their lack of understanding regarding the implications of technology on the economy. He points out that the accelerating nature of technology will lead to massive disruptions across various industries, necessitating a reevaluation of economic models and metrics.
In conclusion, Task emphasizes the need for a more profound understanding of the accelerating pace of technological advancements and the importance of adapting economic strategies to address the evolving economic landscape. He highlights the necessity of increasing money supply and suggests that stablecoins could play a crucial role in supporting economic productivity in the face of technological disruptions.
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