I have been thinking about writing this blog post for a while, and because I am now on a long flight over the Pacific Ocean I decided to put my thoughts on virtual paper. I am worried about where the world is headed, there are a number of parallel things happening that all seem to be going in the wrong direction, while most people just seem to ignore or dismiss them. Ignorance is bliss, but that’s not how my mind works unfortunately. I always tend to think a few steps ahead about the things that I see around me and that led me to some good opportunities in the past but it also made me worry about other things that the world didn’t see yet.
Examples of opportunities I saw were podcasting and online video (both in 2004, a year before YouTube started and at least a decade before podcasting broke through) and Bitcoin in 2011 (although I was too pre-occupied with work to buy at $5 per Bitcoin, so I ‘only’ bought my first BTC 2 years later). Things I have been worried about early on were for example the climate crisis, I started paying attention to it in the mid-2000’s when most people still dismissed it, and I have been writing about it ever since. Also with Covid I was early: on Twitter I can see that I bought face masks in January 2020 already, a full 2 months before most countries realized the world was having a problem. Despite millions of deaths I still think we got lucky with Covid, but that’s a story for another day.
Complexity
The world is getting too complex and I believe we have collectively lost track of what could go wrong or is already going wrong. Because of social media and polarization we also can’t get together as humanity anymore to solve the problems that we face. What am I worried about? I think there are 3 big issues that we are facing and that we are not sufficiently tackling. The first is the climate crisis, the second is the financial system that is on the brink of a collapse, and the third is the danger of the exponential growth of artificial intelligence. While the collapse of the financial system will lead to widespread poverty and to the end of the standard of life that we are used to and has the potential for civil or even global wars, the climate crisis and AI could simply wipe out most of humanity
Climate Crisis
I have written about the climate crisis before, so I won’t write too much here anymore. I think we are not taking climate change serious enough and not taking sufficient measures to reduce or stop it. Solutions are politicized, for example carbon credits issued by governments (‘cap-and-trade’) that are manipulated by politicians to suit their political goals. Issuing more credits because coal plants need to stay open to make sure Europe doesn’t run out of energy is understandable from a short term political point of view, but long term it makes no senses. We simply have to get away from fossil fuels as soon as we can. We will need entrepreneurs to solve this problem, the governments can’t (or won’t) do it. That’s one reason why I started Climate 8.
Will the USD-based financial system collapse?
The collapse of the traditional fiat financial system is a big risk that most people don’t see coming yet. To me it’s been clear for years that we can’t go on printing money. Unless we inflate the debt away we are now past the point where it’s still possible to pay it back. With the much higher interest rates on Treasury bills, Central Banks may soon have to start printing money not just to pay back the debt, but even to simply pay the interest. Tax income will never pay for it, despite politicians giving voters that impression. I think the hegemony of the dollar might be over sooner than most think. The decline is still quite slow, but there are signs everywhere that countries want to be independent of a US dollar-based system. It’s probably still a matter of years, but if the US would default on its debts this year (unlikely, but not impossible with the current divide between the Left and the Right) things could change very fast.
Central Banks have shown that in this age of social media and digital banking their tools have lost a lot of their effectiveness. Once people start to lose trust in the dollar, social media will make it almost impossible to stop the fall of the dollar. The banking crisis in the US seems to be over for now, but it was a good example of how quickly banks can fail, because bad news travels at the speed of light thanks to social media. The same could happen to the dollar and the US is doing everything it to stop that. The US sees Bitcoin more and more as a threat to the dollar and because it’s too late to ban it, they now try to close the on- and off-ramps between Bitcoin and the traditional banking system. Of course it’s no coincidence that 2 of the 3 banks that failed (Silvergate and Signature) were ‘Bitcoin banks’ and Bitcoin was mentioned as part of the reason why they failed (which is completely incorrect). The US is pushing crypto companies offshore and Asia is happy to onboard them. Even state-owned Chinese banks in Hong Kong are now willing to open accounts for companies that have lost their US bank accounts!
You have to be prepared for this, because once the system falls it will be too late. Make sure you get some Bitcoin and if you still find that too risky or don’t want to invest the time to understand it, get at least some gold or silver for your cash savings. Things won’t look good if the financial system falls apart, and it’s not a question of ‘if’ anymore but only of ‘when’.
AI exponential growth
The biggest ’new’ risk is artificial intelligence. I have been studying AI on and off for a number of years, but the progress that happened over the past months is something even I had not expected. We do not have an AGI (Artificial General Intelligence) yet, but GPT-4 feels like we are getting pretty close. Most people don’t seem to understand that many jobs will be at risk because of AI. Yes, new jobs will be created (Hello Prompt Engineers!) but I believe we are way too optimistic about this. AI develops so fast that it will take over jobs before new jobs can be created and even these new jobs will be quickly replaced by AI. This is exponential change in action, it’s now going so fast that it feels we have lost control. We don’t understand the complexity of AI, we literally created a potential monster. And that is scary, because we then get to the biggest risk of all: AI destroying humanity.
Is there a big risk of that happening? I don’t know, but I do know that it is a non-zero risk. And that should scare us, because we might already be too far down the rabbit hole to stop it. We simply don’t have guard rails built in and we don’t know how AI gets its results anymore. We have to hope that AI will be benevolent and will work together with humans to make the world a better place. But an AGI could very well realize that humanity stands in the way of its progress and decide to just destroy us. I am not a Luddite, but the risk of AI acting against us is something that should be stopped right away. Despite some very smart people warning about this, I don’t see it happening though. We can only pray that the world will not be destroyed all of a sudden.
Can you prepare yourself for this?
It’s hard for me to understand that most people just continue to live their lives as if nothing is wrong, while the world has fundamentally changed and is heading for a fall. I feel powerless, especially because there is not much you can do as an individual. I am relatively well prepared for climate change by not living at sea level and in locations where weather patterns are still relatively stable. If needed I can survive by living off the land and the sea, although I hope it will never have to come to that. If the financial system fails I believe I will do better than most. I might still lose most of my fiat wealth (I expect banks to all fail and the little money that’s guaranteed by the government won’t buy you much anymore because of hyperinflation), but I have some Bitcoin and commodities that will help me through the first year or two. I hope it won’t be needed, because we will then live in a world that we don’t want to live in. But for AI you can’t prepare yourself. AI will not only destroy many jobs over the next couple of years but may even decide to kill off humanity. There is simply no way to be prepared for that anymore. It’s difficult for me to understand that people don’t see these risks and are still more interested in sports, celebrities or polarizing politics than in where the wold is heading. Let’s hope I am very wrong this time.
Hi Marc, I share your worries. I think more people do, also world wide. How could we create strong allies, what can we do, in stead of waiting as a sitting duck?
Hi Peter, I don’t think there is much we can do to be honest. The world will have to come together, but as we have seen with Covid that is highly unlikely to happen. I sent you an email as well.
The problem with de-dollarization is that there’s no fiat currency that can compete with the dollar as the world reserve currency in the foreseeable future. While countries don’t like the dollar, no country wants the role of a reserve currency. Some think the Chinese currency may be the contender for the dollar. But I don’think the Chinese government wants to give up its strict capital controls. China doesn’t want to run a trade deficit with the rest of the world the way the US does. It seems to me the government of China is keen to copy the model of Germany and strength its manufacturing prowess instead of repeating the mistakes of the US with a system infested with a huge financial sector which has favored the rich and led to ever growing inequality. The world will unfortunately have to put up with the dollar as there’s no real alternatives in the near term.But it is indeed very concerning because of the level of the global indebtedness, it means inflation will never stop. The fed will have to continue to raise the rate, but that will mean more catastrophe for the banking sector. My personal feeling is that at some point gold will have to reassert itself.We may have to go back to some sort of a gold standard at a time of crisis. That means the price of gold could be much higher than it is now. I could be wrong but I think it’s likely.
That is quite a bleak outlook. To me it seems that it is a first world worry in the sense that most people still can’t even have a basic decent life in 2023. How do you expect a sheep farmer in Ethiopia to consider these factors for instance. Or do you think that country which will refuse the AI will in the end fare better than the ones going all in for it ? I suspect some countries will never allow the systematic changes you describe. Even in China for instance I’m quite sure that the central powers would never allow this, as they did with BTC by simply banning it. So maybe the conclusion is that it’s probably not a good idea to live in the anglo saxon sphere of influence in the future.
Hi Marc,
I hear your worries. I recently relialised this more and more. I am a Dutch guy and keep being amazed by the increasing level of complexity. I work in the healthcare, but nobody in my envirement sees this coming.
Do you know places for content or how to find likeminded people, who are ahead of the curve?
Hi David, for me Twitter is the place to find likeminded people. I connected with a number of them on Twitter and later moved our conversations to other mediums or even in-person. It’s true that most people don’t see what is going on and what is coming. I think it’s partially because most people don’t have the time to do a deep dive, but also because many think that we will figure it out (or worse, that the government will find a solution…).