(Interviewed by Louis James, Editor, International Speculator)
This interview was first published on October 28, 2009.
Editor’s Note: In today’s Weekend Edition, Casey Research founder Doug Casey explains why amazing technologies will make the future better than we can even imagine…
Louis James: Doug, people have written in saying you’re a “doom-and-gloomer” and a “permabear” - but I know you’re an optimist. Why do you suppose that’s so?
Doug: Perhaps it’s because I’ve long said that the Greater Depression is going to be worse than even I think it will be. But looking forward with a long view, I think the future is not only going to be better than I imagine, it’s going to be better than I can imagine.
The coming Greater Depression will be serious, but I don’t think it’s going to change the fundamental long-term trend of human history. I believe Jacob Bronowski was right: The Ascent of Man will continue. Mankind started out grubbing for roots and berries in the mud, but our descendants - not so far in the future - will be colonizing the stars.
L: That was the guy who wrote the BBC series back in the ’70s called The Ascent of Man? I didn’t remember his name, but I remember watching the series…even though I was only eight. So, when you talk about the long term, you’re not talking years, decades, or even centuries, but the grand sweep of human history and beyond.
Doug: Yes, exactly. An interesting thing about investing, and life in general, is that there are long-term trends, medium-term trends, and short-term trends. You have to figure out which ones are important, and then, if and how to capitalize on any of them. And it seems to me that one of the longest-term human trends in existence is the 10,000-year-long bear market in commodities.
In real terms, metals were extremely expensive and rare in Neolithic times.
L: Iron was so rare, it didn’t exist. And I’d guess that a polished copper mirror would have taken the equivalent of many human lives to make.
Doug: Right. What metals there were came from what people could find in those metals’ native forms. That meant primarily gold, for the reasons we talked about in our conversation on gold. There would have been some copper and some silver, but that would have been about it. And even the equivalent of kings back then would have had very little of it.
Then, civilization developed in the Middle East, and we entered the Bronze Age, which gave way to the Iron Age - and now we’re in the Silicon Age. Each one of these things is progressively less rare. Silicon makes up the computer chips that drive modern life, but it’s basically just sand. On a scale of millennia, commodities have collapsed in price. Eventually, they’ll go to near zero in cost. Commodities will drop to no more than the royalties on the software that runs the nanotechnology that extracts them. The future, at least given a free market, should produce mind-boggling abundance.
L: Let’s come back to nanotechnology in a moment. The overall trend you’re describing doesn’t depend on it. Even without nanotech, cheap and abundant energy would drop the prices of most commodities to near zero. Seawater is full of dissolved metals, for example; you could have all you wanted if you just had the energy to process all that water. Cheap enough energy makes the lowest grade concentration of anything economical.
Doug: Yes. We already know how to extract those metals or make artificial oil; it’s strictly a matter of having enough energy to drive the engineering. And, of course, the economics. This is why I find it so frustrating when people talk about running out of natural resources. There’s no danger whatsoever of that. Not only are the resources of the world adequate, they are essentially infinite. It’s a question of technology - know-how - and capital, enough wealth to implement the know-how, that is, to build the machines.
Look, every material thing in the universe is constructed out of the 92 naturally occurring elements in the periodic table. Having anything we want, from a slice of bread, to a new car, to perhaps a new life form, is simply a matter of rearranging atoms into the correct combinations at an acceptable cost.
L: My friend Jim Von Ehr, CEO of Zyvex, a nanotech instrument company, once told me that some of the most valuable land in the future would be the sites of old landfills, because they are basically mountains of purified materials. Once you can reduce matter into its component atoms and make new things with it, such places, packed with high concentrations of useful atoms, will command a premium. In the future, there will be no such thing as trash. So, this bearish trend in commodities you speak of isn’t really a bearish trend at all; it’s a bullish trend in technology.
Doug: And that includes nuclear waste. Greens, who generally have little background in science, are completely unaware that spent reactor fuel is a potentially valuable future resource - in addition to being a trivial storage problem in the interim. The storage problems are almost entirely political. Technology, it’s the most bullish thing possible for the standard of living of the average human being. Many people living below the poverty line in the U.S. have televisions, refrigerators, medicines, and luxuries that even kings and queens of only a hundred years ago couldn’t have dreamed of. That trend is going to continue - and accelerate. It’s hard to overstate how favorable this is.
Among other consequences, advancing technology makes it cheaper and easier to extract, purify, and utilize commodities. As we’ve discussed before, in pre-industrial times, a gold mine needed to grade an ounce or more of gold per ton in order to be worth bothering with. Now you can make money mining deposits that grade a hundredth of that. Simultaneously, our use of these commodities has become more efficient. You can see that clearly in automobiles; the average car in the 1950s might have gotten 10 miles per gallon, now it gets closer to 30 miles per gallon - and goes much faster in the process.
L: And has safer glass, better headlights, movie screens to entertain children on long trips, anti-theft technology, and performs much better in collisions.
Doug: Yes, and that’s how it is with all technology. Just think about computers. Moore’s Law. They double in capacity every 18 months.
Incidentally, that’s the solution to one of the bugaboos of our age: Pollution. The better the technology, the less pollution there is.
L: So, would you say you’re a techno-optimist as a matter of general principle, because that’s the way you’d bet on the multi-millennia trend, or because there are specific technologies you see developing that lead you to this conclusion?
A key fact is that there are more engineers and scientists alive today than there have been in all of the rest of human history combined. And all of these people want to become the next Steve Jobs or Albert Einstein - they all want to become immensely wealthy or make major breakthroughs. The path to the former is by inventing better technologies, and the path to the latter adds to the understanding that allows us to do the same. These people are as motivated as any alive, and I expect a good number of them will succeed.
There is a countertrend, however: Government. States all around the world are becoming increasingly virulent, both in terms of seizing capital and in terms of making capital accumulation more and more difficult. Further, they’re constantly creating new regulations on what can and can’t be done. And remember what I said before: Technology isn’t enough; you have to have the wealth to implement the new technology. Governments, however, are actively destroying the capital we need to advance, and slowing its accumulation. Through power-hungry myopia, bureaucratic stupidity, and ideological insanity, governments are actively destroying the capital we need to advance, and slowing its accumulation.
Back on the positive side, I’m a huge believer in nanotechnology. I believe it is likely, even in the span of the next generation, to change the nature of life on this planet totally, unrecognizably, and irrevocably. It’s the single biggest thing on the horizon.
L: Want to take a moment to define the term, in case any readers are not familiar with it?
Doug: Sure. It’s the creation of computers and machines on the sub-microscopic level - the atomic level, really.
L: There are lots of definitions, but that’s as good as any I’ve heard. Why should anyone care about machines the size of a molecule? Well, for one thing, it carries what you said about better technology and pollution to the ultimate level. If you use molecular machines to build things one atom at a time, there is literally no waste. Zero. Every atom is used and put exactly where it is needed. No byproducts, no pollution.
Doug: Yes. And it enables you to build perfect machines, perfect in the sense of them having no mechanical imperfections, which vastly increases their efficiency and reduces the need for energy.
L: A good example of this I’ve read about is the creation of rocket engines that deliver perfectly linear thrust. Rocket motors now spew out all sorts of stuff, roughly in the right direction, but also including a lot of noise and light, which don’t really help them move. If you could build rocket motors that eject perfectly linear exhaust, you might be able to lift the same payload one of those monstrous Saturn V rockets lifted with a motor the size of a toaster.
Doug: There are many applications. Medical applications are among the ones I’m most interested in. Once you have machines the size of an enzyme, which is really just a natural molecular machine, you can program them to spread through a patient like a “doctor virus,” one that repairs cellular damage from within each and every single cell in a human body. That doesn’t just mean fixing malfunctioning cells as in the case of cancer, though that would be trivial for such machines, but also fine-tuning all sorts of tissues for optimal health, which basically means preventing (and repairing) aging.
L: A fountain of youth; sounds like science fiction.
Doug: It does, but it isn’t. This is hard science. One person I have great respect for is Ray Kurzweil, an inventor and thinker about the future who’s written about a coming “technology singularity” - a point at which technology doesn’t just get better, it all but instantly leaps to its full potential. Everything that is possible to do, we’ll know how to do. After this happens, people will look at this event as the single most important thing to happen - ever. We date things now BC and AD; in the future everything will be pre- and post-singularity. And this could happen within the next 20 or 30 years.
L: Sounds even more like science fiction.
Doug: Well, if you look at a graph of the rate of change in technology, it’s basically flat for a long, long time, then slopes upward gently until about the 1750s. Then the Great Enlightenment and the Industrial Revolution hit, and the curve rises more and more steeply. If you look at it now, it looks poised to basically go vertical. Short of a global catastrophe that knocks us back to the Stone Age or wipes our species clean off the planet, there’s no stopping it. The rate of change is accelerating. If it’s not stopped, you get to the point at which the lifespan of your body, or a better one you make, has no natural limit, and your control over everything in the universe that can be controlled is complete.
[Editor’s Note: Here is a chart on this subject from Doug’s book, Crisis Investing.]
The expected abrupt transition from the Paleolithic to Nanotechnic eras (a long-term perspective). Stone Age agriculture and moon landings lie in the transitional zone.
L: Do you really believe that’s possible? Can atomic-scale machines really be built by human beings? Dick Feynman first introduced the concept we now call nanotechnology in his mind-bending paper, “Plenty of Room at the Bottom” back in 1959. He opened with the idea of recording the entire (then) 24 volumes of the Encyclopedia Britannica on the head of a pin. But then, nothing much happened with the idea, or so it seemed, until the 1980s, when K. Eric Drexler started promoting and popularizing nanotech, particularly in his seminal book, Engines of Creation: The Coming Era of Nanotechnology. Now there’s a lot of talk about it, and the non-profit Foresight Institute continues Drexler’s promotional work, but nobody has built an atomic-scale assembler robot - nor even knows how to do it.
Doug: The way Drexler explained it, if you extend Moore’s Law, not only are computers getting twice as powerful every 18 months, their components are getting twice as small at the same time. Don’t forget that Moore’s Law describes an exponential curve. So, we’re approaching the point at which we’ll have molecular-scale supercomputers. And there’s no reason not to suppose those computers couldn’t give instructions to molecular robots, which he called assemblers. Assemblers could take apart anything at all, one atom at a time, and reassemble those atoms into anything you like. That’s where I think we’re headed.
But even without getting to that level, there are so many other technologies advancing, I think great optimism is warranted. Great optimism in everything except politics and ethics, which continue to be very degraded.
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Doug Casey is a multimillionaire speculator and the founder of Casey Research. He literally wrote the book on profiting during economic turmoil. Doug’s book, Crisis Investing, spent multiple weeks as number one on the New York Times bestsellers list and was the best-selling financial book of 1980. Doug has been a regular guest on national television, including spots on CNN, Merv Griffin, Charlie Rose, Regis Philbin, Phil Donahue, and NBC News.
Doug and his team of analysts write The Casey Report, one of the world’s most respected investment advisories. Each month, The Casey Report provides specific, actionable ideas to help subscribers make money in stocks, bonds, currencies, real estate, and commodities. You can try out The Casey Report risk-free by clicking here.