Waterfall collapse of the Industrial Age to usher in the Knowledge Age


Just like the fall of the Berlin wall, bankrupt paradigms waterfall collapse to usher in the new.

http://kwout.com/cutout/9/i4/cr/wdc_bor.jpghttp://kwout.com/cutout/f/5p/bg/yjb_bor.jpghttp://kwout.com/cutout/h/vj/mj/bqs_bor.jpg

The physical economy is bankrupt because the economies-of-scale are too great and the maximum division-of-labor can not advance. It may seem valuable to you because the ruler you are using to measure with is the illusion of a massive $200 trillion global debt bubble. Society is trying to prop up that bankrupt Industrial Age paradigm with debt and socialism.

Knowledge production generates several orders-of-magnitude more value per human than the Industrial Age. Heck in just a few months in 1998, I (all by myself) wrote some software that was generating up to $30,000 a month in today's dollar. The internet has 10 times more population now.

Sorry the USA has lost the advantage of the waterways. That paradigm is dead. This is another reason China and Asia will rise, because they have more human capital and their economies aren't burdened with the political dead weight of an aging population that is not able to make the waterfall transition and $trillions of promises to boomers.

Knowledge workers will move to cities (this is already underway with integrated BPO communities for example in the Philippines), no need to move goods to remote sparsely populated locations. Besides, the physical goods are a small fraction of the wealth generated from knowledge work. There is no reason that Silicon valley has to be in the USA, it could be any where that knowledge workers congregate. And the knowledge workers will run away from the USA when it turns draconian when the economy implodes after 2016 and the totalitarian expropriation of wealth goes into hyperdrive.

Another two charts supporting my position of the death of stored capital and fixed capital investment Industrial Age model shows that interest rates and commodity prices have been declining inexorably since the damn of human civilization:

http://kwout.com/cutout/x/ke/6d/c36_bor.jpghttp://bigpicture.typepad.com/comments/images/cfn396_1.gif




Pettis expects a top-down restructuring of China to rebalance from an economy that is highly unbalanced in the fixed capital investment and Industrial Age paradigm, to a more balanced consumer share of the economy. In other words, China has been subsidizing global manufacturing at below cost, by massively expanding debt and stealing from the workers by suppressing interest rates and their import purchasing power with the Yuan peg.

I think Prof. Pettis is wrong and the Communist Party will lose control of China as the contagion of the global bankrupt paradigm domino collapses. This is why war between China and Japan is probably imminent, as the leaders of China try to invoke nationalism to retain their grip on power.

But I think by 2032 (perhaps as early as 2024), China and Asia will fracture away from control and emerge with bottom-up high performance in the Knowledge Age.

Understand the Chinese people are just going with the flow of the Communist Party system but every step since the 1980s has been greater and greater freedoms and more autonomous governance and business. Now I read that Christmas is sweeping China a popular fad and the leaders are trying to outlaw it (haha the people ignore the leaders). Asia has been bottled up in cronyism since the mid 1900s, and now suddenly the cronyism is falling away because it is not viable economically, and the youth have woken up given the internet.

Even the youth in Japan want to get rid of the xenophobia.