What creates inflation? The simple freakin' answer

Here's a super simple, 2 minute video, explaining fiat money.  What we call the U.S. dollar (a Federal Reserve Note) is a fiat currency, meaning there is not gold or silver somewhere to back up every dollar.  There's debt, U.S. Treasury bills and bonds, instead.  It's a fancy IOU, basically. 

 Disclaimer

This morning, scanning through articles on what's happening in economics and business, I saw this CNN article "explaining" inflation.  And it pissed me off, I just thought, "This is bullshit!"  There are so many articles like this one, which are written specifically to confuse average people.  The article is not complete BS, there are bits and pieces of truth in it.  But it is confusing, and doesn't actually help you understand inflation.  Everyone is seeing rising prices (inflation) in something we buy, probably many things.  So here's the simple question, and the simple answer.  

Q: Where does inflation come from?

A: The agency who creates the fiat money simply creates far too much money.  

That's it.  That's where inflation comes from.  It really is as simple as that.  Where did I learn this?  From Alan Greenspan's 2007 book, The Age of Turbulence.*  Greenspan was a longtime chairman of the Federal Reserve.  I believe Greenspan referred to it as "government spending," the money creation that leads to inflation.  Before the Great Recession  of 2007-09, the government would spend money it didn't have, then The Fed would create more money, year by year.  Afterwards, The Fed just started creating more and more money, at increasingly high levels, and the government keeps spending, at increasingly high levels.  By "agency," I mean the organization that actually creates the money in a country.  In most major countries today, that's the "central bank."  In some countries, it may be the treasury department, or ministry of finance, or have similar name. 

The "velocity" of money, and other factors play a role in how soon, and how much inflation happens, but inflation comes from a government, or a central bank, creating far too much money.  When they create a huge amount of new money, either minting bills and coins, or creating digital money, usually both, then inflation will come afterwards.  Usually it takes about 12 to 18 months after a huge, new batch of money, for prices to start rising noticeably for consumers.  

This chart is the M2 money supply chart, one way they measure how many U.S. dollars exist.  See that big spike on the right?  That's it, that's the 2020-2021 huge increase in money, created by The Fed.  That's where our inflation is coming from.  

On March 2, 2020 (beginning of Coivd pandemic) there was $15.5219 Trillion in M2 money supply.  On Feb. 1, 2021, there was $19.4119 Trillion.  The Fed created $3,890,000,000,000 that shows up in this measurement, in 11 months. increasing the money supply by 25%.  More money, though not as much, has been created every month since.  

Usually they try to hit 3% per year inflation.  In the 2010's, they couldn't create that much, the economy is really out of whack.  That money was used, and is still being created and used, to bail out the U.S. banking system, to keep it from collapsing, and to bail out major corporations, and keep them from going bankrupt during the Covid-19 shutdowns last year.  

Us Americans got a small chunk of that money.  Our stimulus checks and unemployment money are part of this, but a small part.  No one is sure just how much money was actually created (M2 is one measurement, there are other ways, because money and investments exist in so many forms today.   I've heard estimates that up to $6 Trillion was created in 2020-2021.  In short, that means we are going to have high inflation for a long time to come.  This is why stock prices and real estate prices went up during a depression (another fact, we were in an official depression, not a recession in 2020, subject for another day).

This money creation, in many different major countries, comes from the central banks, primarily.  The U.S. central bank is called the Federal Reserve (The Fed), in the European Union, it's the European Central Bank (aka ECB), in Japan, it's the Bank of Japan (BOJ).  

Since the Great Recession in 2007-2009, all of these banks have been working together to create too much money, trying to get the world economy growing again at their preferred pace, which is about 3% inflation per year.  They couldn't make that happen, except in China.  China's massive growth (due to demographics), has been powering the world economy for 12-13 years.  But now China is slowing down, and screwing up their economy even worse with political pressure.  That's a whole different mess, which will affect us over the next year or two. 

Nomi Prins is a former Wall Street quant (math geek) who worked at Goldman Sachs and Bear Stearns, she's an incredibly intelligent woman, and wrote a book in 2018 called Collusion,* explaining how all the central banks were working together.  In this Talk at Google, she explains what she found in her research.  

Obviously, the whole idea of inflation, our rising prices on things we buy, can get really complicated, when you get into all the details.  But the reason inflation happens is simple, the central banks (or nations) create too much money.  That's it. Now you know.

* Not paid links.

 

The NEXT stock market crash

I've thought that the 2020 stock crash wasn't the "real crash," but a huge correction.  I expected another, bigger stock crash (also tipping the real estate market down) coming in 2021, maybe 2022.  The guy here at Heresy Financial channel feels the same way, but explains the nuts and bolts economic reasons much better than I can.  Here's WHY the next stock market crash will happen, sometime in 2022.  

Disclaimer

The original post I wrote here was actually deleted, in real time, as I was trying to publish it.  Seriously, censorship and free speech suppression against people talking about financial matters is that bad now.  I was able to post just the video clip and caption right after.  

Rather than rewrite the whole blog post I just spent and hour writing (that got mostly deleted), just go to 30:00 in this video and start listening.  This is Dave's Heresy Financial video from October 3, 2019.  Over two years ago...

"Tech stocks in the fucking toilet"

-Chamath Palihapitiya, in the clip below (late October 2021) 

 Chamath Palihapitya interview video

Investor Ray Dalio's warning on where we are economically and socially 

Warren Buffet has been selling more than buying stocks, and is sitting on $149.5 billion in "cash" right now.  Waiting.  (Remember, he and partner Charlie Munger were alive during The Great Depression of the 1930's)

"... the worst bear market in my lifetime."  - Investor Jim Rogers, best known for The Quantum Fund in the 1970's, he's 79 now 

"The biggest crash in world history is coming in October" - Rich Dad, Poor Dad author Robert Kiyosaki   

Michael Burry, of The Big Short fame, was actually forced to stop communicating his stock market views on Twitter, by the FCC, as far as we can tell.  

Why flying cars exist... but won't ever go mainstream like in Sci-Fi movies

This video, by Donut Media, is a really solid, 9 minute look at the history of flying cars.  Yes, they do exist, but the chance of you having one is close to zero, unless you're a pilot with half a million bucks just lying around.  Here's a look at a great sci-fi idea, and why it won't ever go mainstream.

George Jetson had a flying car that automatically folded into a briefcase.  I saw them talked about in my dad's Popular Science and Popular Mechanics magazines in the 1970's.  We all thought we'd have one by the year 2000.  Luke Skywalker had his land speeder.  It didn't fly, but it hovered and hauled ass, which was close enough.  They were in Blade Runner.   Doc's Delorean time machine became one in Back to the Future.  And my personal favorite, Corben Dallas had a flying taxi in The Fifth Element.  Flying cars, they've been in all kinds of sci-fi novels, movies, and a few TV shows for decades.  So where the hell are our flying cars?  

Corben Dallas' flying taxi, and a flying police car, in The Fifth Element (1997).  Just for the record, taxi driving did actually get that crazy, at least when I was doing it.  "Leloo multi-pass."

If you watch the video embedded above, you'll find out that the idea for flying cars goes back to when both airplanes, and cars themselves, were still new, in 1917.  Those first attempts more like personal commuter airplanes. Eventually though, there have actually been a few vehicles that could drive legally on the road, and fly, as well.  Mostly they were prototypes.  But to answer that question above, here are our flying cars.  If you have a pilot's license, and $400,000 or more to spend, you can get one of  the 2 or 3 flying cars that are available, and legal in some places.  The Terafugia Transition seems to be the top contender, over all, in real life.  If you didn't quite put away $400K from your Gamestop stock trading wins, and you need to save up a bit more, here are 15 flying cars, or personal flying vehicles, that are either in the prototype stage or in the works (includes the ones in the previous video).  As cool as these look, and may be to fly, none of them look or fly like George Jetson's car, or the other flying movie cars we've all seen. 

Here's the German version of Popular Mechanics magazine, I believe, showing one of those "future flying car" ideas on the cover, way back in 1957.  Notice how close this is to the quad copter drone type vehicle we're all familiar with today.

But that brings us back to the question, if people have been thinking about, and actually designing, flying car concepts for over 100 years now, why aren't they in operation all over?  And why isn't there some kind of small, vertical takeoff car that's easy to fly?  With all the things that have been invented in 100 years, shouldn't somebody have come up with a legit flying car by now?  How about this one?

This is my personal favorite of all the flying car ideas, the Moller Skycar.  This test hover was in the 1990's, I believe.  One of these even featured in a Clive Cussler novel, helping Dirk and Giordino escape some bad guys, in South America, as I recall.  But, like most flying car ideas, there was a working prototype, but no models ever came to market.  

Back in October of 2019, when many of the ideas in this blog were bouncing around my head, but hadn't been organized, I got this idea to go back and watch the trailers of the top 30 or 40 dystopian future movies, and TV shows, from the 1960's to the 1990's, and see how their imagined future compared with the real world in 2019.  Much to my surprise, the original Blade Runner movie, a sci-fi classic, was set in Los Angeles in November of 2019, right when I started writing out these ideas.  Not only a weird coincidence, but I realized that people my age  (55/Gen X) are living in the future of our high school selves, when Blade Runner (and Mad Max II) came out.  

The big lesson of watching all those futuristic movies was that while sci-fi writers come up with great stories and screenplays, and some really cool ideas for new technologies, they tend to suck at actually predicting the future.  Crazy as it sounds, The Jetsons, created in 1962-63, has more technologies that actually came to be in the 21st century, than nearly all of the sci-fi movies and TV shows.  I wound up writing a 20 chapter online book/blog about my thoughts, which included  The Big Transition idea behind this blog (I recently added the "freakin'" part).  You can see that here.  There's a chapter about flying cars.

The first reason we don't have flying cars is the difference between writing and inventing.  A science fiction writer, a comic book or graphic novel artist/writer, a movie screenplay writer, can imagine anything.  The laws of science and physics don't apply.  There should be a logic in the book or movie, so the fictional world seems believable to the reader or viewer.  But you can break the actual laws of physics in some ways.  Engineers and inventors in the real world can't.  So the simple physical constraints of the real world keep us from having a flying car like Corben Dallas' taxi in The Fifth Element, for example.  Although, Nikola Tesla talked about creating cars that actually hovered a foot above the ground, in the early 1900's, something like Luke Skywalker's land speeder.  No one seems to know what forces he had in mind to do that, but he seemed to think that hovering cars (not hovercraft) were possible, it's in one of the books of his inventions  He never created one, just talked about the possibility.  But the Laws of Physics are a big reason we don't have George Jetson flying cars. 

Another reason is that hybrid vehicles, like part car, part airplane, usually kind of suck at both things.  They may work, but are not as good of a car, or of an airplane, as real cars and real airplanes.  To make a vehicle do two completely different things, like this, or this, for example, usually lowers the abilities of the vehicle in both areas.  But there are times when hybrid vehicles work for some uses, like this one did, back in World War II.

For the $400,000 it takes to buy the least expensive real flying car, you could buy a Cessna 172 airplane ($80K-$150K), a brand new Ford F-150 pick-up ($45K), and a used Lamborghini Gallardo ($110-150K).  With what's left, you could take you pick of a good runabout boat (with a trailer), or a couple of jet skis (with trailer).  So you can easily buy a great truck, a ridiculous sports car, a solid, dependable, used airplane, and a boat or jet skis, for what a real world flying car would cost you.  Still want that flying car?  

The Moller Air Car, which, let's face it, would be cool as fuck to fly around in, never came to market.  The main reason is because designer/inventors are good at inventing, and often not good at other types of thinking.  I'd call it more of a blind spot, than poor thinking.  We all do this.  My dad was a gifted draftsman and engineer, a true mechanical genius, so I witnessed this firsthand, growing up.  Designers, inventors, and engineers think about really cool physical machines.  That's good, that's what they get paid to do, think up, design, engineer, and plan all kinds of machines and mechanical systems, including vehicles.  A good engineer will go to great lengths to design smart, efficient, durable vehicles.  For example, my dad worked at Plymouth Locomotive Works in the late 1970's.  The company went out of business in 1983, but many of their custom locomotives are still in service, 35-40 or more years later, like this one.  That's good designing, engineering, and manufacturing.  

But to design, build, and make something like that Moller Air Car, and make it into a widely used vehicle, takes a whole lot of things besides a functional, working, safe, flying car.  And inventors, engineers, and designers just don't think of all those things.  I think this is why sci-fi writers write amazing novels, comics, and make great movies, but create future worlds that will never happen in real life.  They get hung up on the technology,  but don't find social dynamics near as interesting.  To predict a future society, you have to look at all the weird things that make up a society, mostly weird people.  And most people spend most of their lives doing things that don't make much sense.  Put all those things together, and you get a real (generally pretty dysfunctional) society.  Meanwhile, designers, inventors, engineers, and techie writers and directors think mostly about machines, things that do make sense.  To make flying cars a widespread thing, you have to not just create the car, you have to change society to create a place for that flying car.

 First, someone has to fund the whole design and prototype process, which reportedly cost the Moller Air Car $110 million, or something close to that.  So you need to sell the idea to people with a lot of money, to even get started.  Engineers and inventors, for the most part, are not salespeople.  Once you invent a functioning flying car, then it needs to prove its air worthiness.  More time, more money, and... DUH, DUH, DUH... government regulators.  They don't like new ideas.  

 

Then, after all that work, you need to sell the idea that people actually need these things.  OK, for the Moller Air Car, you could find a lot of people to back something that cool.  But you will also have some kind of activist group trying to keep it from happening.  Every good idea has lots of detractors, especially early on.  Haters gonna hate, no matter how cool your idea is.  

Then you need to fund, and build infrastructure, in society, somewhere, for that new vehicle.   How do you fuel them?  Where do they take off and land?  Guess what, if your loud flying car takes off from your driveway... in your gated golf community filled with $2 million houses, some neighbors WILL NOT be happy.  So you need some kind of airport.  Then you need the FAA to first buy the idea, and then figure out needed regulations, and then add those aircraft to the tens of thousands of aircraft already flying, to keep the skies safe.  Then you need insurance, for when things go wrong.  And things always go wrong, at some point, even on well designed and built ideas.  Ask NASA or Elon Musk.  

Then, if it's really a great idea, politicians somewhere need to have their palms greased, to pass needed laws or ordinances.  Then, after spending 35 years and $600 million (or whatever) getting to that point, you need to make enough money to pay alimony to your three ex-wives that left you because you loved your flying car more than them.  What's that old saying, "If it floats, fucks, or flies... rent it, don't buy it."  

Then you actually have to build a business to sell the flying cars.  That takes more capital, engineers, salespeople, tech people, and all the rest.  Then you have to sell enough of the things to get past the break even point, and actually pay a good return to your investors.  Then you have to worry about competition making something similar, but without all the start-up costs you had to front.  

It's not so much that a VTOL (vertical take off and landing) flying car isn't possible to build.  The Moller Air Car, was there, 20 or more years ago.  But you have to change a big chunk of how society operates to get the functioning flying car to a place where people can actually fly them as a recreational or commuter vehicle.   Engineers, inventors, and techies love the tech, but generally not all the weird people you have to deal with to bring an idea this big into mainstream operation.  

So why I'd love to fly around in a Moller Skycar, and buzz past the gridlocked 405 freeway below, there's little chance that will ever happen.  So that's my take on how something, like flying cars, can seem like such a cool idea for 100 years, but never actually happen in a mainstream way. 

 

Zillow stops flipping houses- stock down over 20% TODAY*

A few days ago, Zillow paused its home flipping business, Zillow Offers.  Today it announced that it's shutting down the business altogether after some serious losses in the last quarter.  Their stock went BASE jumping after the news.  

Zillow may have more data on the nationwide housing market than anyone, but that wasn't enough to launch a large, successful iBuyer real estate business in the crazy, pandemic induced market.  

Reventure Consulting covers this late breaking news well in this video.  Other iBuyer real estate stocks are down a lot as well, and so are some traditional RE agency stocks.  Is this the turning of the tide in the Covid-induced real estate market?  Time will tell.  

Disclaimer

*The 20% one day drop in the Zillow stock price includes the after hours trading, from $95.16 this morning to $75.75 at 8pm (Pacific Time).

Welcome to the (not so) Wonderful World of Inflation

When it comes to the people I want to hear talk about today's economic world, Mohamed El-Erian is about the top of the list.  He's a very intelligent, well established investor who tells it pretty much as it is.  Right now, in this October 22, 2021 Bloomberg interview, he says the signs are telling him, inflation (rising prices) is heading up, and will keep going up for quite a while.   

Disclaimer

 The Fed (the Federal Reserve, the non-government entity that is the U.S. central bank, and creates our money) has been saying this inflation is "transitory," for a few months, meaning they didn't think it would last long.  But inflation has stuck around, and it's getting worse. 

"Inflation is the number one issue facing investors."

 - Paul Tudor Jones, another very smart, savy, established investor, in this October 20, 2021 interview on CNBC.

To calm inflation down, The Fed can raise interest rates that banks charge each other for short term loans.  When they do that, all other interest rates go up as well, in a ripple effect.  But that would mean the cheap, easy money that Wall Street has been relying on since September 2019 (Google "Repo Market Crisis"), is ending.  And that would make stock prices drop, big time.  

So The Fed is stuck, If they do nothing, inflation keeps getting higher, and most everything you buy keeps going up in price, maybe a little, maybe a lot.  If The Fed "slams on the brakes" as El-Erian says in this interview, that means raising interest rates 1/4 % or 1/2 %, and stock prices react and go down.  It looks like The Fed is going to let prices soar, and then raise interest rate too late (sometime next year, say March to August, most likely), and then stocks drop faster and harder.  That's if they haven't tanked already for some other reason, like the fact they are crazy high to start with.  

In any case, for normal, real world, working people, prices are going to keep going up, for many months, maybe a couple of years or more.  Get used to it.  Welcome to the (not so) Wonderful World of Inflation.  And even better stagflation.  That's a stagnant, lackluster economy, with rising prices at the same time.  

Why is the Retail Apocalypse happening?

Once full of customers wandering around and spending money, this mall, the Northridge Mall in Milwaukee, Wisconsin, is one of dozens of shopping malls that have closed down, or have found another purpose.  "The Retail Apocalypse" is the name coined in 2017 for the continuing closing of thousands of retail stores across the U.S., and other parts of the world.  This UrbEx video is an exploration of that abandoned mall, about 16 years after it closed, in 2003.  

Disclaimer

Like most people over 20 years old, I grew up going to shopping malls with my family on a regular basis.  In my birth state of Ohio, Sears, J.C. Penney, and Montgomery Wards were the three main anchor stores I remember, the huge department stores where my parent's shopped for just about everything, from school clothes, furniture, to dishes, to tools.  Yes, we had big discount stores, like Kmart and Grant's in our area, and Walmart and later Target in many other areas. 

Local shops in small town downtowns, or the big shopping centers were where my parents shopped on a daily basis.  We often went to malls on weekends.  The same was true for most of the millions of Americans around the country.  Most all of you reading this have similar memories, I'm sure.  Malls were such a part of American culture, indie director Kevin Smith made a movie called Mall Rats in 1995, just about the people hanging out in malls.  You may recognize a couple of those actors, best known for their later work.  

Then, in the 2010's something began to happen.  The big department stores had been struggling for a while.  But one by one, a few chain stores, in malls and shopping centers, began to close.  Then a few more.  I don't think anyone has a complete count, but several thousand individual stores closed from about 2010 to 2016.  

The frequency was increasing, and major chain store closures started coming faster and faster.  In 2017, the term "Retail Apocalypse" was first coined, and entered popular culture.  The phrase "Dead Mall," appeared as well, later defined as a mall with at least 30% of its stores closed, and 70% or less still remaining.  In in 2017, 2018, and 2019, about 20,000 stores closed, and many major chains went into bankruptcy or completely out of business.  

In 2020, as the pandemic monkey wrenched life for just about everyone, another 9,300 stores closed in the U.S..   A few dozen of the original 1,200 or so enclosed shopping malls in the U.S. have closed down.  Some have been repurposed, some are sitting abandoned, like in the video above, and a few have been demolished.  In the obvious irony, several have been turned into Amazon fulfillment centers.  A recent report says 80,000 MORE store closings can be expected by 2025.

Not only is there a Wikipedia page for the Retail Apocalypse itself, there's one just listing the stores that have closed, and that have gone completely out of business.  So many malls, stores, factories, and other buildings have been abandoned, that urban exploration, or UrbEx, is now a hobby for lots of people in the younger generations.  

Why is all this happening?  

A lot of people blame Amazon, you know, before they tune into Prime, or shop from their phone.  Some people blame bad management 15-20 years ago, at the former behemoth store chains, like Sears or J.C. Penney.  While Amazon has taken a huge number of sales to the online world, I don't think they are specifically to blame.  

My concept, and the reason for this blog, is The Big Freakin' Transition.  It's and extension of The Third Wave concept futurist Alvin Toffler explained in his 1980 book* by that name.  The basic idea is simple, we are leaving the old Industrial Age, and moving into the Information Age.  But that massive transition doesn't happen overnight.  That's where the simple idea gets really complex.  

I believe, and The Big Freakin' Transition explains, that we are in an 80 to 90 year long transition period BETWEEN those two ages.  The old, Industrial Age businesses, models, and organizations are losing steam, and ultimately, dying off.  New, Information Age models, usually using newer technologies, are being built, tested, and evolving.  

The Retail Apocalypse, in my opinion, is simply the old, Industrial Age goods distribution model breaking down, and dying off.  We have lots of new technologies, which has led to new ways of living, and new ways of shopping and buying goods and services.  As the shopping mall, shopping centers, and department stores become less appealing to people, that business model, and those stores, are dying off.  It's much easier, and more efficient, and more time saving, to buy many things online, or on our phones now, and have them shipped to us.  That's the new, Information Age goods distribution system being built.  Amazon is a huge part of that, but so is eBay, Etsy, online stores and sites on platforms like Shopify and others, and millions personal websites selling unique items.  

The Retail Apocalypse is the old, Industrial Age goods distribution system breaking down and dying off, and a new one, with much more online sales, and fewer physical stores, is being built.  The new system will take us into the full Information Age, as all necessary businesses make the transition, or are invented and built.  It's as simple as that.  

There was another Retail Apocalypse, in the late 1800's, did you know that?  A mail order business began to send catalogs to people across the U.S., and ship them goods from huge warehouses.  This had a horrific effect on the small town general stores of the time, eventually most of them went out of business.  In time, that mail-order company opened their own stores.  Big ones.  That mail order company was called Sears & Roebucks.  Later they changed it to just Sears.

* not a paid link.

The Great Resignation- the latest phase of the populist uprising in the U.S.

I first heard about The Great Resignation in mid August, and wrote about it in a report I wrote in early September.  It's continuing.  According to this PBS report above, over 25 million Americans have quit their jobs since January 2021.  In a recession! (Which is technically a depression).  WTF is going on?  I have a pretty good idea.  But I'm an amateur futurist, I've had a head start at all this.

Disclaimer

I've been blogging about economic and work-related issues since mid-2017 (like this post from June 28, 2017).  I saw a very serious economic downturn coming our way, even back then.  But as an amateur futurist who was keeping an eye on some ultra long term cycles playing out, I saw more than just another recession coming, or even another "Great Recession."  

Since late 1989 I've been watching a theory, a concept play out, called The Law of Social Cycle, by a mid-20th century thinker from India, named P.R. Sarkar.  In late January 2020, before Covid-19 was close to hitting U.S. shores, I wrote a chapter in my 20 chapter online book/blog thing about this theory.  In part, that theory, analyzed for the U.S. by economist Ravi Batra, predicted a major, long term, populist uprising in the United States.  My 12th chapter in this online book/blog, written 20 months ago, in the last paragraph says, "...but the Laborer class are still rising, and will force massive change at some point.  This is not even close to over."  That's at the end of my explanation, of my understanding, of P.R. Sarkar's Law of Social Cycle.  You can read that chapter (or skip to the last paragraph) here.  

After reading about this theory in late 1989, and watching much of what Batra predicted play out in the early 1990's, I believed that a MAJOR populist uprising, a wide scale "worker's revolt," of some type, would happen in the U.S. years in the future.  I believe it started with the Occupy Wall Street protests in 2011, and rose up again in the support for both populist candidates, Bernie Sanders and Donald Trump, on the Left and the Right, in the 2016 election.  

But I knew there was more to come. Life for average American workers has been going downhill for 30-40 years.  It has simply been getting harder and harder to make a good living, and raise a family well.  A time of reckoning was coming.  

And that is just one part of the major changes I saw coming, according to the thinking of Alvin and Heidi Toffler (last two blog posts), P.R. Sarkar (this post), and also Richard Florida (more on his Creative Class concept, in future posts).  

In late 2019, I tagged this decade as The Tumultuous 2020's.  There are a whole lot of reasons why, and that's what this blog is for.  Simply put, there are all kinds of societal changes that need to take place, on virtually every level, for human society to move forward.  The major cycles and concepts I've watched for years, even decades, all started converging as we headed into the 2020's.  It's like they were all heading for major transitions, major inflection points, at the same time.  That made me think, "Oh shit."  

There's a lot going on, and it's NOT the crazy conspiracy stuff many people are hearing from bad media and worse websites and stupid friends.  We have all kinds of relatively new technology that makes whole new lifestyles possible, and society itself needs to catch up, and integrate all this technology into lifestyles that work for real humans.  In a sense, we all need to upgrade the world to fit the tech and lifestyles and other issues (economic, climate, social injustice, political, etc) going on in our world.  

It seems the time has come to remodel... the whole freakin' world.  Really.  

There's a lot more to come.  I've been blogging about this big group of inter-related ideas for four years now.  Now that what I've seen coming is partly visible to most people, I've got a lot to say on where we're at as human society, and where we're headed.  Then you can decided what, if any, of my ideas, make sense in your lives.  Then it's time to figure out how we all live in today's world in a more functional way. 

The "Napster moment"- EVERYTHING has to change to an Information Age model

Honestly, being a Gen X guy who began using record players when I was 4 or 5 years old, about 1971-72, it's hilarious that there are actually how-to videos on using one.  That said, I can barely operate a cell phone, which most of today's 3-year-olds have mastered.  Times change, and that's the whole point of this post.  So, thank God for YouTube how-to videos, for the young, the old, and everyone in between.

Disclaimer

In the last post, I explained that my concept, The Big Freakin' Transition, is that we are in an 80 to 90 year transition period between the Industrial Age and the Information Age.  That's one half of the idea.  The other half of the idea is that during this long, increasingly chaotic transition period, EVERY business, every industry, and every human institution, will have the old business or social model disrupted, and a new model will emerge.  So those two ideas are the core of The Big Freakin' Transition.  Again, this whole idea is basically a continuation of The Third Wave * concept that futurists Alvin and Heidi Toffler discovered, and Alvin wrote about in his 1980 book by that name.  

My favorite model for disruption is the music industry.  The older generations of people, and the older Millennials, can remember when the file sharing service Napster exploded onto the scene in 1999.  Before that, the music industry was well entrenched in a stable business model.  Record label company executives looked for talented bands and singers.  They offered their favorite ones a "record contract."  The  record label paid for the studio time while a band created an "album," usually of fifteen songs.  Then the band was sent out on tour to promote the album, and build a following of people to hopefully buy millions of those record albums, usually for about $15 each.  The record label paid for the tours, where tickets were fairly cheap.  They also promoted the new record with single songs on FM radio, with coverage in music magazines like Rolling Stone, and with music videos on MTV, after it came out in 1981.  When the albums sold a lot, the record label made back their money, and tens of millions of dollars more, and the singer or band made a small percentage of that, sometimes millions of dollars.  

So the record labels put out money to find bands, record the albums, and promote them with tours, radio, magazines, and MTV.  All of that was promotion to sell millions of physical records.  That was the money maker, those big, black, "vinyl" discs.  They also sold audio cassettes, and in the 90's, CD's became the new albums.  But selling lots of the albums was the business model.  

Then, on June 1st, 1999, two guys none of us had ever heard of, uploaded a new piece of software on the fledgling internet.  Shawn Fanning and Sean Parker created a file sharing software called Napster, which allowed people worldwide to share Mp3 music files with each other.  With a single click of a computer mouse in 1999, the music industry was doomed.  That's what I mean by "Disrupted."  There was an old business model that was working just fine... for the record companies and a small number of hit artists and bands.  But new technology had been evolving, and some unknown guys had a cool idea to use that new technology.  "Hey, what if we could design software so we could all share our music with other people?"  Napster Disrupted the old business model with one click. 

Now, the music industry didn't collapse overnight.  But in the next few months, 80 million users (myself included), started looking for music files on other people's hard drives, and downloading them, often burning our own CD's of personal mix tapes.  Suddenly music was free, and the traditional music industry went berserk.  They even sued their own customers for a while.  Teenage kids were getting multi-million dollar lawsuits filed against them for downloading 100 songs.  

You can argue for the rights of the old music industry.  You can argue about intellectual property until you're blue in the face, you can say this was piracy, theft, or just plain stealing.  The reality is, everyday people LOVED the free music file sharing idea, and it was simply going to happen, eventually, no matter what.  Napster, as a free service, lasted about two years, then became a paid service after being shut down by court order.  But the Information Age music revolution had begun, and other tech people, notably Steve Jobs and the Apple posse, created new business models.  

Now, 22 years later, we have far more music available to us far cheaper.  Hundreds of thousands of bands and independent musicians and singers find followings, and sell some music to their fans.  Concerts and box sets of physical CD's or vinyl LP's cost a lot.   Most people don't buy albums, they buy single songs or rent music from streaming services.  Nearly every consumer of music would say they like this system better than paying $15 for an album that had three songs they liked, back in the 1980's or 1990's.  The music industry is still evolving, but it has made the transition into an Information Age business model.  

The Big Freakin' Transition idea is that every single business, every industry, and every human institution (religion, law, education, non-profits, membership organizations, political parties, etc), EVERY organization, will be Disrupted by a new model, using new technology, and new social norms made possible by that new technology.  

When this idea was really coming together in my head, 4-5 years ago, I tried to think of some business or industry that would not be affected.  "What everyday item WILL NOT be completely redesigned or disrupted," I asked myself.  Of all things, toilets came to mind.  The toilet in my grandma's 1920's built house as a kid looked pretty much like the ones today, and I imagine the toilets in 20-30 years will still look pretty much the same.  Yes, there will be some weird, high tech versions as outliers, but the basic design probably won't change all that much.  So did that make the toilet industry immune to Disruption?  I thought about the business.  Even if the basic item, like a typical toilet, doesn't change much, the materials, the raw material sourcing, the manufacturing process, the factory location, the price, the marketing, and the distribution that got the toilets from a factory to a new house, that WILL all change due to new technology.  

Ultimately, I could not think of one product or industry that will not be Disrupted by all of our new and evolving technology, and our new social norms and lifestyles made possible by the new technology.  This is why The Big Freakin' Transition is an 80 or 90 year period.  Humans, by nature, don't like change.  We like to think we do, but we don't like very much change at all.  The initial high tech change started slow, then one new product here, one there.  They began to gain a synergy with each other, and more new technologies were developed, and as they came in to everyday life for regular people, our lifestyles began to change.  Other new changes came along, more new technologies, and our lives transformed more and more, faster and faster.  

But there are still many industries that are running on old, Industrial Age mindsets, even if they use many new forms of tech.  Banking, for example, uses more high technology than most industries.  But the whole idea of putting your money in a bank, in a physical building, so they can loan money out at interest to someone else, goes back to the Medici's, in 15th centuryItaly.  Even then, banks had been around for centuries, but that model has not really changed.  We all know now that all kinds of other options are now available, Paypal, Venmo, Apple Pay, Facebook pay, cryptos, wiring money across the globe, even old Western Union.  But the banks, as fancy buildings, each with  a huge safe (which doesn't contain digital money, obviously), still exist.  So banking, and many other industries still using Industrial Age business models, will face their "Napster moment" at some point.  The 2020's, seem to be shaping up as the decade when all the lagging business and social models (like churches, political parties, membership organizations, etc.) that haven't changed yet, will be forced to change.  One one hand they need to catch up, and the other hand, we are in a deep financial crisis, which will drive more change, and drive lots of old models businesses out of business.  

To repeat, at it's core, my concept of The Big Freakin' Transition" is two basic things.  We are in an 80-90 year transition period (from 1956 to about 2035-2045), between the Industrial Age and the Information Age.  Two, EVERY business, industry, and institution will have to figure out a new business/social model, and put into action, to survive.  That's the basic idea.  

As a business owner, or a leader of some kind of organization, you need to ask yourself, "What is the Information Age version of my business or organization?  What is the role of this kind of business in light of all the changes in new technology, and in how we actually live, day to day?  If you don't adapt, someone else will figure out the new model, and Disrupt your business.  So that's the Disruption that every business or institution will have to deal with.   

*not a paid link

The Big Freakin' Transition in a nutshell

I'm going way back, for a classic comedic look at the factory worker's life in the Industrial Age.  Charlie Chaplin trying to get through the day in Modern Times, from 1936.

Disclaimer

The Big Freakin' Transition is my concept, an extension of The Third Wave idea put forth by futurists Alvin and Heidi Toffler, and published in Alvin's 1980 book, The Third Wave *.  

This is a big idea, and involves a lot of different aspects of our society.  But at it's core, my concept of The Big Freakin' Transition is two basic ideas:

One:  We are not IN the Industrial Age anymore, but we are not IN the Information Age, either.  We are in an 80 to 90 years transition period where American society morphs from the Industrial Age into the Information Age.  This transition period began in 1956, according to futurists Alvin and Heidi Toffler, and I estimate the end will be about 2035-2045.

Two:  To remain viable in modern society, EVERY business, industry, organization, institution, and individual must make the transition from an Industrial Age living and working model, to an Information Age living and working model.  When pretty much all of society has made the switch, then we will be fully in the Information Age.  The world seems so crazy these days because we are in this huge, long, major transition phase.  

There are tons of details and factors, but that is The Big Freakin' Transition concept at its core.  

To grossly oversimplify things, originally humans were tribal people that we usually refer to as hunter/gatherers.  The First Wave of civilization was the transition from hunter/gatherer society to an agricultural society  People began to plant crops and farm, stay in one place, and villages became permanent, and turned into small towns, and eventually into cities.  That began about 10,000 years ago, probably in the region that is now Turkey.  It took a couple of thousand years for agriculture to travel the Earth, and become the dominant form of human society.

The Second Wave of civilization was the transition from agricultural society to an industrial society.  This, the Tofflers tell us, began about 350 years ago, and took a couple of hundred years to circle the Earth, to become the dominant form of society.  The factory based Industrial Age continued well into the second half of the 20th century.  

The Third Wave, as the Tofflers saw it, is the transition from an Industrial-based society to an Information-based society.  As it's called now, the transition from the Industrial Age to the Information Age.  Alvin Toffler's book on this came out in 1980, four years before the Apple Macintosh computer, the first personal computer for "regular people."  He also wrote it right as the thousands of American factories began to either outsource jobs to other countries, or replace human workers with industrial robots and other technology.  So most people who did read The Third Wave when it was knew thought, "OK, the factories are shutting down or moving overseas, we have Silicon Valley, high tech, computers and cell phones, we're in the information-based age now."    

Of the people alive today, the Greatest Generation, the Baby Boomers, and Generation X were born at times when the Industrial Age was still going strong.  The Millennials, Generation Z (you'll get a new nickname, don't worry), and today's kids, were born into times when the Industrial age was fading fast, and the Information Age was (and still is) coming on strong.  So to our older generations the Industrial Age is "normal," and to the younger generations, the Information Age is "normal."  That alone explains a lot in today's culture.

The Big Freakin' Transition is my idea that the Toffler's Third Wave concept is still playing out.  I think that we didn't jump right into the full blown Information Age when all the factories shutdown, or moved overseas in the 1980's, 1990's, or 2000's.  I believe we are actually in an 80 to 90 year long transition period BETWEEN the Industrial Age and the Information Age.  We have a lot of the technology of the full Information Age now, but a lot of our businesses, industries, and institutions are still working from Industrial Age models, and have not fully integrated their business or working models to ones that work in the Information Age.  The Tofflers put the beginning of this transition period at 1956, the first year "white collar" office workers outnumbered "blue collar" factory workers in the United States.  I believe this transition period will last at least until about 2040, maybe longer.  

Very simply, we are about 2/3 the way through this long, crazy, chaotic period of transition from one type of society and lifestyle, to another.  No other civilization has had to make this big of a social transition in the span of a single lifetime.  We are going from one way of life to another, and it's weird, scary, crazy, and chaotic.  We are in between the Industrial Age and the Information Age, and have aspects of both working in our world right now.  

That's the Big Freakin' Transition, in a nutshell. For the record, I've been referring to this idea as"The Big Transition" in my personal and online writing, for 3 years or so.  I figured that I'd come up with a catchier name at some point, but I never did.  When I decided to write this blog, and go into more detail on all that the idea ties into, I finally googled "The Big Transition."  There's one religious book by that name, on totally different ideas, and several other things that came up in my search.  So I added the word "freakin'" to set it apart, and to not make it too serious and boring.  I think this concept, as a context for the craziness of today's world, can help us explain and understand what's going on. 

In future posts I'll go into much more depth on this general idea, and into the details of the various aspects of it.  The basic idea to get right now is, yes, the world seems crazy for a reason, we're in a huge transition period that is crazy and chaotic, by it's nature.  It's OK to be freaked out by all that's going on.  I hope this concept can help other people understand this transition, and then find their own way to work within it.

* Not a paid link.