<//Reversion to the mean, baby//
My least favorite theory. What is the economic justification for the P/E that serves as the mean. Does that justification pertain today?>
I agree. The mean was there for various reasons, some of which don't exist today. For example, there used to be a gold standard, with gold backing. There isn't now. So the share premium should be less, or, since shares represent real values and real assets and money is free-floating government stock backed by not much and with a lot of competition, perhaps the money should carry the risk premium.
Also, life expectancy is increased so people have greater reason to save for the future, meaning lower returns are attractive.
There are many other variables meaning the mean of the stone age is not some Universal Standard.
On knowledge making conversation but not wealth, I'm unconvinced. A broader view of wealth is that if we have all that we can think that we need satisfied, we are therefore wealthy. If the cost of that state is $400, we have no need for more wealth.
Knowledge is the producer of such a state.
So, we are on a trajectory to no need for wealth in the form of money because we won't need anything done for us. Simply walk up to the coffee machine, push the button [or will it to produce what you want], and enjoy a free coffee.
Machines can produce coffee machines with a hour of human input [when the technological revolution has progressed for another decade or four] so the cost per cup might be one cent. The beans can be produced on-site with CDNA production systems. Load the machine with some minerals, suck water and CO2 out of the air, with a fuel-cell power supply - photovoltaic powered and methanol-fueled.
Technology is taking costs out of production very quickly.
Knowledge is wealth. When we exist in cyberspace only, we'll just imagine the coffee!
There are some unmistakable trends which Ted Kaczynski, Bill Joy and Stephen Hawking and others have noticed and they are disconcerting, though strangely attractive.
The juggernaut is rolling on and Ted is in prison.
Mqurice |
