Billion Millionaires

The recent Futurist, the World Future Society magazine offers 70 forecasts for 2008 and beyond. The first forecast is: The world will have a billion millionaires by 2025. It says that according to James Canton, author of The Extreme Future globalization and technological innovation will drive this increased prosperity. I have not read yet the book but I have a few quick reflections.

    1. First, I bet before there are billion millionaires there will be million billionaires. Now if you are like me struggling with big numbers here is how it works:

      1 Million

      1,000,000

      106

      1 Billion

      1,000,000,000

      109

      1 Trillion

      1,000,000,000,000

      1012

      1 Quadrillion

      1,000,000,000,000,000

      1015

      1 Quintillion

      1,000,000,000,000,000,000

      1018

      A million seconds is 13 days.
      A billion seconds is 31 years.
      A trillion seconds is 31,688 years.

      2.This means according to this forecast it will look like this: Billion (109) x millionaires (106) = Quadrillion Dollars or 1000 trillion dollars. Now add to it: million (106) x Billionaires (109) = which is another 1000 trillion or Quadrillion dollars. This is without calculating that many of the millionaires will have 10 or 25 or 55 million and that many of the billionaires already have 5 or more than 35 billion. Whichever way you do the math you are talking about a hell of lot of money.

      3. Where is this money going to come from? How is it possible for there to be so much money sloshing around? Okay, I get it. We have three billion people joining now the market economy and the capitalist society in China, India, Russia, Brazil, Mexico and soon Africa and they are all going to want a better life style. Therefore we will all be creating such wealth. Right? No, it still doesn’t make sense unless you factor in hyper-inflation.

      4. In the last 80 years the Dollar lost about 80% of its value. This means that to buy the amount of bread, milk, clothing, oil or gold that you could buy in 1920s with 10 dollars you now need to pay $50 or a lot more. In the early 20th century an ounce of gold was about $20. Today its $750, which is 37 times $20. A similar thing has happened with food and real-estate. We all have a lot more dollars to pass around but most people are not richer. This is what it means when you hear that the dollar is losing its purchasing power. Inflation is more money chasing goods. Hyper inflation is a lot more money chasing goods.

      5. Here is another way to put it. A million dollars in the 70s made you a millionaire. To be a millionaire today with a purchasing power of a millionaire in the 70s you need
      to have a lot more than a million dollars.

      6. How is this possible? What causes such hyper inflation? Central banks work overtime to print money. In a global economy every country wants to devaluate its currency because it makes it more competitive as the goods it manufactures become cheaper. How does a country devaluate its currency? It prints more of it. We are now living through a great competitive devaluation of most currencies. The Central Banks of most nations are printing tremendous amount of currency. They can print as much as they want because in most countries fiat currency doesn’t have to be backed by anything. This means that the $100 bill you hold in your pocket has less value or can buy less today than a week ago and will have even less purchasing power next year. Heck, you better be a millionaire 20 years from now or sooner because the $100 in your pocket today will not buy much tomorrow.

      © Aviv Shahar

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