Meeting notice: The 01-19-99 meeting will be held at
7:30 p.m. at the Royal East (782 Main St., Cambridge),
a block down from the corner of Main St. and Mass Ave.



Suggested Topic: Are nanotech enthusiasts bulls or bears?



On first acquaintance NT seems inherently bullish,
since it appears to be about creating endless streams
of value. However, a person looking further is likely
to wonder if the economy as we know it can survive the
technology at all, given the vanishingly small marginal
costs of fabrication intrinsic to the technology.

Some sectors -- collectibles, real estate -- might
survive or flourish, but you can get an argument even
with those. How interesting will collectibles be in an
age when it is impossible -- not difficult, impossible
-- to tell an original from a fake?  What will cheap
space travel, not to mention cheap underground
construction and cheap underseas habitations, do to the
price of real estate?  Even setting those aside,
clearly most sectors as we know them today would be
subject to a round of price deflation that would be
historically spectacular.  It is not at all clear what
kind of economy would emerge.

There is nothing about the current scene that
undermines these speculations.  Commodity prices, which
have been flat for decades, are solidly
downward-trending.  Industrial sectors all around the
world are plagued, not just with excess capacity, but
declines in the cost of units of manufacturing
capacity, which have the effect of pulling new capacity
onto the market the moment prices seem about to
stabilize.  Nor are services a safe harbour: the
internet is turning out to be a very powerful medium
for converting services that used to cost money --
sexual stimulation, financial news, email accounts --
into free ones.

It seems likely that as processing becomes more
sophisticated and competition on the internet more
intense (and bandwidth expands), more and more services
will be coded up into software and given away.  The
limits of this process are hard to imagine.  Perhaps
some day kids will get their college educations free
from Yahoo.  In any event, deflationary forces are
affecting the prices of services as severely as those
of products.  Ask your broker.

In short, a person looking out on the economy today
sees many reasons to expect several years of a
supply-led (as opposed to a monetary) deflation. Some
are just one-time spikes -- the new economies being
recruited onto the international markets, the decline
in public spending and defense spending in particular,
the slow spread of deregulation, the 'Asian glut', and
so on.  Other forces, like the various 'Moore's laws'
of processing, bandwidth, memory, and storage, look
like they have a longer life span.  Finally, many of
the people on this list might suspect that this era is
permanent: that we are entering a period that will be
characterized from here on by deflationary trends that
will quicken without end until we have reached a
society we cannot now imagine.

Does a particular investment strategy fall out of this
vision?  The most obvious deflation-oriented investment
strategy is to sell equities and put the proceeds in
the bank, since in a deflationary regime savings grow
in value automatically.

Are there subtlties that this simple idea overlooks? 

<>-<>-<>-<>-<>-<>-<>-<>-<>-<>-<>-<>-<>-<>-<>-<>-<>-<>

The difference between the first and second century of
powered flight will almost certainly be that the second
will be the age of self-piloting planes.  This category
includes planes that are entirely unmanned (sensor
platforms of various sizes and freighters) and aircars
or cabs.  These latter will carry humans but will only
accept commands at very high levels of generality
('take me home').

Such planes raise many issues, including visual and
acoustic pollution and safety.  J. Storrs hall is known
to most of us through his intelligent and dedicated
stewardship of sci.nanotech. In recent years he had
been thinking about the contributions molecular
manufacturing might make to the development of aircars.
A draft of his thoughts are at
http://crit.org/~josh/aircar/.  Check it out.


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