In 1977,
Nobel Peace Prize winner and economist, John Kenneth
Galbraith started airing a television show titled “The Age of Uncertainty.”
اضافة اعلان
The 1970s started with an oil shock that brought with it
uncertainty and doubt. The Keynesian economics that were applied in the New Deal
era after the great depression and in the post-World War II Marshall Plan were
sure of what was needed: print money, spend big on infrastructure, and create
big demand, supply will soon catch up, and the cycle would cascade into a boom.
The oil shock brought inflation that hindered job creation. So,
the Phillips curve of 1957 could not produce a desired trade-off between
inflation and unemployment. As a result, a new model was needed to operationalize
cost-push inflation and make it effective in creating more investments, and thus
more jobs.
Uncertainty, which is generally not liked, should be credited with
lots of business generation. Because speculators in financial markets are
uncertain of the outcome of where the whole stock index, or even the price of one
share, is going; they develop different perspectives about the future. The
bears are aggressive in selling because they expect stock prices to go down. However,
bullish investors buy on the assumption that prices will go up.
At the consumer level, needs determine what and how much to buy at different prices. Wholesale businesses speculate much
more, and buy when they expect prices to go up in the future, and they also resort
to hedging. They do the opposite if they expect prices to go down.
Without this uncertainty related to wholesale prices, commodity
prices, gold prices, foreign exchange rates, oil prices, etc … many transactions
would not exist, and the incentive to make fast money would fall.
All these expert houses, which live off this element of uncertainty
may soon find themselves scurrying for a way to earn a living. The reason could
lie in the fact that avant-garde computer technologies have finally succeeded
in creating a miraculously fast and accurate machine — the quantum computer.
Computers that are programed using zeros and ones have been
continuously improved to reach unprecedented speed and a mind-busting number of
computations. Currently, the fastest computer in the world is the Fugaku supercomputer
in Japan.
However, in December 2020, a start-up in the province of Anhui in China,
declared success in creating a quantum computer that can make a computations 10
trillion times faster than the fastest existing supercomputer.
If such a computer becomes commercially available in a few years,
their precision in predicting human behavior and its responses to influences would
be meticulously measured, making many market uncertainties disappear. If all
concerned buyers and sellers are privy to the same precise information, why would
speculation exist?
We are probably living in a world that is changing much faster
than we think, and that world may soon usher us into an age of boring
certainty.
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Opinion & Analysis
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