How new technologies shape the future of the world economy

The world is on the brink of a digital revolution, innovation is disrupting the way we do everything from the use of appliances and gadgets to financial transactions.

New asset classes

The digital economy is growing rapidly around the world. The modern digital economy is characterized by the creation of new asset classes and the digitization of traditional assets. New technologies, such as blockchain, artificial intelligence (AI), the Internet of Things (Internet of Things) and 3D printing, are playing a key role in the development of this growth.

New technologies represent assets that may dominate the global economy in the future. For example, in the blockchain there are virtual coins and tokens, the popularity of which has grown exponentially in a short period of time.

Great players coming into the game

Blockchain allows users to execute transactions securely and much faster than traditional methods. Features of the blockchain have attracted many well-known technology and financial companies, including IBM, Oracle, JP Morgan Chase and Boeing. For example, IBM recently teamed up with financial technology company Stronghold to release a dollar-backed cryptocurrency called Stronghold USD. This virtual currency is an example of how consumer confidence in a traditional asset (in this case a dollar currency) is used to support a digital asset.

There are also examples where companies combine two new technologies to provide solutions for the future. Aerospace giant Boeing recently announced a partnership with artificial intelligence company SparkCognition to develop blockchain-based traffic management solutions for unmanned aerial vehicles.

Game changer

Asset tokenization is not limited to traditional assets such as currencies. The new market can use the intrinsic value of a wide variety of assets to provide security tokens. Blockchain can be a differentiating factor between security tokens and traditional securities. Using smart contracts on the blockchain eliminates the need for an intermediary, thereby reducing transmission costs. This ease of use of the blockchain can significantly affect the traditional banking system. It can also eliminate the need for money as a medium exchange, as all assets are liquid, instantly available and divisible.

Automation and artificial intelligence have already made their mark in many markets. Trafficking algorithms have overtaken human traffickers. In the manufacturing sector, machines have taken up a lot of work that people used to do.

The need for a new structure

In this rapidly changing economy, it is no longer possible to rely on traditional models and decision-making methods. To keep up with new developments such as DAO, AI, VR, P2P and M2M, a new structure needs to be developed. In other words, we need to go beyond Munger’s mental models and focus on digital models such as network theories and exponential growth models.

Digitization of our economy is happening fast. Over time, we will get a clearer picture of what events will dominate this new Web 3.0 economy, but it is clear that this economic revolution is happening on a global scale.

Donald Trump and the Global Economy

Donald Trump was elected the 45th President of the United States on November 8, 2016 and announces that he will take office as President of the United States on January 20, 2016. The newly elected President of the United States Donald Trump has proposed many new government policies that have aroused interest among global investors. Experts believe that this policy may prove costly not only to the US but also to the overall global economy. Most importantly, the global trade scenario is expected to change dramatically under his leadership. Domestically, however, his policies could push Global, at least in the short term.

Donald Trump will hold the presidency of the United States only in early 2017, so the current and immediate reaction of the market is mainly due to expectations and expected policy changes. After taking office, he plans to pursue an expansionary fiscal policy (increasing spending, especially on defense and infrastructure), easing debt restrictions and cutting taxes sharply (primarily in favor of large corporations). This financial stimulus could stimulate economic growth in the U.S., at least in the short term, along with inflation. However, as taxes flow and spending increases, the government’s budget deficit is expected to increase unless such reforms lead to increased tax collection. This will be a bottleneck for growth and employment in the US and will significantly increase inflation as the economy reaches full employment estimates.

Several policies proposed by Trump have different complications for the world’s economies. From completely undermining the importance of combating climate change or global warming to the spread of xenophobia, the most impressive, however, remains its protectionist agenda towards global trade.

His motives to put tariffs on U.S. imports from emerging economies, particularly China and Mexico, and to call China a currency manipulator could negatively affect world trade. Most importantly, his position on the US withdrawal from the Trans-Pacific Partnership (CHP) signals a transition to “anti-globalization”. These factors, combined with his remarks regarding the “rupture of trade deals” and measures to deport immigrant workers, pose a huge threat of a world trade war that could easily lead to a global recession.

The Trans-Pacific Partnership (TPP), which culminated in late 2015 after years of negotiations by trade leaders of 12 countries along the Pacific region, with the exception of China, aims to address trade issues among the states involved. The agreement plans to reduce more than 18,000 trade barriers between member states by making the largest U.S. free trade agreement (FTA) on trade flows. Any changes to this agreement could force other states to retaliate with higher tariffs or impose more trade barriers.

Michael Gappen, the chief U.S. economist at Barclays, believes that if this policy is pursued, it could delay economic growth in the U.S. by 0.5% to 1% over the next year. For the world economy, if these trade patterns of “anti-globalization” are followed by other states, it could further increase the risk of reduced trade and currency wars and, ultimately, a global recession. The first half of 2017 will be crucial, and the whole world will be watching the US and, in particular, Donald Trump for his next steps.