Nick Wasmuth
Aug 8, 2017 · 1 min read

Another way to look at it is to chart how many units of a certain technology can be purchased relative to GDP per capita. In an article from Prof. Mark J. Perry, we have a comparison of what was available to consumers in 1964 vs. 2014. This is an incredible illustration of how much quality has improved relative to purchasing power over a 50-year span, even though merely inflation-adjusted dollars are used, rather than Nominal GDP per capita. If NGDP per capita were used, then the impact is further quadrupled.

Now, when one expands the scope of this observation about proliferating deflationary nodes, we can add up the revenues of the semiconductor, electronic storage, software and other such technologically deflating industries. As of 2016, this calculation comes to about $1.6 Trillion/year, or 2% of World GDP. This figure was just 1% of World GDP in 2004 and only about 0.5% of World GDP in 1992, so rapidly deflating products and components are becoming an ever-rising percentage of all economic output. If the proportion doubles again in the same pattern, then it could be 4% of World GDP by 2026 or so, and continuing to rise after that.

    Nick Wasmuth

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    Understanding how it is. Seeing what it could be. Planning how to get there.