The march of human progress over the past 250 years has at every step been made possible by harnessing energy inputs with ever-higher density. From wood to coal to fossil fuels, higher-density energy makes whole new industries possible, as well as higher productivity and more wealth for society. And when we look at tantalising future technologies, from hyperloop trains and AI, to hydrogen production by electrolysis and water desalination, cheaper and higher-density energy is the chief constraint. The world will need much more energy if our economy is to continue growing at anything approaching historical rates. New alternative and green energy technologies are for the most part not the answer. Yes, they may be less harmful to the environment, but their system-wide effects from lower energy density mean they are really a big step backwards. The world urgently needs a disruption in energy technology.
Enter 2021, in which an advanced AI algorithm solves the super non-linear complexities of plasma physics, clearing the way for commercial fusion energy. The SPARC fusion reactor design from MIT, which has been validated in 2020 as a viable path to less costly fusion energy, is massively improved by this new AI model. Engineers adjust the SPARC design, with new models pointing to an energy gain factor of 20, creating the biggest paradigm shift in energy technology since nuclear power. Even more importantly, a massive investment from public and private sectors would allow the implementation of the new fusion design within a few short years.
The mastery of fusion energy opens up the prospect of a world no longer held back by water or food scarcity, thanks to desalination and vertical farming. It’s a world with cheap transportation, fully unleashed robotics and automation tech, making the current young generation the last required to “work” by necessity. And hey, how about a bit of CO2 sequestration on the side, dialling back the climate change clock in the process? Best of all, fusion energy allows nearly every country to become food- and energy-independent, and sees the most rapid and largest upgrade in living standards ever witnessed.
Trade: The political and investment winds favouring “traditional” green energy stop blowing, and the wind energy ETF FAN falls by 50% in 2021.
See next 2021 prediction:
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Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.