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February
15
2025
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The World As You Know It Is About to End
That’s a hard fact for most people to accept. But if you are genuinely honest about your own beliefs, you’ll recognize how, over the course of your life, virtually everything that you thought you “knew” for certain turned out to be simply wrong. Usually that was because the facts you’d been told were true weren’t true at all. Or were even deliberate lies. (Here’s a hint: everything the government tells you is a lie. Every. Single. Time.) But, for some reason, the more obvious it becomes that a treasured falsehood isn’t in fact true, the more devoted some people will become to their lies. A great example of that are the never-ending Malthusian myths, that for some reason people seem to always embrace – despite the fact that they’re always laughably wrong about their predictions. Remember Y2K? Killer bees. Peak oil. Global warming. It’s always something and the world is always about to end. Remember the The Population Bomb? That was a 1968 best-selling book by Paul Ehrlich, a Stanford professor. He was predicting a global famine in the 1970s and the end of the world’s economy by the 1980s because, he said, the earth’s population was exploding and there wasn’t going to be enough food. Obviously, nothing like that came to pass – there wasn’t a massive famine in Britain, for example. But, when the professor appeared on CBS’s 60 Minutes news magazine in 2023 did he recant any of his false predictions? Of course not! Ehrlich says we’re still heading for a “sixth extinction.” Meanwhile, the real problem for the developed world is that we’re not having enough children. But being completely wrong doesn’t stop the media or government-backed institutions from promoting horrible ideas. This kind of deeply irrational thinking isn’t the real problem for investors. It’s usually not that hard to spot ideas that are completely wrong. No… it’s not bad ideas that are dangerous to investors. It’s good ideas that are the real problem… The real problem is when you’re certain you know something… and you’re right! Here’s one great example. In his 1996 book, The Road Ahead, Bill Gates foresaw how the internet would become part of our daily lives. At the time, few people in the world knew more about how computer technology and communications networks were evolving and merging. Gates had a huge advantage over virtually every other investor in the world. In fact, there may have been no one in history, ever, to be in a better position to understand such a massive change in the world’s economy – not even Rockefeller. But Gates didn’t mention search engines in his book. Or social media. Even though Gates knew more than anyone else in the world, he couldn’t foresee either of the most valuable and important applications of the internet. Google was founded two years later. Friendster, the first social network, was founded six years later. In less than 10 years, social networks (Facebook) and search (Google) were worth more than $100 billion. And today, almost 30 years later, Meta (Facebook and Instagram) and Google combined are worth more than Microsoft. But Gates never invested in either!
Today, more than 80% of Gates’ wealth is invested in only four companies: Microsoft (MSFT), Berkshire Hathaway (BRK), Waste Management (WM), and Canadian National Railway (CNI). Talk about life being stranger than fiction: Gates only became a major investor in Apple (AAPL) because of Warren Buffett! Buffett famously refused to buy any tech stocks for decades despite being close personal friends with both Gordon Moore (founder of Intel) and Bill Gates! So the next time you think you’ve played your hand poorly in regards to missing great opportunities to invest in new technologies, just remember that Bill Gates owns more of a garbage company than he does of any internet business. Gates was like a squirrel watching a bank robbery. He saw the entire thing happen, start to finish. And didn’t understand any of it. On the other hand, Amazon founder Jeff Bezos was a Series A investor in Google, an investment that has, most likely, earned him almost as much as his ownership stake in Amazon. I’ve been incredibly fortunate to get to meet and spend a lot of time with so many of my intellectual heroes, who are legendary thinkers, writers, and investors, over the past 30 years: George Gilder, Jim Rogers, Doug Casey, Bill Bonner, Craig Venter, Michael Lewis, P.J. O’Rourke, Ron Paul, Jim Grant, David Lashmet, Erez Kalir, and Steve Sjuggerud. Something they all have in common? A tremendous humility about the future. And a clear recognition of the limits of their own knowledge. These people say “I think,” and “I believe” a lot. They very, very rarely say “I know.” This fundamental difficulty – to ascertain the true meaning of events to have any idea, at all, about what the future will bring – explains why doctors are usually lousy pilots and lousy investors. Doctors believe they know. They conflate the certainty of their ego with actual certainty in the real world. And those two things are miles apart. Good pilots know the plane will eventually break. They know the unexpected will, eventually, occur. And the weather forecast is almost certainly wrong. Likewise, good investors know the most likely thing to happen next is the thing that’s least expected. And so, as I sit here today, I know the most dangerous aspect of what I’m about to tell you next is that I am so completely certain about it. The coming revolution isn’t technological, like the internet revolution. The coming revolution is physical. Virtually everything in our economy is structured around facilitating “knowledge work.” And all of that work is about to disappear. Thus the world, as you know it, is about to end. I’m 100% certain this will occur. It is inevitable. Matt Smith is one of my best friends – I’ve known him well for more than 20 years. Today, Matt is a rancher in Uruguay. But long before he began his cattle operation, he was one of the most successful tech investors in the world. He started several very successful internet businesses in the early 2000s and, in 2016, just as the music business was beginning to recover from Napster, was able to acquire the world’s largest music-royalty exchange. Today more than $100 million a year is being invested into intellectual property rights through Matt’s platform. Very few people, anywhere, are as good as Matt is at knowing where “the puck” is going and then making great investment decisions around the most likely and profitable outcomes. Here’s what Matt told me recently about artificial intelligence (“AI”) In the 1870s, a family farm was seen as the ticket to economic stability – just as a bachelor’s degree and white-collar jobs are today. Well, the Industrial Revolution upended that completely. In the 1870s, 52% of America’s workforce was in agriculture. By 1900, it dropped to 40%. By 1920, it was just 26%. The trend was impossible to ignore. Today, less than 1% of the workforce is involved in farming. (And, what do we use my farm for? While it’s true that we grow corn, soybeans, and sunflowers, the only important economic activity that goes on at my farm is knowledge work – research and investing.) But what’s coming will be even quicker and more radical than the Industrial Revolution. Keep in mind, America’s Industrial Revolution saw its most disruptive changes between the 1870s and the 1920s – a 60-year stretch. The AI revolution, however, will come much faster. For perspective, Goldman Sachs projects that AI will automate about 300 million jobs within the next decade, while the CEO of Anthropic, creator of leading AI platform Claude, predicts human-capable AI could replace 30% of human labor in just the next two years. Last year alone, 150,000 tech workers lost their jobs across major companies, many due to AI-driven efficiencies. That’s still far from the projected 300 million jobs or 30% of global labor being replaced, but it’s where we’re headed. Consider these details…
And then there’s the robotics that AI will enable. As Matt explains, this is already happening too.
In this regard, AI is a lot like a Bessemer process for the entire economy. As Matt explained the significance of the Bessemer process to me: Before the 1870s, steel production in the U.S. was a painstaking, artisanal craft. Workers toiled over puddling furnaces, manually stirring molten iron to burn off impurities. The process took days and produced just 10 to 20 tons of steel per worker per year. The metal was expensive, inconsistent in quality, and limited to small-scale uses like tools or rails. In the 1870s, the adoption of the Bessemer process – a method that blasted air through molten iron to quickly remove impurities – transformed steelmaking. What once took days could now be done in minutes. Factories hummed with mechanized rolling mills and cranes, while industrialists like Andrew Carnegie built vertically integrated steel empires. By the 1890s, a single steelworker, with the help of machines, could produce over 300 tons of steel a year. It was a 30-fold jump in productivity compared to the artisanal methods of just a few decades earlier. The impact was revolutionary. Steel prices plummeted from $100 per ton in 1870 to just $12 by 1900, making it affordable for skyscrapers, bridges, and railroads. Steel became the backbone of modern infrastructure. Cities like Pittsburgh became industrial giants, and by 1900, the U.S. was producing nearly 40% of the world’s steel. What was once slow, manual labor turned into an efficient, mechanized process, paving the way for modern mass production. This leap – from human hands to mechanized might – didn’t just make steel cheaper. It reshaped the economy, redefined work, and showed how technology could multiply human effort on an unimaginable scale. And AI is going to enable these kinds of changes to virtually every aspect of our economy. Just think about transportation. In the U.S. there are currently 3.5 million truck drivers (about 2 million of these are long-haul tractor-trailer drivers.) There are another 1 million Uber drivers. There are 135,000 school-bus drivers and another 250,000 city bus drivers. Include taxis and there are about 4 million people who drive professionally every day. All of these jobs will be gone in less than 10 years. All of them. It will be interesting to see how that impacts lots of things, but one thing that jumps out at me is that there will be a huge decline in accidents and, therefore, insurance companies will probably see a huge decline in premiums. But, again, trying to imagine exactly how these changes will impact our entire economy is virtually impossible. Just as Bill Gates didn’t see social media or search emerging as the two most important new businesses from the internet, it’s simply unknowable what kinds of new products and services will emerge from AI and robotics. One thing, though, is absolutely certain: electricity will power this revolution and we will need massive, unbelievable amounts of it. The demand for AI will be endless – just as endless as the demand for knowledge work has been around the world for the last 100 years. Matt told me that energy-research journal Joule says global AI-related electricity consumption is projected to rise 56% by 2027 – from 85.4 terawatt hours (TWh) to 134 TWh. That’s higher than the annual electricity usage of Argentina, a country of 45 million people.
But I’m certain electricity demand will grow 10 times more than those forecasts. How do I know? Nvidia’s chips consume an insane amount of energy. Just 10 seconds of physical interaction simulation demands more computing power than the entire Apollo space program used to land on the moon. As a result, a single server rack for AI consumes 80 kilowatts of power per hour –16 times more than traditional servers. And yes, there will be innovations that make these chips and these systems more efficient. But, ironically, that will lead to more demand not less. The economics (the demand curves) around electricity and computing aren’t limited by diminishing marginal utility. Ask any software engineer how much memory he needs for his program to work and the answer is always more. Likewise with robotics and AI, the market will use as much of these innovations as price allows. The cheaper the price, the bigger the demand. And here is the big risk: soaring demand (and prices) for electricity could lead to all kinds of new restrictions on the use of electricity. The Malthusian doomers will want to put limits on electrical generation to “protect the planet” and they will find eager partners among the labor unions and other Luddites who want to protect jobs instead of pursuing massive new opportunities. For my entire life so much opportunity has been wasted (and so much poverty has been created) by these false ideas. The Club of Rome published The Limits to Growth in 1972 – the same year I was born. These economists and political leaders all believed in a modern version of Malthusian scarcity, namely that the modern world’s energy demands couldn’t be met and that soon, unless we mandated huge cuts to consumption, we would face a world of darkness. This way of thinking underpins environmental policies like the Paris Climate Accords, heavy regulatory frameworks, and centralized economic models designed to preserve stability by stifling growth. These ideas are still strongly prevalent in government-backed institutions, like universities and NGOs like the International Energy Agency (“IEA”). These people continue to insist that carbon emissions from energy production must decline to save the planet. And, as a result, they continue to believe that demand for electricity will only grow slowly – and mostly in emerging economies like China and India. They also laughably continue to insist that “clean” energy sources like solar and wind will come to make up more of the energy mix while gas and coal disappear. They have no idea what’s coming. In its 2025 report on the future of energy production, the IEA claims that
Keep in mind, over the past 20 years, IEA’s forecasts for liquefied natural gas (“LNG”) demand have underestimated actual demand by an average of 41% per year. These folks couldn’t be more wrong. But, for years, they’ve held enormous amounts of political power. And, as result, per-capita consumption of electricity in the U.S. has actually fallen since the Global Financial Crisis in 2008-2009. That is all about to change. On President Donald Trump’s first day in office, he unleashed a slew of executive orders, among others, to:
Trump also rescinded earlier executive orders on AI safety and ethical risk management – moves that should significantly reduce regulatory constraints on the industry and unlock its full potential. And he didn’t stop there. On his second day in office, Trump announced Stargate, a $500 billion private-sector AI initiative led by OpenAI, Oracle, SoftBank, and MGX Fund Management. The project aims to establish massive AI data centers and energy systems across the U.S., creating over 100,000 jobs and aiming to strengthen America’s position in the global AI race. What Trump and most of America’s leading tech experts all understand is that AI is going to change everything about the world’s economy. And whoever gets there first will have a massive advantage that could last for 50 or 100 years. That’s because as AI grows more powerful, it will eventually become, in effect, sentient. That is, it will acquire the ability to think and plan for itself – to create things that go beyond its programmers’ imaginations and capabilities. Achieving this artificial general intelligence (“AGI”) is the most important first hurdle in this new world. While I can’t know for certain exactly how the race toward AGI will progress, I do know that AI is going to require massive amounts of electricity – far more than anyone realizes. In time, the most important factor in the economy won’t be the computers or the chips. AI will make these things abundant and low-cost commodities very quickly. As that happens, demand for electricity will grow and grow and grow. The limiting factor won’t be the chips or the data centers, it will be the power to run them and all of the robots. Thus, the society that can produce the most electricity will win this race. The book Dune describes a similar world, where power and the ability to travel are limited by a mineral known as “spice.” Production, distribution, and control of the spice are what drove the politics and the economics in that world. For us, the spice is electricity. And the spice must flow. Porter & Co.
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Most of what you think you know simply isn’t so.
