Transition to the age of talent – Part 1: back to 1971

We’re entering a decade of transition that will change our entire economy and the social contracts we have. We’re currently in a perfect storm of different developments that power this transition. In a short series I’ll describe every one of these elements of this perfect storm and why this means the very fabric of our societies will change. And why I think we’re moving to the age of talent.

For the first element of this perfect storm we have to go back to 1971 and the moment Richard Nixon abandoned the gold standard. The effect of this is that money is no longer scarce but plentiful, something that we’ve seen reflected in it’s price called the interest rate. That went from 20% in the 1980’s to 0% of even negative interest rates in recent years. There was so much money that banks needed to pay to lend it to the central banks.

Just to put this in perspective, the total amount of money in the Eurozone in 1980 was about 1.000 billion euros. Right now it’s about 10.000 billion euros. That’s 10 times as much money. The reason for this is simple: when a bank has 100.000 euro’s it can lend out 1.000.000 as they need to have about 10% ‘on their balance sheet’. But then when the person that lend the 1.000.000 buys something and the buyer puts (part of that) back in the bank again, the bank can use that to lend out even more money again.

Modern monetary theory

The weird thing is that despite money losing it’s value, the rich have gotten richer. This is because the current economic model is still build on money being scarce. Even when governments were paying negative interest rates, debates were about taking on too much debt. While they got paid to take on this debt.

In the Netherlands pension funds are not able to keep on par with inflation because of low interest rates and they were build on interest rates defining the value of their holdings. We also see many investments from these and other wealth funds in private pirate equity, that tend to buy companies just to suck them dry.

We are in the end game, the last stage of our current form of capitalism. Where money is no longer scarce, but needs to find increasingly higher returns in a shrinking world (we’ll address that in a later part of this series). So we need to move to a new form of capitalism. Our current form of capitalism started in 1971, where the banks and not the central bank were in charge of money creation.

One such theory, while controversial of course as it goes again current doctrine, is Modern Monetary Theory. This theory says governments should no longer take on debt to fund their expenditure, but simply print money as we’ve seen with quantitative easing this did not create inflation. It wasn’t until supply chains broke because of the pandemic and wars happened that we got massive inflation.

Now I’m unsure if MMT is the solution and the system that is going to be the next stage of capitalism, I do know they current model of capitalism is in it’s last stage. When money loses it’s value but the rich do get richer at the expense of the middle class, it’s a recipe for revolution.

But this is not the only major change that is happening, so we’re in for a major transition.

Bas is a professional snoop. He's a futurist with a focus on the world of work, recruitment and HR technology.

He's a much requested speaker on events all over the world.

His recent book it called Talent Acquisition Excellence.

He organises Digitaal-Werven