Why The Fed Fears Uber?

Personally, I don’t think the Fed fears any disruptive technology or service with regard to deflation.  Nor should anyone else, aside from those getting disrupted (like Taxi Drivers in this case).  Automation (i.e. how I made my living in my old life) in a modern society is progress, has saved whole industries and opened up other channels for resources.

“This brings us to why the Fed is afraid of Uber. As the company (and similar entities) become part of our daily routine, a whole class of workers likely disappears if the ultimate direction is to automate driving. Don’t get me wrong. Technology and cost-saving, combined with higher efficiency, is a big positive for the economy longer term, but technology is inherently deflationary as human labor gets replaced.”

Progress is progress.  It is  not deflationary, and it should never be thought of as a bad thing.  It could well be that technology is piling up more and more of the population like sedentary cord wood, while fewer people benefit.  But the dynamic is no different than when the first guy holding a round tube with gun powder, a wick and a ball in it blew the head of another guy (holding a sword) right off.  Or Henry Ford and the production line… or 3D printing – which Wall Street hyped to no end – and its ability to print complex geometries from CAD models.  It ain’t stopping because it’s progress.

These savings through efficiency can be reallocated elsewhere in the economy. Talk of inflation or deflation should not blame efficiency or the lack thereof.  Talk of inflation or deflation is strictly within the monetary realm.  Deflation is only perceived as a bad thing because for the current system, which relies on debt creation and periodic money printing, deflation is indeed a bad thing because once taking root, it could unwind the system by bringing all those debits in line.

Imagine that?  We have come to think of cost savings and efficiency as somehow being tied up with something commonly thought to be negative.