One thing I really like about Peter Thiel’s book “Zero to One” is that it is very heavy on instruction and ideas and very light on justification and evidence.
This is the opposite of most books.
If a big brain like Malcolm Gladwell comes up with a big brain idea like “you’ll get good at a thing if you practice it for 10,000 hours” then he needs to write another 50,000 words of filler and anecdotes before he can sell the idea for $29.99.
When Thiel wrote “Zero to One” it was the opposite.
He basically said (and I’m guessing on motive here) “here’s what I believe, here’s what I’ve learned, here’s how to build a company and I don’t care if you believe me or not but I’m already a multi-billionaire I don’t need to spend my time justifying my thoughts to you, buy the book if you want.”
So while I lack a few of Thiel’s billions, I will strive to mimic his heavy-on-content light-on-filler prognostication methodology…starting now.
In 2022 I believe that quality of life for middle class people will fall and that they will not notice. They will have fewer restaurants to choose from, packages they order online will take longer to arrive, the things they spend money on will go up in price or down in quality or both, and all the while their net worth will rise enough to make them not realize their quality of life is actually declining.
1 - Labor Issues start affecting the middle class
Right now 0% of America is suffering from a problem where their garbage is no longer collected or their trains and buses don’t run because of a labor issue, I think that changes before the end of the year.
A small amount of this will come from overt labor action: strikes and disputes in 2022 will exceed 2011-2021 numbers.
The main source of labor disruption for garbage collection and public transit/bus service will be Amazon, UPS, and FedEx recruiting people who can work on their feet for hours on end & safely drive a vehicle.
2 - Inflation will continue rising
Pretty easy prediction here and I don’t have much to add to the debate that I haven’t been spouting on twitter for the better part of the last year, but I expect that inflation will average between 4% and 8% for the first 6 months of 2022 and between 5% and 10% for the second half of the year.
Components-wise, automotive prices will cease to be a leading contributing factor to inflation as the chip shortage is mostly resolved and auto manufacturers return to fuller production. Home and food prices will instead drag inflation higher and labor/wages will continue trailing inflation - a big squeeze for the middle class.
3 - Food Insecurity
A major overlooked story in the last quarter of 2021 was that China banned phosphate exports. This effectively removed 40-45% of this primary fertilizer component from the global market.
Downstream of phosphate is fertilizer, and fertilizer prices have been going haywire recently.
Fertilizer is upstream of farming and farming is upstream of food which is upstream of - absolutely everything.
2021’s inflation was mostly the result of unnecessary fiscal stimulus when Biden sought to pour gasoline onto an economy that was already set to boom. A lot of 2022’s inflation will be driven by the increased price of raw food prices.
4 - Red Wave
Donald Trump was the most personally revolting politician of my lifetime. On first blush, any normal upstanding person disdains the guy and even the people who strongly support him wouldn’t want to have dinner with him.
Yet Trump won the presidency despite being anti-charming.
I believe that Donald Trump’s repugnance masked what has been a growing support for Republican policies, and Republicans have had to learn to survive on ideas despite the Trump handicap.
Simultaneously, Trump’s repulsion sent a false signal to Democrats that Americans supported Democrat policies when they really just were repelled by an obviously repellant man.
This led Democrats into a previously-unimaginable realm of policy that is often just zany on its face.
Now that Trump is gone, inflation is high, our Afghanistan humiliation is complete, Biden’s popularity is in the tank, and there are video clips of every congressman defending some silly idea I expect that the Democrats lose the house and senate in an unprecedented red wave.
5 - Price Controls
Unfortunately I believe that we are heading the way of price controls in 2022. I believe they will be what I’ll call “soft-enforced” via:
Executive emergency action of questionable legality (akin to OSHA vax mandates) - will take awhile to work its way through court system and maybe some judges will allow rules to take effect while working through
Public shaming from politicians - probably the least effective but the loudest
Extralegal threats via enforcement organizations similar to Operation Choke Point. Think of this as a conversation the government initiates with a proprietor by saying “Nice business you got here, would be a shame if something happened to it.” The FDA has broad remit to reexamine whether food is suitable for consumers, the SEC can make life very difficult for public companies, the IRS can make a person’s life much less enjoyable on a whim.
I think that politicians will see a good bit of success by putting companies between rocks and hard places and that this will be evident by the end of 2022 as consumer packaged good companies see their margins shrink by the end of the year as input prices rise and they face serious government headwinds in raising their prices commensurately.
6 - Boxcar will crush it
It’s been a crazy two years for Boxcar. After building a very solid business around commuting we were totally decimated by the pandemic, pivoted to a number of other business lines to stay alive, and are seeing our business roar back.
I expect that our weekly revenue will exceed $80,000 by the end of 2022 as commuters return to the office but look to do so in comfort, safety, and style.
7 - Bitcoin will hit $120,000
Today bitcoin sits at $47,230 and I expect it will hit a high above 120k at some point in 2022, a 150% increase. I believe it will outperform the S&P 500 on the year.
Bonus perennial prediction - Ethereum will not shift to proof of stake.
This has been a prediction of mine every year since 2015 despite POS being less than one year away the entire time.
I saw Vitalik pitch “Bitcoin 2.0” at Coin Summit in 2014 (video) and even then he was talking about how Casper was imminent. Casper no longer exists in the ETH development pipeline but its proof of stake concept does and I think it remains vaporware.
Caveat: if they ever do shift to proof of stake, it will result in massive re-centralization and ETH will fall to a a solana/cardano competitor.