Moore's Law is dying sooner due to Global Macroeconomic policies (SUPPLY SIDE ECONOMIC POLICIES)

I read an interesting story about Samsung where Samsung's profits are going to crash by 96%. For a company of the size of Samsung, this loss is primarily due to loss on its memory devices. At the bottom of this is actually falling consumer demand due to rising interest rates. The highest inflation in last 30 years has forced the Federal Reserve to hike interest rates to tame inflation.

Last time when interest rates were this high under Paul Volckler, the National Debt of United States was well under $1 trillion. Hence, raising rates had very low impact on overall macroeconomic conditions. It did slow down the economy resulting in staglation. US was able to come out of its stagflation but at the expense of rising National Debt. The National Debt post Ronald Reagan, has steadily climbed and the Nation has run persistently high trade deficits as well as budget deficits except under Bill Clinton when there was a rare budget surplus.

However, Unwanted wars under subsequent presidents have converted budget surplus to budget deficits. Now, the twin deficits (trade and budget) have been financed by printing more USD as well as by countries like China. The trade war between US and China has raised tensions between two economic powers. China and Russia are now working on de-dollarization and post COVID stimulus has primarily helped the wealthy 1% due to huge disparities in the economy. The social benefit spending and the spending to finance the twin deficits has blown up the money supply. Now, it has become extremely difficult to tame the inflation as the GENNIE HAS ESCAPED FROM BOTTLE.

The debt-based economy is showing signs of cracking. Had USD not been a global currency, Reaganomics would have seen its demise in its infancy. However, the world is losing its confidence in USD to be able to sustain the deficits any longer. It's high time that macroeconomic reforms are needed so that while trade deficits are eliminated, the budget deficits are also eliminated gradually. When these things are happening, there also has to a growth in real demand as compared to growing more consumer debt. Debt based economic system eventually falls apart. Hence, the U.S. needs New Macroeconomics so that the debt is under control, but real demand keeps growing.

Only when the real demand grows would there be demand for more smartphones and hence a demand for more memory chips. Only then can big giants like Samsung see a real growth for their products and hence a real growth in their profits. If such reforms are not taken into consideration, it is very likely that with the dropping corporate profits, corporations like Samsung would stop further investments for progress of Moore's law. It would be sensible to do so as there would be very low RoI due to lack of consumer demand.

If above analysis makes sense, do consider reading my books as they not only offer free market solution to eliminate deficits but also raise demand in proportion to growing supply of produced goods. This would ensure that future progress of Moore's law and growth of overall semiconductor industry is sustainable. Failure to do so would be catastrophic for the entire semiconductor industry as well as overall US economy.

About the Author

Apek is author of books on technology and macroeconomics. He is presently an entrepreneur in financial industry.