When we wrote Israel FIRST!, we agreed to hold ourselves accountable regarding predictions made, which were listed in Appendix B of the book. Some of those predictions involved the financial peaks of nations.

The primary long-term financial predictions we made in Summer 2015 were:

1. The United States is a nation that is peaking and has reached its economic climax.
2. Israel is presently a nation that is being seeded.
3. Israel is a nation that is being seeded compared to the sprouting we might see in the next few years. Even as other parts of the world deteriorate, Israel will advance at an accelerated rate in these momentous times.
4. Caution: Israel is an emerging economy, considered to be quite small overall, and easily influenced by world events. Israel should be considered as a long-term investment only.

Only eight months has elapsed since the releasing of the book to the printers, so it is really too early to claim accuracy regardless what has happened. These predictions will require many years to verify, even though there is and has been a “feel” here in America, by many political conservatives that America is in both moral and economic decline.

Only when the secular historians begin to look BACK and say “we peaked” could we truly stand up and say “we called it right”.

But, before historians would look back, you would expect to see some economists and/or historians to look FORWARD and predict that a decline may be in front us, and that HAS just happened.

Secular Book Predicts Falling Growth

Robert J. Gordon, a noted American economist, has just published “The Rise and Fall of American Growth“. His thesis is that the growth in America between 1870 and 1970 was an unprecedented, unrepeatable period of trans-formative growth and innovation.  He writes “No other era in human history, either before or since, combined so many elements in which the standard of living increased as quickly and in which the human condition was transformed so completely.”

He says that nothing on the horizon, not even the Internet, can match the changes brought by the combination of electricity, hot and cold running water, the telephone and the internal combustion engine.

• NOTE: While some critics Robert J. Gordon might be going too far in his downplaying of the importance of the Internet, even I, as a former executive of a high-tech startup whose success came from the Internet, have to admit that the Internet is just ONE major invention, versus SEVERAL in the industrial age. In our time, I see the Internet’s main accomplishment being the improved speed and cost at which ideas and information can be made available to the masses. This is a shifting of power from the elites, making information and ideas harder to control (both good and bad ones). While the printing press transformed the world in the years that followed 1450, it is hard to argue that essentially “putting a free printing press in every home” would not additionally transform the world in the years following 2000.

I find it interesting that the decade that Robert J. Gordon chose for his initial decade of growth (1870-1880) was the same decade that Jews began to return to the Holy Land. One of the first new neighborhoods in Jerusalem outside the city walls (Nahalat Shiv’a) was established in 1869. The first modern Jewish settlement was Petah Tikva in 1878, and not in 1882 as is often cited. The first Aliyah WAVE began in 1882.

Moore’s Law is Finally Failing

Another fundamental secular prediction that is predicting change looking FORWARD, is the slowing of “Moore’s Law”. Gordon Moore of the chip maker Intel has been credited with an observation that for about 50 years, the number of transistors on a chip could double every two years.

This amazing principle meant that every two years chips could get MORE intelligent, FASTER, CHEAPER, SMALLER in size and LOWER POWER.  The powerful impact of all these things combined cannot be overstated!  I find it interesting that the age of silicon began approximately when Jerusalem was unified as the capital of Israel in 1967.

Anyway, the problem for Moore’s Law is that the most powerful chip company in the world, with all its billions of dollars of resources, has to admit that Moore’s Law has shifted from every 2 years, to every 2.5 years. But that official statement does not admit what is underneath, which is that the CHEAPER is gone, and the LOWER POWER is hardly true. In addition the FASTER benefit is struggling as well. It will take 5 to 10 years for the impact of this slowing of Moore’s Law to truly trickle though our economy, but unless there is some unknown breakthrough coming, this will slow economic growth.

The Economist issue March 12, 2016 issue has an excellent series of articles on this topic if you want to dig further.

• NOTE: The impact of a slowing of Moore’s Law has been talked about for over 20 years. For many years everyone who predicted Moore’s Law would end, even Gordon Moore himself who in 1995 predicted it would end in 2005, has been shown to be wrong.  So Intel, the very company whose founder coined the term “Moore’s Law” would not have been quick to make this call themselves. Admitting a change in Moore’s Law does not help their business. Therefore, this official pronouncement is notable.

Peaking Stock Market?

There is one other measure of economic prosperity and sentiment — the stock market. Did the stock market peak in 2015 or not? So far its peaks in 2015 have held firm. The S&P and Dow hit all-time highs in May 2015. Since that time the market has bounced back several times getting close to those levels, but not exceeding them. The proper way to think about this is as a “slight validation” for the peaking, rather than its proof. Why don’t we want to use this information as evidence to validate our thesis right now? Because if we did, then if the market were to exceed its May high points we would have to retract them too.

In short, we are talking about long term trends here, and so we should also judge them over the long term. But, not all our financial predictions were for the longer term!

So in the next blog post of this series, we will discuss the here and now!  Is financial collapse coming soon, or not?  Not only will we look at our predictions, we will talk about one issue we forgot to put in the book, and probably should have.