The Future of Things

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The Future of Things

The future of things. Have you ever seen Back to the Future? Being a product of the 80’s, Back to the Future is probably in my Top 10 favorite movies list. I also loved its sequel that came out in 1989 – Back to the Future II. Whereas the first move took a look back at what happened in the past, Back to the Future II looked forward to the future – 30 years ahead, to be exact. Interestingly enough, they got several things right. Doc Brown’s Smartwatch, Video Calling, and biometrics are all things that were just dreams in 1989 but are everywhere in 2024. In today’s episode I want to look toward the future. Not 30 years into the future, but how about the next decade? This may be more fun than it is accurate, but there’s always a chance my track record will be half as good as Back to the Future II.

1. Cash may make a comeback – Have you noticed many merchants are beginning to tack on a percentage charge for using a debit or credit card? You will see more of this. Or you might also see a discount offered if you are willing to pay cash. In addition to these new charges, we are seeing more of, there are efforts in Congress to cap the amount of interchange income banks and card companies make every time you swipe your card. The state of Illinois recently passed a law that limits what can be charged on the portion of every sale attributable to sales tax. These kinds of laws capping income on cards may lead some banks to begin charging for debit cards and many credit card issuers may reduce their rewards offerings in response to these skinner incomes. Some consumers will continue paying the extra fee for the convenience of using plastic. But some will opt to carry more cash than in the past and use it when they can save 3% to do so. So, cash might actually be back in vogue – at least for part of the decade.

2. Drones, Drones, and more Drones – Once federal rules are solidified on beyond-visual-line-of-sight-flight, expect to see more drones in the air. We’ll probably see Amazon, Fed Ex and UPS utilizing them first for package delivery in big cities. Walmart already is. But as drones evolve, their uses will to so that they are not just carrying packages, but maybe even fast food. It might even be that one day I can order a Chick-Fil-A sandwich with Polynesian sauce and have it delivered to me at home. I guess I can already have Door Dash do that, but it’s not quite as fun as the idea of a flying object coming to my front door. We might not see the flying cars of Back to the Future II in the next 10 years, but we’re likely to see the skies full of objects that are moving things more efficiently than we can on roads.

3. Electricity Costs Will Be Going Up. These costs are already up over the last few years. But with power-hungry Data Centers, particularly ones that run artificial intelligence, growing in number, demand for electricity is only going to increase. We also have an aging infrastructure, many of which are being transitioned to solar and wind generation. These methods are more expensive, requiring more transmission lines than other forms of energy generation. In addition to that, if we continue to see more and more electric cars on the road, we are going to see electrical demand for charging stations increasing. Regardless of what you think about the value of green initiatives, they are costly. I think the result will be increasingly higher electricity costs over the next decade. Tennessee sits in a really good spot, because it its proximity to TVA and readily available power. This is one reason I think Ford decided to invest so much in West TN – access to ample power.

4. Internet Access Will be Available in Nearly Every Part of the Globe – Internet Access has arguably become just as important as electricity. According to space.com, Elon Musk’s Space X has launched over 6000 Starlink Satellites into orbit. In concert with ground transceivers, these satellites can help provide internet access almost anywhere. They already claim to cover 99% of the US. According to CNET, they’ll need 10,000 satellites to truly cover the globe. They’ll achieve that within the next 10 years. Right now, it’s really only a viable option in rural areas, but as speeds increase, we might find that all of us are utilizing it in the not-too distant-future.

5. Inflation will be higher than it has been in recent decades – From 1990 to 2020 inflation was almost non-existent. But Covid and the monetary policies utilized following ignited inflation again, and every one of us has felt it. I wish I could say I have confidence in the Fed to defeat it – but I think that even high interest rates are not a strong enough strategy to extinguish inflation. I expect it to bounce between 3% and 4% over the next decade. Here’s the main reason why: lack of available labor. Fewer people are being born and fewer people are working. It’s just as simple as that. I actually came across an article in the Wall Street Journal recently that said that worldwide birthrate is actually expected to fall below the replacement rate in the next few decades. This means the world population will start shrinking. This demographic trend is a problem, because you will eventually end up with more retirees than people who are working. So, we won’t have enough people to fill all the jobs we will need over the next decade. But another problem we have is the mismatch of jobs and people that want to work those jobs. There are many jobs available that Americans choose not to work. Our labor force has become very picky. This is going to be a problem for the foreseeable future. A recession could potentially call a halt to inflation – but I think it will return as soon as economic growth returns.

6. Artificial Intelligence will be everywhere – You may not have run into it yet, but you will. Right now, AI uses seem more entertaining than useful. But just as you were told in the early 2000’s that the internet would change the way we live, AI will as well. Do you still not understand what Artificial Intelligence is? I asked Chat GPT for a concise definition of AI and here is what it said: AI refers to the simulation of human intelligence in machines that are programmed to think, learn, and perform tasks autonomously, often using algorithms and data-driven models. Chad’s definition is: AI is technology that can analyze, synthesize, think, and learn. It has great risks, and it also has great opportunity. One of the risks will be that of deep fakes. These are AI generated pictures or voices that are copies of the real thing. We are going to have to learn how to be more discerning on social media and elsewhere to spot, not just fake news, but fake video and fake pictures. It’s very possible we’ll be duped by imposters and that we’ll have to develop a skeptical eye to test everything before believing it. AI is coming, whether we like it or not. Going back to my example of the internet earlier, probably each and every one of you engage with the internet in some shape or form. By 2034, I believe you will be interacting with artificial intelligence in some shape or form as well.

One last thing I believe will happen over the last decade – Foundation Bank and McKenzie Banking Company will continue to grow, one relationship at a time. 10 years from now, I can almost guarantee you there will be fewer community banks like us. When I began in the industry there were over 8,000 banks. Now there are roughly 4,800. I would not be surprised if there were half that by the end of the next decade. Our hope is to remain a community bank, and our ambition is to continue fulfilling our purpose statement to invest in things that will outlive us. We’d love to invest in your financial life. Start your financial conversation with us today by visiting our website at foundationbank.org. We also hope you’ll subscribe to this podcast to it in your favorite podcast app and share it on social media. This episode is not a recommendation specific to your own unique circumstances. Please consult your own advisor for guidance. Foundation Bank and MBC are a member FDIC and an equal housing lender, and until our next episode, God bless you.

-President Chad P. Wilson, CFP

Today’s episode of “Money Matters” was written and recorded by President Chad P. Wilson of Foundation Bank / McKenzie Banking Company on June 11, 2024. This episode does not constitute financial advice. Please consult a financial professional to discuss your specific needs. Any rates mentioned are subject to change and are accurate as of the recording date. Foundation Bank/MBC is an Equal Housing Lender, Member FDIC.