70

In our time, 70 is one of the most important numbers. That's because that number provides us with an easy way to calculate the doubling-time for any percentage-based growth.


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Image by Aslak Raanes - source: Flickr

"The greatest shortcoming of the human race today is our inability to understand the Exponential Function," so begins the lesson of Dr. Albert A. Bartlett, a professor emeritus of Physics at the University of Colorado-Boulder. And this lesson is one to remember, which is why I've linked part 1 of that lecture below, and you can follow the other 7 parts from there. To illustrate how bad we are at understanding exponential growth, let's do a little thought experiment:

Say we have a bacterium that divides every minute; so after a minute we have 2 bacteria, after two minutes there are four, and so on. Now let's say we put that single bacterium in a jar at exactly 11 o'clock and we see the jar fill up, and at 12 o'clock precisely the jar is full. These bacteria need air and space to move, so they can not survive in a full jar. Can you tell me at what time that jar was half full?

I'm blessed with an audience that's very intelligent, so I'm sure none of you answered 11:30 o'clock. Or did you? When I ask this question at random people I very seldom hear the right answer, which is of course 11:59. Yes, at 1 minute before 12 the jar is half full, because the population doubles every minute. For some strange reason the right answer eludes us, even when it is so easy to understand when you talk about something that doubles in numbers over a fixed period of time.

Now let's imagine those bacteria can think en speak for themselves, much like we can. What would their mindset be at 11:59? Well, the jar would be only half full, so they wouldn't worry about anything; there's enough air and free space, so... They are blissfully unaware of the fact that in just one minute they'll all die. And this is the basis of the problems we face.

In an economy where everything is judged by its rate of growth, we tend to overlook this huge basic problem with the exponential function. Now here's where the number 70 comes in and why I want you all to never forget this "rule of 70" (also known as the rule of 72 or 69.3). Because any growth that can be expressed as a steady percentage number per fixed time period has a so-called doubling time. Where the bacteria doubled every minute, we use the number 70 to calculate the doubling time for any percentage growth.

If something grows 2% every year, the doubling time can be calculated by dividing 70 by 2. Divide 70 by the percentage per time period and you get the number of time periods needed for 100% growth. The number 70 is an approximation of the natural logarithm of 2 multiplied by 100. This is not important however; just remember the number and you'll have a better grasp when politicians and bankers say that 2% inflation or 2% growth per year is indicative of "healthy" growth. When something grows 2% per year, it doubles in size every 35 years! They say the size of the economy needs to double in size within your working lifetime!

Add to that the knowledge that the size of the economy today is the result of all preceding growth, at least since we started measuring, and you see the fallacy in the so called "healthy growth", why growth-numbers reported by China several years back of almost 10% per year were totally ridiculous. And maybe you now begin to understand why life is so frantic and why average Joe needs to work longer and harder every year, despite all progression in technology; we're chasing after an unreachable goal, dictated by today's dogma that is the ever growing economy.

Maybe, just maybe you now also see why a deflationary currency like Bitcoin, with a fixed supply of 21 million coins, is just what we need to better represent the reality that we live on a planet with finite resources. Infinite growth, as represented by the ever inflating amount of Fiat currency, may not be the best way to model a finite Earth... One more reason for Fiat to die and Bitcoin to take over as the world's reserve currency, if you ask me :-)


The Most IMPORTANT Video You'll Ever See (part 1 of 8)


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