The housing bubble blew up so catastrophically because science and technology let us down. It blew up because our technocratic elite told us to expect an ever-wealthier future, and science hasn't delivered. Except for computers and the Internet, the idea that we're experiencing rapid technological progress is a myth.
Such is the claim of Peter Thiel, who has either blundered into enough money that his crackpot ideas are taken seriously, or who is actually on to something. A cofounder of PayPal and an early investor in Facebook (his stake was recently reported to be around 3%), Mr. Thiel is the unofficial leader of a group known as the "PayPal mafia," perhaps the most fecund informal network of entrepreneurs in the world, behind companies as diverse as Tesla (electric cars) and YouTube.
Mr. Thiel, whose family moved from Germany when he was a toddler, studied at Stanford and became a securities lawyer. After PayPal, he imparted a second twist to his career by launching a global macro hedge fund, Clarium Capital. He now matches wits with some of the great macro investors, such as George Soros and Stanley Druckenmiller, by betting on the direction of world markets.
Those two realms of investing--narrow technology and broad macro--are behind his singular diagnosis of our economic crisis. "All sorts of things are possible in a world where you have massive progress in technology and related gains in productivity," he says. "In a world where wealth is growing, you can get away with printing money. Doubling the debt over the next 20 years is not a problem."
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