New Stiglitz just dropped.

Here's the inflation story everyone believes (warning: it's false): America gave the poor too much money during the recession, and now the economy is awash with free money, which made them so rich they're refusing to work, meaning the economy isn't making anything. Prices are soaring due to increased cash and missing labor.

Lawrence Summers says there's only one answer. We must impoverish the poor: raise interest rates, cause a recession, and eliminate millions of jobs, until the poor are stripped of their underserved fortunes and return to work.

https://pluralistic.net/2021/11/20/quiet-part-out-loud/#profiteering

This is nonsense. Countries around the world suffered inflation during and after lockdowns, whether they gave out humanitarian money to keep people from starvation. America has slightly greater inflation than other OECD countries, but it's not due to big relief packages.

The Causes of and Responses to Today's Inflation, a Roosevelt Institute report by Nobel-winning economist Joseph Stiglitz and macroeconomist Regmi Ira, debunks this bogus inflation story and offers a more credible explanation for inflation.

https://rooseveltinstitute.org/wp-content/uploads/2022/12/RI CausesofandResponsestoTodaysInflation Report 202212.pdf

Sharp interest rate hikes exacerbate the slump and increase inflation, the authors argue. They compare monetary policy inflation cures to medieval bloodletting, where doctors repeated the same treatment until the patient recovered (for which they received credit) or died (which was more likely).

Let's discuss bloodletting. Inflation hawks warn of the wage price spiral, when inflation rises and powerful workers bargain for higher pay, driving up expenses, prices, and wages. This is the fairy-tale narrative of the 1970s, and it's true except that OPEC's embargo drove up oil prices, which produced inflation. Oh well.

Let's be generous to seventies-haunted inflation hawks and say we're worried about a wage-price spiral. Fantastic! No. Real wages are 2.3% lower than they were in Oct 2021 after peaking in June at 4.8%.

Why did America's powerful workers take a paycut rather than demand inflation-based pay? Weak unions, globalization, economic developments.

Workers don't expect inflation to rise, so they're not requesting inflationary hikes. Inflationary expectations have remained moderate, consistent with our data interpretation.

https://www.newyorkfed.org/microeconomics/sce#/

Neither are workers. Working people see surplus savings as wealth and spend it gradually over their lives, despite rising demand. People may have saved money by staying in during the lockdown, but they don't eat out every night to make up for it. Instead, they keep those savings as precautionary balances. This is why the economy is lagging.

People don't buy non-traded goods with pandemic savings (basically, imports). Imports don't multiply like domestic purchases. If you buy a loaf of bread from the corner baker for $1 and they spend it at the tavern across the street, that dollar generates $3 in economic activity. Spending a dollar on foreign goods leaves the country and any multiplier effect happens there, not in the US.

Only marginally higher wages. The ECI is up 1.6% from 2019. Almost all gains went to the 25% lowest-paid Americans. Contrary to the inflation worry about too much savings, these workers don't make enough to save, even post-pandemic.

Recreation and transit spending are at or below pre-pandemic levels. Higher food and hotel prices (which doesn’t mean we’re buying more food than we were in 2019, just that it costs more).

What causes inflation if not greedy workers, free money, and high demand? The most expensive domestic goods produce the biggest revenues for their manufacturers. They charge you more without paying their workers or suppliers more.

The largest price-gougers are funneling their earnings to rich people who store it offshore through stock buybacks and dividends. A $1 billion stock buyback doesn't buy $1 billion in bread.

Five factors influence US inflation today:

I. Price rises for energy and food

II. shifts in consumer tastes

III. supply interruptions (mainly autos);

IV. increased rents (due to telecommuting);

V. monopoly (AKA price-gouging).

None can be remedied by raising interest rates or laying off workers.

Russia's invasion of Ukraine, omicron, and China's Zero Covid policy all disrupted the flow of food, energy, and production inputs. The price went higher because we made less.

After Russia invaded Ukraine, oil prices spiked, and sanctions made it worse. But that was February. By October, oil prices had returned to pre-pandemic, 2015 levels attributable to global economic adjustments, including a shift to renewables. Every new renewable installation reduces oil consumption and affects oil prices.

High food prices have a simple solution. The US and EU have bribed farmers not to produce for 50 years. If the war continues, this program may end, and food prices may decline.

Demand changes. We want different things than in 2019, not more. During the lockdown, people substituted goods. Half of the US toilet-paper supply in 2019 was on commercial-sized rolls. This is created from different mills and stock than our toilet paper.

Lockdown pushed toilet paper demand to residential rolls, causing shortages (the TP hoarding story was just another pandemic urban legend). Because supermarket stores don't have accounts with commercial paper distributors, ordering from languishing stores was difficult. Kleenex and paper towel substitutions caused greater shortages.

All that drove increased costs in numerous product categories, and there were more cases. These increases are transient, caused by supply chain inefficiencies that are resolving.

Demand for frontline staff saw a one-time repricing of pay, which is being recouped as we speak.

Illnesses. Brittle, hollowed-out global supply chains aggravated this. The constant pursuit of cheap labor and minimal regulation by monopolies that dominate most sectors means things are manufactured in far-flung locations. Financialization means any surplus capital assets were sold off years ago, leaving firms with little production slack. After the epidemic, several of these systems took years to restart.

Automobiles are to blame. Financialization and monopolization consolidated microchip and auto production in Taiwan and China. When the lockdowns came, these worldwide corporations cancelled their chip orders, and when they placed fresh orders, they were at the back of the line.

That drove up car prices, which is why the US has slightly higher inflation than other wealthy countries: the economy is car-centric. Automobile prices account for 9% of the CPI. France: 3.6%

Rent shocks and telecommuting. After the epidemic, many professionals moved to exurbs, small towns, and the countryside to work from home. As commercial properties were vacated, it was impractical to adapt them for residential use due to planning restrictions. Addressing these restrictions will cut rent prices more than raising inflation rates, which halts housing construction.

Statistical mirages cause some rent inflation. The CPI estimates what homeowners would pay to rent their properties. When rents rise in your neighborhood, the CPI believes you're spending more on rent even if you have a 30-year fixed-rate mortgage.

Market dominance. Almost every area of the US economy is dominated by monopolies, whose CEOs disclose on investor calls that they use inflation scares to jack up prices and make record profits.

https://pluralistic.net/2022/02/02/its-the-economy-stupid/#overinflated

Long-term profit margins are rising. Markups averaged 26% from 1960-1980. 2021: 72%. Market concentration explains 81% of markup increases (e.g. monopolization). Profit margins reach a 70-year high in 2022. These elements interact. Monopolies thin out their sectors, making them brittle and sensitive to shocks.

If we're worried about a shrinking workforce, there are more humanitarian and sensible solutions than causing a recession and mass unemployment. Instead, we may boost US production capacity by easing workers' entry into the workforce.

https://pluralistic.net/2022/06/01/factories-to-condos-pipeline/#stuff-not-money

US female workforce participation ranks towards the bottom of developed countries. Many women can't afford to work due to America's lack of daycare, low earnings, and bad working conditions in female-dominated fields. If America doesn't have enough workers, childcare subsidies and minimum wages can help.

By contrast, driving the country into recession with interest-rate hikes will reduce employment, and the last recruited (women, minorities) are the first fired and the last to be rehired. Forcing America into recession won't enhance its capacity to create what its people want; it will degrade it permanently.

Nothing the Fed does can stop price hikes from international markets, lack of supply chain investment, COVID-19 disruptions, climate change, the Ukraine war, or market power. They can worsen it. When supply problems generate inflation, raising interest rates decreases investments that can remedy shortages.

Increasing interest rates won't cut rents since landlords pass on the expenses and high rates restrict investment in new dwellings where tenants could escape the costs.

Fixing the supply fixes supply-side inflation. Increase renewables investment (as the Inflation Reduction Act does). Monopolies can be busted (as the IRA does). Reshore key goods (as the CHIPS Act does). Better pay and child care attract employees.

Windfall taxes can claw back price-gouging corporations' monopoly earnings.

https://pluralistic.net/2022/03/15/sanctions-financing/#soak-the-rich

In 2008, we ruled out fiscal solutions (bailouts for debtors) and turned to monetary policy (bank bailouts). This preserved the economy but increased inequality and eroded public trust.

Monetary policy won't help. Even monetary policy enthusiasts recognize an 18-month lag between action and result. That suggests monetary tightening is unnecessary. Like the medieval bloodletter, central bankers whose interest rate hikes don't work swiftly may do more of the same, bringing the economy to its knees.

Interest rates must rise. Zero-percent interest fueled foolish speculation and financialization. Increasing rates will stop this. Increasing interest rates will destroy the economy and dampen inflation.

Then what? All recent evidence indicate to inflation decreasing on its own, as the authors argue. Supply side difficulties are finally being overcome, evidence shows. Energy and food prices are showing considerable mean reversion, which is disinflationary.

The authors don't recommend doing nothing. Best case scenario, they argue, is that the Fed won't keep raising interest rates until morale improves.

The Federal Funds Rate (FFR) is the target interest rate set by the Federal Reserve System (Fed)'s policy-making body (FOMC). This target is the rate at which the Fed suggests commercial banks borrow and lend their excess reserves overnight to each other.

The FOMC meets 8 times a year to set the target FFR. This is supposed to promote economic growth. The overnight lending market sets the actual rate based on commercial banks' short-term reserves. If the market strays too far, the Fed intervenes.

Banks must keep a certain percentage of their deposits in a Federal Reserve account. A bank's reserve requirement is a percentage of its total deposits. End-of-day bank account balances averaged over two-week reserve maintenance periods are used to determine reserve requirements.

If a bank expects to have end-of-day balances above what's needed, it can lend the excess to another institution.

The FOMC adjusts interest rates based on economic indicators that show inflation, recession, or other issues that affect economic growth. Core inflation and durable goods orders are indicators.

In response to economic conditions, the FFR target has changed over time. In the early 1980s, inflation pushed it to 20%. During the Great Recession of 2007-2009, the rate was slashed to 0.15 percent to encourage growth.

Inflation picked up in May 2022 despite earlier rate hikes, prompting today's 0.75 percent point increase. The largest increase since 1994. It might rise to around 3.375% this year and 3.1% by the end of 2024.

I relocated my notes database from Roam Research to Obsidian earlier this year expecting to stay there for a long. Obsidian is a terrific tool, and I explained my move in that post.

Moving everything to Tana faster than intended. Tana? Why?

Tana is just another note-taking app, but it does it differently. Three note-taking apps existed before Tana:

1. simple note-taking programs like Apple Notes and Google Keep.

2. Roam Research and Obsidian are two graph-style applications that assisted connect your notes.

3. You can create effective tables and charts with data-focused tools like Notion and Airtable.

Tana is the first great software I've encountered that combines graph and data notes. Google Keep will certainly remain my rapid notes app of preference. This Shu Omi video gives a good overview:

Tana handles everything I did in Obsidian with books, people, and blog entries, plus more. I can find book quotes, log my workouts, and connect my thoughts more easily. It should make writing blog entries notes easier, so we'll see.

Tana is now invite-only, but if you're interested, visit their site and sign up. As Shu noted in the video above, the product hasn't been published yet but seems quite polished.

Whether I stay with Tana or not, I'm excited to see where these apps are going and how they can benefit us all.

"Don't let technology control you; manage your phone."

"Don't become a slave to technology," said Richard Branson. "Manage your phone, don't let it manage you."

Unfortunately, most people are addicted to smartphones.

Worrying smartphone statistics:

• 46% of smartphone users spend 5–6 hours daily on their device.

• The average adult spends 3 hours 54 minutes per day on mobile devices.

• We check our phones 150–344 times per day (every 4 minutes).

• During the pandemic, children's daily smartphone use doubled.

Having a list of productive, healthy, and fulfilling replacement activities is an effective way to reduce smartphone use.

The more you practice these smartphone replacements, the less time you'll waste.

Skills Development

Most people say they 'don't have time' to learn new skills or read more. Lazy justification. The issue isn't time, but time management. Distractions and low-quality entertainment waste hours every day.

The majority of time is spent in low-quality ways, according to Richard Koch, author of The 80/20 Principle.

What if you swapped daily phone scrolling for skill-building?

There are dozens of skills to learn, from high-value skills to make more money to new languages and party tricks.

Learning a new skill will last for years, if not a lifetime, compared to scrolling through your phone.

Watch Docs

Love documentaries. It's educational and relaxing. A good documentary helps you understand the world, broadens your mind, and inspires you to change.

Recent documentaries I liked include:

• 14 Peaks: Nothing Is Impossible

• The Social Dilemma

• Jim & Andy: The Great Beyond

• Fantastic Fungi

Make money online

If you've ever complained about not earning enough money, put away your phone and get to work.

Instead of passively consuming mobile content, start creating it. Create something worthwhile. Freelance.

Internet makes starting a business or earning extra money easier than ever.

(Grand)parents didn't have this. Someone made them work 40+ hours. Few alternatives existed.

Today, all you need is internet and a monetizable skill. Use the internet instead of letting it distract you. Profit from it.

Bookworm

Jack Canfield, author of Chicken Soup For The Soul, said, "Everyone spends 2–3 hours a day watching TV." If you read that much, you'll be in the top 1% of your field."

Few people have more than two hours per day to read.

If you read 15 pages daily, you'd finish 27 books a year (as the average non-fiction book is about 200 pages).

Jack Canfield's quote remains relevant even though 15 pages can be read in 20–30 minutes per day. Most spend this time watching TV or on their phones.

What if you swapped 20 minutes of mindless scrolling for reading? You'd gain knowledge and skills.

Favorite books include:

• The 7 Habits of Highly Effective People — Stephen R. Covey

• The War of Art — Steven Pressfield

• The Psychology of Money — Morgan Housel

• A New Earth — Eckart Tolle

Get Organized

All that screen time could've been spent organizing. It could have been used to clean, cook, or plan your week.

If you're always 'behind,' spend 15 minutes less on your phone to get organized.

"Give me six hours to chop down a tree, and I'll spend the first four sharpening the ax," said Abraham Lincoln. Getting organized is like sharpening an ax, making each day more efficient.

Creativity

Why not be creative instead of consuming others'? Do something creative, like:

• Painting

• Musically

• Photography\sWriting

• Do-it-yourself

• Construction/repair

Creative projects boost happiness, cognitive functioning, and reduce stress and anxiety. Creative pursuits induce a flow state, a powerful mental state.

This contrasts with smartphones' effects. Heavy smartphone use correlates with stress, depression, and anxiety.

Hike

People spend 90% of their time indoors, according to research. This generation is the 'Indoor Generation'

We lack an active lifestyle, fresh air, and vitamin D3 due to our indoor lifestyle (generated through direct sunlight exposure). Mental and physical health issues result.

Put away your phone and get outside. Go on nature walks. Explore your city on foot (or by bike, as we do in Amsterdam) if you live in a city. Move around! Outdoors!

You can't spend your whole life staring at screens.

Podcasting

Okay, a smartphone is needed to listen to podcasts. When you use your phone to get smarter, you're more productive than 95% of people.

Favorite podcasts:

• The Pomp Podcast (about cryptocurrencies)

• The Joe Rogan Experience

• Kwik Brain (by Jim Kwik)

Podcasts can be enjoyed while walking, cleaning, or doing laundry. Win-win.

Journalize

I find journaling helpful for mental clarity. Writing helps organize thoughts.

Instead of reading internet opinions, comments, and discussions, look inward. Instead of Twitter or TikTok, look inward.

“It never ceases to amaze me: we all love ourselves more than other people, but care more about their opinion than our own.” — Marcus Aurelius

Give your mind free reign with pen and paper. It will highlight important thoughts, emotions, or ideas.

Never write for another person. You want unfiltered writing. So you get the best ideas.

Find your best hobbies

List your best hobbies. I guarantee 95% of people won't list smartphone scrolling.

It's often low-quality entertainment. The dopamine spike is short-lived, and it leaves us feeling emotionally 'empty'

High-quality leisure sparks happiness. They make us happy and alive. Everyone has different interests, so these activities vary.

My favorite quality hobbies are:

• Nature walks (especially the mountains)

• Video game party

• Watching a film with my girlfriend

• Gym weightlifting

• Complexity learning (such as the blockchain and the universe)

This brings me joy. They make me feel more fulfilled and 'rich' than social media scrolling.

Make a list of your best hobbies to refer to when you're spending too much time on your phone.

Looking back into the past can help you understand what's happening today and why.

"Creator economy" conjures up images of originality, sincerity, and passion. Where do Michelangelos and da Vincis push advancement with their gifts without battling for bread and proving themselves posthumously? 

Creativity has been as long as humanity, but it's just recently become a new economic paradigm. We even talk about Web3 now.

Let's examine the creative economy's history to better comprehend it. What brought us here? Looking back can help you understand what's happening now.

No yawning, I promise 😉.

Creator Economy's history

Long, uneven transition to creator economy. Let's examine the economic and societal changes that led us there.

1. Agriculture to industry

Mid-18th-century Industrial Revolution led to shift from agriculture to manufacturing. The industrial economy lasted until World War II.

The industrial economy's principal goal was to provide more affordable, accessible commodities.

Unlike today, products were scarce and inaccessible.

To fulfill its goals, industrialization triggered enormous economic changes, moving power from agrarians to manufacturers. Industrialization brought hard work, rivalry, and new ideas connected to production and automation. Creative thinkers focused on that then.

It doesn't mean music, poetry, or painting had no place back then. They weren't top priority. Artists were independent. The creative field wasn't considered a different economic subdivision.

2. The consumer economy

Manufacturers produced more things than consumers desired after World War II. Stuff was no longer scarce.

The economy must make customers want to buy what the market offers.

The consumer economic paradigm supplanted the industrial one. Customers (or consumers) replaced producers as the new economic center.

Salesmen, marketing, and journalists also played key roles (TV, radio, newspapers, etc.). Mass media greatly boosted demand for goods, defined trends, and changed views regarding nearly everything.

Mass media also gave rise to pop culture, which focuses on mass-market creative products. Design, printing, publishing, multi-media, audio-visual, cinematographic productions, etc. supported pop culture.

The consumer paradigm generated creative occupations and activities, unlike the industrial economy. Creativity was limited by the need for wide appeal.

Most creators were corporate employees.

Creating a following and making a living from it were difficult.

Paul Saffo said that only journalists and TV workers were known. Creators who wished to be known relied on producers, publishers, and other gatekeepers. To win their favor was crucial. Luck was the best tactic.

3. The creative economy

Consumer economy was digitized in the 1990s. IT solutions transformed several economic segments. This new digital economy demanded innovative, digital creativity.

Later, states declared innovation a "valuable asset that creates money and jobs." They also introduced the "creative industries" and the "creative economy" (not creator!) and tasked themselves with supporting them. Australia and the UK were early adopters.

Individual skill, innovation, and intellectual property fueled the creative economy. Its span covered design, writing, audio, video material, etc. The creative economy required IT-powered activity.

The new challenge was to introduce innovations to most economic segments and meet demand for digital products and services.

Despite what the title "creative economy" may imply, it was primarily oriented at meeting consumer needs. It didn't provide inventors any new options to become entrepreneurs. Instead of encouraging innovators to flourish on their own, the creative economy emphasized "employment-based creativity."

4. The creator economy

Next, huge IT platforms like Google, Facebook, YouTube, and others competed with traditional mainstream media.

During the 2008 global financial crisis, these mediums surpassed traditional media. People relied on them for information, knowledge, and networking. That was a digital media revolution. The creator economy started there.

The new economic paradigm aimed to engage and convert clients. The creator economy allowed customers to engage, interact, and provide value, unlike the consumer economy. It gave them instruments to promote themselves as "products" and make money.

Writers, singers, painters, and other creators have a great way to reach fans. Instead of appeasing old-fashioned gatekeepers (producers, casting managers, publishers, etc.), they can use the platforms to express their talent and gain admirers. Barriers fell.

It's not only for pros. Everyone with a laptop and internet can now create.

2022 creator economy:

Since there is no academic description for the current creator economy, we can freestyle.

The current (or Web2) creator economy is fueled by interactive digital platforms, marketplaces, and tools that allow users to access, produce, and monetize content.

No entry hurdles or casting in the creative economy. Sign up and follow platforms' rules. Trick: A platform's algorithm aggregates your data and tracks you. This is the payment for participation.

The platforms offer content creation, design, and ad distribution options. This is platforms' main revenue source.

The creator economy opens many avenues for creators to monetize their work. Artists can now earn money through advertising, tipping, brand sponsorship, affiliate links, streaming, and other digital marketing activities.

Even if your content isn't digital, you can utilize platforms to promote it, interact and convert your audience, and more. No limits. However, some of your income always goes to a platform (well, a huge one).

The creator economy aims to empower online entrepreneurship by offering digital marketing tools and reducing impediments.

Barriers remain. They are just different. Next articles will examine these.

Why update the creator economy for Web3?

I could address this question by listing the present creator economy's difficulties that led us to contemplate a Web3 upgrade.

I don't think these difficulties are the main cause. The mentality shift made us see these challenges and understand there was a better reality without them.

Crypto drove this thinking shift. It promoted disintermediation, independence from third-party service providers, 100% data ownership, and self-sovereignty. Crypto has changed the way we view everyday things.

Crypto's disruptive mission has migrated to other economic segments. It's now called Web3. Web3's creator economy is unique.

Here's the essence of the Web3 economy:

• Eliminating middlemen between creators and fans.

• 100% of creators' data, brand, and effort.

• Business and money-making transparency.

• Authentic originality above ad-driven content.

In the next several articles, I'll explain. We'll also discuss the creator economy and Web3's remedies.

Final thoughts

The creator economy is the organic developmental stage we've reached after all these social and economic transformations.

The Web3 paradigm of the creator economy intends to allow creators to construct their own independent "open economy" and directly monetize it without a third party.

If this approach succeeds, we may enter a new era of wealth creation where producers aren't only the products. New economies will emerge.

This article is a summary. To read the full post, click here.