Photo fascination is taking over the consciousness of a substantial number of people. Wherever you look, people are browsing thru “social media”. Walking and scrolling. Gazing down constantly, the prospects of permanent neck damage seem certain. Dinner, family, meetings and all manner of activity are dominated by the pervasive digital world seen through the small portal of a phone screen. With the riveted concentration of a scientist editing a PhD thesis, people are glued to this “critical” work. The scary part is the object of these fixators are other people’s picture albums.
Video is another big attraction. Back in ancient times before smart phones, most of this personal material was relegated to a realm known as “home movies”. A short ten years ago the IPhone was introduced. In those days, it was considered impolite to corner a guest into a session of viewing family memories, as production values were non-existent and subject matter often mind numbing to outsiders.
It seems that this giant group of social media participants can be quite vulnerable to all kinds false info and misplaced beliefs. There is speculation that the smartphone and internet can seduce users to dwell in a “silo” filled with mis-information circulated by sources with uniform ideologies and beliefs.
Our computers have become such a pervasive element of our affairs and consciousness that the criminal opportunities are endless. The specter of computer crime and “hacking” has taken center stage. “I mean, it could be Russia, but it could also be China. It could also be lots of other people. It also could be somebody sitting on their bed that weighs 400 pounds, OK? – Trump 9-27-16.
The continuous drumbeat of dark forces of tech honing in on our email, Twitter password, and democracy itself has become a fixture of daily media focus. Outside of the 2016 US Presidential election Russia hacking story, I noticed a number of recent headlines tacking up the theme.
Wired Magazine on 6-20-17: How An Entire Nation Became Russia’s Test Lab for Cyberwar
https://www.wired.com/story/russian-hackers-attack-ukraine/
A Cyberattack ‘the World Isn’t Ready For’ NYT 6-22-17
Fortune magazine on 6-22-17: Meet 5 of the World’s Most Dangerous Hacker Groups
http://fortune.com/2017/06/22/cybersecurity-5-hacker-groups/
Many of these stories involve Phishing. “Phish” is another one of those cute and edgy tech words that this new world has spawned. According to the Indiana University website: “Phishing scams are typically fraudulent email messages appearing to come from legitimate enterprises (e.g., your university, your Internet service provider, your bank). These messages usually direct you to a spoofed website or otherwise get you to divulge private information (e.g., passphrase, credit card, or other account updates). The perpetrators then use this private information to commit identity theft.
One type of phishing attempt is an email message stating that you are receiving it due to fraudulent activity on your account, and asking you to “click here” to verify your information.
Phishing scams are crude social engineering tools designed to induce panic in the reader. These scams attempt to trick recipients into responding or clicking immediately, by claiming they will lose something (e.g., email, bank account). Such a claim is always indicative of a phishing scam, as responsible companies and organizations will never take these types of actions via email.”
The 2014 book, Countdown to Zero Day: Stuxnet and the Launch of the World’s First Digital Weapon is hyped on Amazon; “Top cybersecurity journalist Kim Zetter tells the story behind the virus that sabotaged Iran’s nuclear efforts and shows how its existence has ushered in a new age of warfare—one in which a digital attack can have the same destructive capability as a megaton bomb.”
The hyperbole of a book sales blurb reaches about as far into fearmongering as you can go with the “megaton” reference. The story of Stuxnet is revealing in that the hacking complexity faced by US and Israeli intelligence was incredibly difficult to implement. With virtually infinite resources and a very defined target within the Iranian nuclear program, the “cyber warriors” had great difficulty in their efforts to slow or stop the uranium centrifuges of Iran.
People who are deep in their rabbit holes of social information are vulnerable to reading email and clicking without thoughtful contemplation about personal privacy or protection of corporate secrets. This may be nothing other than the information vulnerability that has always existed via those who are blind to their own security. Today as I am writing this, a new “Ransomware Attack” is “Spreading Rapidly Across World”. Cooler heads would emphasize, after realizing that the treat was actually really easy to avoid and the vast majority of users were unaffected. “The silver lining is that Windows computers that have installed both the March 2017 and April 2017 security-patch bundles should be immune to today’s ransomware worm”. https://www.tomsguide.com/us/ransomware-attack-june,news-25389.html
Thus, anyone who protects their windows 10 computer with preset auto-updates is immune. Alas, you really do not have to fear the “attack” that will not be “spreading” to your fully up to date computer.
The digital infoscape that pervades our lives is expanding exponentially. The sheer number of devices and activities that are now exposed to nefarious and criminal activity is beyond contemplation. The headlines are quite troubling, but we need to check these fears in the context of the rapidly growing ecosystem. The corresponding digital entropy will push a parallel increase in the amount of criminal activity.
The fears of hacking are an example of the cognitive bias of Probability Neglect.
“When strong emotions are triggered by a risk, people show a remarkable tendency to neglect a small probability that the risk will actually come to fruition”. Cass Sunstein, Probability Neglect: Emotions, Worst Cases, and Law 11-20-2001 The Law School, The University of Chicago
Human bias is geared and particularly reactive to the sensational. Survival has depended on avoiding risks that are much different than what modern humans now face. The complexity of the digital realm overwhelms these traits of our distant ancestors and we often draw the wrong conclusions from dramatic events.
The increase in incidents of criminality is a result of a massive expansion of cyber life. More users equal more hacks. More digital crimes are troubling but the actual rate of increase is most likely tracking the expansion of users. The world is no more dangerous as the criminal activities always existed as a percentage of all activity. This probabilistic understanding helps us stay calm as citizens and as investors…the ballooning connected world is going to have an equally rising thread of crime. With prudent attention, most are unlikely to be effected.
1848 Was the year of the famous California Gold Rush. 1799 was another gold rush year that is less well known. That was the time of the Carolina Gold Rush. Gold has attracted rapt attention of all stripes throughout the ages. Looking at the history of gold teaches incredible lessons of economic history.
From the book documenting the fascinating history of gold linked money in the US, “One Nation Under Gold”:
NO ONE TRYING TO UNDERSTAND the United States would be so careless as to avoid an examination of its money. The country that produced the wealthiest society in the world, the seat of the largest stock and bond markets, the granddaddy of the consumer society that has enveloped much of the planet— at home and abroad, America is synonymous with its dollar and the unabashed pursuit of it. As powerful and ubiquitous as the dollar may be, however, America’s relationship to its own currency has throughout its history been uneasy, rocky, and divisive nearly to the point of insurrection. What is the dollar worth, according to whom, and how should that value be measured? These seemingly fundamental questions have never been settled to universal satisfaction even through four centuries of American financial history. From the very origins of the nation in eighteenth-century political fervor to the twenty-first century’s presidential debates, we continue to argue about the dollar with the often implicit understanding that far more than a piece of paper is at stake. The question of American money is wrapped up in patriotism, in the nation’s self-worth, and in America’s standing in the world, a standing that never feels as confident or sturdy as the imperial reach of the dollar and the American military machine might imply. In modern America the dollar is a way of projecting strength into the world, and therefore many Americans insist that the dollar must stand for something besides itself; the dollar ought to guarantee an enduring promise; the dollar should be, as President John F. Kennedy first said (and many after him), as good as gold.
Ledbetter, James. One Nation Under Gold: How One Precious Metal Has Dominated the American Imagination for Four Centuries (pp. xv-xvi). Kindle Edition.
Global monetary policy has been greatly influenced by the US since the end of World War II. The international conference at Bretton Woods in 1944 attempted to create a refined global system that sought to avoid the monetary and nationalist dynamics that led to WWI and WWII. The competing interests of the US and Britain at the time complicated the effort to address this most vexing social challenge.
See The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order (Council on Foreign Relations Books (Princeton University Press)) Feb 11, 2013 by Benn Steil
On August 15, 1971, there was a speech given by President Nixon that changed the US dollar quite significantly and suddenly. American money was removed from a “Gold Standard” that had existed since 1945.
Nixon gave this televised address on that Sunday evening in August, 1971.
Good evening:
I have addressed the Nation a number of times over the past 2 years on the problems of ending a war. Because of the progress we have made toward achieving that goal, this Sunday evening is an appropriate time for us to turn our attention to the challenges of peace.
America today has the best opportunity in this century to achieve two of its greatest ideals: to bring about a full generation of peace, and to create a new prosperity without war.
This not only requires bold leadership ready to take bold action–it calls forth the greatness in a great people.
Prosperity without war requires action on three fronts: We must create more and better jobs; we must stop the rise in the cost of living; we must protect the dollar from the attacks of international money speculators.
We are going to take that action–not timidly, not half-heartedly, and not in piecemeal fashion. We are going to move forward to the new prosperity without war as befits a great people–all together, and along a broad front.
The time has come for a new economic policy for the United States. Its targets are unemployment, inflation, and international speculation. And this is how we are going to attack those targets….
Search for “Nixon Gold 1971” online and see video and the remainder of the text. It is fascinating historical material and perspective on economic and monetary policy. The story was grossly overshadowed by the Watergate scandal and never really saw the attention that was warranted.
The end of the gold backed dollar era spawned a new paradigm and the modern era of “Fiat” money. Fiat money is currency, coins or specie that a government has declared to be legal tender, but it is not backed by a physical commodity.
This allows for governments to attempt to adjust the money supply to fit the economic conditions without regard to the amount of gold that is mined or held by a government.
In November of 2008 a period in US economic history known as QE1 began. QE1 was followed by two additional phases of money creation known as QE2 and QE3. Quantitative Easing is the notion that when interest rates fall extremely low or all the way to zero, governments can expand the money in circulation in hopes of stimulating economic activity; money is created or “printed”.
The notion of Quantitative Easing is the opposite of a gold standard. Money was created to “reflate” asset prices with an eye towards the housing values that had gone so low. Looking back to the dark markets of 2009, it seems that these efforts to push prices has worked. The QE solution has significant consequences as global markets adjust to the massive amounts of money that have been injected into the system. The management of the money supply may be the most complex and difficult in the realm of economic study and practice of central banks.
The post QE period is likely to be volatile. The era of gold backed money was filled with frequent panics and manias. Hard money put a ceiling on how much value could circulate and in many cases, this put a cap on potential economic growth. It may be that Fiat money can allow for greater economic growth without the constraints of the notion of physical money. There are big unknowns and the markets will not have an easy time as The Fed and other central banks take some of this money out of the global financial system. We are living in a perpetual money experiment that has a history of surprise and unintended consequences.
Markets of all types – bonds, commodities, stocks and interest rates have been moved by this monetary effort to push the US and Global economy towards growth and higher rates of employment. Now the US Federal Reserve is stepping further in the direction of a “tighter” money supply.
This will create a more challenging environment for markets, especially bonds as the Fed begins selling some of the bonds in its massive portfolio. There is an old saying, “Don’t fight the Fed”. This pertains to the idea that if interest rates are rising, the market will eventually suffer. The consequences of rising interest rates are likely to slow the markets, although we are starting from some of the lowest rates in many years and it seems likely that rates could move a long way before they restrain growth.
The US Dollar incites passion from many across the political spectrum. Many politicians recite slogans about the “strength” of the buck as if it represents some sort of underlying reflection of our virtue as a nation. Those that are more economically sophisticated understand that domestic manufacturers and exporters benefit from a lower value to the currency. The monetary dynamics that drive global trade reside side by side with prices of domestic goods, labor and living standards. The financial crisis of 8 years ago is still reverberating and is likely to produce challenges across the markets and domestic economy.
One potential benefit of owning equities is that the prices tend to adjust to the underlying monetary changes. These adjustments can be tough, and downswings are to be expected. Ownership of blue chip companies can be a great buffer against changes in the value of currencies. As investors hold in the face of fluctuation, collect dividends and hopefully see higher prices, they can ignore the machinations of the central banks. Stay calm and hold, collect dividends and carry on.
Thinking long term – on a personal note, Rhonda and I celebrated our twenty sixth wedding anniversary. I was able to express my love in the following writing that I composed at 2am the night before our anniversary (feel free to use pieces or the whole to express love to someone that you care about):
I Look
In Your Eyes
I See My Beautiful Wife
A Young Bride
Road Trip and Great Adventure
Pregnant Rhonda with The Short Hair
The Most Loving Mom
She Will Do Everything For Her Girls, For Me
Our Wonderful Home
Rhonda Listens
Raises The Girls With Care, Affection and Constant Teaching
My Partner, My Support, My Life Is Lifted So Very High
I See
It All In Your Beautiful Eyes
Husband and Wife
David and Rhonda, So Far To Go
I Love You Forever
David