Baseball great Yogi Berra once said, “In theory there
is no difference between theory and practice. In practice there is.” He may
have been on to something.
Last May, Fed Chairman Ben Bernanke introduced the
idea the Fed's economic stimulus program, known as Quantitative Easing (QE),
might be ratcheted down sooner rather than later. The concept, that easy money –
the Fed has injected about $2.75 trillion into financial markets during the past
five years – could soon be behind us, threw global markets into a tizzy.
Expectations that interest rates in more developed
economies would move higher as QE tapered off caused investors to pull money
from emerging markets (where many had sought higher returns). This created
challenges in emerging countries with large current account deficits (deficits that
occur when total imports exceed total exports, making a country a debtor nation).
So, what will happen when the Fed actually begins to
buy fewer bonds? Pundits are mixed in their opinions. Some believe markets may
become more volatile; others believe markets have already factored in the
effects of tapering. In August, the Financial
Times described it this way:
“The beginning of
the end for QE matters greatly as for the past five years central banks led by
the Fed have actively encouraged investors to pile into risky assets. With QE
suppressing interest rates and more importantly, the volatility of prices,
investors duly obliged and sought risky assets. Now with the Fed thinking about
reversing some support, this summer’s turmoil may be a taste of what is coming
in the form of higher long-term bond yields and market volatility. Some will
argue the Fed’s taper is pretty much reflected by the sharp rise we have seen
in long-term Treasury yields since May.”
We’ll
know more when the Federal Open Market Committee announcement is made. Over
time, however, it may not be all that easy to quantify the effects of more
accommodative monetary policy in the United States, if that’s what the Fed
chooses to do this week. There are other flashpoints that could affect markets,
as well, including economic stressors in emerging markets, decisions on Syria, and
upcoming Washington budget battles.
exploring the internet of everything… Before you read further, you may
want to cue the music to Hanna Barbera’s space age cartoon, The Jetsons. The
Internet of Everything (a.k.a. The Internet of Things) seems to be bringing the
world closer to a reality where your refrigerator can order groceries, your
smartphone can start your car, and tattoos only show when you want them to be
seen. Two of the keys to connecting everyday things to each other and to the
Internet are radio frequency identification (RFID) chips and Near Field
Communication (NFC) systems.
RFID
chips are all around us. Companies use them to manage inventories, farmers use
them to track livestock and, in Boston, commuters use 3D-printed, chip-embedded
rings to pay for mass transit. If you’ve traveled overseas recently, you probably
used an RFID chip. Newer American passports have chips embedded to make it
easier for Homeland Security to read them. In addition, contactless smart credit
cards, which rely on chips and pin codes, are the standard across most of
Europe and much of South America and Asia. As a result, Americans who try to
use credit cards that have magnetic stripes and require signatures sometimes
face challenges when trying to pay for goods abroad.
NFC
is short-range wireless communications technology that may be best known for making
it easier to pay for things with your smartphone or tablet. According to
Venture Beat, an online magazine that focuses on the role of technology in
daily life, one of the most powerful applications of NFC technology may be tag
writing and reading. How does it work? Imagine this:
“When
you arrive at home you will hold your phone up to the NFC tag embedded in the
door. This will turn the electronic lock, opening the door, but it will also
switch your phones to “home mode,” enabling it to use your home Wi-Fi network
and launching an app that connects to your home server to turn on the lights.
Heading to the kitchen, you might then put your tablet next to the stovetop to
begin cooking the evening meal. NFC tags in the tablet and stovetop recognize
each other, the tablet starts up the recipe app with instructions on cooking
tonight’s dinner. At the end of the evening, you’ll place your device on the
bedside table and the proximity to another tag will bring up the clock/alarm
app.”
Just
think. Someday, the Internet of Everything may even include Jetsons-style
flying cars.
Weekly Focus – Think
About It
Ideas
are like rabbits. You get a couple and learn how to handle them, and pretty
soon you have a dozen.
--John Steinbeck, American writer
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