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S3T Feb 13 - Valentines edition: Interest Rates, Care Economy, Shared Habitats, Messy Gardens...

S3T Feb 13 - Valentines edition: Interest Rates, Care Economy, Shared Habitats, Messy Gardens...

Mixed messages about inflation and interest rates raise questions about where to invest. The answer lies in deepening our understanding of the most neglected aspects of our economy - and ourselves. Where we invest is not so important as how we invest: Empathizing and caring enough to own problems? or just finding ways to deflect them?

Economic Outlook

Interest Rates and Instability

Lots of talk of rising interest rates (here and here). If that happens, will it effect crypto prices? This Coinbase note says yes maybe: "If interest rates rise suddenly, investors may shift strategies by selling some of those assets for cash, which will be able to earn interest with virtually no risk sitting in a savings account."

But those who take this approach might be disappointed - banks have lots of cash and don't need to attract depositors.   There are a lot of mixed messages about where BTC's future prices (range of 10K to 100K!). Credit card debt is up (perhaps on a seasonal cycle), and at least one goldbug sees a "wave of bankruptcies and foreclosures" on the horizon.

Many of the current warnings come with a dish of unsolicited advice about what moves to make. This feels like a time of uncertainty, but it also does not feel like a time to do something rash. As always, it is good to plan carefully, seek trusted advice, and when recieving unsolicited advice consider what the advice giver has to gain from your cooperation.

Project Hamilton

MIT and the Boston Federal Reserve Bank are working together on research to examine approaches for central bank digital currency. MIT's piece on the effort is worth a read to understand where this might go.

MIT experts test technical research for a hypothetical central bank digital currency
In collaboration with the Federal Reserve Bank of Boston, MIT experts have begun designing and testing a technical framework through which Central Bank Digital Currency (CBDC) research can be performed in the U.S.

Bitcoin Payments?

OpenNode is building a platform that makes it easy for merchants to accept Bitcoin. Interesting because it suggests momentum toward using Bitcoin as a way to pay - at the same time the IRS approach treats Bitcoin as property (meaning payments have tax implications beyond just sales tax.

As this helpful guide explains, the IRS tax logic hinges on the point that in order to spend your crypto, you must first sell it in order to convert it into cash - and that sale is a taxable event. I'm curious what happens if crypto is transferred without such a "sell event" and whether this is what OpenNode hopes to enable.

Bitcoin payment processor OpenNode raises $20M from Twitter and others
Bitcoin payment processor OpenNode has raised $20 million in a Series A funding round and is now valued at $220 million.


Valentine Theme

Homemade Valentines from Bygone Years

Hope you have plans for a pleasant Valentines Day! Accordingly, the following sections share several ways for us to increase our ability to love and care for ourselves, our fellow humans and our world.

In past S3T editions we've explored how our own mental models can cause us to adopt limited views about how the economy must work and to falsely believe that certain problems are just unsolvable, and that human suffering is someone else's problem. Whether you lead change by advising, building, investing or teaching, you probably sense on some level that we have to break out of those old mental models.

Breaking out of those constraints becomes possible when we make a deliberate attempt to deepen our understanding on several fronts:

Understanding How to Own Problems Instead of Transferring Them

There is a deep flaw under much of the "best practices" that guide how we process and solve key problems. You can find this flaw in common everyday examples:

  • Customer support phone line systems that use robots to tell you to "press 1 for more options" and "tell me what you want...I'm sorry I didn't catch that, do you want me to... (anything except what you actually want)." These systems might in some narrow sense "save money." But they impose an enormous amount of waste and frustration. If customers could retrieve all the time they lose being on hold, they'd have more money to spend on your product.
  • Financial "cost savings" initiatives. Consider how often efficiency initiatives simply push costs into future quarters or years. In the process they force a company to take longer than it should to achieve key transformations. This often occurs alongside "barbershop budgeting": instead of truly picking priorities, just cut everyone's budget ie everyone gets a haircut.
  • Health economics - The story of healthcare in America is a story about ensuring the solvency and security of one part of an industry by making others insolvent.
  • Economic development at the expense of the environment - temporary enrichment for a few by deleting the natural infrastructure required to sustain air, water and food for everyone.  

In each case, we are creating some sort of narrow solution, by imposing a bigger problem on everyone else. Benefiting a few while worsening the overall situation for everyone. Pushing burdens onto others who often aren't equipped to deal with those burdens.  

The common denominators:

  • Solving an overly narrow definition of the problem.
  • Solving for the convenience of one party with no regard for the impact to the other stakeholders.

When we take this kind of approach, we don't really take an ownership mindset. Instead of owning the problem and carefully engineering a way to solve it, we just transfer it. To other parties, or future generations. In doing so, we usually just make things worse.

Change leaders understand that taking an ownership mentality to own and solve a problem has benefits that narrow problem solving doesn't - even when the attempt to own and solve the problem fails. Every attempt to solve a problem teaches you something about the problem and about your approach. Overly narrow approaches short circuit this and miss opportunities for true improvements and innovation.  

Understanding how to grow the Care Economy

The Care Economy - the collective work that supports the "development and maintenance of human capabilities" is so vital yet so  poorly understood and undervalued. A significant percentage of caring work is uncompensated, or under-compensated. Perfect example: compare the wages of a person who denies healthcare claims vs the wages of the person caring for the patient. Another example: consider the way mother's often have to carry so many different kinds of caring roles, - and as Peterson and Calarco explain - the social safety net we seemingly just expect them to provide with little or no compensation.  

“Other Countries Have Social Safety Nets. The U.S. Has Women.”
Anne Helen Petersen and Jessica Calarco discuss how mothers are experiencing and responding to pandemic-related disruptions in their normal routines.

This brings us to the simple reason why we need to help drive a shift toward a caring economy: Our future payoffs are shaped by the kinds of investments we make. If we invest equitably in developing and maintaining the capabilities of humans and the capabilities of nature, we will enjoy certain kinds of outcomes. If however, we invest in activities that diminish or marginalize these capabilities, there will be a very different and very grim set of payoffs.

Understanding how to Empathize  

So much good becomes possible when we take the time to understand each other, the burdens that some must bear every day, and the weariness of constantly being reminded that you're different and not understood. Even well-intentioned actions can sometimes take a toll. Menominee poet and activist Chrystos delves into this specific point in her must-read poem Into the Racism Workshop.  

Outdoor Notes

Photo by Emiel Molenaar / Unsplash

Yard and Garden Planning

Spring will be here before you know it! Whether you live the rural, suburban, or urban life, you occupy a Shared Habitat with dozens maybe hundreds of other species. Adding native plants and flowers to your yard or balcony will make a positive difference for those species and you! Ideas to explore:  

Cornell is offering an online course "Gardening for Birds and Nature". Check out the free preview here. Excellent way to get ready for spring. Great last minute Valentine Gift!

The Audubon Society maintains a Native Plants Database where you can enter your zip code to discover trees, shrubs and flowers best suited for your location.  

  • Filter the results to find plants that attract butterflies as well as specific bird species you want to attract to your yard.
  • Once you find plants you want, the site connects you with local native plant nurseries in your area, or gives you options for ordering online via Audubon.  

Natural but not Messy - All About Birds offers this excellent guide for Wildlife Gardens that nurture nature without triggering an intervention from your HOA.

Native Plants
Native plants provide food and shelter for local birds and wildlife. Native plants also require less water and fewer chemicals to maintain, which makes them better for the environment. Best of all,

Final Note

Personally, I think the gloriously tangled chaos of nature is enchanting. But I get that not everyone is there yet. :)  Thank you for reading and forwarding to a friend. Hope you are S3T for a great week ahead!


Opinions mine. Not financial advice. I may hold assets discussed.