I recently wrote about alternate currencies as a solution to the financial crisis, specifically to the ineffectiveness of monetary policy at the zero interest rate bound. Well it looks like Greg Mankiw (independently) agrees with me which is quite exciting. When currencies loose value over time the Fed could lower its rate to less than zero (e.g. you give me $100 today, I’ll give you $98 in a year) and still find people who would be willing to lend at those terms:
Reduce the return to holding money below zero. Imagine that the Fed were to announce that, one year from today, it would pick a digit from 0 to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.
It definitely is an unorthodox solution that would be difficult to implement in practice but it’s also novel and interesting and it helps us understand why certain solutions work and others don’t:
I understand that this plan is not entirely practical. But you have to give the student credit for thinking out of the box. And his plan does address a fundamental problem facing the economy right now: Given the fall in wealth, increases in risk premiums, and problems in the banking system, the interest rate consistent with full employment might well be negative.
One key challenge to coming up with good solutions to problems is understanding why things are the way they currently are and what an ideal solution would have to accomplish. Coming up with good ideas that don’t quite cut it is an excellent learning process for getting closer to the optimal solution.
Update: The Economist talks about Switzerland charging foreigners a fee to keep their money there in the 1970s – effectively imposing a negative interest rate (this would have to be a percentage of the assets kept there instead of a lump sum).
Over the last two years, but especially in the last few months, Twitter has become an extremely efficient way of sharing information. You can follow people whose interests you share, learn from what they link to, and if you really like what they are saying you can share or retweet it. Only having 140 characters to communicate with forces people to become more and more succinct and it leads to very interesting behavior. This limit has made it OK to simply post a link combined with a short comment, something people are far more likely to do than write long blog posts. If people like it they will retweet it and people who see these retweets will do the same resulting in an extremely quick transmission of information. More importantly a search over that conversation will quickly let you see what people are saying and thinking about something – down to the last second.
A lot of people have been talking about the immense potential this offers to understand how people feel about any topic or product and learn from this data. Skittles was widely applauded for its innovative marketing campaign that turned skittles.com into a live display of what people were saying about skittles (including the campaign itself). At Apture we want to take the best ideas that people have on the web and make them available to everyone – to democratize them. With our new Apture Twitter Viewer anyone with a website can now integrate a live search stream about any topic right into their pages it takes less than ten seconds. We did this on apture.com/twitter/ and being able to see what people are saying about the things you write about is truly exhilarating - I’ve found myself visiting the page over and over to see what people are saying. It makes your webpage more powerful, more up-to-date, and gives your readers a reason to keep coming back. Apture user Steven Johnson realized this immediately and wrote an excellent post about the power of bringing internet conversations to your website with embedded Apture Twitter Viewer showing what people are saying about his new camera flash, the Lumopro 120.
We also pride ourselves on doing more than the obvious – apart from immediacy the most powerful features of Twitter are its interconnectedness and the ability to share. How often have you seen someone reply to someone else on Twitter and wished to quickly see the other side of that conversation? We make it easy, clicking on a person’s Twitter name inside of any Tweet will bring up their profile and Twitter stream. We do the same for hashtags, click on one to see what other people are saying about the topic. The other aspect is media. With the Apture Twitter Viewer will open any supported media you link to in a new Apture window so you can see it right there. We support Video, Images, Audio, Maps, and much more from more than 30 sources, all available right there.
Now combine immediacy, interconnectedness, and multi media sharing: See what people are saying about the things you care about, see who they are, where they are from, what else they are saying, and see all the media they like – isn’t that powerful. It really lets you dive into a conversation, all in just a few seconds.
It’s official now, Apture has raised $4.1 Million in Series A funding, led by Clearstone Ventures. We are all extremely excited and could not wish for a better partner in this – Clearstone immediately understood the big vision behind what we are doing and the new opportunities that it will open up. We got great press today including an excellent article on Techcrunch as well as lots and lots of congratulatory Tweets – you can read more about the actual announcement on the Apture blog. I’ve always said that laser focused companies with great ideas can still make it in the current environments and we are very happy to be another proof point for this. We have a lot that we want to accomplish and we now have the resources to really focus on executing our vision. Stay tuned.
Richard Florida has a phenomenal article on how the current crisis will shape the geography of American cities. Recent growth has focused around growth in increasingly suburban cities clusters and the feedback loop that this created and about how the kind of sustainable economic growth that we want for the future will be about communicating and spreading ideas. But first things first, let us look at a typical housing boom city:
As prices rose, more people moved in, seeking inexpensive lifestyles and the opportunity to get in on the real-estate market where it was rising, but still affordable. [...] Cities grew, tax coffers filled, spending continued, more people arrived. Yet the boom itself neither followed nor resulted in the development of sustainable, scalable, highly productive industries or services. It was fueled and funded by housing, and housing was its primary product. Whole cities and metro regions became giant Ponzi schemes.
The big increase in suburbanization was a product of the World War II era, young men returning from the war, starting families, buying houses in cheaper areas, stores opening to sell to this new market, factories also moving to make use of the cheaper space and plentiful labor, creating jobs, attracting more workers, … This is where it gets interesting:
But that was then; the economy is different now. It no longer revolves around simply making and moving things. Instead, it depends on generating and transporting ideas. The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, the highest rate of metabolism. Velocity and density are not words that many people use when describing the suburbs. The economy is driven by key urban areas; a different geography is required.
This is pretty intuitive to anyone who works in the knowledge economy but I think it is an extremely important observation to keep in mind as we think about how to prepare the country and the economy for the future. Cities, especially well designed ones, offer places where people can gather and communicate and where ideas spread quickly. While the Internet has given us more and more tools for rapid communication nothing can really replace face to face conversations and brainstorming.
Florida goes on to talk about how government should encourage renting instead of homeownership and how homeownership makes our society less nimble, but I want to focus on the large point of building environments in which people can communicate better. There are many environmental and health benefits to properly designed living spaces, but there is also an economic benefit. As we try to determine how to create the sustainable economic growth for the decades ahead we need to remember that government can help create the right environment for entrepreneurship and growth but is very bad at picking the winners. We need to focus on creating environments in which people can work together to start successful new business, big and small, incremental and revolutionary, and make them accessible to more people.
Palo Alto proves that you don’t need the look of a typical city to foster an atmosphere that encourages communication and innovation. We just have to do a better job of connecting “suburbs to cities and to each other, and allowing regions to grow bigger and denser without losing their velocity.”
This weekend I spent some time reading a great book on the History of the of the Middle East – ‘A Brief History of the Last 2000 Years’ which I highly recommend, but for those of you who want to cover twice the number of years in less than two minutes and still actually learn something this interactive history map is incredible.
Much as I love reading I have always felt like getting the big picture of history is extremely difficult through books and even most history classes and I think that interactive media is extremely well suited to this. But who are all these people, you ask, the Hittites, the Seljuks? When it comes to digging deeper the map isn’t enough, wouldn’t it be great to have Apture in an interactive map like this? What do you think?