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China and US Must Learn From One Another and Collaborate on CBDC

China and US Must Learn From One Another and Collaborate on CBDC

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The governments of China and the U.S. frame digital currency as part of their great-power competition, but instead they should work on this technology together.

Today, the relationship between China and the United States is one of escalating competition. On Oct. 23, 2019, Facebook CEO Mark Zuckerberg testified before the U.S. House Financial Services Committee on Libra. Zuckerberg and members of Congress had much to disagree on. One consensus that did emerge, however, was concern regarding China’s digital currency project. Zuckerberg noted:

“While we debate these issues, the rest of the world isn’t waiting. China is moving quickly to launch similar ideas in the coming months.”

Building on this, the U.S. Senate Banking, Housing and Urban Affairs Subcommittee on Economic Policy recently discussed the need for a digital dollar as a response to China’s growing economic influence. Similarly, Huang Qifan, vice chairman of the China Center for International Economic Exchanges — a leading think tank backed by the Chinese government — claimed five days later that the Chinese government-led CBDC project, referred to as the Digital Currency Electronic Payment, or DCEP, would replace the SWIFT international financial messaging and payments system, describing it as a tool for the U.S. to exercise its global hegemony.

China has committed to advancing blockchain and CBDC technology. Digital currencies fall within the broader geopolitical competition between the U.S. and China — which makes sense. The two countries have much to disagree on, particularly given the context of military and economic interests, political alliances, and approaches to issues such as human rights and privacy. This has led to a lack of trust between the two countries. Both countries, however, should not limit their responsibility to innovate amid their great-power competition. Digital currency technology offers an opportunity to remake the financial system into one that is more efficient and inclusive, an outcome that is critical for both countries and for a more prosperous world.

Economic slowdown and inequality threaten domestic stability. Sustainable economic growth will be necessary for both the U.S. and China to help lead a more integrated world. Digital currency innovation, therefore, must be framed as a way to solve the critical problems of inefficient payments systems, financial exclusion and economic inequality, rather than as a geopolitical tool to gain influence. Technology should be seen as a force for good rather than as a tool for geopolitical competition. The COVID-19 pandemic has demonstrated how interconnected the world is. Similarly, the future of payments will necessitate imagining a more interoperable and integrated framework. Consequently, the two great nations of the East and the West must seek out ways to learn from one another and collaborate for global prosperity.

The collapse of the U.S. innovation triangle

According to one commentator, U.S. innovation has historically existed through the “triangular alliance of government, academia, and private business.” This relationship, however, has broken, as federal research grants have been increasingly replaced by corporate funding. What is the outcome for digital currencies? Facebook’s Libra sought to expand its payments system without collaborating with the U.S. government.

Libra initially proposed a global stablecoin, which was immediately met with concern by regulators, central banks and other stakeholders who worried about its effects on fiat currency. In response, Facebook released a second version of the Libra white paper in April. These changes toned down Facebook’s ambition for a global currency. Importantly, the new design is meant to promote digital payments within countries and at its core prioritizes blockchain over crypto.

Libra met with strong resistance from the U.S. government, not only for consumer protection and financial stability reasons, but also due to broader national security and geopolitical interests. Libra threatened to upend the U.S.-backed payments system established at Bretton Woods in 1944 by:

  1. Reducing the use and holdings of the dollar domestically and internationally.
  2. Undermining the Federal Reserve’s ability to conduct monetary policy and posing unforeseen systemic risks.
  3. Limiting the U.S. government’s ability to impose economic sanctions against adversaries such as Iran and North Korea.

Libra tests the extent of private-sector innovation. Broader payments-system transformation requires a more active and engaged U.S. government. The country, however, has not engaged heavily in CBDC conversations beyond expressing some openness to the technology at recent hearings held by the Senate Banking Committee and House Financial Services Committee, nor can it allow private-sector players — like Libra — to lead innovation in this space, as the U.S. government distrusts private-sector projects that undermine or circumvent the dollar-based system.

Furthermore, U.S. regulators must better define the role of cryptocurrencies and private sector projects, and how they might fit into an increasingly digitized payments system. A digital dollar alone cannot advance the payments system. Cryptocurrencies will be needed to operate alongside and interact with a digital dollar for financial solutions such as cross-border remittances and decentralized finance. A lack of government leadership, however, has resulted in weaknesses in the payments system, demonstrated by the government’s inability to quickly distribute COVID-19 stimulus checks to Americans.

The centralized Chinese model for digital currency innovation

For China, blockchain and digital currency technology is a critical piece in furthering the country’s global ambitions. In 2017, China banned all private-sector cryptocurrency trading and fundraising through initial coin offerings. The purpose was — as is now clear — to make way for the development of the DCEP. Shortly after Zuckerberg’s hearing with Congress, President Xi Jinping delivered a speech saying that blockchain technology will be a core facet of China’s vision for future innovation.

Rather than relying on private-sector innovation, the People’s Bank of China — the nation’s central bank — took on the role of innovator. This centralized approach was to foster innovation that fit the payment needs and political goals of the Chinese government. In 2014, the PBoC established a research team to find solutions for digital fiat currency. After the announcement of Libra, China accelerated research and development of the DCEP. 

The Chinese digital currency is backed by a one-to-one reserve of yuan at the central bank. This digital currency will likely be integrated with private payment providers such as Alipay and WeChat Pay. In 2020, China has taken major steps toward this ambition, completing the top-level design for a new CBDC, piloting its distribution and beginning tests with private companies.

In line with China’s approach to innovation, the core ledger will be centralized, allowing for a high transaction volume. The DCEP is also designed to further China’s geopolitical interests, as it offers a new system to clear and settle cross-border payments that can bypass the traditional SWIFT messaging system, allowing for Chinese international payments to operate independently from the U.S. dollar and circumvent any potential sanctions.

China’s lessons for the U.S. on government action

The U.S. should not embrace a centralized approach to innovation, like that of China’s, as this undermines the private sector and goes against the U.S.’s form of governance. The U.S., however, can learn from China to advance innovation in payments systems.

Rather than responding to private-sector development after the fact, the U.S. Federal Reserve needs to design a CBDC or, at the least, take on a more proactive leadership role in its design that moves beyond high-level Senate hearings. This includes developing technological frameworks — such as ledgers, cryptography, APIs, interoperability, etc. — and determining how to protect consumers, guarantee cybersecurity, ensure financial stability and promote inclusion.

Policymakers and regulators — including Congress, the Federal Reserve, the Financial Industry Regulatory Authority, the Securities and Exchange Commission and the Treasury Department — must better define the role of private-sector involvement. The development of the global payments system has historically been supported by the U.S. government through the issuance and management of the dollar and a regulatory framework that creates space for an ecosystem of financial institutions. Similarly, the evolution of the digital payments system will require a digital foundation set by the U.S. government.

The U.S.’s lessons for China on decentralization and consumer protection

The PBoC has thus far released little information about the DCEP. A more open design, inspired by the U.S.’s approach to innovation, is needed for testing, inclusion and innovation.

The PBoC should open the research and development process of the DCEP, allowing private-sector and academic experts to participate publicly in a more open-source creation of digital currency-based payments systems. This would allow regulators to better test the DCEP and identify problems, as well as proactively promote innovation for payment platforms that will interface with the DCEP.

The government should open public debate on defining the role of cryptocurrencies — as commodities or securities — and establishing consumer protection policies that safeguard retail investors. Despite the government ban on issuing and trading domestic cryptocurrency, a large number of cryptocurrency exchanges today are registered abroad and hold money from Chinese investors whose rights cannot be guaranteed.

The PBoC should build and maintain a cooperative relationship with other central banks and multinational institutions — for example, the Bank of England, the International Monetary Fund, and the Bank for International Settlements — to jointly develop international CBDC standards and explore a cross-chain payments system.

It should establish more stringent data protection standards so that CBDC-based payments are secure and protect anonymity. The global pushback against the social networking service TikTok demonstrates a movement for data privacy, particularly in regard to government surveillance. The Chinese government can enhance international trust and garner recognition if it proactively designs a CBDC system that protects privacy and limits government intrusion.

Global prosperity requires collaboration

The current payments system is slow, expensive and fragmented, preventing billions of people from using the global financial market. As a result, billions of people, including American and Chinese residents, are unable to generate wealth. Prosperity for people on the ground in an increasingly global world, however, necessitates cooperation between the U.S. and China in the midst of competition. For this, cooperation should begin between the central banks and take the form of:

  1. Working together to design CBDC frameworks and cybersecurity standards that maintain financial stability.
  2. Designing tests with private-sector companies that ensure data protection in a world that is beginning to reject unregulated, invasive technology.
  3. Integrating payments systems across large private-sector players.
  4. Assessing financial inclusion opportunities by working directly with people and organizations from marginalized communities.
  5. Determining how to protect consumer privacy in the context of national security interests.

A digital currency war between China and the U.S. will not improve the lives of the Chinese or American people, much less the world. Instead, it risks creating two separate payments systems that will only serve to promote further global competition and distrust. People on the ground who simply need an inclusive, efficient, low-cost system will be left behind and forgotten once again in a digital world driven by egos and great-power competition.

Digital currency technology offers an opportunity to create a more prosperous payments system. By working together to advance payments systems, the U.S. and China can usher in a new era of inclusive economic growth for a more interconnected world.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article was co-authored by Nikhil Raghuveera and Victor Ji.

The authors are thankful to David Chuanwei Zou, chief economist at Wanxiang Blockchain, and Jennifer Hongbo Jiang, former global head of RMB Solutions at JPMorgan Chase, for comments and insights.

Nikhil Raghuveera is a fellow at the Atlantic Council GeoTech Center. He previously worked in economic consulting, nonprofit consulting, cryptocurrency and venture capital.

Victor Ji is a research assistant at the Belfer Center for Science and International Affairs and a graduate student at the Harvard Kennedy School. He is a former executive partner at BitBlock Capital.

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Mistakes Were Made

Mistakes Were Made

Authored by C.J.Hopkins via The Consent Factory,

Make fun of the Germans all you want, and I’ve certainly done that…

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Mistakes Were Made

Authored by C.J.Hopkins via The Consent Factory,

Make fun of the Germans all you want, and I’ve certainly done that a bit during these past few years, but, if there’s one thing they’re exceptionally good at, it’s taking responsibility for their mistakes. Seriously, when it comes to acknowledging one’s mistakes, and not rationalizing, or minimizing, or attempting to deny them, and any discomfort they may have allegedly caused, no one does it quite like the Germans.

Take this Covid mess, for example. Just last week, the German authorities confessed that they made a few minor mistakes during their management of the “Covid pandemic.” According to Karl Lauterbach, the Minister of Health, “we were sometimes too strict with the children and probably started easing the restrictions a little too late.” Horst Seehofer, the former Interior Minister, admitted that he would no longer agree to some of the Covid restrictions today, for example, nationwide nighttime curfews. “One must be very careful with calls for compulsory vaccination,” he added. Helge Braun, Head of the Chancellery and Minister for Special Affairs under Merkel, agreed that there had been “misjudgments,” for example, “overestimating the effectiveness of the vaccines.”

This display of the German authorities’ unwavering commitment to transparency and honesty, and the principle of personal honor that guides the German authorities in all their affairs, and that is deeply ingrained in the German character, was published in a piece called “The Divisive Virus” in Der Spiegel, and immediately widely disseminated by the rest of the German state and corporate media in a totally organic manner which did not in any way resemble one enormous Goebbelsian keyboard instrument pumping out official propaganda in perfect synchronization, or anything creepy and fascistic like that.

Germany, after all, is “an extremely democratic state,” with freedom of speech and the press and all that, not some kind of totalitarian country where the masses are inundated with official propaganda and critics of the government are dragged into criminal court and prosecuted on trumped-up “hate crime” charges.

OK, sure, in a non-democratic totalitarian system, such public “admissions of mistakes” — and the synchronized dissemination thereof by the media — would just be a part of the process of whitewashing the authorities’ fascistic behavior during some particularly totalitarian phase of transforming society into whatever totalitarian dystopia they were trying to transform it into (for example, a three-year-long “state of emergency,” which they declared to keep the masses terrorized and cooperative while they stripped them of their democratic rights, i.e., the ones they hadn’t already stripped them of, and conditioned them to mindlessly follow orders, and robotically repeat nonsensical official slogans, and vent their impotent hatred and fear at the new “Untermenschen” or “counter-revolutionaries”), but that is obviously not the case here.

No, this is definitely not the German authorities staging a public “accountability” spectacle in order to memory-hole what happened during 2020-2023 and enshrine the official narrative in history. There’s going to be a formal “Inquiry Commission” — conducted by the same German authorities that managed the “crisis” — which will get to the bottom of all the regrettable but completely understandable “mistakes” that were made in the heat of the heroic battle against The Divisive Virus!

OK, calm down, all you “conspiracy theorists,” “Covid deniers,” and “anti-vaxxers.” This isn’t going to be like the Nuremberg Trials. No one is going to get taken out and hanged. It’s about identifying and acknowledging mistakes, and learning from them, so that the authorities can manage everything better during the next “pandemic,” or “climate emergency,” or “terrorist attack,” or “insurrection,” or whatever.

For example, the Inquiry Commission will want to look into how the government accidentally declared a Nationwide State of Pandemic Emergency and revised the Infection Protection Act, suspending the German constitution and granting the government the power to rule by decree, on account of a respiratory virus that clearly posed no threat to society at large, and then unleashed police goon squads on the thousands of people who gathered outside the Reichstag to protest the revocation of their constitutional rights.

Once they do, I’m sure they’ll find that that “mistake” bears absolutely no resemblance to the Enabling Act of 1933, which suspended the German constitution and granted the government the power to rule by decree, after the Nazis declared a nationwide “state of emergency.”

Another thing the Commission will probably want to look into is how the German authorities accidentally banned any further demonstrations against their arbitrary decrees, and ordered the police to brutalize anyone participating in such “illegal demonstrations.”

And, while the Commission is inquiring into the possibly slightly inappropriate behavior of their law enforcement officials, they might want to also take a look at the behavior of their unofficial goon squads, like Antifa, which they accidentally encouraged to attack the “anti-vaxxers,” the “Covid deniers,” and anyone brandishing a copy of the German constitution.

Come to think of it, the Inquiry Commission might also want to look into how the German authorities, and the overwhelming majority of the state and corporate media, accidentally systematically fomented mass hatred of anyone who dared to question the government’s arbitrary and nonsensical decrees or who refused to submit to “vaccination,” and publicly demonized us as “Corona deniers,” “conspiracy theorists,” “anti-vaxxers,” “far-right anti-Semites,” etc., to the point where mainstream German celebrities like Sarah Bosetti were literally describing us as the inessential “appendix” in the body of the nation, quoting an infamous Nazi almost verbatim.

And then there’s the whole “vaccination” business. The Commission will certainly want to inquire into that. They will probably want to start their inquiry with Karl Lauterbach, and determine exactly how he accidentally lied to the public, over and over, and over again …

And whipped people up into a mass hysteria over “KILLER VARIANTS” …

And “LONG COVID BRAIN ATTACKS” …

And how “THE UNVACCINATED ARE HOLDING THE WHOLE COUNTRY HOSTAGE, SO WE NEED TO FORCIBLY VACCINATE EVERYONE!”

And so on. I could go on with this all day, but it will be much easier to just refer you, and the Commission, to this documentary film by Aya Velázquez. Non-German readers may want to skip to the second half, unless they’re interested in the German “Corona Expert Council” …

Look, the point is, everybody makes “mistakes,” especially during a “state of emergency,” or a war, or some other type of global “crisis.” At least we can always count on the Germans to step up and take responsibility for theirs, and not claim that they didn’t know what was happening, or that they were “just following orders,” or that “the science changed.”

Plus, all this Covid stuff is ancient history, and, as Olaf, an editor at Der Spiegel, reminds us, it’s time to put the “The Divisive Pandemic” behind us …

… and click heels, and heil the New Normal Democracy!

Tyler Durden Sat, 03/16/2024 - 23:20

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Harvard Medical School Professor Was Fired Over Not Getting COVID Vaccine

Harvard Medical School Professor Was Fired Over Not Getting COVID Vaccine

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A…

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Harvard Medical School Professor Was Fired Over Not Getting COVID Vaccine

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A Harvard Medical School professor who refused to get a COVID-19 vaccine has been terminated, according to documents reviewed by The Epoch Times.

Martin Kulldorff, epidemiologist and statistician, at his home in Ashford, Conn., on Feb. 11, 2022. (Samira Bouaou/The Epoch Times)

Martin Kulldorff, an epidemiologist, was fired by Mass General Brigham in November 2021 over noncompliance with the hospital’s COVID-19 vaccine mandate after his requests for exemptions from the mandate were denied, according to one document. Mr. Kulldorff was also placed on leave by Harvard Medical School (HMS) because his appointment as professor of medicine there “depends upon” holding a position at the hospital, another document stated.

Mr. Kulldorff asked HMS in late 2023 how he could return to his position and was told he was being fired.

You would need to hold an eligible appointment with a Harvard-affiliated institution for your HMS academic appointment to continue,” Dr. Grace Huang, dean for faculty affairs, told the epidemiologist and biostatistician.

She said the lack of an appointment, combined with college rules that cap leaves of absence at two years, meant he was being terminated.

Mr. Kulldorff disclosed the firing for the first time this month.

“While I can’t comment on the specifics due to employment confidentiality protections that preclude us from doing so, I can confirm that his employment agreement was terminated November 10, 2021,” a spokesperson for Brigham and Women’s Hospital told The Epoch Times via email.

Mass General Brigham granted just 234 exemption requests out of 2,402 received, according to court filings in an ongoing case that alleges discrimination.

The hospital said previously, “We received a number of exemption requests, and each request was carefully considered by a knowledgeable team of reviewers.

A lot of other people received exemptions, but I did not,” Mr. Kulldorff told The Epoch Times.

Mr. Kulldorff was originally hired by HMS but switched departments in 2015 to work at the Department of Medicine at Brigham and Women’s Hospital, which is part of Mass General Brigham and affiliated with HMS.

Harvard Medical School has affiliation agreements with several Boston hospitals which it neither owns nor operationally controls,” an HMS spokesperson told The Epoch Times in an email. “Hospital-based faculty, such as Mr. Kulldorff, are employed by one of the affiliates, not by HMS, and require an active hospital appointment to maintain an academic appointment at Harvard Medical School.”

HMS confirmed that some faculty, who are tenured or on the tenure track, do not require hospital appointments.

Natural Immunity

Before the COVID-19 vaccines became available, Mr. Kulldorff contracted COVID-19. He was hospitalized but eventually recovered.

That gave him a form of protection known as natural immunity. According to a number of studies, including papers from the U.S. Centers for Disease Control and Prevention, natural immunity is better than the protection bestowed by vaccines.

Other studies have found that people with natural immunity face a higher risk of problems after vaccination.

Mr. Kulldorff expressed his concerns about receiving a vaccine in his request for a medical exemption, pointing out a lack of data for vaccinating people who suffer from the same issue he does.

I already had superior infection-acquired immunity; and it was risky to vaccinate me without proper efficacy and safety studies on patients with my type of immune deficiency,” Mr. Kulldorff wrote in an essay.

In his request for a religious exemption, he highlighted an Israel study that was among the first to compare protection after infection to protection after vaccination. Researchers found that the vaccinated had less protection than the naturally immune.

“Having had COVID disease, I have stronger longer lasting immunity than those vaccinated (Gazit et al). Lacking scientific rationale, vaccine mandates are religious dogma, and I request a religious exemption from COVID vaccination,” he wrote.

Both requests were denied.

Mr. Kulldorff is still unvaccinated.

“I had COVID. I had it badly. So I have infection-acquired immunity. So I don’t need the vaccine,” he told The Epoch Times.

Dissenting Voice

Mr. Kulldorff has been a prominent dissenting voice during the COVID-19 pandemic, countering messaging from the government and many doctors that the COVID-19 vaccines were needed, regardless of prior infection.

He spoke out in an op-ed in April 2021, for instance, against requiring people to provide proof of vaccination to attend shows, go to school, and visit restaurants.

The idea that everybody needs to be vaccinated is as scientifically baseless as the idea that nobody does. Covid vaccines are essential for older, high-risk people and their caretakers and advisable for many others. But those who’ve been infected are already immune,” he wrote at the time.

Mr. Kulldorff later co-authored the Great Barrington Declaration, which called for focused protection of people at high risk while removing restrictions for younger, healthy people.

Harsh restrictions such as school closures “will cause irreparable damage” if not lifted, the declaration stated.

The declaration drew criticism from Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, and Dr. Rochelle Walensky, who became the head of the CDC, among others.

In a competing document, Dr. Walensky and others said that “relying upon immunity from natural infections for COVID-19 is flawed” and that “uncontrolled transmission in younger people risks significant morbidity(3) and mortality across the whole population.”

“Those who are pushing these vaccine mandates and vaccine passports—vaccine fanatics, I would call them—to me they have done much more damage during this one year than the anti-vaxxers have done in two decades,” Mr. Kulldorff later said in an EpochTV interview. “I would even say that these vaccine fanatics, they are the biggest anti-vaxxers that we have right now. They’re doing so much more damage to vaccine confidence than anybody else.

Surveys indicate that people have less trust now in the CDC and other health institutions than before the pandemic, and data from the CDC and elsewhere show that fewer people are receiving the new COVID-19 vaccines and other shots.

Support

The disclosure that Mr. Kulldorff was fired drew criticism of Harvard and support for Mr. Kulldorff.

The termination “is a massive and incomprehensible injustice,” Dr. Aaron Kheriaty, an ethics expert who was fired from the University of California–Irvine School of Medicine for not getting a COVID-19 vaccine because he had natural immunity, said on X.

The academy is full of people who declined vaccines—mostly with dubious exemptions—and yet Harvard fires the one professor who happens to speak out against government policies.” Dr. Vinay Prasad, an epidemiologist at the University of California–San Francisco, wrote in a blog post. “It looks like Harvard has weaponized its policies and selectively enforces them.”

A petition to reinstate Mr. Kulldorff has garnered more than 1,800 signatures.

Some other doctors said the decision to let Mr. Kulldorff go was correct.

“Actions have consequence,” Dr. Alastair McAlpine, a Canadian doctor, wrote on X. He said Mr. Kulldorff had “publicly undermine[d] public health.”

Tyler Durden Sat, 03/16/2024 - 21:00

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Correcting the Washington Post’s 11 Charts That Are Supposed to Tell Us How the Economy Changed Since Covid

The Washington Post made some serious errors or omissions in its 11 charts that are supposed to tell us how Covid changed the economy. Wages Starting with…

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The Washington Post made some serious errors or omissions in its 11 charts that are supposed to tell us how Covid changed the economy.

Wages

Starting with its second chart, the article gives us an index of average weekly wages since 2019. The index shows a big jump in 2020, which then falls off in 2021 and 2022, before rising again in 2023.

It tells readers:

“Many Americans got large pay increases after the pandemic, when employers were having to one-up each other to find and keep workers. For a while, those wage gains were wiped out by decade-high inflation: Workers were getting larger paychecks, but it wasn’t enough to keep up with rising prices.”

That actually is not what its chart shows. The big rise in average weekly wages at the start of the pandemic was not the result of workers getting pay increases, it was the result of low-paid workers in sectors like hotels and restaurants losing their jobs.

The number of people employed in the low-paying leisure and hospitality sector fell by more than 8 million at the start of the pandemic. Even at the start of 2021 it was still down by over 4 million.

Laying off low-paid workers raises average wages in the same way that getting the short people to leave raises the average height of the people in the room. The Washington Post might try to tell us that the remaining people grew taller, but that is not what happened.

The other problem with this chart is that it is giving us weekly wages. The length of the average workweek jumped at the start of the pandemic as employers decided to work the workers they had longer hours rather than hire more workers. In January of 2021 the average workweek was 34.9 hours, compared to 34.4 hours in 2019 and 34.3 hours in February.

This increase in hours, by itself, would raise weekly pay by 2.0 percent. As hours returned to normal in 2022, this measure would misleadingly imply that wages were falling.

It is also worth noting that the fastest wage gains since the pandemic have been at the bottom end of the wage distribution and the Black/white wage gap has fallen to its lowest level on record.

Saving Rates

The third chart shows the saving rate since 2019. It shows a big spike at the start of the pandemic, as people stopped spending on things like restaurants and travel and they got pandemic checks from the government. It then falls sharply in 2022 and is lower in the most recent quarters than in 2019.

The piece tells readers:

“But as the world reopened — and people resumed spending on dining out, travel, concerts and other things that were previously off-limits — savings rates have leveled off. Americans are also increasingly dip into rainy-day funds to pay more for necessities, including groceries, housing, education and health care. In fact, Americans are now generally saving less of their incomes than they were before the pandemic.

This is an incomplete picture due to a somewhat technical issue. As I explained in a blogpost a few months ago, there is an unusually large gap between GDP as measured on the output side and GDP measured on the income side. In principle, these two numbers should be the same, but they never come out exactly equal.

In recent quarters, the gap has been 2.5 percent of GDP. This is extraordinarily large, but it also is unusual in that the output side is higher than the income side, the opposite of the standard pattern over the last quarter century.

It is standard for economists to assume that the true number for GDP is somewhere between the two measures. If we make that assumption about the data for 2023, it would imply that income is somewhat higher than the data now show and consumption somewhat lower.

In that story, as I showed in the blogpost, the saving rate for 2023 would be 6.8 percent of disposable income, roughly the same as the average for the three years before the pandemic. This would mean that people are not dipping into their rainy-day funds as the Post tells us. They are spending pretty much as they did before the pandemic.

 

Credit Card Debt

The next graph shows that credit card debt is rising again, after sinking in the pandemic. The piece tells readers:

“But now, debt loads are swinging higher again as families try to keep up with rising prices. Total household debt reached a record $17.5 trillion at the end of 2023, according to the Federal Reserve Bank of New York. And, in a worrisome sign for the economy, delinquency rates on mortgages, car loans and credit cards are all rising, too.”

There are several points worth noting here. Credit card debt is rising, but measured relative to income it is still below where it was before the pandemic. It was 6.7 percent of disposable income at the end of 2019, compared to 6.5 percent at the end of last year.

The second point is that a major reason for the recent surge in credit card debt is that people are no longer refinancing mortgages. There was a massive surge in mortgage refinancing with the low interest rates in 2020-2021.

Many of the people who refinanced took additional money out, taking advantage of the increased equity in their home. This channel of credit was cut off when mortgage rates jumped in 2022 and virtually ended mortgage refinancing. This means that to a large extent the surge in credit card borrowing is simply a shift from mortgage debt to credit card debt.

The point about total household debt hitting a record can be said in most months. Except in the period immediately following the collapse of the housing bubble, total debt is almost always rising.

And the rise in delinquencies simply reflects the fact that they had been at very low levels in 2021 and 2022. For the most part, delinquency rates are just getting back to their pre-pandemic levels, which were historically low.  

 

Grocery Prices and Gas Prices

The next two charts show the patterns in grocery prices and gas prices since the pandemic. It would have been worth mentioning that every major economy in the world saw similar run-ups in prices in these two areas. In other words, there was nothing specific to U.S. policy that led to a surge in inflation here.

 

The Missing Charts

There are several areas where it would have been interesting to see charts which the Post did not include. It would have been useful to have a chart on job quitters, the number of people who voluntarily quit their jobs during the pandemic. In the tight labor markets of 2021 and 2022 the number of workers who left jobs they didn’t like soared to record levels, as shown below.

 

The vast majority of these workers took other jobs that they liked better. This likely explains another item that could appear as a graph, the record level of job satisfaction.

In a similar vein there has been an explosion in the number of people who work from home at least part-time. This has increased by more than 17 million during the pandemic. These workers are saving themselves thousands of dollars a year on commuting costs and related expenses, as well as hundreds of hours spent commuting.

Finally, there has been an explosion in the use of telemedicine since the pandemic. At the peak, nearly one in four visits with a health care professional was a remote consultation. This saved many people with serious health issues the time and inconvenience associated with a trip to a hospital or doctor’s office. The increased use of telemedicine is likely to be a lasting gain from the pandemic.

 

The World Has Changed

The pandemic will likely have a lasting impact on the economy and society. The Washington Post’s charts captured part of this story, but in some cases misrepr

The post Correcting the Washington Post’s 11 Charts That Are Supposed to Tell Us How the Economy Changed Since Covid appeared first on Center for Economic and Policy Research.

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