What the heck is Cyber 9/11?What does Cyber 9/11 mean? Is there a real risk? What should we be preparing for? There are two aspects to the Cyber 9/11 concept. The first is the disaster itself; 9/11 was a catastrophe that ended the lives of over 3000 people in one day. There are fears that if power grids were hacked or enough damage was done to logistical centers, the ensuing chaos would cause deaths. Quite memorably, back in 2000, a disgruntled public works employee in Australia hacked into the water treatment system and caused raw sewage to pour into public areas, flooding a Hyatt hotel. One man acting alone caused a disgusting, expensive mess. Of course security experts are concerned with what a team of angry individuals could do. The second aspect to a potential Cyber 9/11 is the change in the regulatory landscape that occurred after 9/11 in 2001. I remember flying as a teenager in the 90s. So many things changed later. The airport changes were most obvious to regular citizens, but the passage of the Patriot Act in October 2001 was far more consequential. It dramatically changed the way surveillance was conducted. Under the Fourth Amendment, private citizens are supposed to be protected from warrantless search and seizures. The Patriot Act really weakened that. Law enforcement is now allowed to delay the notice of search warrants. They don’t need nearly as much oversight from judges to conduct phone and internet surveillance. These Constitution-weakening changes occurred after 9/11 in 2001.
How might our Constitutional rights be altered after a Cyber 9/11?Centralized powers have made it obvious that they love using calamities to push through changes the public would never otherwise accept. Winston Churchill was the first person on record to say, “Never let a crisis go to waste,” as he worked to establish the UN in the 1940s, but he was hardly the last.
- Rahm Emmanuel, regarding the 2008 banking crisis: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”
- Hillary Clinton, regarding the push for universal healthcare in 2020: “This would be a terrible crisis to waste.”
- Klaus Schwab, regarding the Covid pandemic: “. . . the pandemic represents a rare but narrow window of opportunity to reflect, reimagine, and reset our world to create a healthier, more equitable, and more prosperous future.”
So, is a Cyber 9/11 something we should be preparing for?Some experts believe that a Cyber 9/11 would be difficult to pull off by the known terrorist groups for technical reasons. And the world is too connected, globally, for most governments to pursue large-scale cyberattacks, even between unfriendly nations. For people who want to use the internet to harm American society, there are simply better ways to do it. However, we can’t ignore the fact that cyberattacks have been increasing. Ask any small business owner. Daisy has mentioned in previous articles that most of this site’s income goes to security. And I’ve heard similar things from friends that work in fields as diverse as accounting and energy. These stories from friends align with what security professionals have found, too. The Information Security Forum is a London-based firm that provides guidance on internet security for many Fortune 500 companies and governments around the world. They have seen a huge increase in cyberattacks, too, and in June this year, they hosted an Operational Technology Cyber Simulation exercise in Brussels. This gave industry leaders an opportunity to meet and collaborate, working through a simulation of a cyberattack on a fictitious manufacturing facility
How would governments react to a major cyberattack?I don’t think a major cyberattack is an unreasonable concern. I also don’t think it’s unreasonable to ask, if we did have a major cyber event, how would our governments react? Central banks and governments around the world have been talking an awful lot about implementing CBDCs. In late June, 130 countries representing 98% of the global economy were exploring CBDCs. This is despite a lack of interest by average citizens. During Covid, many people became aware of how China used its social credit system, interconnected with online banking, to enforce compliance. It’s not just China that people can look to with alarm. When Nigeria’s government tried to impose CBDCs on their citizens, widespread protests erupted. In the U.S., Republican Senators introduced legislation that would ban the federal government from implementing a CBDC. Europeans don’t want CBDCs, either. It has simply become too obvious that CBDCs will be used as a means of control, and politicians have been caught admitting it. Look at the Rumble pranksters who convinced European Central Bank President Christine LaGarde that she was on the phone with Ukrainian President Vlodymyr Zelensky. She admits, thinking that she is speaking privately, that CBDCs would be used to control what kind of payments the population would be able to make. There’s no putting the cat back in that bag. Politicians and central bankers want total financial control, and they think they have the technology to do it, through CBDCs. Average citizens worldwide have been making it clear that they would really prefer to have the option of private, decentralized payments through crypto or cash, and so there is a legitimate concern that any upcoming cyberattack (no matter who actually conducts it) could be used to reset financial systems worldwide.
But do they have the technology to pull this off successfully?Who knows. We’ve talked before about Ukraine’s Diia app and how, shortly after it launched, they had a massive data breach in which millions of people had their personal information released all over the dark web. This breach was tiny compared to what just happened to the people of India in the recent Aadhaar data breach. Aadhaar is the Indian program launched to streamline the identification process of Indian citizens. The program was rolled out in 2009, issuing a unique 12-digit number to each person who registered in exchange for their biometric data/ Before Aadhaar, there was no universal identification program within India, and as you can imagine, this led to widespread abuse and corruption. Aadhaar claimed to solve that problem. Within a few years of launching, Aadhaar had become the world’s largest biometric data collection service. As of 2023, 99% of Indians, or 1.3 billion people, have handed over their fingerprints and iris scans in exchange for access to government services. The Indian government has boasted that this allows the poorest Indians, many of whom had no official identification beforehand, to receive benefits. A court ruling in 2018 claimed that the Indian government could demand Aadhaar data, but that private entities such as banks and phone companies could not. However, despite this court ruling, many educated people within India claim that it was not clear what services would or would not be withheld based on Aadhaar participation. Instances of fraud have been playing out since its adoption. It has been used for voter fraud. And, once you opt-in, there’s no opting out. Within the past two weeks, India has suffered a massive data breach, with 815 million people having their biometric data and banking information put up for sale on the dark web. This is the biggest data breach in history. Eight hundred fifteen million people means that more than 1 in 10 people on planet Earth just had their data stolen. You can find many, many videos on YouTube of furious Indians talking about the data breach, but Western media has totally ignored this for reasons that are probably obvious.
How am I preparing?So, after all this, am I preparing for Cyber 9/11? Am I prepping for the attack itself, or some kind of biometrically linked CBDC to roll out? General chaos, leading to Thirdworldization, is my pre-2024 election prediction. There are some power-hungry people individuals who would love to have the whole world living under a global digital system, but I think that forced implementation is more likely to cause chaos than anything else. These systems are not foolproof and lead to problems wherever they’re tried. We may not be able to avoid attempts at forced implementation. But we can prepare by paying attention to our surroundings, becoming more skilled producers rather than consumers, and most of all, developing trusted networks of friends and family in the real world. For more information on preparing for a cyberattack, check out this article and this one.
Guest Contribution: “The Fed Approaches the End of the Rate Hiking Cycle”
Today, we present a guest post written by David Papell and Ruxandra Prodan, Professor and Associate Instructional Professor of Economics at the University…
The Federal Open Market Committee (FOMC) maintained the target range for the federal funds rate (FFR) at 5.25 – 5.5 percent in its November 2023 meeting. While the September 2023 Summary of Economic Projections (SEP) projected a range between 5.5 and 5.75 percent by the end of 2023, it clear that the Committee will wait before deciding whether to end the rate hiking cycle or to have one more rate increase at a subsequent meeting. There is widespread agreement that the Fed fell “behind the curve” by not raising rates when inflation rose in 2021, forcing it to play “catch-up” in 2022. “Behind the curve,” however, is meaningless without a measure of “on the curve.” In the latest version of our paper, “Policy Rules and Forward Guidance Following the Covid-19 Recession,” we use data from the SEP’s from September 2020 to June 2023 to compare policy rule prescriptions with actual and FOMC projections of the FFR. This provides a precise definition of “behind the curve” as the difference between the FFR prescribed by the policy rule and the actual or projected FFR. We analyze four policy rules that are relevant for the future path of the FFR in the post: The Taylor (1993) rule with an unemployment gap is as follows, where Rt is the level of the short-term federal funds interest rate prescribed by the rule, πt is the inflation rate, πLR is the 2 percent target level of inflation, ULRt is the 4 percent rate of unemployment in the longer run, Ut is the current unemployment rate, and rLRt is the ½ percent neutral real interest rate from the current SEP. Yellen (2012) analyzed the balanced approach rule where the coefficient on the inflation gap is 0.5 but the coefficient on the unemployment gap is raised to 2.0. The balanced approach rule received considerable attention following the Great Recession and became the standard policy rule used by the Fed. These rules are non-inertial because the FFR fully adjusts whenever the target FFR changes. This is not in accord with FOMC practice to smooth rate increases when inflation rises. We specify inertial versions of the rules based on Clarida, Gali, and Gertler (1999), where p is the degree of inertia and is the target level of the federal funds rate prescribed by Equations (1) and (2). We set p as in Bernanke, Kiley, and Roberts (2019). Rt-1 equals the rate prescribed by the rule if it is positive and zero if the prescribed rate is negative. Figure 1 depicts the midpoint for the target range of the FFR for September 2020 to September 2023 and the projected FFR for December 2023 to December 2026 from the September 2023 SEP. Following the exit from the ELB to 0.375 in March 2022, the FFR rose to 5.375 in September 2023 and is projected to rise to 5.625 in December 2023 before falling to 4.875 in December 2024, 3.875 in December 2025, and 2.875 in December 2026. The figure also depicts policy rule prescriptions. Between September 2020 and September 2023, we use real-time inflation and unemployment data that was available at the time of the FOMC meetings. Between December 2023 and December 2026, we use inflation and unemployment projections from the September 2023 SEP. The differences in the prescribed FFR’s between the inertial and non-inertial rules are much larger than those between the Taylor and balanced approach rules. Figure 1. The Federal Funds Rate and Policy Rule Prescriptions. Panel A. Non-Inertial Rules Policy rule prescriptions are reported in Panel A for the non-inertial Taylor and balanced approach rules. They are not in accord with the FOMC’s practice of smoothing rate increases when inflation rises. The prescriptions for the two rules are identical at the ELB through March 2021. The FOMC fell behind the curve starting in June 2021 when the prescribed FFR increased from the ELB of 0.125 to 2.625 for the Taylor rule and to 0.375 for the balanced approach rule while the actual FFR stayed at the ELB. The policy rule prescriptions sharply increased through 2021 and peaked in March 2022 to 7.875 for the Taylor rule and 8.125 for the balanced approach rule when the FFR first rose above the ELB to 0.375. The gap also peaked in March 2022 at 750 basis points for the Taylor rule and 775 basis points for the balanced approach rule. The gap narrowed considerably between March 2022 and September 2023 as the FFR rose from 0.375 to 5.375 while the Taylor rule prescriptions fell to 6.125 and the balanced approach rule prescriptions fell to 6.625. Looking forward, the gap between the FFR projections and the policy rule prescriptions reverses in December 2023 and the FFR projections are above the policy rule prescriptions through December 2026. Figure 1. The Federal Funds Rate and Policy Rule Prescriptions. Panel B. Inertial Rules Panel B reports the results for the inertial Taylor and balanced approach rules. They are much more in accord with the FOMC’s practice of raising the FFR slowly when inflation rises. The prescriptions for the two rules are identical at the ELB through March 2021 and rise to 0.375 for the Taylor rule in June 2021. The FOMC fell behind the curve starting in September 2021 when the prescribed FFR increased to 0.875 for the Taylor rule and 0.625 for the balanced approach rule while the actual FFR stayed at the ELB. The gap between the policy rule prescriptions and the FFR peaked in March 2022 at 200 basis points when the prescribed FFR was 2.325 for both rules while the FFR first rose above the ELB to 0.375. The Fed is no longer behind the curve. The gap narrowed steadily and, in September 2023, the FFR was equal to the inertial balanced approach rule prescription and 25 basis points above the inertial Taylor rule prescription. As of the November 2023 meeting, it is unclear whether the FOMC will follow the prescriptions in the September 2023 SEP and raise the FFR to 5.625 or leave it unchanged at 5.375 at the December 2023 meeting. If the FOMC raises the FFR to 5.625, it will be 25 basis points above the balanced approach rule prescription and 50 basis points above the Taylor rule prescription. If the FOMC leaves the FFR unchanged at 5.375, it will be equal to the balanced approach rule prescription and 25 basis points above the Taylor rule prescription. The inertial rules prescribe a much smoother path of rate increases from September 2021 through June 2023 than that adopted by the FOMC. If the Fed had followed the inertial Taylor or balanced approach rule instead of the FOMC’s forward guidance, it could have avoided the pattern of falling behind the curve, pivot, and getting back on track that characterized Fed policy during 2021 and 2022. Looking forward, the FFR projections from the September 2023 SEP are generally 25 basis points above the policy rule prescriptions through June 2025, equal to the policy rule prescriptions through March 2026, and 25 basis points below the policy rule prescriptions through December 2026. The current and projected FFR is in accord with prescriptions from inertial policy rules.
This post written by David Papell and Ruxandra Prodan. recession unemployment covid-19 fomc open market committee fed recession unemployment
Credit Card Delinquencies Continue to Rise—Who Is Missing Payments?
This morning, the New York Fed’s Center for Microeconomic Data released the 2023:Q3 Quarterly Report on Household Debt and Credit. After only moderate…
The Share of Newly Delinquent Credit Card Users Rose in the Third Quarter and Exceeds the Pre-Pandemic Average
Who Is Driving the Rising Credit Card Delinquencies?In the next series of charts, we explore the variation in this delinquency transition rate for several different groups of credit card users. First, we look at delinquencies by birth generation. While Baby Boomers (born 1946-64), Generation X (born 1965-79), and Generation Z (born 1995-2011) credit card users have delinquency rates similar to their pre-pandemic levels and trends, Millennial (born 1980-94) credit card users began exceeding pre-pandemic delinquency levels in the middle of last year and now have transition rates 0.4 percentage point higher than in the third quarter of 2019.
Millennial Credit Card Delinquency Exceeds Pre-Pandemic Levels while Baby Boomers, Generation X, and Generation Z Are at or near Their 2019 AveragesThe chart below shows how credit card delinquencies have evolved by zip median income. We categorize all zip codes into four groups ranked by area income with the first quartile representing the lowest and the fourth quartile representing the highest income. The lowest-income areas persistently have the highest delinquency rates, but all four quartiles are now above their pre-pandemic levels. Although not shown here, the pattern for delinquency rates by U.S. Census region is similar to the zip income pattern. The South has higher delinquency rates over the time series, but all regions have new credit card delinquency rates higher than their pre-pandemic averages and are evolving similarly.
Delinquency Rates Are Rising Fastest for Lower-Income Areas, but Each Income Quartile Area Has Rates at or above Their 2019 LevelsNext, we look at how balances have evolved based on borrower credit profiles. The chart below shows the delinquency transition rates for card users by their outstanding total credit card balances in the previous quarter. Generally, those with higher total balances are more likely to transition to delinquency, and recent trends are consistent with this pattern. Those with combined balances over $20,000 have the highest transition rate since the beginning of 2022 both in the level and the pace of increase, but the prevalence of balances this large is low at 6 percent of credit card holders. Meanwhile, borrowers with balances of less than $5,000, 68 percent of credit card borrowers last quarter, have recent delinquency transition rates similar to their pre-pandemic levels.
Those with the Largest Credit Card Balances Were the Most Likely to Fall behind but Make Up a Small Share of Credit Card UsersThe last of these charts shows the delinquency transition rates for credit card users based on whether a borrower also has other types of debt. The share of mortgage holders with a new credit card delinquency is only slightly higher than before the pandemic. Meanwhile, borrowers with auto loans (gold line) or student loans (red line) were more likely to fall behind on their loans than before the pandemic. This was especially the case for those with student loans and auto loans (shown in light blue). This group’s transition rate into a credit card delinquency is 0.6 percentage point higher than it was prior to the pandemic. These repayment difficulties will likely continue to mount for student loan borrowers, as shown in our recent special survey of such borrowers, now that student loan payments have resumed.
Credit Card Delinquencies Are Rising Particularly Quickly for Those with Auto and Student Loans
ConclusionDelinquency rates on most credit product types have been rising from historic lows since the middle of 2021. The transition rate into delinquency remains below the pre-pandemic level for mortgages, which comprise the largest share of household debt, but auto loan and credit card delinquencies have surpassed pre-pandemic levels and continue to rise. While the growth in auto loan delinquency has appeared to moderate over recent quarters, credit card delinquency rates have risen at a sharper pace. Even though the increase in delinquency appears to be broad based across income groups and regions, it is disproportionately driven by Millennials, those with auto or student loans, and those with relatively higher credit card balances. The labor market and the general economy have remained resilient throughout this period which makes pinning down the causes of rising delinquencies rates more difficult. Whether this is a consequence of shifts in lending, overextension, or deeper economic distress associated with higher borrowing costs and price pressures is an important topic for further research. We will continue to monitor conditions for household balance sheets for further signs of distress.
Andrew F. Haughwout is the director of Household and Public Policy Research in the Federal Reserve Bank of New York’s Research and Statistics Group.
Donghoon Lee is an economic research advisor in Consumer Behavior Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.
Daniel Mangrum is a research economist in Equitable Growth Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.
Belicia Rodriguez is a senior research analyst in the Federal Reserve Bank of New York’s Communications and Outreach Group.
Wilbert van der Klaauw is the economic research advisor for Household and Public Policy Research in the Federal Reserve Bank of New York’s Research and Statistics Group.
Joelle Scally is a regional economic principal in the Federal Reserve Bank of New York’s Research and Statistics Group.
Crystal Wang is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.
How to cite this post: Andrew Haughwout, Donghoon Lee, Daniel Mangrum, Belicia Rodriguez, Joelle Scally, Wilbert van der Klaauw, and Crystal Wang, “Credit Card Delinquencies Continue to Rise—Who Is Missing Payments?,” Federal Reserve Bank of New York Liberty Street Economics, November 7, 2023, https://libertystreeteconomics.newyorkfed.org/2023/11/credit-card-delinquencies-continue-to-rise-who-is-missing-payments/.
Disclaimer The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).
Beloved Las Vegas, Las Vegas Strip tradition closer to the end
Maybe it’s time to let the old ways die. That’s a line sung by Bradley Cooper’s character in the hit "A Star Is Born" remake he and Lady Gaga co-starred…