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The metaverse: Mark Zuckerberg’s Brave New World

Mark Zuckerberg attempts to create his own metaverse that would result in ever more centralization, leading to a dystopian future.
If Facebook happened to be a human being, where would he/she/they currently be? Most likely in prison…..

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Mark Zuckerberg attempts to create his own metaverse that would result in ever more centralization, leading to a dystopian future.

If Facebook happened to be a human being, where would he/she/they currently be? Most likely in prison… for a very long time. The company’s transgressions are too numerous to list. But Facebook is not human; it’s a company, and a very profitable one, at that. In fact, it’s now one of the most profitable companies in the world. Facebook’s market capitalization has recently surpassed the $1 trillion mark.

When we think of Facebook — more specifically, Facebook Inc. — we tend to think of a social media platform that is somewhat dated. However, it is important to remember that this multiheaded hydra is a conglomerate that owns 78 different companies, including WhatsApp and Instagram. In other words, Facebook is much more than cat videos and conspiracy theories. Spearheaded by Mark Zuckerberg, a champion of smoked meats, Facebook Inc. is a well-oiled machine. Its power is undeniable, and this power is growing. As Fortune magazine recently noted:

“Facebook, it appears, can’t be hurt — not by major ad buyers boycotting its service, not by state and federal investigations, and not even by a pandemic.”

The COVID-19 pandemic may have brought the world to its knees, but Mark Zuckerberg, Facebook’s CEO, hasn’t felt the effects. Last year, he had a measly net worth of $82 billion; today, it’s above $130 billion. Now, with Zuckerberg attempting to create his own metaverse, expect his value — and his power — to increase substantially.

The metaverse

Before discussing the metaverse, it’s important to ask one important question: What the hell is the metaverse, anyway? A blending of the words “meta,” which means beyond, and “universe,” the metaverse combines elements of the physical world and merges them with virtual spaces. American writer and author Neal Stephenson coined the term in 1992. Two decades later, no longer confined to the realms of sci-fi, the metaverse is almost upon us.

Related: Sci-fi or blockchain reality? The ’Ready Player One’ OASIS can be built

In this brave new world, the lines between physical reality and digital domains will become increasingly blurry. Nonfungible tokens (NFTs) and cryptocurrencies are already part of the metaversal experience, but going forward, in the actual metaverse, they will be combined with you, the user. Although we currently live, communicate and shop on the internet, once the metaverse comes into existence, we very well live our lives in the internet. Elon Musk wants to transport us to Mars, but Zuckerberg wants to transport us to, and place us in, the internet. Literally.

Related: The convergence between Tesla, SpaceX, renewable energy and Bitcoin mining

In a recent interview to The Verge, Zuckerberg described the metaverse as an “embodied internet, where instead of just viewing content — you are in it.” We will be tenants in Zuckerberg’s ever-expanding house. Rent will be paid in the form of data. This is not a comforting thought. As Wired’s Toby Tremayne noted, Big Tech firms like Facebook have “become walled gardens increasingly centralised and controlled by corporate interests.” Facebook already “owns WhatsApp, Instagram and Oculus,” which gives “them ownership of our friends, our behaviour, our gait, eye movement and emotional state.” Soon, if Zuckerberg has his way, Facebook Inc. will have even greater control over our lives. That, I argue, should comfort no one but Zuckerberg.

To access the metaverse, biometric data will be required. Eye scans, voice recordings, pulse rates, etc. All of this information will be collected by Facebook Inc. What will be done with this data? Considering Facebook has a sordid history of violating users’ data, this is an important question to ask. What laws, if any, will apply in the metaverse? If my avatar steals an asset, such as digital artwork, from another user, will I be punished? What happens if I live in Canada but my victim lives in Cambodia? If you think the world of crypto has its issues with crime, and it does, imagine the problems that the metaverse will present us with. Think Grand Theft Auto mixed with real-life scenes from Haiti or South Africa. Can we trust Facebook to police the metaverse? Of course not. Then again, who can we trust to police the unknown? World governments? Please.

Related: The data economy is a dystopian nightmare

For this piece, I reached out to Matthew Ball, a metaversal mystic of sorts. A venture capitalist, futurist and Silicon Valley-veteran rolled into one, Ball told me:

“The very premise of the metaverse means that more of our lives will be online, rather than just data relating to our lives.”

As for our economies, they “will run virtually rather than just be augmented digitally (i.e. via email, ecommerce, etc.).” Relocating to the metaverse, Ball warned, will intensify “many present-day risks, such as those of misinformation, data security, data rights (i.e. portability, right to be forgotten, disclosures), as well as the risks of platform control (e.g. Apple’s ownership of app standards, app distribution, app billing).” What we are witnessing is a digital evolution of sorts. The internet has changed the way we bring information, provide services and experiences online, but the metaverse — through goggles, headsets and haptic sensors — will revolutionize what it means to be human. Essentially, the metaverse will take us somewhere completely unknown. The question we must ask now, though, is: Should Facebook be the company to take us there, wherever there may be?

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

John Mac Ghlionn is a researcher and cultural commentator. His work has been published by the likes of The New York Post, The Spectator, The Sydney Morning Herald and National Review.

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There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it’s only a matter…

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March 19, 2024

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There Goes The Fed's Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it's only a matter of time before the Fed admits it is unable to rsolve the so-called "last mile" of inflation and that as a result, the old inflation target of 2% is no longer viable.

Then one year ago, we correctly said that while everyone was paying attention elsewhere, the inflation target had already been hiked to 2.8%... on the way to even more increases.

And while the Fed still pretends it can one day lower inflation to 2% even as it prepares to cut rates as soon as June, moments ago Goldman published a note from its economics team which had to balls to finally call a spade a spade, and concluded that - as party of the Fed's next big debate, i.e., rethinking the Neutral rate - both the neutral and terminal rate, a polite euphemism for the inflation target, are much higher than conventional wisdom believes, and that as a result Goldman is "penciling in a terminal rate of 3.25-3.5% this cycle, 100bp above the peak reached last cycle."

There is more in the full Goldman note, but below we excerpt the key fragments:

We argued last cycle that the long-run neutral rate was not as low as widely thought, perhaps closer to 3-3.5% in nominal terms than to 2-2.5%. We have also argued this cycle that the short-run neutral rate could be higher still because the fiscal deficit is much larger than usual—in fact, estimates of the elasticity of the neutral rate to the deficit suggest that the wider deficit might boost the short-term neutral rate by 1-1.5%. Fed economists have also offered another reason why the short-term neutral rate might be elevated, namely that broad financial conditions have not tightened commensurately with the rise in the funds rate, limiting transmission to the economy.

Over the coming year, Fed officials are likely to debate whether the neutral rate is still as low as they assumed last cycle and as the dot plot implies....

...Translation: raising the neutral rate estimate is also the first step to admitting that the traditional 2% inflation target is higher than previously expected. And once the Fed officially crosses that particular Rubicon, all bets are off.

... Their thinking is likely to be influenced by distant forward market rates, which have risen 1-2pp since the pre-pandemic years to about 4%; by model-based estimates of neutral, whose earlier real-time values have been revised up by roughly 0.5pp on average to about 3.5% nominal and whose latest values are little changed; and by their perception of how well the economy is performing at the current level of the funds rate.

The bank's conclusion:

We expect Fed officials to raise their estimates of neutral over time both by raising their long-run neutral rate dots somewhat and by concluding that short-run neutral is currently higher than long-run neutral. While we are fairly confident that Fed officials will not be comfortable leaving the funds rate above 5% indefinitely once inflation approaches 2% and that they will not go all the way back to 2.5% purely in the name of normalization, we are quite uncertain about where in between they will ultimately land.

Because the economy is not sensitive enough to small changes in the funds rate to make it glaringly obvious when neutral has been reached, the terminal or equilibrium rate where the FOMC decides to leave the funds rate is partly a matter of the true neutral rate and partly a matter of the perceived neutral rate. For now, we are penciling in a terminal rate of 3.25-3.5% this cycle, 100bps above the peak reached last cycle. This reflects both our view that neutral is higher than Fed officials think and our expectation that their thinking will evolve.

Not that this should come as a surprise: as a reminder, with the US now $35.5 trillion in debt and rising by $1 trillion every 100 days, we are fast approaching the Minsky Moment, which means the US has just a handful of options left: losing the reserve currency status, QEing the deficit and every new dollar in debt, or - the only viable alternative - inflating it all away. The only question we had before is when do "serious" economists make the same admission.

They now have.

And while we have discussed the staggering consequences of raising the inflation target by just 1% from 2% to 3% on everything from markets, to economic growth (instead of doubling every 35 years at 2% inflation target, prices would double every 23 years at 3%), and social cohesion, we will soon rerun the analysis again as the implications are profound. For now all you need to know is that with the US about to implicitly hit the overdrive of dollar devaluation, anything that is non-fiat will be much more preferable over fiat alternatives.

Much more in the full Goldman note available to pro subs in the usual place.

Tyler Durden Tue, 03/19/2024 - 15:45

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Household Net Interest Income Falls As Rates Spike

A Bloomberg article from this morning offered an excellent array of charts detailing the shifts in interest payment flows amid rising rates. The historical…

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March 19, 2024

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A Bloomberg article from this morning offered an excellent array of charts detailing the shifts in interest payment flows amid rising rates. The historical anomaly was both surprising and contradicted our priors.

10 Key Points:

  1. Historical Anomaly: This is the first time in the last fifty years that a Federal Reserve rate hike cycle has led to a significant drop in household net interest income.
  2. Interest Expense Increase: Since the Fed began raising rates in March 2022, Americans’ annual interest expenses on debts like mortgages and credit cards have surged by nearly $420 billion.
  3. Interest Income Lag: The increase in interest income during the same period was only about $280 billion, resulting in a net decline in household interest income, a departure from past trends.
  4. Consumer Debt Influence: The recent rate hikes impacted household finances more because of a higher proportion of consumer credit, which adjusts more quickly to rate changes, increasing interest costs.
  5. Banks and Savers: Banks have been slow to pass on higher interest rates to depositors, and the prolonged period of low rates before 2022 may have discouraged savers from actively seeking better returns.
  6. Shift in Wealth: There’s been a shift from interest-bearing assets to stocks, with dividends surpassing interest payments as a source of unearned income during the pandemic.
  7. Distributional Discrepancy: Higher interest rates benefit wealthier individuals who own interest-earning assets, whereas lower-income earners face the brunt of increased debt servicing costs, exacerbating economic inequality.
  8. Job Market Impact: Typically, Fed rate hikes affect households through the job market, as businesses cut costs, potentially leading to layoffs or wage suppression, though this hasn’t occurred yet in the current cycle.
  9. Economic Impact: The distribution of interest income and debt servicing means that rate increases transfer money from those more likely to spend (and thus stimulate the economy) to those less likely to increase consumption, potentially dampening economic activity.
  10. No Immediate Relief: Expectations for the Fed to reduce rates have diminished, indicating that high-interest expenses for households may persist.

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One more airline cracks down on lounge crowding in a way you won’t like

Qantas Airways is increasing the price of accessing its network of lounges by as much as 17%.

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March 19, 2024

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Over the last two years, multiple airlines have dealt with crowding in their lounges. While they are designed as a luxury experience for a small subset of travelers, high numbers of people taking a trip post-pandemic as well as the different ways they are able to gain access through status or certain credit cards made it difficult for some airlines to keep up with keeping foods stocked, common areas clean and having enough staff to serve bar drinks at the rate that customers expect them.

In the fall of 2023, Delta Air Lines  (DAL)  caught serious traveler outcry after announcing that it was cracking down on crowding by raising how much one needs to spend for lounge access and limiting the number of times one can enter those lounges.

Related: Competitors pushed Delta to backtrack on its lounge and loyalty program changes

Some airlines saw the outcry with Delta as their chance to reassure customers that they would not raise their fees while others waited for the storm to pass to quietly implement their own increases.

A photograph captures a Qantas Airways lounge in Sydney, Australia.

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This is how much more you'll have to pay for Qantas lounge access

Australia's flagship carrier Qantas Airways  (QUBSF)  is the latest airline to announce that it would raise the cost accessing the 24 lounges across the country as well as the 600 international lounges available at airports across the world through partner airlines.

More Travel:

Unlike other airlines which grant access primarily after reaching frequent flyer status, Qantas also sells it through a membership — starting from April 18, 2024, prices will rise from $600 Australian dollars ($392 USD)  to $699 AUD ($456 USD) for one year, $1,100 ($718 USD) to $1,299 ($848 USD) for two years and $2,000 AUD ($1,304) to lock in the rate for four years.

Those signing up for lounge access for the first time also currently pay a joining fee of $99 AUD ($65 USD) that will rise to $129 AUD ($85 USD).

The airline also allows customers to purchase their membership with Qantas Points they collect through frequent travel; the membership fees are also being raised by the equivalent amount in points in what adds up to as much as 17% — from 308,000 to 399,900 to lock in access for four years.

Airline says hikes will 'cover cost increases passed on from suppliers'

"This is the first time the Qantas Club membership fees have increased in seven years and will help cover cost increases passed on from a range of suppliers over that time," a Qantas spokesperson confirmed to Simple Flying. "This follows a reduction in the membership fees for several years during the pandemic."

The spokesperson said the gains from the increases will go both towards making up for inflation-related costs and keeping existing lounges looking modern by updating features like furniture and décor.

While the price increases also do not apply for those who earned lounge access through frequent flyer status or change what it takes to earn that status, Qantas is also introducing even steeper increases for those renewing a membership or adding additional features such as spouse and partner memberships.

In some cases, the cost of these features will nearly double from what members are paying now.

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