Memia 2021.05: That was fun😒//💸monetary policy for dummies (please)👶// climate🌪️jenga💥// the spinach talks🌿// alt-wood🪵

Plate me up some Fair and Moose🦌

Kia ora / Hi

Welcome to another weekly Memia newsletter exploring emerging tech and thinking about the future as it unfolds, with an eye on my corner of the world, Aotearoa New Zealand.

That was fun😒

Amazon founder Jeff Bezos announced he was stepping down as CEO after 27 years, passing the reins of the now *US$1.67 trillion* market cap company to the leader of its engine room AWS subsidiary, Andy Jassy.

Whatever one’s views on Bezos’ and Amazon’s business practices and ethics, it was a relentless innings of driving Darwinian efficiency throughout the company. Two particular standouts from Bezos’ legacy for me:

  • The collection of Bezos’ annual letters to shareholders (link to CBInsights overview article with links to originals) which he has written every year since IPO in 1997: highly intelligent, distilled thinking about running the world’s largest, fast-growing, most customer-focused tech business. Always worth delving into.

  • His 2002 API mandate: Former Amazon employee Steve Yegge, by then at Google, wrote this leaked internal rant email about his time at Amazon (fun read), including Bezos’ famous “mandate” on service interfaces…arguably the genesis of AWS:

    1) All teams will henceforth expose their data and functionality through service interfaces.
    2) Teams must communicate with each other through these interfaces.
    3) There will be no other form of interprocess communication allowed: no direct linking, no direct reads of another team’s data store, no shared-memory model, no back-doors whatsoever. The only communication allowed is via service interface calls over the network.
    4) It doesn’t matter what technology is used. HTTP, Corba, Pubsub, custom protocols — doesn’t matter.
    5) All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions.
    6) Anyone who doesn’t do this will be fired.

    — JEFF BEZOS

💸Monetary policy for dummies (please)👶

  • Monetary policy = money supply, interest rates

  • Fiscal policy = borrowing, spending, taxes

After a series of OIA requests, Stuff reported that way back in January 2020 the Reserve Bank repeatedly warned the government that money printing would lead to house price inflation.

Since then, the RBNZ’s QE programme is approaching NZ$100Bn in new money, and (guess what?) housing values have risen an astonishing 15% annually in some cities (Notably NOT Ōtautahi, largely due to post-earthquake housing oversupply).

Source: CoreLogic

(According to one commentator, Grant Wilson of Exante Data in the Australian Financial Review last November, the RBNZ has shredded its credibility, authoring “the most activist monetary policy on the planet, while ignoring the facts on the ground”).

The stories of how (admittedly rational) New Zealand property investors have been leveraging up to cash in are mind boggling too: Bernard Hickey sums up landlords’ unbelievable good fortune: it’s not risky or hard work. While this goes on, an entire generation is being permanently priced out of home ownership and forced to pay so much of their income on rent they can’t even save.

A modern definition of Monetary Policy might go something like:

“tools which advanced economy central banks use to manage price stability and unemployment, while inadvertently leading to massive intergenerational imbalances of income and wealth”

(Yes, pandemic… and yes, complete lack of fiscal policy response from the government so far, but…is the central bank actually in control of its own levers?)

If you dig around on the RBNZ’s website, you’ll find the Monetary Policy Handbook, which explains the rather simplified “Monetary transmission mechanism”:

“Monetary policy operates through a simple principle: higher interest rates tend to lead to lower employment and inflation than would otherwise be the case; for lower interest rates, the opposite is true. However, underlying this simple relationship is a complex transmission mechanism, whereby interest rates influence aggregate demand through different channels and across varying time periods, with broader economic consequences”

“…tend to lead to…” gives it away, eh? Even if that’s how it is *supposed* to work back in the good old days, the global economy is a now a dynamic, multipolar, violently pulsing organism… does the RBNZ’s (effectively 3-parameter?) model come close to fitting how things *actually* work today? The “NZSIM” model currently in use dates back to 2017 and the last model peer review on the website I can find is dated from 2014… an aeon ago when thinking about recent advances in machine learning. And that was before a global pandemic blew the global financial system out of equilibrium…and Elon Musk started buying Bitcoin by the US$Billion.

Couple of requests for the RBNZ:

  • Monetary Policy for Dummies: An accessible, Aotearoa-centric explainer of the up to date theory and new uncertainties behind monetary policy: as simple as possible, (but no simpler). What is on your website is impenetrable - and the average Gen Zer who finds themselves shut out of a housing market for life by forces they can’t comprehend deserves better explanation.

  • Perhaps hire a few superstar data scientists to review your model, eh?

Related, and this time looking on the upside, the ever-ebullient Sam Stubbs argues that the global economy is poised to boom just as it did after Spanish Flu:

“Over $15 billion has been directly injected into the economy by the Government. And the Reserve Bank has made up to NZ$60b of cheap credit available. And now confidence has returned, much of this money has been invested, spent or lent. It’s raised house prices to scary levels, but it’s also saved many jobs.

Meanwhile, disruptive technology is keeping inflation at bay, as it has for the last decade.

New business models, driven by technology, means it’s hard to put up prices. Ask any taxi driver what Uber has meant for them, or any big retailer about Amazons’ impact. Covid hasn’t slowed the deflationary impact of technology. And as necessity is the mother of invention, it might have sped it up.”

Climate🌪️jenga💥

The WEF’s virtual Davos Agenda 2021 coins the most scarily apt metaphor for what is coming:

“Think of it as a game of Jenga and the planet’s climate system as the tower. For generations, we have been slowly removing blocks. But at some point, we will remove a pivotal block, such as the collapse of one of the major global ocean circulation systems, for example the Atlantic Meridional Overturning Circulation (AMOC), that will cause all or part of the global climate system to fall into a planetary emergency.”

(I’m steeped in these conversations since my dad was publishing the ocean science of these mechanisms and warning of the risks back in 2008).

😨It’s intentionally fear-inducing when phrased like this. Puts house prices in perspective.

[Weak] signals

Memia’s regular collection of signals from the future:

The Great Unbundling

  • UK-based global tech industry analyst Benedict Evans published his annual macro trends presentation deck, 134 data-dense slides with deep insights covering five headline topics:

    • Covid acceleration

    • The great unbundling

    • Harder problems

    • China and the end of the American internet

    • Tech as a regulated industry

Glued to my screen

Future of transport

  • Flying cars: the city of Coventry is getting the world’s first eVTOL airport by the end of 2021:

Mmm tasty🤢

Alt-meat startup Novameat has 3D-printed the “world’s biggest” cell-based meat prototype - mimicking the texture, taste, appearance, and nutritional properties of animal meat products from vegetable sources.

Alt-wood🪵

The spinach talks🌿

By far the greatest headline so far this year:

Nanobionics engineers at MIT have transformed spinach plants into sensors capable of detecting nitroaromatics (found in explosives): when the spinach roots detect the presence of the chemicals, carbon nanotubes within the plant leaves emit a signal, which is read by an infrared camera, sending an email alert to the scientists. Neat, and what possibilities does this open up…?

Mind expanding

Obsolete mathematicians?

Interesting story from Israel: a team of physicists has invented an automated conjecture /proof system which carries out the work traditionally done by theoretical mathematicians. The “Ramanujan Machine”, named after the famed Indian mathematician Srinivasa Ramanujan, automatically examines mathematical patterns and effectively discovers new formulas for mathematical constants. Quite limited in scope right now but with potential to automate discovery of new formulas for physical and universal constants.

Rollcall

A few shout-outs around AoNZ, congratulations go to:

Hidden gems

Spotted around the internet…

  • More Myanmar coup footage:

“I Wake Up Before You Do: Nine Reasons Why I Have a Brand-New Tesla, a Full-Time Startup Job, an Online Side Hustle, and a Great Family, While You Retweet the Dalai Lama, Like a Loser”

  • And if you don’t already follow Janelle Shane’s quirky AI creations, you should:

🙏🙏🙏 Thanks as always for reading, and to everyone who takes time to get in touch with links and feedback each week!

More again next week.

Ngā Mihi / Cheers

Ben

1

Clearly I still need to work out how to use this feature.