We're still here 💪
An overview of China and Turkey's economic challenges, a look back at the rise of the US Dollar, a look ahead at Web3, and a pinch of optimism for the year ahead.
Hello, and happy holidays!
We hope you’re staying safe, celebrating with the people who matter, and taking some time to reflect on the year that was. It’s what we’re doing.
Our 18 published issues in 2021 were read by over 20,000 of our growing community of knowledge seekers. In case you missed some of our greatest hits of the year — here’s a quick roundup of our best stuff.
💡 Check out the Food For Thought section for some life lessons from an 80-year-old and Yuval Noah Harari’s musings on how COVID shone a light on humanity’s weaknesses, and gave us a chance to showcase our strength. (Also, add Bob Dylan’s ‘The times, they're a changing’, to your year-ender playlist).
💡 We often recommend content featuring Balaji S on Forward, and this issue includes some of his greatest hits on the concept of a ‘network state’ — including a video version of his article on how the blockchain can help start a new, geographically decentralised country.
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We need to talk about COVID 🦠
New year, new COVID right?
Just when people are winding down from work schedules and trying to travel or spend time with family, the Omicron update patch has added a whole layer of uncertainty to the mix.
But is the situation as bad as last year?
According to Emily Oster, not really. Oster writes in The Atlantic that despite Omicron’s proclivity to spread faster, the fact that vaccinated people are still generally safe means it is time to switch from harsh clampdowns to more societal common sense. Have smaller gatherings, ensure your loved ones are fully vaccinated, and learn to balance the risk-reward better as a society. It’s all about the externalities.
A tale of two economies 💱
One of the world’s most dominant economies in recent years, China has also had one of the most dramatic catch up stories (compared to the US). Despite the staggering growth, China is now running into some mighty headwinds, which Noah Smith neatly classifies into 4 categories — real estate crunch, electricity crunch, President Xi’s industrial crackdown, and of course, COVID.
Real estate is one of the factors that have been in the news recently. While other global economies have had to deal with falling land prices and the resulting fallout, China’s problem runs a bit deeper.
While China is having to swim harder, Turkey is firmly flailing at the deep end. Inflation has spiked to a whopping 21%, with the Turkish Lira rapidly losing purchasing power with respect to the dollar. For a country that relies on imports for many core commodities, the rapid depreciation of its currency is not helping. Fanning the flames of the economic decline is the country’s authoritarian president Recep Tayyip Erdogan, whose counter-intuitive economic policy dictates that continuously reducing interest rates is the best way to stimulate a flagging economy. More details here and here.
The big dollar bait and switch 💲💲💲
The US Dollar is the reserve currency of the world — this is known.
Ever wondered how it got that status? In his book Super Imperialism, financial analyst Michael Hudson unravels how the dollar elbowed its way to the status by going off the gold standard, making its bed with big oil, and baking American debt into the global monetary base. If this is a topic of interest but you don’t want to go through the entire book, Bitcoin Magazine has a detailed deep dive that breaks down the rise of the dollar and how it contributed to America’s Super Imperialism.
💡 While we’re on the subject of the dollar, here’s a quick note on how reserve currencies have evolved over the years.
Will the world leapfrog into a Bitcoin era? 🚀
Until half a decade back, large parts of India were entirely disconnected from the Internet. Broadband penetration was poor and unaffordable to many. Then, low cost high speed data entered the picture, and huge swathes of the country suddenly lit up with Internet activity, An entire generation just ‘leapfrogged’ fixed line connectivity and embraced 4G. In the Western world, smartphones did a similar thing to landlines.
With world financial systems playing a balancing act with interest rates and inflation, we’re already seeing small countries begin to skip traditional systems and embrace Bitcoin. Here’s Bitcoin Magazine again on how largely unbanked countries could opt for Bitcoin as their gateway to the financial system, and how, if you really think about it, buying Bitcoin is not too different from buying a long put option on the fiat financial system.
Welcome to Web3 🌐3️⃣
The global internet community has been abuzz with talk of ‘Web3’ — the promise of the next stage of the Internet built atop blockchain tech with smart contracts — pretty much all of 2021.
Here are some useful resources to get up to speed with the narrative around Web3 so far, starting with Chris Dixon’s tweet thread:
An overview of how people are lapping up digital land and items on the metaverse for millions of dollars:
A more in-depth analysis of how crypto could be the foundation for new nations that are built not based on geography, but a shared vision and decentralised finance.
💡 In case you decide to get on with building a Decentralised Country, here’s an awesome episode from The a16z Podcast on how to get network effects working in your favour.
And finally, how Web3 is expanding the horizons of what can be called ‘the funtier’ the overall enjoyment of activities that can also make you money (if you’re into play-to-earn gaming, this one’s for you)
Stuff we loved 👍
We’re tailoring the final 2 sections of our last issue of the year to prime you for success in 2022. Starting with a curation from the house of Farnam Street on how to make better decisions.
Want to set your goals higher in 2022? What better motivation than a literal documentary about conquering peaks.
Ray Dalio has been our go-to guy this year on Forward for taut yet detailed analysis of global economies. But in this 30 minute video, the legendary investor distils some core life principles that he believes are crucial to succeed in life.
Food for thought 💡
To wrap our last issue of the year, we want to leave you with a shimmer of positivity to wash down the taste of what has been a pretty unremarkable couple of years for many. In this post looking forward to 2022, Noah Smith highlights some of the good stuff — how some regions are successfully tapering down energy usage, how adoption of renewables and clean energy sources are picking up across the world, how far we’ve come in understanding the human genome and making effective vaccines, and so much more.
We’ve messed up a lot, but we’re also trying to clean it up.
That’s a wrap from all of us at NEO for 2021. If you think this newsletter made your Sunday morning a little better, please spread the love and send it to your friends.
Happy holidays, we’ll see you next year!
Your friends at NEO