#Economics
connect sources of supply and demand by going
around traditional brokers, gatekeepers and
agents.
Examples include companies like SoFi, which
provides private student loans without banks, and
Amazon, which provides shopping without stores. It
has been remarked that Uber is the world's largest
taxi company but owns no taxis; Airbnb is the
world's largest lodging company but owns no real
estate; and Facebook is the world's largest
advertising company yet provides no content.
All of these companies are not only disrupting
existing business models but are lowering costs to
consumers in the process. This process feeds
expectations of lower prices in the future and
further reduces velocity and increases deationary
pressures.
For now, the Federal Reserve is stymied. The
psychological, technological and demographic
INM MAGAZINE VOLUME 8 | FEBRUARY 2016
trends causing deation are not going away. The
Fed cannot tolerate deation because it increases
the real value of debt and jeopardizes the banks.
The Fed will be forced to return to its ination tool kit
of quantitative easing, currency wars and perhaps
“helicopter money” in the year ahead.
These dominant economic trends — natural
deations countered by policy ination — produce
a rich set of indications and warnings.
“The Fed will be forced to return to its ination
tool kit of quantitative easing, currency wars
and perhaps “helicopter money” in the year
ahead.”
These models use complexity theory and
behavioural psychology, among other tools, to
identify trends in their early stages and to foresee
companies that are more likely to succeed or fail
based on those trends.
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