Tag: Big Tech

Big Fed or BigTech? The Force Behind U.S. Inequality

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By Karen Petrou

  • An influential new Fed staff study asserts that increased market power is to blame for much of U.S. income inequality over the past forty years, discounting monetary policy’s impact after 2008 by looking only at inflation, not also at QE and ultra-low rates. 
  • Incorporating these factors into its construct and reviewing other research suggests a large causal role also for post-crisis monetary policy.
  • Which is worse is yet to be told, but it seems clear that market concentration, monetary policy-fueled asset-valuation hikes, and ultra-low rates exacerbate the structural factors on which the Fed continues to blame economic inequality.  Indeed, concentration and post-crisis policy are likely to be considerably more causal than the prolonged decline in educational quality, demographic shifts, increased innovation, and perhaps even regressive fiscal policy.
Continue reading “Big Fed or BigTech? The Force Behind U.S. Inequality” →

Dialing for Dollars: Solving CBDC’s Equality Conundrum

~ Karen Petrou ~ 1 Comment

By Karen Petrou

  • CBDC advocates tout its inclusiveness, but the digital divide is a profoundly exclusionary impediment to CBDC access for LMI, disabled, older, and rural households. 
  • Centralized deposit-taking and payments via the Post Office and/or Fed pose challenges to personal privacy and even freedom of expression that, if not averted in initial design, could come to pose significant political and governance risk.  Lack of private competition also presents discrimination risk based on pricing or other terms not subject to outside scrutiny.
  • If CBDC succeeds as some envision it, then lending will come either from the federal government – Big Brother problems of still more concern – or capital-markets sources outside the perimeter of safety-and-soundness and often also consumer-protection regulation and enforcement.
  • A CBDC in which the Fed acts as an open-source utility corrects for many current inclusion, governance, and intermediation obstacles to payment-system speed and efficiency. 
Continue reading “Dialing for Dollars: Solving CBDC’s Equality Conundrum” →

Big Tech, Big Macroeconomic Problems

~ Karen Petrou ~ 1 Comment

By Karen Petrou

It’s easy enough to miss the macroeconomic and financial-sector impact of giant tech-platform companies in the swirl of concern about privacy, political integrity, concentration, and corporate governance.  However, big tech also has massive macroeconomic impact with far-reaching financial-system implications.  We explored safety-and-soundness implications in here and economic-equality impact in here.  Now comes a sweeping IMF study linking and even attributing structural economic transformation to these same big-tech behemoths.  Although inconclusive in critical respects, it’s worth a careful look. Continue reading “Big Tech, Big Macroeconomic Problems” →

Hard Questions on Data Privacy

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By Karen Petrou

On February 13, bipartisan Senate Banking leadership asked for views on how best to craft a new consumer-data privacy and security framework.  Reflecting 2017’s Equifax debacle, the inquiry seems rooted in the credit-reporting framework.  Essential though it is, data-integrity fixes for the credit bureaus aren’t anywhere near sufficient protection now that consumer financial data are increasingly clutched in the hands of Facebook, Amazon, Google, and an array of lightly- or un-regulated technology-based consumer-finance providers.  As we have demonstrated, sustainable, sound, and fair consumer credit is critical to economic equality.  Continue reading “Hard Questions on Data Privacy” →

Making “Responsible Innovation” a Reality: Big Tech, Small Money, and U.S. Economic Equality

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By Federal Financial Analytics

FedFin has just released a new policy paper laying out how emerging risks in unregulated tech-based financial products may threaten U.S. economic inequality.  It’s not that regulated institutions have always done that much better, but rather that the power of big data, predictive modeling, and far-flung commercial interests combines with tech-firm culture in still more dangerous ways far outside the reach of effective controls or meaningful enforcement.  Continue reading “Making “Responsible Innovation” a Reality: Big Tech, Small Money, and U.S. Economic Equality” →