Gautam Adani Is World’s 5th Richest Person

Gautam Adani, the Indian infrastructure mogul, became the richest Asian billionaire in history earlier this month–and he’s kept on climbing, reported Forbes magazine.

“Adani has now passed Warren Buffett to become the 5th richest person in the world,” said Forbes, estimating that the 59-year-old Adani has a net worth of $123.7 billion, as of Friday’s market close, edging out the $121.7 billion fortune of Buffett, who is 91.

Worth $8.9 billion just two years ago, Adani’s fortune spiked to an estimated $50.5 billion in March 2021 because of his skyrocketing share prices–then nearly doubled by March 2022, to an estimated $90 billion, as Adani Group stocks rose even further, according to Forbes.

“Adani’s estimated $123.7 billion net worth makes him the richest person in India, $19 billion wealthier than the country’s number 2, Mukesh Ambani (who’s worth an estimated $104.7 billion). He surpasses Buffett as shares of the famed investor’s Berkshire Hathaway dropped by 2% on Friday amid a broad drop in the U.S. stock market,” said Forbes.

There are now only four people on the planet richer than Adani, according to Forbes’ real-time billionaire tracker: Microsoft cofounder Bill Gates (worth an estimated $130.2 billion), French luxury goods king Bernard Arnault ($167.9 billion), Amazon founder Jeff Bezos ($170.2 billion) and Tesla and SpaceX chief Elon Musk ($269.7 billion), according to Forbes.

World today has 2,668 billionaires, including 236 newcomers—far fewer than last year’s 493

Forbes’ 36th annual World’s Billionaires List, released earlier this month, reveals 2,668 billionaires, including 236 newcomers—far fewer than last year’s 493.

Elon Musk tops the World’s Billionaires ranking for the first time ever, with an estimated net worth of $219 billion. Altogether the total net worth of the world’s billionaires is $12.7 trillion, down from last year’s $13.1 trillion.

Following last year’s record-breaking number of billionaires, the past 12 months have proven to be more volatile. The number of billionaires fell to 2,668, down from 2,755 last year. A total of 329 people dropped off the list this year—the most in a single year since the 2009 financial crisis.

“The tumultuous stock market contributed to sharp declines in the fortunes of many of the world’s richest,” said Kerry A. Dolan, Assistant Managing Editor of Wealth, Forbes. “Still, more than 1,000 billionaires got wealthier over the past year. The top 20 richest alone are worth a combined $2 trillion, up from $1.8 trillion in 2021.”

Key facts for the 2022 World’s Billionaires list:

  • Top Five: Tesla’s Elon Musk tops the list, unseating Amazon founder Jeff Bezos, who drops to the No. 2 spot after spending the past four years as the richest person in the world. Bernard Arnault of LVMH remains at No. 3, followed by Bill Gates at No. 4. Rounding out the top five is Warren Buffett, who rejoins the top five after falling to No. 6 last year.
  • Newcomers: Among the list of notable newcomers are Lord of the Rings director Peter Jackson(No.1929); OpenSea founders Devin Finzer and Alex Atallah (Nos. 1397); social media and e-commerce tycoon Miranda Qu (No. 1645) and pop star and cosmetics mogul Rihanna (No. 1729).
  • Self-Made: Of the total 2,668 people on the 2022 ranking, 1,891 are self-made billionaires, who founded or cofounded a company or established their own fortune (as opposed to inheriting it).
  • Women: There are 327 women billionaires, including 16 who share a fortune with a spouse, child or sibling, down from 328 in 2021.
  • Globally: Regionally, Asia-Pacific boasts the most billionaires, with 1,088, followed by the United States, with 735, and Europe, with 592.
  • Drop-offs: The war in Ukraine, a Chinese tech crackdown and slipping stock prices pushed 329 people off the World’s Billionaires list this year, including 169 one-hit wonders who were part of last year’s record 493 newcomers.

To view the full list, visit www.forbes.com/billionaires.

The 2022 Billionaires issue features five consecutive covers, including:

  • Igor Bukhman: When Vladimir Putin invaded Ukraine, Igor Bukhman, the Russia-born billionaire founder of gaming company Playrix, found himself with thousands of employees divided by the frontlines. His internal battlefield offers lessons for us all.
  • Ken Griffin: War in Europe. The China-Russia alliance. De-dollarization. Ken Griffin, Wall Street’s billionaire kingpin, is making the best out of the worst of times.
  • Tope Awotona: Awotona built Calendly out of frustration. Now the scheduling app is worth $3 billion—and the subject of a heated Twitter spat among Silicon Valley elite.
  • Ryan Breslow: Bolt cofounder Ryan Breslow has boosted the value of his fintech to the moon by promising an Amazon-style checkout to millions of online retailers. Now the new billionaire is making a lot of noise—and some powerful enemies—challenging the tech industry’s culture and ethics.
  • Falguni Nayar: A decade ago, when she was 49, Nayar left behind her investment banking career to launch beauty-and-fashion retailer Nykaa. She took it public in November and is now India’s richest self-made woman. Nykaa, which means “one in the spotlight,” currently sells more than 4,000 brands online and in its 102 stores.

The Forbes World’s Billionaires list is a snapshot of wealth using stock prices and currency exchange rates from March 11, 2022.

Bitcoin Miners Seek Ways To Dump Fossil Fuels

For the past year a company that “mines” cryptocurrency had what seemed the ideal location for its thousands of power-thirsty computers working around the clock to verify bitcoin transactions: the grounds of a coal-fired power plant in rural Montana.

But with the cryptocurrency industry under increasing pressure to rein in the environmental impact of its massive electricity consumption, Marathon Digital Holdings made the decision to pack up its computers, called miners, and relocate them to a wind farm in Texas.

“For us, it just came down to the fact that we don’t want to be operating on fossil fuels,” said company CEO Fred Thiel.

In the world of bitcoin mining, access to cheap and reliable electricity is everything. But many economists and environmentalists have warned that as the still widely misunderstood digital currency grows in price — and with it popularity — the process of mining that is central to its existence and value is becoming increasingly energy intensive and potentially unsustainable.

The Hardin Generating Station, a coal-fired power plant that is also home to the cryptocurrency “mining” operation Big Horn Data Hub, is seen on April 20, 2022, in Hardin, Mont. Energy from burning coal is used to power thousands of computers that are kept on site to produce the digital currency known as bitcoins. (AP Photo/Matthew Brown)

Bitcoin was was created in 2009 as a new way of paying for things that would not be subject to central banks or government oversight. While it has yet to widely catch on as a method of payment, it has seen its popularity as a speculative investment surge despite volatility that can cause its price to swing wildly. In March 2020, one bitcoin was worth just over $5,000. That surged to a record of more than $67,000 in November 2021 before falling to just over $35,000 in January.

Central to bitcoin’s technology is the process through which transactions are verified and then recorded on what’s known as the blockchain. Computers connected to the bitcoin network race to solve complex mathematical calculations that verify the transactions, with the winner earning newly minted bitcoins as a reward. Currently, when a machine solves the puzzle, its owner is rewarded with 6.25 bitcoins — worth about $260,000 total. The system is calibrated to release 6.25 bitcoins every 10 minutes.

When bitcoin was first invented it was possible to solve the puzzles using a regular home computer, but the technology was designed so problems become harder to solve as more miners work on them. Those mining today use specialized machines that have no monitors and look more like a high-tech fan than a traditional computer. The amount of energy used by computers to solve the puzzles grows as more computers join the effort and puzzles are made more difficult.

Marathon Digital, for example, currently has about 37,000 miners, but hopes to have 199,000 online by early next year, the company said.

Determining how much energy the industry uses is difficult because not all mining companies report their use and some operations are mobile, moving storage containers full of miners around the country chasing low-cost power.

The Cambridge Bitcoin Electricity Consumption Index estimates bitcoin mining used about 109 terrawatt hours of electricity over the past year — close to the amount used in Virginia in 2020, according to the U.S. Energy Information Center. The current usage rate would work out to 143 TWh over a full year, or about the amount used by Ohio or New York state in 2020.

Cambridge’s estimate does not include energy used to mine other cryptocurrencies.

A key moment in the debate over bitcoin’s energy use came last spring, when just weeks after Tesla Motors said it was buying $1.5 billion in bitcoin and would also accept the digital currency as payment for electric vehicles, CEO Elon Musk joined critics in calling out the industry’s energy use and said the company would no longer be taking it as payment.

Some want the government to step in with regulation. In New York, Gov. Kathy Hochul is being pressured to declare a moratorium on the so-called proof-of-work mining method — the one bitcoin uses — and to deny an air quality permit for a project at a retrofitted coal-fired power plant that runs on natural gas.

A New York State judge recently ruled the project would not impact the air or water of nearby Seneca Lake. “Repowering or expanding coal and gas plants to make fake money in the middle of a climate crisis is literally insane,” Yvonne Taylor, vice president of Seneca Lake Guardians, said in a statement.

Anne Hedges with the Montana Environmental Information Center said that before Marathon Digital showed up, environmental groups had expected the coal-fired power plant in Hardin, Montana, to close.

“It was a death watch,” Hedges said. “We were getting their quarterly reports. We were looking at how much they were operating. We were seeing it continue to decline year after year — and last year that totally changed. It would have gone out of existence but for bitcoin.”

The cryptocurrency industry “needs to find a way to reduce its energy demand,” and needs to be regulated, Hedges said. “That’s all there is to it. This is unsustainable.”

Some say the solution is to switch from proof-of-work verification to proof-of-stake verification, which is already used by some cryptocurrencies. With proof of stake, verification of digital currency transfers is assigned to computers, rather than having them compete. People or groups that stake more of their cryptocurrency are more likely to get the work — and the reward.

While the method uses far less electricity, some critics argue proof-of-stake blockchains are less secure. Some companies in the industry acknowledge there is a problem and are committing to achieving net-zero emissions — adding no greenhouse gases to the atmosphere — from the electricity they use by 2030 by signing onto a Crypto Climate Accord, modeled after the Paris Climate Agreement.

“All crypto communities should work together, with urgency, to ensure crypto does not further exacerbate global warming, but instead becomes a net positive contributor to the vital transition to a low carbon global economy,” the accord states.

Marathon Digital is one of several companies pinning its hopes on tapping into excess renewable energy from solar and wind farms in Texas. Earlier this month the companies Blockstream Mining and Block, formerly Square, announced they were breaking ground in Texas on a small, off-the-grid mining facility using Tesla solar panels and batteries.

“This is a step to proving our thesis that bitcoin mining can fund zero-emission power infrastructure,” said Adam Back, CEO and co-founder of Blockstream.

Companies argue that cryptocurrency mining can provide an economic incentive to build more renewable energy projects and help stabilize power grids. Miners give renewable energy generators a guaranteed customer, making it easier for the projects to get financing and generate power at their full capacity.

The mining companies are able to contract for lower-priced energy because “all the energy they use can be shut off and given back to the grid at a moment’s notice,” said Thiel.

In Pennsylvania, Stronghold Digital is cleaning up hundreds of years of coal waste by burning it to create what the state classifies as renewable energy that can be sent to the grid or used in bitcoin mining, depending on power demands.

Pennsylvania’s Department of Environmental Protection is a partner in the work, which uses relatively new technology to burn the waste coal more efficiently and with fewer emissions. Left alone, piles of waste coal can catch fire and burn for years, releasing greenhouse gases. When wet, the waste coal leaches acid into area waterways.

After using the coal waste to generate electricity, what’s left is “toxicity-free fly ash,” which is registered by the state as a clean fertilizer, Stronghold Digital spokesperson Naomi Harrington said.

As Marathon Digital gradually moves its 30,000 miners out of Montana, it’s leaving behind tens of millions of dollars in mining infrastructure behind.

Just because Marathon doesn’t want to use coal-fired power anymore doesn’t mean there won’t be another bitcoin miner to take its place. Thiel said he assumes the power plant owners will find a company to do just that. “No reason not to,” he said.

Biden Admn. To Decide On Student Loans In Months

White House press secretary Jen Psaki said last week that President Biden’s use of executive action to cancel some federal student loan debt is “still on the table” and that a “decision” could be made in the coming months.

Psaki made the comments during an appearance on “Pod Save America” after being pressed about past comments by White House chief of staff Ron Klain. “Yes, still on the table, still on the table,” Psaki could be heard saying to apparent cheers from the audience attending the live podcast, which was released by the platform on Friday. She then pointed to the Aug. 31 deadline for when the freeze on student loan debt payments and interest accrual is set to lapse, saying: “We have to then decide whether it’s extended.”

“Nobody’s had to pay a dollar, a cent, anything in student loans since Joe Biden has been president,” Psaki said. “And if that can help people ease the burden of costs in other parts of their lives, that’s an important thing to consider. That’s a big part of the consideration.”

Between now and the end of August, Psaki said the moratorium is “either going to be extended or we’re going to make a decision, as Ron referenced, about canceling student debt.”

White House press secretary Jen Psaki on Friday said President Biden’s use of executive action to cancel some federal student loan debt is “still on the table” and that a “decision” could be made in the coming months.

Between now and the end of August, Psaki said the current moratorium on student loan payments is “either going to be extended or we’re going to make a decision, as [White House chief of staff Ron Klain] referenced, about canceling student debt.”

Biden last extended the pause earlier this month amid mounting pressure from advocates, borrowers and members of his own party to provide further relief.

Biden during his campaign called for federal student loan debt cancellation, and supported forgiveness of at least $10,000 per borrower. However, some top Democrats have pushed for him to go beyond that, canceling up to $50,000 per borrower or wiping out federal student loan debt entirely.

The White House called on Congress to send legislation canceling debt to Biden’s desk, but Democrats are not optimistic about their chances of doing so in the 50-50 Senate given staunch GOP opposition. Sixty votes would be needed to overcome procedural hurdles.

The background: The current pause on federal student loan payments was first implemented under the Trump administration at the outset of the coronavirus pandemic. It has since been extended six times.

Biden last extended the pause earlier this month amid mounting pressure from advocates, borrowers and members of his own party to provide further relief.

India’s Apex Court Upholds BJP Govt’s Foreign Contribution Regulation Act

The Supreme Court on Friday, April 8th affirmed the validity of the Foreign Contribution (Regulation) Amendment (FCRA) Act, 2020, which imposes new conditions on the receipt and use of funds by NGOs.

A bench headed by Justice A.M. Khanwilkar upheld the 2020 amendments made to the FCRA Act, 2010. The detailed judgment in the case will be uploaded on the top court website later in the day.

The Centre had told the Supreme Court that there exists no fundamental right to receive unbridled foreign contributions without any regulation, while defending the amendments made in 2020 to the Foreign Contribution (Regulation) Act.

The MHA emphasized that FCRA aim was to ensure foreign contribution does not adversely impinge upon the functioning of parliamentary institutions, political associations, and academic, and other voluntary organisations as well as individuals in India.

The petitioners had challenged the amendments, which included newly added sections 12 and 17, which state that the foreign contributions must be deposited in the FCRA account created in the specified branch of the scheduled bank, which was later notified as State Bank of India, New Delhi branch.

The petitioners claimed the amendments were arbitrary and stringent, which made the functioning of NGOs extremely difficult.

The Ministry of Home Affairs (MHA) in a 355-page affidavit filed in the Supreme Court, said Parliament has enacted the Foreign Contribution (Regulation) Act, laying down a clear legislative policy of strict controls over foreign contributions for certain activities in the country.

The MHA said the “legislation has also prohibited acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto”. The affidavit was settled by Solicitor General of India Tushar Mehta, who was assisted by advocate Kanu Agrawal.

Petitioners in the matter were — Noel Harper and Nigel Mills of Share and Care Foundation in Andhra Pradesh and Joseph Lizy and Annamma Joachim of National Workers Welfare Trust in Telangana.

British Chancellor Rishi Sunak Seeks Inquiry Into Wife Akshata Murty’s Tax Leak

Rishi Sunak of the United Kingdom, an embattled British Conservative party Chancellor of the exchequer, has defended his Indian wife Akshata Murthy, daughter of Narayana Murthy, one of the founders of software giant Infosys, against charges of avoiding paying taxes in Britain.

Sunak, who is of East African-Indian origin, told media that reports about her non-domicile status are ‘unpleasant smears’. A non-dom in the United Kingdom does not have to pay tax on her overseas income. The BBC estimated “she would have avoided 2.1 million pounds a year in UK tax”.

This, while not unlawful, is embarrassing for Sunak, under whom comes Her Majesty’s Revenue and Customs (HMRC). “To smear my wife to get at me is awful,” Sunak insisted.

Murthy is said to own a 0.9 per cent stake in Infosys, which has been calculated as being worth 500 million pounds. Annual dividends from this holding is estimated to be 11.6 million pounds. On Thursday, it emerged she pays just 30,000 pounds a year in the UK on the British income.

Rishi Sunak is now demanding a Whitehall inquiry to find out who leaked details about his wife Akshata Murty’s tax arrangements. Murty has said she will pay UK taxes on her overseas income, following a row over her non-domicile status, the BBC reported.

Downing Street has rejected newspaper reports that its staff leaked damaging stories about Sunak to the media. It has been a bruising week for the Chancellor, and now he has asked senior civil servants for a full investigation to establish who divulged his wife’s tax status.

His allies say very few people had access to the personal information, which Sunak declared to Whitehall officials when he became a minister in 2018, the BBC reported.

Some Conservative MPs say he was naive to think the details would remain private, and that he should have predicted that the tax arrangements would be criticised as inappropriate, despite being legal. Sunak’s team has dismissed suggestions of a rift with Downing Street and say the prime minister has been “incredibly supportive”.

The opposition Labor party said it would be “breath-taking hypocrisy” if the Chancellor’s wife had reduced her tax bill as he raised taxes for millions of workers — referring to the rise in National Insurance contributions imposed in last month’s budget by Sunak.

Opposition Labor Party MP Louise Haigh said: “I think the question many people will be asking is whether it was ethical and whether it was right that the Chancellor of the Exchequer, whilst piling on 15 separate tax rises to the British public, was benefiting from a tax scheme that allowed his household to pay significantly less to the tune of potentially tens of millions of pounds.”

The Chancellor’s brand, vigorously promoted since he came to office, has been damaged, with some members of the ruling Conservative Party questioning his judgement. Opposition MPs have said Sunak’s family is benefiting at a time when he is putting up taxes for millions of others, the BBC reported.

However, a section of British newspapers has claimed that Prime Minister Boris Johnson’s office is leaking damaging material about Sunak to media. 10 Downing Street described the allegations as “categorically untrue” and “baseless”.

On Thursday, the pro-Johnson Daily Mail ran a headline, which read: “Collapsed fitness chain backed by Rishi Sunak’s non-dom wife was paid up to 650,000 pounds in furlough cash – while her billionaire father’s IT firm claimed Covid handout for hundreds of UK staff”.

Earlier, the attack against Sunak ranged from he being the richest member of Parliament with a net worth of 200 million pounds, to Infosys operating in Russia, which western corporate houses are restrained from doing after the West’s sanctions against the Russian Federation following its invasion of Ukraine.

While Sunak may have built a slight fortune as an investment banker, his background is upper middle class, his father being a general practitioner and mother an owner of a chemist’s shop.

The allegation about Infosys was ridiculous as an Indian company is under no obligation to copy its western counterparts, since the government of India maintains normal economic ties with Moscow.

From December 2021 until before the Russia-Ukraine conflict — when Johnson’s continuity as head of government looked untenable, because of a series of scandals associated with him — it was widely being speculated in British print media as well as in Conservative circles that Sunak was a front-runner to succeed Johnson.

It was also pointed out at that point that while other cabinet colleagues were strenuously defending Johnson against the barrage of demands for him to step down, Sunak was lukewarm in doing so, which was interpreted as ‘ambition’.

Sunak became popular when the British government was significantly generous in protecting the livelihoods during the Covid-19 crisis. But having borrowed money to extend such assistance, it was inevitable that he would have to raise taxes to repay the debt. However, given the cost of living crisis that had descended on Britons because of inflation, the Chancellor’s recent budget has been condemned as uncaring.

In Britain, a budget is identified in particular with the Chancellor, although the intelligentsia is aware its contents have the prior approval of the Prime Minister. With Johnson not saying much to protect Sunak against the onslaught unleashed against him on his proposals or lack of them, an impression has grown that the latter is being thrown under a bus.

Rising Oil Prices To Keep Indian Rupee On A Slippery Slope

High crude oil prices combined with fears of rising inflation are expected to keep the Indian rupee under pressure, next week. Lately, the Brent crude oil price has remained elevated due to the Russian-Ukrainian war. The price has hovered in the range of $100-$110 in the last few weeks.

“Rupee has been under pressure due to rising US bond yields, inflation and high crude oil prices,” said Sajal Gupta Head Fx & Rates Edelweiss.

“These circumstances are going to be tough for the Indian rupee to appreciate. Expect rupee to trade between 75.50 and 76.25 in the next week.” Last week, the rupee closed at 75.90 to a greenback.

“Next week is a relatively shorter week but market participants will be keeping an eye on the inflation and industrial production number to gauge a view for the currency,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

“Expectation is that inflation could remain elevated following the recent rise in energy and food prices. On the other hand, industrial production could grow at a slower pace in January and could further weigh on the currency.”

The Central Statistics Office (CSO) is slated to release the macro-economic data points of Index of Industrial Production (IIP), Consumer Price Index (CPI) on March 12.

On the other hand, expectations of India Inc’s healthy Q4FY22 results season should attract fresh equity focused foreign funds which might cub any sharp weakness in the Indian rupee versus the US dollar.

“Dollar index have surged past week and it is now trading near crucial psychological mark of 100,” said Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities.

“Rupee is likely to consolidate next week on back of improving sentiments for equity markets. In near term, spot USD INR expected to trade in the range of 76.20 to 75.70. with bias towards appreciation.”

$40 Billion Borrowed By US Consumers in February Alone

Americans got into a lot more debt in February this year as rampant inflation kept up the pressure, the Federal Reserve’s consumer credit report showed last week. Debt levels jumped by nearly $42 billion to a total of almost $4.5 trillion. That’s an annual increase of 11.3%, seasonally adjusted, far outperforming economists’ expectations and setting a new high. In January, total credit had grown only 2.4%.

The Fed’s historical consumer credit data goes back to the early 1940s. Revolving credit, which includes credit cards, jumped by 20.7% to about $1.1 trillion. The category increased by only 4% in the prior month.

Nonrevolving credit, such as student or car loans, grew by 8.4% to $3.4 trillion, also outpacing a smaller January gain.

Americans have been challenged with a rapid pace of price increases everywhere, from the grocery store to the gas station. Year-over-year inflation has increased at a pace not seen in 40 years.

Consumer spending has kept up the pace so far, but it is not immediately clear whether that’s because people are paying more for the same items that got more expensive or are actually buying more goods and services.

In late February, Russia’s invasion of Ukraine jolted global energy markets and boosted the price of gasoline. With prices at the pump rising higher in March, credit card spending is unlikely to have gone down after the February jump.

Elon Musk Could Become World’s First Trillionaire In 2024

Tesla and SpaceX CEO Elon Musk could become the first person to ever accumulate a $1 trillion net worth, and it could happen as soon as 2024, says a new report.

Musk is currently said to be the richest person in the world, overtaking former Amazon CEO Jeff Bezos last year to claim the title, reports Teslarati.

While Musk has stated many times that material possessions are not a concern of his, eventually selling nearly all of his personal properties as proof, a new study from Tipalti Approve suggests he could become the first person to ever accumulate a $1 trillion net worth.

Musk’s net worth, according to Forbes’ Real Time Billionaires list, sits at over $260 billion, nearly $70 billion more than Bezos’ current estimation of about $190 billion.

His wealth skyrocketed over the past few years thanks to his majority ownership of Tesla, which increased in value substantially since 2020. SpaceX also has helped Musk’s net worth skyrocket and could catalyze even more growth in the next two years.

“Since 2017, Musk’s fortune has shown an annual average increase of 129 per cent, which could potentially see him enter the trillion-dollar club in just two short years, achieving a net worth of $1.38 trillion by 2024 at age 52,” Tipalti Approve, who conducted the study, said in their report.

“SpaceX generates massive incomes by charging governmental and commercial clients to send various things into space, including satellites, ISS supplies, and people,” it added.

Other billionaires are also expected to hit the trillion-dollar range, but not before Musk, the report said.

Zhang Yiming, TikTok’s founder, is projected to reach a $1 trillion net worth by 2026 at 42 years old, making him the youngest trillionaire. Bezos may not hit the threshold until 2030. Bezos broke ground in the net worth realm by reaching $100 billion before any other entrepreneur in the world.

Ukraine Incursion, World Stagflation

Finger pointing in the blame game over Russia’s Ukraine incursion obscures the damage it is doing on many fronts. Meanwhile, billions struggle to cope with worsening living standards, exacerbated by the pandemic and more.

Losing sight in the fog of war

US Secretary of State Anthony Blinken insists, “the Russian people will suffer the consequences of their leaders’ choices”. Western leaders and media seem to believe their unprecedentedcrushing sanctions” will have a “chilling effect” on Russia.

With sanctions intended to strangle Russia’s economy, the US and its allies somehow hope to increase domestic pressure on Russian President Vladimir Putin to retreat from Ukraine. The West wants to choke Russia by cutting its revenue streams, e.g., from oil and gas sales to Europe.

Already, the rouble has been hammered by preventing Russia’s central bank from accessing its US$643bn in foreign currency reserves, and barring Russian banks from using the US-run global payments transfer system, SWIFT.

Withdrawal of major Western transnational companies – such as Shell, McDonald’s and Apple – will undoubtedly hurt many Russians – not only oligarchs, their ostensible target.

Thus, Blinken’s claim that “The economic costs that we’ve been forced to impose on Russia are not aimed at you [ordinary Russians]” may well ring hollow to them. They will get little comfort from knowing, “They are aimed at compelling your government to stop its actions, to stop its aggression”.

As The New York Times notes, “sanctions have a poor record of persuading governments to change their behavior”. US sanctions against Cuba over six decades have undoubtedly hurt its economy and people.

But – as in Iran, North Korea, Syria and Venezuela – it has failed to achieve its supposed objectives. Clearly, “If the goal of sanctions is to compel Mr. Putin to halt his war, then the end point seems far-off.”

Russia, major commodity exporter

Undoubtedly, Russia no longer has the industrial and technological edges it once had. Following Yeltsin era reforms in the early 1990s, its economy shrank by half – lowering Russian life expectancy more than anywhere else in the last six millennia!

Russia has become a major primary commodity producer – not unlike many developing countries and the former settler colonies of North America and Australasia. It is now a major exporter of crude oil and natural gas.

It is also the largest exporter of palladium and wheat, and among the world’s biggest suppliers of fertilizers using potash and nitrogen. On 4 March, Moscow suspended fertilizer exports, citing “sabotage” by “foreign logistics companies”.

Farmers and consumers will suffer as yields drop by up to half. Sudden massive supply disruptions will thus have serious ramifications for the world economy – now more interdependent than ever, due to earlier globalization.

Sanctions’ inflation boomerang

International Monetary Fund Managing Director Kristalina Georgieva has ominously warned of the Ukraine crisis’ economic fallouts. She cautions wide-ranging sanctions on Russia will worsen inflation and further slow growth.

No country is immune, including those imposing sanctions. But the worst hit are poor countries, particularly in Africa, already struggling with rising fuel and food prices.

For Georgieva, more inflation – due to Russian sanctions – is the greatest threat to the world economy. “The surging prices for energy and other commodities – corn, metals, inputs for fertilizers, semiconductors – coming on top of already high inflation” are of grave concern to the world.

Russia and Ukraine export more than a quarter of the world’s wheat while Ukraine is also a major corn exporter. Supply chain shocks and disruptions could add between 0.2% to 0.4% to ‘headline inflation’ – which includes both food and fuel prices – in developed economies over the coming months.

US petrol prices jumped to a 17-year high in the first week of March. The costs of other necessities, especially food, are rising as well. US Treasury Secretary Janet Yellen has acknowledged that the sanctions are worsening US inflation.

The European Union (EU) gets 40% of its natural gas from Russia. Finding alternative supplies will be neither easy nor cheap. The EU is Russia’s largest trading partner, accounting for 37% of global trade in 2020. Thus, sanctions may well hurt Europe more than Russia – like cutting one’s nose to spite one’s face.

The European Central Bank now expects stagflation – economic stagnation with inflation, and presumably, rising unemployment. It has already slashed its growth forecast for 2022 from 4.2% to 3.7%. Inflation is expected to hit a record 5.1% – way above its previous 3.2% forecast!

Developing countries worse victims
Global food prices are already at record highs, with the Food Price Index (FPI) of the Food and Agricultural Organization up more than 40% over the past two years.

The FPI hit an all-time high in February – largely due to bad weather and rising energy and fertilizer costs. By February 2022, the Agricultural Commodity Price Index was 35% higher, while maize and wheat prices were 26% and 23% more than in January 2021.

Besides shortages and rising production costs – due to surging fuel and fertilizer prices – speculation may also push food prices up – as in 2007-2008.

Signs of such speculation are already visible. Chicago Board of Trade wheat future prices rose 40% in early March – its largest weekly increase since 1959!

Rising food prices impact people in low- and middle-income countries more as they spend much larger shares of their incomes on food than in high-income countries. The main food insecurity measure has doubled in the past two years, with 45 million people close to starvation, even before the Ukraine crisis.

Countries in Africa and Asia rely much more on Russian and Ukrainian grain. The World Bank has warned, “There will be important ramifications for the Middle East, for Africa, North Africa and sub-Saharan Africa, in particular”, where many were already food insecure before the incursion.

The Ukraine crisis will be devastating for countries struggling to cope with the pandemic. Unable to access enough vaccines or mount adequate responses, they already lag behind rich countries. The latest food and fuel price hikes will also worsen balance-of-payments problems and domestic inflationary pressures.

No to war!

The African proverb, “When two elephants fight, all grass gets trampled”, sums up the world situation well. The US and its allies seem intent to ‘strangle Russia’ at all costs, regardless of the massive collateral damage to others.

This international crisis comes after multilateralism has been undermined for decades. Hopes for reduced international hostilities, after President Biden’s election, have evaporated as US foreign policy double standards become more apparent.

Russia has little support for its aggressive violation of international law and norms. Despite decades of deliberate NATO provocations, even after the Soviet Union ended, Putin has lost international sympathy with his aggression in Ukraine.

But there is no widespread support for NATO or the West. Following the vaccine apartheid and climate finance fiascos, the poorer, ‘darker nations’ have become more cynical of Western hypocrisy as its racism becomes more brazen.

59 Percent Of Indian Billionaires Are Self-Made

Fifty-nine percent of Indian billionaires are self-made, according to a new report.

“We are happy to be associated with Hurun India for the launch of the M3M Hurun Global Rich List 2022, curated with an in-depth market research which demonstrates that Indian businesses are one of the fastest value creators,” said Pankaj Bansal, Director, M3M India, on the M3M Hurun Global Rich List 2022.

Over the last few years, wealth creation by India Inc. has catapulted the economic growth in the country.

Interestingly, 59 per cent of the country’s billionaires are self-made, thus indicating that the new-generation entrepreneurs are financially-wise, asset-rich and investment-vibrant. Also, gender inclusivity and equality has been a noticeable theme with women outranking men across industries, said Bansal.

“Having said this, it is also true that the rich have invested in philanthropy and have played a significant role in the social and economic growth in India, particularly focusing on nutrition, education and women empowerment,” he said.

As Andrew Carnegie, one of the greatest philanthropists, said, “Ninety per cent of all millionaires become so through owning real-estate.”

“The real estate sector is ranked third amongst major sector in India and is also the second largest in terms of employment generation, and it particularly delivers in short-term and long-term employment creation. This sector is also looking forward to contribute 13 per cent in India’s GDP by 2025 and reach a market size of $1 trillion by 2030.

“No wonder, it contributed 8.1 per cent to the overall list of billionaires and possesses a concentration of 275 billionaires, which I am certain will see a significant jump in the next 5 years owing to unmet housing demands generated by urbanisation and modernisation of towns,” Bansal said.

“We are hopeful that the year 2022 will ignite the economic buoyancy in the country and will enable us to match steps with our global counterparts. Particularly, when India is gaining momentum in startups and unicorns, and has become 3rd largest ecosystem in the world, only after US and China,” he added.

The U.S. Is Considering A Radical Rethinking Of The Dollar For Today’s Digital World

Since its establishment as the country’s national currency, the dollar has undergone many updates and changes, but nothing compares to the proposal being debated today.

The U.S. is gingerly considering whether to adopt a digital version of its currency, one better suited for today’s increasingly cashless world, ushering in what could be one of the dollar’s most fundamental transformations.

In that scenario, the U.S. would not only mint the coins and print paper bills but also issue digital cash, or a central bank digital currency (CBDC), that would be stored in apps or “digital wallets” on our smartphones.

We could then use them to pay for things, just like we do with Venmo or Apple Pay, and no physical money would change hands.

It’s a vision of a cashless future that other countries are already embracing. China, for example, has unveiled the digital yuan on a trial basis. India this week said it would create a digital rupee.

Now the U.S. is weighing whether it wants to get into the game.

Last month, the Federal Reserve released a much-anticipated paper, laying out the advantages and disadvantages of a digital currency.

The Fed says it’s a first step, meant to kick-start an important conversation among policymakers and to gather feedback from average people to some of the country’s largest financial institutions.

So, how would it actually work?

Policymakers stress these are early days yet, and there is a lot that needs to be hammered out. All in all, the transactions conducted with digital dollars probably wouldn’t seem too different from existing private alternatives that allow us to pay for things by bringing our smartphones next to digital readers.

China, for example, allows digital yuan payments in the cities in which the country is piloting its digital currency, allowing citizens to make payments via an app set up by the government.

Reducing or eliminating fees is one clear benefit.

When you make a contactless payment today, it may seem immediate, but according to Chris Giancarlo, the former chairman of the Commodity Futures Trading Commission, a lot happens behind the scenes.

“My mobile device tells his mobile device to inform a whole series of banks, to confirm who I am, how much money is in my bank, that there is enough money to move from my bank to his bank,” he says.

And at each step of the way, there are transaction fees. In 2020, they added up to more than $110 billion, which was generally shouldered by businesses.

With a digital dollar, you could in theory eliminate those middlemen. If you wanted to buy a sandwich, for instance, you could transfer money from a digital wallet directly to a cashier.

It wouldn’t necessarily entirely eliminate nongovernment players. In China, for example, users who want to use the digital yuan can go to banks to add money to their digital wallets.

But just having digital dollars in circulation could put pressure on credit card companies and payment processors to lower fees to be competitive. That is, if enough people start using the Fed-run version.

In China, adoption of the e-renminbi has been slow given that private providers such as WeChat or Alipay are already pretty popular and entrenched.

Another argument for creating a digital dollar is to open up digital transactions to Americans who don’t have bank accounts. According to the Fed, more than 5% of U.S. households are “unbanked.”

Providing them with a digital wallet would allow people to participate in our increasingly cashless financial system.

It would also make it easier for the federal government to distribute benefits.. For example, having a digital dollar in place during the pandemic could have allowed the government to transfer relief payments directly into digital wallets.

What are the challenges?

Without question, one of the biggest issues is privacy. Because the Fed would implement and oversee the project, the central bank could accrue a vast amount of data, potentially giving it a lot more visibility into everyone’s financial life.

That could be useful to regulators who want to combat money laundering, for example, but it would also raise serious privacy concerns.

That makes it critical to sort out how much information the Fed would have, according to Raghuram Rajan, a professor of finance at The University of Chicago Booth School of Business and a former governor of the Reserve Bank of India.

“There will be legitimate questions about how much the government knows about each individual, and also, how much it can act to restrain activities by individuals,” he says.

Cybersecurity is another critical issue, especially given the uptick in hacks and heists at cryptocurrency exchanges.

To implement a digital dollar, the U.S. government would need to modernize the country’s financial infrastructure to stave off attacks.

A digital version of the Chinese yuan is displayed during a trade fair in Beijing in September. China is among a handful of countries that are experimenting with national digital currencies.

So what’s next?

Fed Chair Jerome Powell and his colleagues are moving ahead cautiously and methodically.

The Fed is in the process of soliciting feedback from the public after releasing its paper last month. And last week, the Federal Reserve Bank of Boston released preliminary results of its ongoing research into the technological challenges associated with implementing a digital currency in the U.S.

It would take five to 10 years to introduce a digital currency in the U.S., several experts say, but they argue policymakers can’t sit idly by.

There is concern that by moving slowly, the U.S. is letting other countries shape standards for national digital currencies, and the popularity of the dollar could be diminished.

After all, for decades, it has been the world’s primary reserve currency, meaning many countries hold their reserves in U.S. dollars.

But Powell has made it clear he’s in no hurry. Last year, a reporter asked the central banker whether he was worried the U.S. was falling behind countries like China.

“I think it’s more important to do this right than to do it fast,” he replied.

World Bank Downgrades 2022 Global Growth Forecast To 4.1%

The global economy is on track to grow by 4.1 per cent in 2022, down 0.2 percentage point from a previous projection, the World Bank Group said in its latest Global Economic Prospects release.

“The global recovery is set to decelerate markedly amid continued Covid-19 flare-ups, diminished policy support, and lingering supply bottlenecks,” the semiannual report added on Tuesday.

The global outlook is “clouded by various downside risks,” including renewed Covid-19 outbreaks due to new virus variants, the possibility of unanchored inflation expectations, and financial stress in a context of record-high debt levels, according to the report.

After rebounding to an estimated 5.5 per cent in 2021, global growth is expected to decelerate markedly to 4.1 per cent in 2022, the report noted. The latest projection for 2021 and 2022 is 0.2 percentage point lower than the June forecast, respectively.

The report also noted that the Covid-19 pandemic has raised global income inequality, partly reversing the decline that was achieved over the previous two decades, Xinhua news agency reported.

By 2023, annual output is expected to remain below the pre-pandemic trend in all emerging market and developing economy (EMDE) regions, in contrast to advanced economies, where the gap is projected to close.

Preliminary evidence suggests that the pandemic has also caused within-country income inequality to rise somewhat in EMDEs because of particularly severe job and income losses among lower-income population groups, according to the report.

“The world economy is simultaneously facing Covid-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory,” said World Bank Group President David Malpass.

Noting that rising inequality and security challenges are “particularly harmful” for developing countries, Malpass added that putting more countries on a favourable growth path requires concerted international action and a comprehensive set of national policy responses.

Eternalhealth Raises $10 Million Series A Funding After Initial $10 Million In Seed Financing

EternalHealth, the first new health plan to be approved in Massachusetts since 2013, announced today that it has raised another $10 million in Series A funding. This additional financing follows an initial $10 million in Seed and Pre-Series A investment by successful healthcare and tech entrepreneurs last summer.

John Sculley, former Apple CEO, is involved in the Series A funding round and believes in the mission of eternalHealth, which is founded by Pooja Ika, the first woman at the age of 24 to launch a new Medicare Advantage Health Plan in the United States.

“Around two decades ago, I decided I wanted to disrupt the healthcare industry by collaborating with entrepreneurs who believed in their mission,” said Sculley, former Apple CEO and an investors and shareholder in eternalHealth, “I truly believe we have a healthcare Moonshot with eternalHealth and I am excited to see how we can better the space together. I believe in Pooja’s mission and with the help of her team, she has been able to accomplish so much in one year.”

Ms. Ika said the Series A funding, which includes seed investors and additional successful technology and healthcare entrepreneurs, will be used to support the day-to-day operations, and help attract and retain membership, while most of the capital will be used as risk-based capital to support the company’s membership growth.

Typically, the launch of a new health plan takes two to three years and costs tens of millions of dollars, said Ms. Ika.

“At eternalHealth, we accomplished this historic goal within a year. The initial seed round helped us build a technology-powered infrastructure, optimize our operations, and hire a skilled team of 20 professionals,” added Ms. Ika. “Now, that we are operationally sound, we are actively trying to grow and increase our membership base. The goal has always been to build a sustainable business model, that is committed to doing things the right way.”

New insurers have raised hundreds of millions of dollars at the same stage Ms. Ika is at now, but Ms. Ika is very mindful about raising capital and said, “It is not because we cannot raise the capital, it is because we are being intentional with our use of capital. I strive to achieve the same results of some of my mentors who have started successful health plans across the country. Their advice to me was to get all of our regulatory approvals with as little capital as possible, and that is exactly what we did.”  Ms. Ika added that this is the first time ever that a health plan has been launched in the United States by a woman at 24 and not only that, but by a woman of color.

“Navigating through the healthcare system can be complicated, and insurance companies are not always the best at helping beneficiaries navigate through it,” said Ms. Ika. “eternalHealth is committed to empowering and educating our members so that they make informed decisions and take their care into their own hands. By educating our members, establishing collaborative relationships with the providers and health systems in our network, and using the latest technology and tools, we can deliver higher quality care at a lower cost to our members.”

eternalHealth believes that through their partnership with Red Sox legend David Ortiz, popularly known as Big Papi, Massachusetts residents will be able to connect Ortiz’s trustworthy and kind personality to eternalHealth’s commitment to offering high quality, affordable products, while acting as a trustworthy and transparent partner to its members.

Through its technology-driven, innovative platform, eternalHealth is looking to substantially reduce its administrative & operating costs (SG&A) across the entire enterprise. The cost savings will allow for more dollars to be allocated towards the total cost of care, while also passing down the savings to their members through its robust benefits to lead them in the healthy direction.

Once eternalHealth reaches the critical membership threshold, it will implement value-based contracting with providers, through which they will collaborate with providers and help them manage the overall quality of care for their patients through platform driven intelligence, improve the overall quality of life, and reduce healthcare costs. Ms. Ika says, “At eternalHealth, we believe we can really reduce healthcare costs by leveraging the right technology. That helps with member retention and satisfaction, which remains a key priority for eternalHealth. Just because it has not been done before, that does not mean it is impossible. eternalHealth strives to be a catalyst for change in a market that has seen little disruption.

About eternalHealth

Headquartered in Boston, eternalHealth provides high-quality care with low out-of-pocket costs to the residents of Massachusetts, while prioritizing preventive care and transparency. Founded, owned, and built by women, eternalHealth is a Medicare Advantage health plan that offers HMO and PPO products. For more information about our plans and services, please visit our website at www.eternalHealth.com

Democrats Look To Scale Back Biden Bill To Get It Passed

According to media reports, momentum is growing for narrowing the scope of President Biden’s social spending and climate package as Democrats seek a way to get the bill through the Senate with Sen. Joe Manchin’s (D-W.Va.) support.

Manchin effectively killed a much more wide-ranging bill, known as the Build Back Better Act, on Sunday by announcing his opposition, deeply disappointing and angering the White House and fellow congressional Democrats.

Days later, the pain still stings, but Democrats are actively seeking solutions that might find muster with the conservative West Virginia senator, whose vote is a necessity in the 50-50 Senate evenly divided between the two parties.

Democratic lawmakers, lobbyists and experts at think tanks believe Manchin might be won over if the bill is revised to include fewer programs for a longer period of time.

“That is the way forward here,” said Ben Ritz, director of the Center for Funding America’s Future at the Progressive Policy Institute, who has advocated for a bill with fewer items.  “Most of the party is starting to come around to that,” Ritz added. Some Democrats think their party made a mistake in going too large in the first place.

Progressives initially pushed a $6 trillion measure before falling back to $3.5 trillion — in part to signal that cut represented a concession on their party. The lower figure also proved too high for Manchin and fellow centrist Democratic Sen. Kyrsten Sinema (D-Ariz.), however, and the House ultimately passed a roughly $2 trillion version of Biden’s spending plan in November, which had a number of key provisions that were temporary. For example, the bill included provisions to extend the increased child tax credit amount for one year, and to create a universal preschool program for six years.

“To get someone like Manchin, a Democrat representing a conservative state, to a point where they can support something, [Democrats] started off on the wrong foot about letting the bill get too big about too many things,” said Tucker Shumack, a principal at Ogilvy Government Relations who previously served as an aide to former moderate Sen. Olympia Snowe (R-Maine).

Manchin argued that Democrats are not being honest about the cost of the bill, since temporary programs are likely to be extended in the future. “They continue to camouflage the real cost of the intent behind this bill,” Manchin said in a statement Sunday outlining his opposition to the measure.

In his recent comments, Manchin said he couldn’t explain voting for Build Back Better in West Virginia, a state former President Trump won twice by double digits. Jorge Castro, co-lead of the tax-policy practice at Miller & Chevalier and a former aide to former West Virginia Democratic Sen. Jay Rockefeller (D), said that a more focused bill could help Democrats counter Republican attacks that the bill is a grab-bag of spending. “I think it definitely helps from a messaging perspective,” he said.

Some moderate Democrats have long called for the Build Back Better Act to include fewer items for a longer time period, and are emphasizing this idea in the wake of Manchin’s recent comments.

“At the start of these negotiations many months ago, we called for prioritizing doing a few things well for longer, and we believe that adopting such an approach could open a potential path forward for this legislation,” Rep. Suzan DelBene (D-Wash.) chair of the centrist New Democrat Coalition, said in a statement Sunday.

White House Chief of Staff Ronald Klain tweeted a link to DelBene’s statement, saying the administration appreciates “all that @RepDelBene and the House New Dem Coalition has done to move forward on Build Back Better and the President’s agenda!”

Progressive lawmakers have been leading supporters of including more items in the bill, even if that means some programs are temporary. But they are acknowledging that some items may need to be removed from the package in subsequent negotiations.

In a statement on Wednesday, Congressional Progressive Caucus Chair Pramila Jayapal (D-Wash.) said that cuts should be as minimal as possible.

“In Congress, we will continue to prioritize a legislative path for Build Back Better, focused on taking the current text of the legislation passed by the House, keeping as much of it as possible — but no less than the elements contained in the framework negotiated by the President and committed to by Senators Manchin and Sinema some months ago,” Jayapal said.

It’s not certain exactly which items from the House-passed bill would end up in a narrower bill, and exactly which would be left out. The New Democrat Coalition in their statement mentioned as top priorities the expanded child tax credit, building on ObamaCare and addressing climate change. Senate Finance Committee Chairman Ron Wyden (D-Ore.) also made reference to those items in a statement.

Manchin has raised concerns about including Medicare expansion and paid family leave in the spending package, suggesting that those items might not make it into a package with fewer content areas.

The expanded child tax credit could prove to be challenging to include in a compromise with Manchin. The West Virginia senator has expressed a desire for the income limits for the credit to be lowered and for there to be work requirements associated with the credit.

The Washington Post on Monday reported that Manchin had provided the White House last week with a $1.8 trillion proposal that included universal preschool for 10 years, ObamaCare expansion and climate spending, but not the expanded child tax credit. Neither Manchin’s office nor the White House have publicly confirmed the report.

Ritz said it’s possible that Manchin and other Democrats could reach a compromise on the child tax credit, such as by targeting the child tax credit expansion more toward younger children or lowering the income level where the expanded credit starts to phase out.

He also said that even if a bill didn’t include an extension of the expanded child tax credit, a package that included other items such as universal preschool, Obama Care expansion, climate funding and affordable housing investments would still be transformative.

Biden Administration Extends Student Loan Pause Through May 1, 2022

The U.S. Department of Education announced a 90-day extension of the pause on student loan repayment, interest, and collections through May 1, 2022. The extension will allow the Administration to assess the impacts of the Omicron variant on student borrowers and provide additional time for borrowers to plan for the resumption of payments and reduce the risk of delinquency and defaults after restart.

The Department will continue its work to transition borrowers smoothly back into repayment, including by improving student loan servicing.

“Since Day One of this Administration, the Department has focused on supporting students and borrowers throughout the pandemic and ensuring they have the resources they need to return to repayment successfully,” said U.S. Secretary of Education Miguel Cardona. “This additional extension of the repayment pause will provide critical relief to borrowers who continue to face financial hardships as a result of the pandemic, and will allow our Administration to assess the impacts of Omicron on student borrowers.

As we prepare for the return to repayment in May, we will continue to provide tools and supports to borrowers so they can enter into the repayment plan that is responsive to their financial situation, such as an income-driven repayment plan. Students and borrowers will always be at the center of our work at the Department, and we are committed to not only ensuring a smooth return to repayment, but also increasing accountability and stronger customer service from our loan servicers as borrowers prepare for repayment.”

The pause on student loan payments will help 41 million borrowers save $5 billion per month. Borrowers are encouraged to use the additional time to ensure their contact information is up to date and to consider enrolling in electronic debit and income-driven repayment plans to support a smooth transition to repayment. More information can be found at StudentAid.gov.

This action is one of a series of steps the Biden-Harris Administration has taken to support students and borrowers, make higher education more affordable, and improve student loan servicing, including providing nearly $13 billion in targeted loan relief to over 640,000 borrowers. Actions within that include:

Revamping the Public Service Loan Forgiveness program in October, which has already provided $2.4 billion in loan relief to 38,000 borrowers. As part of that effort, the Department implemented a Limited PSLF Waiver to count all prior payments made by student borrowers toward PSLF, regardless of the loan program. Borrowers who are working in public service but have not yet applied for PSLF should do so before October 31, 2022, and can find out more at StudentAid.gov/PSLF.

Providing $7.0 billion in relief for 401,000 borrowers who have a total and permanent disability. Approving $1.5 billion in borrower defense claims, including extending full relief to approved claims and approving new types of claims.

Providing $1.26 billion in closed school discharges to 107,000 borrowers who attended the now-defunct ITT Technical Institute. Helping 30,000 small business owners with student loans seeking help from the Paycheck Protection Program.

The Reasons And Solutions To Rising Inflation In The US

With inflation at a 39-year high, Americans are feeling the pinch in just about every facet of daily life. The consumer price index jumped 6.8% from a year earlier, the fastest pace since 1982, as prices surged for staples such as food and gasoline, as well as new and used cars, rent and medical care, the Labor Department said Friday.

There’s been plenty of finger-pointing from both sides of the political aisle about who’s responsible for the spiraling costs, but as usual with issues that have such a broad impact, the causes are complex.

President Joe Biden acknowledged last month that “inflation hurts Americans’ pocketbooks, and reversing this trend is a top priority for me.’’ But he said his $1 trillion infrastructure package, including spending on roads, bridges and ports, would help ease supply bottlenecks.

Here’s a quick breakdown of how we got here and some of the strategies that might help reverse the trend:

►CPI Report: Consumer prices climbed 6.8% in November from a year earlier, the most since 1982, as inflation surged higher

►Inflation surges to 39-year high: How much more are you paying and what’s the damage for Biden?

►Personal finance: What’s not to love? The US savings bond that earns 7% with inflation protection, yet gets ignored

Why are grocery prices so high?

There are myriad reasons for the higher grocery bills, including the same labor shortages, supply chain bottlenecks and strong consumer demand that have driven up the cost of other goods and services. Toss in the wild cards plaguing the food industry: Extreme weather, particularly heat and drought that have curtailed crop yields. A surge in exports. COVID-19 outbreaks at meatpacking plants. Volatile consumer eating patterns amid the ups and downs of the health crisis.

Meanwhile, dire worker shortages, particularly at restaurants, have pushed up wages and the cost of dining out.

There are still fewer factory, warehouse and port workers as parents care for distance-learning children or stay home because of COVID-19 fears. Fuel costs have soared. Dozens of container ships are stuck in the waters near the Ports of Los Angeles and Long Beach, California, waiting to unload cargo. The cost to lease a shipping container for a delivery from China has increased nearly tenfold to $20,000.

Other factors driving inflation

Cars are one of the leading culprits.

Also behind the spike are items such as hotel rates and airline fares, which plunged last year in the early days of the pandemic and rose sharply from those lows this year as consumer demand returned amid the reopening economy.

Supply chain bottlenecks, with COVID-19-related worker absences at factories and ports still high, are also leading to low supplies and higher prices for consumer electronics, appliances and many other products.

The crunch comes on top of a semiconductor shortage and parts supply disruptions that have meant low inventories and higher prices for cars.

The average sales price of a new vehicle hit a record $42,802 in September, breaking the old record of $41,528 set in August, J.D. Power said. The average U.S. price is up nearly 19% from a year ago, when it broke $36,000 for the first time, J.D. Power said. The auto price increases have helped to drive up U.S. inflation.

The Gerald Jones Honda lot in Augusta, Ga., is mostly empty. On a late October morning, there were only six new cars available when there are usually around 250.

►Where are we going from here? Are we at risk of stagflation as prices rise and growth slows?

►The high cost of buying a car: US vehicle sales tumble amid chip shortage, record prices

What role did the stimulus play in driving inflation?

That’s complicated. The stimulus checks, which started to get mailed out under President Donald Trump’s administration, continued through March, when eligible married couples, for example, received up to $2,800 – plus $1,400 for each dependent.

The economy looked very different in the spring of 2020, when Americans first started to receive stimulus checks: The U.S. economy had collapsed as lockdowns took effect, businesses closed or cut hours and consumers stayed home as a health precaution. Employers slashed 22 million jobs. Economic output plunged at a record-shattering 31% annual rate in last year’s April-June quarter.

Everyone braced for more misery. Companies cut investment. Restocking was put off. And a brutal recession ensued.

Yet instead of sinking into a prolonged downturn, the economy staged an unexpectedly rousing recovery, fueled by massive government spending and a bevy of emergency moves by the Fed. By the spring of 2021, the rollout of vaccines had emboldened consumers to return to restaurants, bars and shops.

Suddenly, businesses had to scramble to meet demand. They couldn’t hire fast enough to plug job openings – a near record 10.4 million in August – or buy enough supplies to fill customer orders. As business roared back, ports and freight yards couldn’t handle the traffic. Global supply chains became snarled.

Costs rose. And companies found that they could pass along those higher costs in the form of higher prices to consumers, many of whom had managed to sock away a ton of savings during the pandemic.

To curb inflation, fed reduces bond purchases

Last month, in a milestone for the U.S. recovery from the COVID-19 recession, the Federal Reserve agreed to gradually dial back the bond-buying stimulus it launched early in the health crisis.

The decision, which has been expected for months, reflects the strides the economy has made, with unemployment falling sharply from its pandemic peak. But it also pointedly reveals the central bank’s growing concern about inflation that has surged in recent months amid supply chain bottlenecks.

Fed Chair Jerome Powell told reporters the Fed will be patient and hold off on raising rates so the economy can reach full employment, but he added officials “won’t hesitate” to act if inflation doesn’t ease, presumably by the second half of next year.

►Worker shortage: As millions of jobs go unfilled, employers look to familiar faces in ‘boomerang employees’

►Personal finance and politics: What the jump in consumer prices means for your pocketbook, Joe Biden’s troubles

Biden announces ports open 24/7 to fight inflation, reduce supply chain crunch

In October, Biden announced that the Port of Los Angeles – at the center of the supply chain logjam – will operate around the clock to help clear out some of the hundreds of thousands of shipping containers from Asia stranded on its docks. The neighboring Port of Long Beach, which has been conducting a similar pilot project at one of its 12 terminals, is expected to follow.

As ports gear up operations, dozens of cargo vessels dot the surrounding harbor, waiting for the chance to unload 40-foot containers filled with food, clothing and even holiday gifts, from skateboards to elliptical bicycles. In normal times, there are no waits. But it’s not that simple.

A visit to the ports of Los Angeles and Long Beach and interviews with port officials, union representatives, workers and freight companies reveal it likely will take months to make a significant dent in the port backlog and disentangle the myriad other kinks in the nation’s vast supply network.

Other players, including truck drivers and warehouse workers, need to shift their schedules. There are also equipment shortfalls, bureaucratic hurdles and severe worker shortages at other hubs in the overwhelmed supply chain.

►Will it save holiday shopping? Biden says running LA ports 24/7 will help save Christmas shopping. It’s not that simple, experts warn.

Gasoline Costs More For A Host Of Reasons

Americans are acutely sensitive to gasoline prices, especially when they’re on the rise. One reason, of course, is that we buy a lot of gas: an estimated 570 gallons this year for the average driver, which at current national average prices would cost close to $2,000. Also, gas prices are posted all over town on large signs – unlike, say, milk prices – and people typically buy gas on its own rather than as part of a larger shopping trip, making price changes more noticeable. And gas prices can and do swing sharply and unpredictably, in ways that can seem unconnected to the rest of the economy.

Regular gas costs, on average, 58.7% more than it did a year ago this time – $3.491 a gallon last month, versus $2.20 in November 2020, according to the federal Energy Information Administration (EIA).

But looking just at the recent rise can be misleading, or at least incomplete. For one thing, a year ago the United States was battling yet another wave of COVID-19 cases, large parts of the economy were still shuttered and demand for gas was way down. Estimated consumption in 2020 was 534 gallons per driver, down 14.4% from 624 gallons in 2019.

How we did this

Also, the volatility of gas prices means they can go down as sharply and as suddenly as they go up. In the spring of 2020, as the COVID-19 pandemic sparked widespread lockdowns, the average gas price sank 27% between Feb. 24 and April 27. Since 1994, average gas prices have fluctuated between a low of 96.2 cents a gallon in February 1999 and a high of $4.114 in July 2008. The current average price, in fact, is almost exactly what it was in September 2014 – at least on a nominal basis.

When inflation is factored in, today’s prices appear more modest. In today’s dollars, gas cost an average of $5.20 a gallon in June 2008, and more than $4 as recently as September 2014.

Also, gasoline is not a single, uniform product. Besides regular, midgrade and premium gas, which differ by octane rating, there’s conventional and “reformulated” gas. The latter is required to be sold in California, along the Northeastern seaboard and in several other major urban areas to reduce smog and other air pollutants.

Over the past year, reformulated gas was consistently 30 to 35 cents more expensive than conventional gas until mid-October, when the differential began to widen, according to an analysis of EIA price data – it’s­ now about 46 cents more expensive. Over the same period, midgrade gas has ranged from 37 cents to 46 cents more expensive than regular, while premium has been 25 to 27 cents higher than midgrade.

Where you buy gas also matters. Much of the U.S. petroleum industry is concentrated along the Gulf Coast, making it perhaps unsurprising that gas tends to be cheapest there. The average price in that region was $3.072 a gallon in late November, and in Texas it was also a hairsbreadth above $3.

By contrast, California almost always has the most expensive gas in the country. The state’s average price in late November was $4.642 a gallon, and in San Francisco it was $4.816. Besides the fact that California already uses pricier reformulated gas and has relatively high gas taxes and environmental fees, it is geographically far removed from other refining centers and relatively few fuel pipelines cross the Rocky Mountains to connect California’s refineries to the rest of the country.

Under normal conditions, the state’s refineries can produce enough gasoline to meet demand there, according to the California Energy Commission. But if refineries go offline due to weather, accidents or mechanical breakdowns, the state typically imports gasoline from overseas – adding to the price because of the cost of marine shipments.

A Good Pay Raise Next Year Expected As Companies Struggle To Fill Jobs

The amount of money companies are setting aside for raises is expected to rise at the fastest rate in more than a decade, as employers fight to keep and hire workers in a historically tight labor market, a new survey says.  

Budgets for wage hikes are projected to jump 3.9% next year, the biggest annual leap since 2008, according to a November survey of compensation executives by the Conference Board, a nonprofit membership group of mostly large businesses.  

The growing pools of cash are meant to entice young workers and hold on to existing staff at a time when a record number of jobs are going unfilled, and consumers are dealing with the worst inflation in 39 years.   

“Growth in wages for new hires and accelerating inflation are the main causes of the jump in salary increase budgets,’’ the report said. It added that 46% of executives said higher pay for new employees was a reason for the larger pay pools that are expected, while 39% said inflation helped fuel the increase.

The consumer price index increased 6.8% in November as compared to the previous year, the fastest pace since 1982, with the cost of groceries, gas, rent and cars all on the rise, the Labor Department said Friday.

Labor shortage and wages

Budgets for salary increases have already risen, with the average pool of cash increasing by 3% in the survey taken last month, compared with the 2.6% that was predicted in an earlier survey in April.

A labor shortage has helped spark a ripple effect, enabling younger people entering the workforce to earn higher wages, more experienced employees to pursue new positions and potentially higher pay, and blue-collar workers to demand union representation and better work conditions.

“The rapid increase in wages and inflation are forcing businesses to make important decisions regarding their approach to salaries, recruiting, and retention,’’ the Conference Board report said, It tnoted that labor shortages will probably continue through 2022 while wages likely increase by more than 4%.

Blue-collar workers as well as those in unions are also expected to see pay hikes. “Wages for new hires, and workers in blue-collar and manual services jobs will grow faster than average,’’ the report wrote. 

Workers, from Kellogg cereal facilities to university faculty to Starbucks stores, are demanding higher wages and improved working conditions amid a pandemic that many say magnified inequities and disparities.

The pay hikes many businesses are offering could cost consumers if companies raise the price of services or goods to cover the higher wages, says the Conference Board.. 

And the Federal Reserve may boost interest rates beyond the two increases that economists are already projecting for next year to help slow inflation, according to the Board.

Is India Against Cryptocurrencies?

While the crypto currency market is booming and thousands of new virtual currencies are being mined every week, many financial experts and governments are vehemently raising voice to ban all cryptos for various reasons.

Last week, RBI governor Shaktikanta Das said the Reserve Bank had “serious concerns from the point of view of macro-economic and financial stability” and that blockchain technology can thrive without cryptocurrencies. Really, there is a grain of truth to the claim that cryptocurrencies are rivals of central banks as they cannot control them like sovereign money.

India has recently taken a more keen note on cryptocurrencies, thanks to its robust growth in the country amid a lack of regulations. However, things are likely to undergo a drastic change, with the government eager to bring in rules and regulations in the digital currency sector. (News18.com 12/18/2021).

There are thousands of virtual currencies on the market today, which are known as cryptocurrencies. Such currencies exchanged through crypto exchanges have not yet been approved by any country or central bank. Recently, El Salvador, a Central American country, officially recognized only the powerful Bitcoin.

But the CBDC is the official cryptocurrency issued by the Central Bank of India. This is the main difference between other cryptocurrencies and CDBC. The CBDC (Central Bank Digital Currency) will also be  marketed through the blockchain technology as done by other virtual currencies . It is likely to be a digital token or electronic form of the current currency. The Reserve Bank of India will be in charge of supervising and monitoring the official crypto of the Indian government. Digital money cannot be withdrawn as we usually withdraw from banks and ATMs. Their transactions will be through digital platforms. It is not yet clear whether it will be listed on other crypto exchanges.

There is no doubt that the operation of private currencies is being restricted to strengthen the official cryptocurrencies. There are some valid points to know about the official cryptocurrency of India.

The primary concern for India’s central bank is the anonymity that virtual currencies offer to their investors. While the record of cryptos is kept on an open ledger, the owner’s identity is not revealed. This can create problems for banks and the IRS to track the flow of money. And hence cryptocurrencies could be used to transfer illegal money or evade taxes and fund terrorist activities.

Digital currency will reduce the difference between the value of an ordinary currency and the cost of printing it. The bottom line is that government spending will go down. Meanwhile, the RBI Due to the restrictions, the value of digital currency will not fluctuate as seen in cryptocurrencies. This is where investors are most likely to stay away.

The total amount of digital currency issued can be converted into cash and is part of the currency in circulation in the economy. Over the last 5-6 years, the currency, including notes and coins, has grown from Rs 16.63 lakh crore to Rs 28.60 lakh crore. One of the main reasons for the rise in inflation is the circulation of this currency in the markets.

With the advent of digital currency, the RBI’s ability to intervene in markets will increase. Digital currency can reduce the amount of money in the market. After Kovid, people are increasingly using digital means.

Tamil Nadu CM MK Stalin Appoints MR Rangaswami As State’s ‘Investment Ambassador’

Tamil Nadu Chief Minister M.K. Stalin has appointed a prominent Indian American venture capitalist, M.R. Rangaswami as Tamil Nadu’s ‘Investment Ambassador’ on Friday, November 26.

Rangaswami has been an active member of the Indian American community whose influence has inspired many.

Over the years he has worn many hats including being an entrepreneur, investor, corporate eco-strategy expert, community builder and a philanthropist.

Most importantly, he is the founder of Indiaspora, a nonprofit who mission is to unite the Indian diaspora and to transform their success into meaningful impact in India and on the global stage.

By sharing insights, hosting events and connecting people, Indiaspora unites the professionally, geographically and religiously diverse Indian American community toward collective action, the press release said.

On honoring him his new crown, CM Stalin praised Rangaswami for his achievements in the US.

Dr. VGP, an Indian American community leader and president of the World Federation of Tamil Youth, USA in Chicago, congratulated CM Stalin on the appointment and said Tamil Nadu will soon become India’s number one industrialized state under Rangaswami’s captaincy, it said.

Neil Khot, national chairman of the Indian American Business Coalition, based in Washington, D.C., congratulated Rangasawami, saying that he is an excellent and apt choice who can make things happen.

Tamil Nadu has made giant strides in attracting global investment recently, thanks to IAS officer T. Muruganandam, who was till recently industries secretary and was now promoted to the key position as the state’s finance secretary, noted the release.

The event was attended by Rangaswami wife and his two children, who have been supportive of his past endeavors and his current leadership position to tackle more India-centric issues.

What Does Current Inflation Tell Us About The Future?

What signal should we be taking from current inflation for future inflation? The answer: some signal, but not a lot. To be sure, inflation is running high (figure 1); and, after excluding the typically volatile categories of food and energy prices, is running higher than it has been in decades. But because the factors that are leading to inflation are pandemic-related and therefore temporary, the current trend does not forecast the future.

To examine whether this short-term run up in inflation points to higher inflation in the years ahead, I look at the factors that appear to be contributing. I find that the strength and composition of consumer demand for goods since the pandemic began as well as supply constraints caused by the pandemic are the sources of the current spike. The clearly temporary nature of those factors suggests we should not extrapolate recent inflation pressure into the future.

Key Points:

Goods inflation has indeed been extraordinarily high.

The identifiable factors behind goods inflation—a surge in consumer demand and lagging supply—are primarily pandemic-related.

Increasing vaccination rates and decreasing the health risks should rebalance spending patterns, leading to a decrease in demand for goods and an increase in demand for services.

If increases in the supply of services lags behind increases in demand for services, we would see new and worrying inflation risks arise.

Inflation as of October 2021

Figure 1 shows inflation from 1969 to 2021, both by the consumer price index (CPI) and by the personal consumption expenditure (PCE) deflator. Some observers have tried to draw parallels between the current episode in inflation and the 1970s; this is incorrect.

While inflation has increased relative to recent years, inflation is significantly below the levels seen in the 1970s.

As measured by the CPI, the annual rate of inflation from October 2020 to October 2021 was 6.2 percent. As measured by the PCE deflator, the annual rate of inflation from September 2020 to September 2021 (the most recent available data) was 4.4 percent. Some of those price increases reflect a bounce back from the unusually low level of prices in the first part of the pandemic. For example, if the CPI had grown at a rate close to the Federal Reserve’s target from the first month of the pandemic through October 2020, the CPI annual inflation rate over the last year would have been 5.1 percent. That rate is still quite high, but a percentage point lower than the actual annual rate.

Which goods and services have driven the recent run-up in inflation? Figure 2 shows that the answer is core commodities, or goods. As figure 2a shows, core goods inflation has been strikingly high in recent months. In contrast, inflation in core services (2b) has been far more muted and has generally recovered to pre-pandemic rates.

Figures 2c and 2d show that inflation in energy and in food, which are excluded from core inflation, are both elevated. Energy inflation is quite volatile; domestic energy producers faced very low prices early in the pandemic, and those producers may be waiting to see if price increases are durable before increasing supply. Food inflation is worrying and appears to be a global trend related to the pandemic among other factors. The same trends are evident looking at PCE inflation (not shown).

Figure 3 shows just how unusual core goods inflation has been: it is higher than it’s been over the last 30 years. Since 2000, core goods inflation has been negative roughly half the time, meaning that the price of goods (on a quality-adjusted basis) falls on average. Given this recent history, the skyrocketing goods prices seen during the pandemic are all the more extraordinary. In contrast, core services inflation has been close to its average from the early 1990s to 2008 (when the significant decline in house prices dampened shelter costs).

Inflation in Economic Recoveries

As I have shown, the primary contributor to the recent spike in inflation is core goods. The strength in real consumer spending (shown in figure 4a) has reflected a surge in spending on consumer goods (shown in figure 4b). Real goods spending is currently about 15 percent higher than it was pre-pandemic, and there were a couple of months when it was 20 percent higher.

Are the trends described above a signal that we should expect continued extraordinary inflation for core goods—everything from automobiles to exercise mats—in the coming years? Three factors suggest no.

First, the surge in spending on goods has put upward pressure on prices as suppliers have been unable to keep up with demand. Suppliers have strong incentives to iron out issues with the supply chain to get more product onto shelves; in addition, the problems with the supply chain that owe more directly to the pandemic will ebb as the pandemic is brought under control globally.

Second, that surge in goods spending is no doubt temporary because households—as the pandemic recedes—will rebalance consumer spending toward services, which has been unusually depressed (figure 4c).

Third, the fiscal support to households that has helped to finance the surge in goods spending has largely waned.

In contrast to spending on consumer goods, spending on services remains below its pre-pandemic peak. This pattern is a significant departure from previous business cycles where services were relatively unaffected.

Inflation Risks on the Horizon

Although the recent surge in consumer goods inflation does not suggest persistent inflation in this sector going forward, two other issues present risk to the inflation outlook: labor supply and demand in the services sector as well as the recent increases in housing prices.

As consumer spending rebalances towards services, demand for labor in the services sector will rise beyond already-elevated levels. For example, in September, job openings in leisure and hospitality were a remarkable 530,000 higher than trend but employment was 1.5 million below its pre-pandemic level. If consumer demand for leisure and hospitality services return to (or temporarily exceeds) pre-pandemic levels, demand for labor will likely increase significantly.

Softness in labor force participation rates and a frustratingly slow pace of matching job seekers with jobs has raised concerns about weakness in the supply of labor. To be sure, the pace of job matching is probably slowed by the sheer number of job openings and opportunities across multiple industries that candidates have to consider. In addition, because of pandemic-related issues, some people are constrained from working or worried about the health risks of working. My expectation is that those issues will resolve.

However, continued weakness in labor supply may suggest that the experience of the pandemic and the changing nature of work since March 2020 could persistently dampen how much labor people are willing to supply. If labor supply continues to be restrained, this will affect the ability of the U.S. economy to produce goods and services.

That would increase inflationary pressures for a given level of aggregate demand, which is a problem. But, in that circumstance the more significant problem to address would be that our standard of living would be lower.

The other factor that is creating some inflationary risks on the horizon is house price growth and how that is going to spill over into the rental market. Historically, there is a strong relationship between house price growth and inflation in the rental market (figure 5). After rents grew at roughly a 3¾ percent annual pace before the pandemic, this inflation rate was at a remarkably low level of less than 2 percent in the first half of this year.

Rent inflation is now rising to more typical levels; rents grew 2¾ percent between October 2020 and October 2021 and that rate looks poised to increase. While deserving of notice, worrying inflation in this sector would be more of the plain vanilla-type that less accommodative monetary policy would be well-equipped to dampen.

Conclusion

The biggest risk to inflation going forward is not a continuation of the forces currently at work in the goods sector: this will not be persistent. Instead, the biggest risk is that large increases in demand for workers in the services sector will not be met by equally large increases in labor supply.

Policymakers can encourage labor supply by continuing to get the pandemic under control through vaccinations and sensible health policies. Moreover, policymakers can also remove barriers that make work costly, such as lack of access to affordable, high-quality childcare. Policymakers can facilitate the matching of job seekers with jobs through job fairs and better access to labor market information. Finally, immigrants are a critical source of workers in the U.S., and rates of immigration are significantly down relative to pre-pandemic projections.

A return to more typical levels of, for example, green card issuance would help to expand labor supply in the U.S. to meet the growing demand for labor. In short, the policies that will rein in inflation in the future are the same policies that support a sustained and equitable labor market recovery.

World Bank Reports, India Received Largest Remittances In 2021

The recently launched report by World Bank noted that India received $87 billion in remittances in 2021, and the United States was the biggest source, accounting for over 20% of these funds.

On Wednesday, November 17, the World Bank report stated, “Flows to India (the world’s largest recipient of remittances) are expected to reach $87 billion, a gain of 4.6% — with the severity of COVID-19 caseloads and deaths during the second quarter (well above the global average) playing a prominent role in drawing altruistic flows (including for the purchase of oxygen tanks) to the country,”

India is followed by China, Mexico, the Philippines, and Egypt, the report said. In India, remittances are projected to grow 3% in 2022 to $89.6 billion, reflecting a drop in overall migrant stock, as a large proportion of returnees from the Arab countries await return, it said.

Remittances to low- and middle-income countries are projected to have grown a strong 7.3% to reach $589 billion in 2021, the Bank said.

This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7% despite a severe global recession due to COVID-19, according to estimates from the World Bank’s Migration and Development Brief.

“Remittance flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the COVID-19 crisis. Facilitating the flow of remittances to provide relief to strained household budgets should be a key component of government policies to support a global recovery from the pandemic,” said Michal Rutkowski, World Bank Global Director for Social Protection and Jobs.

Inflation Explained: Why Prices Keep Going Up And Who’s To Blame?

Confused about inflation? You’re not alone. Inflation is, paradoxically, both incredibly simple to understand and absurdly complicated.  Let’s start with the simplest version: Inflation happens when prices broadly go up.

That “broadly” is important: At any given time, the price of goods will fluctuate based on shifting tastes. Someone makes a viral TikTok about brussels sprouts and suddenly everyone’s gotta have them; sprouts prices go up. Meanwhile sellers of cauliflower, last season’s trendy veg, are practically giving their goods away. Those fluctuations are constant.

Inflation is when the average price of virtually everything consumers buy goes up. Food, houses, cars, clothes, toys, etc. To afford those necessities, wages have to rise too.

It’s not a bad thing. In the United States, for the past 40 years or so (and particularly this century), we’ve been living in an ideal low-and-slow level of inflation that comes with a well-oiled consumer-driven economy, with prices going up around 2% a year, if that. Sure, prices on some things, like housing and health care, are much higher than they used to be, but other things, like computers and TVs, have become much cheaper — the average of all the things combined has been relatively stable.

Still with me?

All right, let’s cut to today, and why inflation is all over the news.

When ‘inflation’ is a bad word

Inflation becomes problematic when that low-and-slow simmer gets fired up to a boil. That’s when you hear economists talk about the economy “overheating.” For a variety of reasons, largely stemming from the pandemic, the global economy finds itself at a rigorous boil right now.

In the United States, prices have climbed 6.2% — the biggest increase since November 1990, and well above the Federal Reserve’s long-term inflation goal of around 2%.

And here’s where Econ 101 merges a bit with Psych 101. There’s a behavioral economics aspect to inflation where it can become a self-fulfilling prophecy. When prices go up for a long enough period of time, consumers start to anticipate the price increases. You’ll buy more goods today if you think they’ll cost appreciably more tomorrow. That has the effect of increasing demand, which causes prices to rise even more. And so on. And so on.

That’s where it can get especially tricky for the Federal Reserve, whose main job is to control money supply and keep inflation in check.

How’d we get here? Blame the pandemic.

In the spring of 2020, as Covid-19 spread, it was like pulling the plug on the global economy. Factories around the world shut down; people stopped going out to restaurants; airlines grounded flights. Millions of people were laid off as business disappeared practically overnight. The unemployment rate in America shot up to nearly 15% from about 3.5% in February 2020.

It was the sharpest economic contraction on record.

By early summer, however, demand for consumer goods started to pick back up. Rapidly. Congress and President Joe Biden passed a historic $1.9 trillion stimulus bill in March that made Americans suddenly flush with cash and unemployment assistance. People started shopping again. Demand went from zero to 100, but supply couldn’t bounce back so easily.

When you pull the plug on the global economy, you can’t just plug it back in and expect it start humming at the same pace as before.

Take cars, for example. Automakers saw the Covid crisis beginning and did what any smart business would do — shut down temporarily and try to mitigate losses. But not long after the pandemic shut factories down, it also drove up demand for cars as people worried about exposure on public transit and avoided flying. Automakers had whiplash.

Cars require an immense number of parts, from an immense number of different factories around the world, to be built by highly skilled laborers in other parts of the world. Getting all of those discreet operations back online takes time, and doing so while keeping workers from getting sick takes even more time.

Economists often describe inflation as too much money chasing too few goods. That’s exactly what happened with cars. And houses. And Peloton bikes. And any number of other items that became hot ticket items.

How’s the supply chain involved in all this?

“Supply chain bottlenecks” — that’s another one you see all over, right?

Let’s go back to the car example.

We know that high demand + limited supply = prices go up.

But high demand + limited supply + production delays = prices go up even more.

All modern cars rely on a variety of computer chips to function. But those chips are also used in cellphones, appliances, TVs, laptops and dozens of other items that, as bad luck would have it, were all in high demand at the same time.

That’s just one example of the disconnect in the global supply chain. Because new cars have been slow to roll in, used car demand shot through the roof, which drove overall inflation higher. In some cases, car owners were able to sell their used cars for more than what they paid for them a year or two prior.

What happens next?

Prices and wages are likely to keep going up well into 2022, officials and economists say. But for how long and how much depends on countless variables across the globe.

Policymakers’ top priority is to unclog the supply chain bottlenecks to get goods moving at their pre-pandemic pace. That’s a lot easier said than done. And there’s no telling what kind of shocks — a resurgent Covid variant, a massive shipping container getting stuck in a key waterway, a natural disaster — could set back progress.

Economists and investors in the United States expect that the Fed will tighten monetary policy by raising interest rates and dialing back emergency stimulus, thereby slow the pace of inflation. When money becomes more expensive to borrow, that can take the heat off price increases and bring the economy back down to that nice, gentle simmer.

US Announces Big Hike In Medicare Premiums

The federal government announced a large hike in Medicare premiums Friday night, blaming the pandemic but also what it called uncertainty over how much it may have to be forced to pay for a pricey and controversial new Alzheimer’s drug.

The 14.5% increase in Part B premiums will take monthly payments for those in the lowest income bracket from $148.50 a month this year to $170.10 in 2022. Medicare Part B covers physician services, outpatient hospital services, certain home health services, medical equipment, and certain other medical and health services not covered by Medicare Part A, including medications given in doctors’ offices.

The Centers for Medicare and Medicaid Services played down the spike, pointing out that most beneficiaries also collect Social Security benefits and will see a cost-of-living adjustment of 5.9% in their 2022 monthly payments, the agency said in a statement. That’s the largest bump in 30 years.

“This significant COLA increase will more than cover the increase in the Medicare Part B monthly premium,” CMS said. “Most people with Medicare will see a significant net increase in Social Security benefits. For example, a retired worker who currently receives $1,565 per month from Social Security can expect to receive a net increase of $70.40 more per month after the Medicare Part B premium is deducted.”

The increase, however, is far more than the Medicare trustees estimated in their annual report, which was released in late August. They predicted the monthly premium for 2022 would be $158.50. The actual spike — the largest since 2016 — could hurt some seniors financially.

It “will consume the entire annual cost of living adjustment (COLA) of Social Security recipients with the very lowest benefits, of about $365 per month,” said Mary Johnson, a Social Security and Medicare policy analyst for The Senior Citizens League, an advocacy group. “Social Security recipients with higher benefits should be able to cover the $21.60 per month increase, but they may not wind up with as much left over as they were counting on.”

Medicare premiums have typically increased at a far faster rate than Social Security’s annual adjustments, the league said. And much of the 2022 increase in Social Security benefits will be eaten up by inflation, which is also rising at a rapid clip.

CMS said part of the increase for 2022 was because of uncertainty over how much the agency will end up paying to treat beneficiaries to be treated with Aduhelm, an Alzheimer’s drug approved by the US Food and Drug Administration in June over the objections of its advisers. Some experts estimate it will cost $56,000 a year. Medicare is deciding whether to pay for it now on a case-by-case basis.

Because Aduhelm is administered in physicians’ offices, it should be covered under Medicare Part B, not Part D plans, which pay for medications bought at pharmacies. Traditional Medicare enrollees have to pick up 20% of the cost of most Part B medications, which would translate into about $11,500 in out-of-pocket costs for those prescribed Aduhelm.

“The increase in the Part B premium for 2022 is continued evidence that rising drug costs threaten the affordability and sustainability of the Medicare program,” CMS Administrator Chiquita Brooks-LaSure said in a statement. “The Biden-Harris Administration is working to make drug prices more affordable and equitable for all Americans, and to advance drug pricing reform through competition, innovation, and transparency.”

Also, Congress last year limited the 2021 premium increase even as emergency Medicare spending surged during the coronavirus pandemic. The monthly charge rose less than $4.

Along with the premium spike, the annual deductible for Medicare Part B beneficiaries is rising to $233 in 2022, up from $203 in 2021.

Medicare is the federal health insurance plan covering more than 62 million people, mostly 65 and older.  Part B premiums are based on income. Individuals earning $500,000 or more a year and joint filers making $750,000 or more annually will pay $578.30 a month for coverage in 2022.

China Overtakes U.S. To Grab Top Spot On Global Wealth

Global wealth tripled over the last two decades, with China leading the way and overtaking the U.S. for the top spot worldwide.

That’s one of the takeaways from a new report by the research arm of consultants McKinsey & Co. that examines the national balance sheets of ten countries representing more than 60% of world income.

“We are now wealthier than we have ever been,” Jan Mischke, a partner at the McKinsey Global Institute in Zurich, said in an interview.

Net worth worldwide rose to $514 trillion in 2020, from $156 trillion in 2000, according to the study. China accounted for almost one-third of the increase. Its wealth skyrocketed to $120 trillion from a mere $7 trillion in 2000, the year before it joined the World Trade Organization, speeding its economic ascent.

Richest 10%

The U.S., held back by more muted increases in property prices, saw its net worth more than double over the period, to $90 trillion.

In both countries — the world’s biggest economies — more than two-thirds of the wealth is held by the richest 10% of households, and their share has been increasing, the report said.

As computed by McKinsey, 68% of global net worth is stored in real estate. The balance is held in such things as infrastructure, machinery and equipment and, to a much lesser extent, so-called intangibles like intellectual property and patents.

Financial assets are not counted in the global wealth calculations because they are effectively offset by liabilities: A corporate bond held by an individual investor, for instance, represents an I.O.U. by that company.

The steep rise in net worth over the past two decades has outstripped the increase in global gross domestic product and has been fueled by ballooning property prices pumped up by declining interest rates, according to McKinsey. It found that asset prices are almost 50% above their long-run average relative to income. That raises questions about the sustainability of the wealth boom.

“Net worth via price increases above and beyond inflation is questionable in so many ways,” Mischke said. “It comes with all kinds of side effects.”

Surging real-estate values can make home ownership unaffordable for many people and increase the risk of a financial crisis — like the one that hit the U.S. in 2008 after a housing bubble burst. China could potentially run into similar trouble over the debt of property developers like China Evergrande Group.

The ideal resolution would be for the world’s wealth to find its way into more productive investments that expand global GDP, according to the report. The nightmare scenario would be a collapse in asset prices that could erase as much as one-third of global wealth, bringing it more in line with world income.

Inflation Expectations Among Consumers Hit New Highs, Fed Survey

Americans’ inflation fears continued to accelerate in October, climbing for the 12th consecutive month in a row to another record high, according to a key Federal Reserve Bank of New York survey published Monday, November 8, 2021.

“Median inflation uncertainty – or the uncertainty expressed regarding future inflation outcomes – increased at both the short- and medium-term horizons. Both measures reached series highs in October,” the survey said.

Heads of households surveyed by the New York Fed expected consumer prices to rise by a median of 5.7 percent over the next year, according to the bank’s October Survey of Consumer Expectations.  The one-year inflation rate projected by consumers rose 0.4 percentage points since September and reached the highest level since the survey began in 2013.

The Fed and economists pay close attention to inflation expectations among consumers, particularly long-term expectations, when assessing the future of price increases. Steady increases in consumer inflation expectations could lead to what economists call a wage-price spiral: higher prices prompting workers to hold out for higher wages, which exacerbates the need to raise prices.

With consumers braced for the highest inflation levels in nearly a decade, they are also expecting the price of things like food, gasoline, rent and college tuition to rise over the next year. The only things that Americans expect to get cheaper over the next year are home prices and medical care.

The report is based on a rotating panel of 1,300 households.

Federal Reserve Chairman Jerome Powell has largely attributed the spike in consumer prices to pandemic-induced disruptions in the supply chain, a shortage of workers that has pushed wages higher and a wave of pent-up consumers flush with stimulus cash.

Although Powell has repeatedly said the rise in inflation is likely “transitory,” he acknowledged last week during the Fed’s two-day policy-setting meeting that the surge may not fade until the latter half of 2022. He maintained that wild swings in consumer prices will stop once current pressures on the supply chain dissipate.

“Our baseline expectation is that supply bottlenecks and shortages will persist well into next year and elevated inflation as well,” Powell told reporters. “And that, as the pandemic subsides, supply chain bottlenecks will abate and job growth will move back up. And as that happens, inflation will decline from today’s elevated levels.”

His comments came after the Federal Open Market Committee voted to begin pulling back on the extraordinary stimulus it has given the economy since March 2020. The U.S. central bank announced that it would reduce its aggressive bond-buying program by $15 billion a month in mid-November, lowering its purchases of long-term Treasury bonds by $10 billion a month and purchases of mortgage-backed securities by $5 billion a month.

C.S. Venkatakrishnan To Be CEO of Barclays

Barclays new CEO is CS Venkatakrishnan, an Indian-American and the first person of color to hold that position. Mysore-born CS Venkatakrishnan has replaced Jes Staley as Barclays CEO after the latter stepped down on Monday, November 1st. Barclays said succession planning has been in place for some time, and he had been identified as the preferred candidate more than a year ago.

Jes Staley stepped down from Barclays, which is Britain’s third-biggest bank by market value, after a probe into his relationship with financier and sex offender Jeffrey Epstein. The bank said Staley will get a 2.5 million pound ($3.5 million) payout and receive other benefits for a year.

Better known as ‘Venkat’, he studied at Massachusetts Institute of Technology, where he got a PhD in operations research, after which he joined JPMorgan Chase in 1994. At JP Morgan Chase, venkat had held senior roles in Asset Management, where he was Chief Investment Officer for approximately $200 billion in Global Fixed Income, as well as in Investment Banking, and in Risk.

He joined Barclays in 2016. Prior to his appointment as Group CEO, Venkat was Head of Global Markets, Co-President of Barclays Bank PLC (BBPLC), and a member of the Group Executive Committee of Barclays, based in New York. He has also served as Chief Risk Officer at Barclays.

Venkat will be on a higher base salary than his predecessor and will receive £2.7 million ($3.69 million) in fixed pay – half in cash and half in shares. This amount is more than Staley’s 2.4 million pounds a year, it’s still a cut from Venkat’s – undisclosed – fixed pay as head of global markets, Barclays’ board said. Venkat will be eligible for a bonus up to a maximum of 93 per cent of his fixed pay and long-term incentives up to 140 per cent of fixed pay per year and a cash payment instead of a pension of £135,000 a year.

Venkatakrishnan joined Barclays as chief risk officer and initiated a comprehensive review of the bank’s exposure to bad credit card debt. The review led to Barclays taking a £320 million impairment charge after Venkatakrishnan urged the bank to adopt a more conservative approach to predicting how much of its credit card book would not be paid. Venkat is the executive sponsor for Embrace, the global multi-cultural network at Barclays, the bank said in its stock exchange announcement on Monday.

The board “identified Venkat as its preferred candidate for this role over a year ago, as a result of which he moved from the position of group chief risk officer to head of global markets,” London-headquartered Barclays noted in an announcement to the stock exchange. “The board has long been confident in Venkat’s capabilities to run the Barclays Group.”

The executive, known for his “genial unflappability” and “fondness for emojis,” appears to care about diversity. He has made progress on promoting women, Bloomberg reported. Venkatakrishnan is also the executive sponsor for Embrace, the global multi-cultural network at Barclays. He leads the company’s “Race at Work Action Plan,” which has strived to improve diversity at the company where underrepresented minorities comprise just 5% and 21% of the staff in the UK and the US respectively.

The 56-year-old who is now based in New York was born in Mysore, the southernmost city in the southern Indian state of Karnataka. Even now, Venkatakrishnan enjoys a meal at an Indian restaurant that would “serve lunch on orange plastic trays,” Ken Abbott, Barclays’ chief risk officer for the Americas until 2018, told Bloomberg. “He thought that was very authentic.”

2 Indians Led Firms In Forbes List of Future Billion Dollar Companies

Two Indian American-led companies made Forbes magazine’s annual list of 25 venture-backed startups that are most likely to become unicorns, with valuations of more than $1 billion.

Legion Technologies, founded by Sanish Mondkar; and Alchemy, co-founded by Nikil Viswanathan and Joseph Lau are featured in the new List released by Forbes earlier this month.

“A $1 billion valuation isn’t what it used to be, as companies reach that milestone at breakneck speed, noted Forbes, adding that even startups with barely any revenue are earning sky-high valuations as investors bet on future growth.

The average estimated 2020 revenue for companies on this year’s list is just $12 million; last year’s list featured startups with an average of $30 million in revenue.

“Still there are plenty of up-and-comers worth keeping an eye on, including one that tests your dog’s DNA and another that will help you notarize documents from the comfort of your home. This list represents the 25, in alphabetical order, that we think have the best shot of becoming future stars,” said the magazine, in its introduction to the list.

Mondkar, a former chief product officer at SAP, left his job in 2015. He then traveled around the country with his two dogs, talking with people outside of Silicon Valley, according to his profile in Forbes. A year later, he founded Legion Technologies, a workforce management software that helps employers manage their hourly wage workers.

“There is no innovation targeted at these hourly workers,” says Mondkar, 48. The Redwood City, California-based company uses artificial intelligence and machine learning to help its customers forecast demand and optimize their labor costs, while taking into account employees’ preferences for when and how they work. “Most employees quit these jobs because of schedule conflicts,” he said. “The goal for the algorithms is to prioritize both sides.”

“Good jobs create happier, more productive employees who are less likely to quit,” wrote Mondkar in a blog post. “At an average cost of $4,969 per employee who quits, imagine how much money could be saved if they stayed on board.”

Philz Coffee was Legion’s first customer. Dollar General and SoulCycle also use Mondkar’s technology. With increased attention on workforce issues during the pandemic, Legion revenues are expected to more than double this year, to $11 million, predicted Forbes, noting that Legion’s 2020 revenue was $5 million. Mondkar has raised $85 million in equity from First Round Capital, Norwest Venture Partners, Stripes, XYZ.

Viswanathan and Lau co-founded Alchemy in 2017, a year after building Down to Lunch, which The New York Times touted as “the hottest new social app in America.” Alchemy makes it easier to read and write information onto blockchains, such as Ethereum and Flow. “Alchemy provides the leading blockchain development platform powering over $30 billion in transactions for tens of millions of users in every country globally. Our mission is to enable developers to bring the magic of blockchain to the world,” wrote Viswanathan in his LinkedIn profile.

“The computer and internet fundamentally improved human life on planet earth. We’re excited to help enable the global opportunity of blockchain – the next tectonic shift,” he said.

The service starts free for smaller developers, but larger customers pay a monthly fee. The San Francisco-based firm is on pace to increase revenue tenfold this year, to an estimated $20 million, as it helps clients like PwC, Unicef and OpenSeat conduct more than $30 billion in volume annually, noted Forbes in its profile of the company. Alchemy’s 2020 revenue was $2 million. The company has raised $96 million in equity from Addition, Coatue, and Pantera.

Sitharaman Meets With U.S. Businesses In New York

India’s Finance Minister Nirmala Sitharaman’s meetings with U.S. businesses and institutions continued at a feverish pitch, including talks with two key investors asking them to broaden their world view and look at India for investment. As part of this, Sitharaman on Oct. 16 met Scott Sleyster, executive Vice president and chief operating officer of Prudential Financial, and Philip Vassiliou, chief investment officer of Legatum, in New York.

Her discussions with Sleyster revolved around the reforms towards capital bond market, investor charter and other initiatives. The robust structural growth and continued interest of the company to invest in India formed part of the discussion with Vassiliou. Earlier during the day, Sitharaman addressed global business leaders and investors at a Roundtable organized by USISPForum and Ficci India in New York.

“With the current reset in the global supply chain and clear headed and committed leadership in India, I see opportunities galore in India for all investors and industry stakeholders,” she said at the Roundtable.

The finance minister also met Jane Fraser, CEO of Citi.

Fraser talked about the strength of India’s economic recovery and how India will increasingly become an important destination of investment for multinational corporations looking to grow their operations.

Sitharaman also held one-to-one meetings with Raj Subramanyam, Indian American CEO of FedEx; Ajay Banga, executive chairman, and Meibach Michael, CEO at Mastercard; and Arvind Krishna, chairman and chief executive officer at IBM.

The discussions revolved around getting more investment into India.

All the business leaders talked about the positive impact India’s reforms, in particular the PLI schemes, will have on labor-intensive sectors in the country. IBM indicated its interest in India in the areas of hybrid cloud, automation, 5G, cybersecurity, data, and AI.

The recently launched initiative of the National Infrastructure Master Plan, GatiShakti and India having the third largest start-up ecosystem and unicorn base formed part of discussion with Subramanyam.

Pandora Papers Expose World Leaders Of Secret Wealth

A massive leak of financial documents was published by several major news organizations on Sunday that allegedly tie world leaders to secret stores of wealth, including King Abdullah of Jordan, Czech Prime Minister Andrej Babis and associates of Russian President Vladimir Putin.

The dump of more than 11.9 million records, amounting to about 2.94 terabytes of data, came five years after the leak known as the “Panama Papers” exposed how money was hidden by the wealthy in ways that law enforcement agencies could not detect.

The International Consortium of Investigative Journalists, a Washington, D.C.-based network of reporters and media organizations, said the files are linked to about 35 current and former national leaders, and more than 330 politicians and public officials in 91 countries and territories. It did not say how the files were obtained, and Reuters could not independently verify the allegations or documents detailed by the consortium.

Jordan’s King Abdullah, a close ally of the United States, was alleged to have used offshore accounts to spend more than $100 million on luxury homes in the United Kingdom and the United States.

DLA Piper, a London law office representing Abdullah, told the consortium of media outlets that he had “not at any point misused public monies or made any use whatsoever of the proceeds of aid or assistance intended for public use.”

The Washington Post, which is part of the consortium, also reported on the case of Svetlana Krivonogikh, a Russian woman who it said became the owner of a Monaco apartment through an offshore company incorporated on the Caribbean island of Tortola in April 2003 just weeks after she gave birth to a girl. At the time, she was in a secret, years-long relationship with Putin, the newspaper said, citing Russian investigative outlet Proekt.  The Post said Krivonogikh, her daughter, who is now 18, and the Kremlin did not respond to requests for comment.

Days ahead of the Czech Republic’s Oct. 8-9 parliamentary election, the documents allegedly tied the country’s prime minister, Babis, to a secret $22 million estate in a hilltop village near Cannes, France.  Speaking during a television debate on Sunday, Babis denied any wrongdoing. “The money left a Czech bank, was taxed, it was my money, and returned to a Czech bank,” Babis said. (Courtesy: Reuters)

Over 1,000 Indians Have Net Worth of Rs 1,000 Crore

India has achieved the milestone of having over 1,000 individuals with net worth of Rs 1,000 crore, said Hurun India. Accordingly, the IIFL Wealth Hurun India Rich List 2021 revealed that 1,007 individuals across 119 cities have a net worth of Rs 1,000 crore. The report cited that cumulative wealth was up 51 percent, while average wealth increased by 25 percent. Besides, it showed that 894 individuals saw their wealth increase or stay the same, of which 229 are new faces, while 113 saw their wealth drop and there were 51 dropouts.

Currently, India has 237 billionaires, up 58 compared to last year. “While ‘Chemicals’ and ‘Software’ sectors added the greatest number of new entrants to the list, Pharma is still at number one and has contributed 130 entrants to the list. The youngest in the list is aged 23, three years younger than the youngest last year.” Furthermore, the list report pointed out that Reliance Industries’ Chairman and Managing Director Mukesh Ambani continued to be the richest man in India for the 10th consecutive year with a wealth of Rs 718,000 crore.

“With INR 505,900 crore, Gautam Adani & family moved up two places to the second spot in the IIFL Wealth Hurun India Rich List 2021.” The Adani group has a combined market capitalization of Rs 9 lakh crore, except Adani Power, all listed companies are valued at more than a lakh crore. “Gautam Adani is the only Indian to build not one, but five Rs 1 lakh crore companies,” said Anas Rahman Junaid, MD and chief researcher, Hurun India. In addition, Shiv Nadar of HCL retained the third rank, as HCL’s limited exposure to Covid affected segments such as travel, retail and hospitality resulted in a 67 percent increase in his wealth to Rs 236,600 crore.

For the 12 months that ended in December 2020, HCL became only the third Indian IT company to break through the $10 billion revenue mark. With 255 individuals Mumbai tops the list of richest Indians followed by New Delhi (167), Bengaluru (85). Hyderabad retained the fourth position. Chennai overtook Ahmedabad at the fifth place.

Is U.S. Losing The Race To Decide The Future Of Money?

In cities across China, the country’s central bank has begun rolling out the e-renminbi—an all-digital version of its paper currency that can be accessed and accepted by merchants and consumers without an internet connection, credit or even a bank account. Already having conducted more than $5 billion in e-renminbi transactions, China has opened its digital currency up to foreigners. Next year, when Beijing hosts the Winter Olympic Games, authorities are expecting to let the world test drive its technological achievement.

The U.S., by contrast, is having trouble even concluding its multi-year exploration into the possibility of an e-dollar. In fact, an upcoming Federal Reserve paper on a potential U.S. digital currency won’t take a position on whether the central bank of the United States will, or even should, create one. Instead, Federal Reserve Chair Jerome Powell said in recent testimony to Congress, this paper will “begin a major public consultation on central bank digital currencies…” (Once planned for July, the paper’s release has since been moved to September.)

Once the world leader in digital payments and technological innovation, the U.S. is being outpaced by its top global adversary as well as much of the industrialized and the developing world. The Bahamas recently announced the integration of its digital Sand Dollar into a stock exchange, while Australia, Malaysia, Singapore and South Africa are moving forward with the world’s first cross-border central bank digital currency exchange program led by the Bank for International Settlements (BIS), which is known as the central bank of central banks.

Such developments have been somewhat outshined by El Salvador’s recent decision to make bitcoin a legally accepted currency, which few expect to make significant impact in the payment space. But outside of the cryptocurrency space, nations around the globe are making significant strides in the development of the digital future of money — supported by governments and backed by powerful central banks. Leadership in this space will have implications for more than just payments: geopolitical ambitions, economic growth, financial inclusion and the very nature of money could all be dictated by who leads the charge and how.

“I don’t think the U.S. is aware there is a race”

Digital currencies are the next wave in the “evolution of the nature of money in the digital economy,” Hyun Song Shin, economic adviser and co-leader of the Monetary and Economic Department at the Bank for International Settlements, tells TIME. As more of our world migrates from physical brick-and-mortar to wireless and cloud-based, the way we pay for things is changing as well. A central bank digital currency would operate just like cash, but instead of having to carry it in a physical wallet or put it into a bank account, it would be stored and accessed digitally. Not only could U.S.-backed digital currency facilitate easier, modern banking, it could prove vital in protecting American international influence.

Late to the party, the U.S. is “stepping up its research and public engagement” on digital currencies, the Federal Reserve says, including forming working groups on cryptocurrency and other kinds of digital money, and experimenting with technology that would be central to producing a digital dollar. The Fed’s regional Boston branch is overseeing these efforts with the Massachusetts Institute of Technology on what’s known as Project Hamilton. But the path towards a digital U.S. dollar has met many challenges, skeptics and outright opponents. All while China, and other countries, push forward.

Lagging behind the world

Just how far behind is the U.S. in the development of a central bank-issued digital currency (CBDC)? According to global accounting firm PwC’s inaugural CBDC global index, which tracks various CBDCs’ project status from research to development and production, the U.S. ranks 18th in the world. America’s potential efforts trail countries like Sweden, South Korea and China but also countries like the Bahamas, Ecuador, Eastern Caribbean and Turkey. China, with its government’s hyperfocus on maintaining control and overseeing data, has been working to develop a CBDC for almost a decade.

And the U.S. is probably not close to catching up. Analysts like Harvard economics professor Kenneth Rogoff, who study monetary policy and digital currencies, estimate that the U.S. could be at least a decade away from issuing a digital dollar backed by the Fed. In that time, Rogoff argued in an op-ed earlier this year, the modernization of China’s financial markets and reduction or removal of its currency controls “could deal the dollar’s status a painful blow.”

China has already largely moved away from coin and paper currency; Chinese consumers have racked up more than $41 trillion in mobile transactions, according to a recent research paper from the Brookings Institution, with the lion’s share (92%) going through digital payment processors WeChat Pay and Alipay.

“The reason you could say the U.S. is behind in the digital currency race is I don’t think the U.S. is aware there is a race,” Yaya Fanusie, an Adjunct Senior Fellow at the Center for a New American Security, and a former CIA analyst, tells TIME in an interview. “A lot of policymakers are looking at it and concerned…but even with that I just don’t think there’s this sense of urgency because the risk from China is not an immediate threat.” Not only is the U.S. running significantly behind in the development of a CBDC, we are trailing the rest of the world in digital payments broadly.

Kenya, for example, has almost fully digitized its economy through its digital currency and payment system MPESA, making transactions free and almost instantaneous. India’s Unified Payments Interface (UPI) allows users to transfer money instantly between bank accounts with no cost. Brazil’s PIX facilitates the transfer of money between people and companies in up to 10 seconds. All of these programs work through and are overseen by the countries’ central banks rather than commercial banks or other private companies.

What’s holding the U.S. back?

Critics argue CBDCs are simply a solution in search of a problem and potentially harmful. Many see support from the banking sector as vital to the success of a digital U.S. dollar, however commercial banks in the U.S. have taken a largely adversarial stance. “The proposed benefits of CBDCs to international competitiveness and financial inclusion are theoretical, difficult to measure and may be elusive,” the American Bankers Association said in a statement at a recent congressional hearing on digital currencies. “While the negative consequences for monetary policy, financial stability, financial intermediation, the payments system, and the customers and communities that banks serve could be severe.”

The Bank Policy Institute, which lobbies on behalf of the country’s largest banks, went so far as to argue that neither the Fed nor the U.S. Treasury even has the constitutional authority to issue a digital currency. Commercial banks dominate the U.S. financial system to such a degree that unraveling them would be ostensibly impossible, experts say, they also would be a powerful adversary. Former Goldman Sachs managing director Nomi Prins notes banks have clearly seen the writing on the wall.

“Banks are centralized middlemen with respect to financial transactions,” Prins, author of Collusion: How Central Bankers Rigged The World, tells TIME. “The more popular cryptocurrency or digital currency becomes, the fewer profits the banking system can reap from traditional services and verification methods that allow them to hold, take or use their customers’ money, and the more financial power they stand to lose as a result.” Even disruptive financial technologies like PayPal, Venmo and Zelle work through the banking system, rather than around it, thanks in large part to the banks’ power.

Central bankers also generally have concluded that commercial banks are a necessary piece of a potential CBDC ecosystem, thanks to their pre-existing regulatory guardrails and ability to move money. Top policymakers at the Fed, including influential Vice Chair for Supervision Randal Quarles, have joined the banking industry in arguing that a digital dollar “could pose significant and concrete risks” and that the potential benefits “are unclear.” Fed Governor Christopher Waller said in August he was “skeptical that a Federal Reserve CBDC would solve any major problem confronting the U.S. payment system,” in a recent speech he titled “CBDC: A Solution in Search of a Problem?”  Further, there’s no central U.S. authority with direct oversight or responsibility for any of this.

In addition to the Fed, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Federal Trade Commission, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, Office of Thrift Supervision, Financial Stability Oversight Council, Federal Financial Institutions Examination Council and the Office of Financial Research would all have some stake in the development of a digital currency backed by the central bank, to say nothing of state and regional authorities.

“The U.S. has an active congressional debate, which is beneficial and very important,” Federal Reserve Governor Lael Brainard tells TIME in an interview. “But the U.S. also has a diffusion of regulatory responsibility with no single payments regulator at the federal level, which is not as helpful. That diffusion of responsibility is part of what creates the lags that our system is working through.” None of this exists in China where the Chinese Communist Party oversees the central bank, commercial banks and their regulators and is unconcerned with privacy.

How a downgraded dollar could hamstring U.S. influence

An American CBDC could have lasting geopolitical impact and curb a longstanding international effort to reduce reliance on the mighty U.S. dollar. “Why we should care about this is that the U.S. financial system is not intrinsically dominant,” Fanusie says. “Other countries, both allies and adversaries, are sincerely interested in finding ways to decrease their dependence on the dollar.” With the U.S. dollar as the world’s reserve and primary funding currency, the U.S. can restrict access to funding from financial markets, limit countries’ ability to sell their natural resources and hinder or block individuals’ access to the banking sector.

“Other countries, both allies and adversaries, are sincerely interested in finding ways to decrease their dependence on the dollar”

While dollar dominance has rankled much of the world for decades, there has been no suitable replacement for the U.S., with its massive economy, sophisticated banking system and sprawling international presence. China is in the midst of a long-term push to simultaneously grow its financial markets and internationalize its currency. Both have the end goal of allowing China and its allies to limit the ability of the U.S. to enforce its will through economic actions like sanctions. Fanusie wrote in a January report that being the first major economy to roll out a digital currency is “part of China’s geopolitical ambitions.”

However, the renminbi will not become the world’s reserve currency — at least, not any time soon. But what China has done by being in the forefront of CBDC development is put itself in position to take the lead on development and implementation of rules and regulations for digital currencies on a global scale. “While America led the global revolution in payments half a century ago with magnetic striped credit and debit cards, China is leading the new revolution in digital payments,” writes Brookings’ economic studies fellow Aaron Klein.

Why should central banks offer digital currencies?

Over the past decade, digital currencies, including cryptocurrency and “stablecoins,” have sprung up like weeds. Some purport to be just as safe as dollars, but are backed by questionable assets. In a crisis regulators worry they could fluctuate wildly in value or lose their value altogether. Having central banks, which are responsible for the printing and circulation of coins and paper money, issue digital currencies is in part a reaction to this private sector activity, Shin says, “accelerated by the potential encroachment of private digital currencies, and the need to preserve the role of money as a public good.”

“The status quo is not an option”

Notably, a U.S. digital currency could provide benefits to everyday people. It could increase financial inclusion and fix flaws in current payments systems, Shin adds, citing findings of a recent BIS study.

For example, transferring money between U.S.-based bank accounts, even those held by the same person, can take days. The process can be even longer when crossing international borders. Credit and debit card transactions similarly don’t settle for days and come with significant fees for merchants, who sometimes pass them on to customers. CBDCs could grant universal access to the banking sector and quickly facilitate the distribution of paychecks and government funds, reducing the need for costly bank workarounds like check cashing and payday loans.

Championing CBDCs

Brainard has been pushing the Fed to move on a digital currency for years, but there was little urgency from others at the Fed or in Congress. Companies developing their own currencies, consumers investing in cryptocurrency and the COVID-19 pandemic making paper notes anathema to many Americans changed that. Before COVID-19, Facebook’s Libra project (now known as Diem) showed lawmakers and central bankers the potential for a private company to step in and fill the void by effectively minting its own currency that could be spent by users around the world.

“The status quo is not an option,” Diem co-creator David Marcus said at the International Monetary Fund’s 2019 fall meeting. “Whether it’s Libra or something else, the world is going to change in a profound way.” Brainard, for one, has taken notice. “My own thinking is that stablecoins and related private sector initiatives are moving very rapidly, which makes it incumbent on us to move more rapidly,” she tells TIME. “That is why I have been pushing to advance outreach, cross-border engagement, and policy and technology research for several years now.” So-called stablecoins — unregulated digital currencies created by private companies that purport to represent dollars but are completely unregulated — have become a significant worry for lawmakers and shown the importance of considering tying currency to a central bank.

“It’s getting harder and harder for community banks to compete for new customers when big tech companies can afford to spend billions on marketing and technology,” Sen. Sherrod Brown, who chairs the Senate Banking Committee, tells TIME. “But many of these new ‘fintech’ products don’t come with the consumer protections, federal backing or customer service and relationships with the community that small banks and credit unions provide.”

During a hearing on digital currencies in June, Sen. Elizabeth Warren, the ranking member of the Subcommittee on Financial Institutions and Consumer Protection, compared stablecoins to worthless “wildcat notes” that were issued by speculators in the 19th century. Her expert at that hearing, Lev Menand, an Academic Fellow and Lecturer in Law at Columbia Law School, went further in his testimony, calling stablecoins “dangerous to both their users and … to the broader financial system.”

With private companies pushing deeper into the digital currency space, rival countries seeking to seize leadership and a public that is moving further away from physical currency, the U.S. is facing a world in which it may not control or even lead the world’s payment systems. That would make the future of money look very different from the past.

Cash Will Soon Be Obsolete. Will America Be Ready?

When was the last time you made a payment with dollar bills?

Some people still prefer to use cash, perhaps because they like the tactile nature of physical currency or because it provides confidentiality in transactions. But digital payments, made with the swipe of a card or a few taps on a cellphone, are fast becoming the norm. To keep their money relevant, many central banks are experimenting with digital versions of their currencies. These currencies are virtual, like Bitcoin; but unlike Bitcoin, which is a private enterprise, they are issued by the state and function much like traditional currencies. The idea is for central banks to introduce these digital currencies in limited circulation—to exist alongside cash as just another monetary option—and then to broaden their circulation over time, as they gain in popularity and cash fades away. ChinaJapan, and Sweden have begun trials of central bank digital currency. The Bank of England and the European Central Bank are preparing their own trials. The Bahamas has already rolled out the world’s first official digital currency. The end of cash is on the horizon, and it will have far-reaching effects on the economy, finance and society more broadly.

The U.S. Federal Reserve, by contrast, has largely stayed on the sidelines. This could be a lost opportunity. The United States should develop a digital dollar, not because of what other countries are doing, but because the benefits of a digital currency far outweigh the costs. One benefit is security. Cash is vulnerable to loss and theft, a problem for both individuals and businesses, whereas digital currencies are relatively secure. Electronic hacking does pose a risk, but one that can be managed with new technologies. (As it happens, offshoots of Bitcoin’s technology could prove helpful in increasing security.)

Digital currencies also benefit the poor and the “unbanked.” It is hard to get a credit card if you don’t have much money, and banks charge fees for low-balance accounts that can make them prohibitively expensive. But a digital dollar would give everyone, including the poor, access to a digital payment system and a portal for basic banking services. Each individual or household could have a fee-free, noninterest-bearing account with the Federal Reserve, linked to a cellphone app for making payments. (About 97 percent of American adults have a cellphone or a smartphone.) To see how this might help, consider the payments that the U.S. government made to households as part of the coronavirus stimulus packages. Millions of low-income households without bank accounts or direct deposit information on file with the Internal Revenue Service experienced complications or delays in getting those payments. Checks and debit cards mailed to many of them were delayed or lost, and scammers found ways to intercept payments. Central-bank accounts could have reduced fraud and made administering stimulus payments easier, faster and more secure.

A central-bank digital currency can also be a useful policy tool. Typically, if the Federal Reserve wants to stimulate consumption and investment, it can cut interest rates and make cheap credit available. But if the economy is cratering and the Fed has already cut the short-term interest rate it controls to near zero, its options are limited. If cash were replaced with a digital dollar, however, the Fed could impose a negative interest rate by gradually shrinking the electronic balances in everyone’s digital currency accounts, creating an incentive for consumers to spend and for companies to invest. A digital dollar would also hinder illegal activities that rely on anonymous cash transactions, such as drug dealing, money laundering and terrorism financing. It would bring “off the books” economic activity out of the shadows and into the formal economy, increasing tax revenues. Small businesses would benefit from lower transaction costs, since people would use credit cards less often, and they would avoid the hassles of handling cash.

To be sure, there are potential risks to central-bank digital currencies, and any responsible plan should prepare for them. For example, a digital dollar would pose a danger to the banking system. What if households were to move their money out of regular bank accounts and into central-bank accounts, perceiving them as safer, even if they pay no interest? The central bank could find itself in the undesirable position of having to allocate credit, deciding which sectors and businesses deserve loans. But this risk can be managed. Commercial banks could vet customers and maintain the central-bank digital currency accounts along with their own interest-bearing deposit accounts. The digital currency accounts might not directly help banks earn profits, but they would attract customers who could then be offered savings or loan products. (To help protect commercial banks, limits can also be placed on the amount of money stored in central-bank accounts, as the Bahamas has done.) A central-bank digital currency could be designed for use across different payment platforms, promoting private sector competition and encouraging innovations that make electronic payments cheaper, quicker and more secure.

Another concern is the loss of privacy that central-bank digital currencies entail. Even with protections in place to ensure confidentiality, no central bank would forgo the ability to audit and trace transactions. A digital dollar could threaten what remains of anonymity and privacy in commercial transactions—a reminder that adopting a digital dollar is not just an economic but also a social decision. The end of cash is on the horizon, and it will have far-reaching effects on the economy, finance and society more broadly. With proper preparation and open discussion, we should embrace the advent of a digital dollar.

U.S. Crypto Regulation Talks Are Heating Up, With Three Major Themes Emerging Here’s What They Mean For Investors

One of the founding principles of cryptocurrency is that it’s decentralized and unregulated. But the U.S. government isn’t too worried about crypto’s founding principles. SEC chair Gary Gensler spoke at the Aspen Security Forum Tuesday, highlighting his view of the SEC’s role in cryptocurrency regulation. Gensler called the current crypto landscape the ‘Wild West’. A few key themes have emerged on the subject of new U.S. cryptocurrency regulation: stopping cryptocurrency crime and tax evasion, stablecoin regulation, and the potential for investment vehicles like crypto ETFs and other funds.

For many crypto enthusiasts, the decentralized nature of digital currencies — which, unlike traditional currencies, aren’t backed by any institution or government authority — is a big draw. But regulatory guidance can help protect investors. “As much as I like the decentralization and the lack of government [involvement], I am glad that they are paying attention because unfortunately with cryptocurrency, there are a lot of scams,” says Kiana Danial, author of “Cryptocurrency Investing for Dummies.” Here’s a rundown of the proposals we’ve seen so far, and how they may affect cryptocurrency investors in the future: Cryptocurrency Crime and Tax Evasion Cryptocurrency regulation is tucked into a provision of the $1 trillion bipartisan infrastructure bill moving through Congress.

The provision would expand the definition of a brokerage to include companies that facilitate digital asset trades — like cryptocurrency exchanges. The change would mean increased tax reporting responsibility to help the IRS track crypto tax evasion. Some lawmakers and industry groups argue that the language of the draft is too broad, according to reporting by the Washington Post. Additionally, SEC Chairman Gensler spoke recently about a need to increase regulation and help prevent more ransomware attacks, like the one that shut down the Colonial Pipeline back in May. The pipeline attack was one of a number of high profile instances of hackers seeking Bitcoin ransoms.

While Gensler didn’t comment on exactly how the SEC planned to help stop these crimes, he did say that the agency would continue to exercise the full extent of its power. “[The SEC] will continue to take our authorities as far as they go,” Gensler said during an appearance at the Aspen Security Forum in Colorado. A recent U.S. treasury report voiced the same concerns as Gensler, saying cryptocurrency “poses a significant detection problem by facilitating illegal activity broadly including tax evasion.”

[READ MORE]: Cryptocurrency Crime Is Booming. Here’s How to Invest Safely

What Investors Should Know Under the proposed law included in the infrastructure bill, companies that facilitate crypto trades would be required to report tax information about those trades to the IRS (just as brokers of traditional investments like stocks do) starting in the 2024 tax season. “The bill is generally investor-friendly because it makes crypto tax compliance easier for investors,” says Shehan Chandrasekera, CPA, head of tax strategy at CoinTracker.io, a crypto tax software company. “This is because if the bill passes, exchanges will have to issue 1099-B tax forms with cost basis information to investors.”

That means the exchange would provide a record of taxable events on the platform, like how much your Bitcoin was worth when you bought it and when you sell it back into U.S. dollars. Today, only some exchanges report this info. “This will significantly reduce the crypto tax filing burden,” Chandrasekera says. It’s already important to keep your own records of any capital gains or losses on your crypto trades, which you should report on your federal tax returns. But this regulation would make it even more essential, since the IRS would more easily be able to find any cases of tax evasion related to crypto. Stablecoin Regulation Gensler also hinted Tuesday that increased stablecoin regulation could help with the cryptocurrency crime problem, as “the majority of what happens [on cryptocurrency exchanges and platforms] is cryptocurrency to cryptocurrency.” Gensler says that by bypassing the involvement of U.S. dollars in direct crypto-to-crypto trades, bad actors may be more able to evade public policy measures and other sanctions aimed at preventing money laundering or ensuring tax compliance.

PRO TIP

Apart from federal regulation, there have been many state-specific cryptocurrency legislations passed. Know what regulations apply in your state. Stablecoins are a type of cryptocurrency pegged to an existing currency, like USDT (Tether). USDT is tied to the price of the U.S. dollar, so its value is constantly $1. And the SEC isn’t the only agency that’s taken interest. Federal Reserve Chairman Jerome Powell has spoken about stablecoin regulation recently, too, while testifying before the U.S. House Committee on Financial Services earlier this month. Powell said that if stablecoins are going to be a “significant” part of the payments universe, “we need an appropriate regulatory framework, which we frankly don’t have.”

Treasury Secretary Janet Yellen echoed that sentiment recently, coordinating a meeting with the President’s Working Group on Financial Markets to discuss “the rapid growth of stablecoins, potential uses of stablecoins as a means of payment, and potential risks to end-users, the financial system, and national security,” according to a meeting readout. What Investors Should Know Nearly three-quarters of trading on all crypto trading platforms occurred between a stablecoin and some other token in July, Gensler said. While it’s unclear yet what any regulatory action on stablecoins would look like, any regulation could impact investors who hold or use stablecoins as part of their strategy.

Crypto-to-crypto trades often incur lower fees on many exchanges than buying crypto outright in U.S. dollar-to-cryptocurrency transactions, and stablecoins’ low price volatility makes them a potentially better option for purchases than transferring cash each time. But for investors, they’re not as great a store of value as more volatile cryptos like Bitcoin. If you’re investing in crypto looking for long-term growth, experts recommend sticking with more established coins like Bitcoin or Ethereum. In anticipation of any coming guidance, you should also make sure to choose a cryptocurrency exchange that maintains compliance with evolving federal and state regulators in the United States. This includes many established, high-volume U.S.-based exchanges, like Coinbase and Gemini. “I only purchase my cryptocurrency assets from regulated brokers at this point, because we have the luxury of doing so. Of course in other countries they don’t have it, but we do,” says Danial.

Cryptocurrency ETFs While the government considers how to make it harder to use cryptocurrency for illicit activities and tax evasion, there is still no way for Americans to buy into crypto using more traditional investment accounts like those at a Fidelity or a Vanguard. The SEC has yet to approve a cryptocurrency ETF (exchange-traded fund) — despite several proposed funds from different institutions and exchanges —  but Gensler revealed on Tuesday that it may be coming. “We do it in the equity market, we do it in the bond markets, people might want it here,” Gensler said. While acknowledging there have already been SEC filings for ETFs, “I anticipate we’ll have some new ones under what’s called the Investment Companies Act — and when combined with other federal laws, the law provides significant investor protections,” he says. The Investing Companies Act requires companies, including mutual funds, to disclose information about their finances and investments on a “regular basis,” according to the SEC.

Until an ETF gets approved, “there’s not really a way to buy a security that closely tracks the price of a specific cryptocurrency,” says Jeremy Schneider, the personal finance expert behind Personal Finance Club. That means the only way for investors to really do that is to buy coins directly from an exchange. While there has been some confusion about whether cryptocurrencies are securities (and under SEC regulation), Gensler made clear that every initial coin offering (ICO) he has seen is a security: “Generally, folks buying these tokens are anticipating profits, and there’s a small group of entrepreneurs and technologists standing up and nurturing the projects … I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight.” But Gensler reiterated that the SEC has jurisdiction, and “our federal securities laws apply.”

Cryptocurrency ETFs are not yet available in the U.S., but may offer a way for investors to get into cryptocurrency without having to buy directly from an exchange in the future. If you’re interested in crypto, these funds could help you diversify your holdings across different coins, like a conventional ETF or index fund. But they’re still just as speculative as any crypto investment; if you’re waiting for a Bitcoin ETF because you’re unwilling to take on the risk, you may want to reconsider whether crypto belongs in your portfolio at all. In the meantime, Gensler’s stance that every ICO is a security could mean investors should look to the SEC for protections as regulation becomes more concrete.

Biden Administration Grants Automatic Student Loan Forgiveness To 325,000 Permanently Disabled Borrowers

The Biden administration moved Thursday (Aug. 19, 2021)  to grant 325,000 people who are severely disabled automatic federal student loan forgiveness to the tune of $5.8 billion, setting the stage for reforms to a process that is widely criticized as cumbersome and onerous. “The Department of Education is evolving practices to make sure that we’re keeping the borrowers first and that we’re providing relief without having them jump through hoops,” Education Secretary Miguel Cardona said on a call with reporters Thursday.  “I’ve heard from borrowers over the last six months that the processes are too difficult so we’re simplifying it.”

By law, anyone who is declared by a physician, the Social Security Administration or Department of Veterans Affairs to be totally and permanently disabled is eligible to have their federal student loans discharged. The benefit has never been widely publicized, so few have taken advantage. And when they do, many are met with tedious paperwork and requirements. There is a three-year monitoring period in which borrowers must submit annual documentation verifying their income does not exceed the poverty line. The requirement routinely trips up people who wind up having their loans reinstated. To ease the burden, the Biden administration in March waived the paperwork requirement during the coronavirus pandemic, retroactive to March 13, 2020, when President Donald Trump declared a national emergency.

On Thursday, Cardona said the Education Department will indefinitely extend the income waiver. The department will also pursue the elimination of the requirement altogether through the negotiated rulemaking process in October. The federal agency is proposing new rules to provide automatic disability discharges for anyone identified as eligible through data matching initiatives with Veterans Affairs and the Social Security Administration.

In 2016, the Education Department partnered with the two other agencies to identify eligible borrowers. While the department removed the application requirement in 2019 for veterans, it did not do the same for people identified through the SSA match. Only half of the people identified through the SSA match have received the discharge, according to the Education Department. A bipartisan coalition of congressional lawmakers, including Sens. Chris Coons, D-Del., and Rob Portman, R-Ohio, had urged Trump to automatically discharge the debt, much like his administration had done in 2019 for permanently disabled veterans. But the Trump administration failed to act, while hundreds of thousands of disabled borrowers defaulted on their loans.

A Freedom of Information Act request made by the D.C.-based nonprofit National Student Legal Defense Network found over 517,000 individuals as of May had not received relief. Asked about the discrepancy between the May figure and the 325,000 announced Thursday, Ben Miller, a senior adviser at the Education Department, said the older figure likely includes duplicates that may be showing up in multiple matches. He assured the latest figure accounts for all of the borrowers currently on the books.

“Obviously, we anticipate there will be new matches each quarter,” Miller said. “This is not just a one-time action.” Eligible borrowers will receive notice of their approved discharge in September and the department expects cancellation will occur by the end of the year. People who wish to opt-out of forgiveness will be given the opportunity. While borrowers will not be subject to federal income taxes on the canceled debt, they may encounter state taxes. Consumer groups had urged the Biden administration to automatically discharge the federal student loans of eligible borrowers, rather than require them to submit an application for debt forgiveness. Many were disappointed when the Education Department announced the income waiver in March without automating the process. Advocates praised the administration Thursday for stepping up.

“This is a life-altering announcement for hundreds of thousands of student loan borrowers with disabilities,” Dan Zibel, chief counsel at the National Student Legal Defense Network. “Today’s step is another indication that the Department is listening to the voices of student loan borrowers.”

Rihanna, A Billionaire, Is the Richest Female Musician

It’s official! Forbes has named Rihanna a billionaire, making her the richest female musician and the second wealthiest woman entertainer in the world. The singer, whose real name is Robyn Fenty, is now second only to Oprah in wealth with an estimated net worth of $1.7 billion. Not too shabby!

It was her music that first made her a household name, but according to Forbes, the majority of Rihanna’s net worth comes from her cosmetics brand Fenty Beauty. Rihanna owns 50 percent of the beauty company, which she launched in 2017. Fenty immediately set itself apart by prioritizing inclusivity; it launched with 40 shades of foundation for different skin tones and that number has since grown to 50.

Fenty Beauty was launched in partnership with luxury goods conglomerate LVMH, which is run by the world’s richest person, Bernard Arnault. Upon its launch, Rihanna described Fenty Beauty as her “passion project.” Now, Forbes estimates that a whopping $1.4 billion out of her $1.7 billion fortune comes from the brand. The rest of Rihanna’s net worth is from her lingerie line, Savage x Fenty, and the money she’s earned as a singer and actress.

Fans, including Rihanna’s peers, are celebrating this milestone moment. “[A] BILLI-ON here, a BILLI-ON there- Little Bajan bih w/ green [eyes] – dat bag is a different size,” Nicki Minaj wrote in an Instagram Story.

Fans are eagerly awaiting Rihanna’s next album, which is rumored to be in the reggae genre. Something they can look forward to that’ll arrive far more quickly is the star’s Met Gala look. It’s been confirmed that she’s on the guest list for the star-studded benefit, which is scheduled for next month. Looks like she’ll be one of the richest people at the party.

Was US Money Used To Fund Risky Research Lab In China That Supposedly Is The Origin Of Coronavirus?

As the debate continues over the origins of the coronavirus, a heated political battle is taking place over virus research carried out in China using US funds. It’s linked to the unproven theory that the virus could have leaked from a lab in Wuhan, the Chinese city where it was first detected.

A report released by Republican lawmakers cites “ample evidence” that the lab was working to modify coronaviruses to infect humans and calls for a bipartisan investigation into its origins.

Republican Senator Rand Paul also alleges that US money was used to fund research there that made some viruses more infectious and more deadly, a process known as “gain-of-function”.

But this has been firmly rejected by Dr Anthony Fauci, the US infectious diseases chief. What is ‘gain-of-function’ research? “Gain-of-function” is when an organism develops new abilities (or “functions”).

This can happen in nature, or it can be achieved in a lab, when scientists modify the genetic code or place organisms in different environments, to change them in some way.

For example, this might involve scientists trying to create drought-resistant plants or modify disease vectors in mosquitoes to make them less likely to pass on infections.

With viruses that could pose a risk to human health, it means developing viruses that are potentially more transmissible and dangerous.

Scientists justify the potential risks by saying the research can help prepare for future outbreaks and pandemics by understanding how viruses evolve, and therefore develop better treatments and vaccines.

Did the US fund virus research in China?

Yes, it did contribute some funds. Dr. Fauci, as well as being an adviser to President Biden, is the director of the US National Institute of Allergy and Infectious Diseases (NIAID), part of the US government’s National Institutes of Health (NIH).

This body did give money to an organization that collaborated with the Wuhan Institute of Virology. That organization – the US-based Eco Health Alliance – was awarded a grant in 2014 to look into possible coronaviruses from bats.

Eco Health received $3.7m from the NIH, $600,000 of which was given to the Wuhan Institute of Virology. In 2019, its project was renewed for another five years, but then pulled by the Trump administration in April 2020 following the outbreak of the coronavirus pandemic.

In May, Dr Fauci stated that the National Institutes of Health (NIH) “has not ever and does not now fund gain-of-function research in the Wuhan Institute of Virology”.

Senator Rand Paul asked Dr Fauci if he wanted to retract that statement, saying: “As you are aware it is a crime to lie to Congress.” Senator Paul believes the research did qualify as “gain-of-function” research, and referred to two academic papers by the Chinese institute, one from 2015 (written together with the University of North Carolina), and another from 2017. One prominent scientist supporting this view – and quoted by Senator Paul – is Prof Richard Ebright of Rutgers University.

He told the BBC that the research in both papers showed that new viruses (that did not already exist naturally) were created, and these “risked creating new potential pathogens” that were more infectious. “The research in both papers was gain-of-function research”, he said.

He added that it met the official definition of such research outlined in 2014 when the US government halted funding for such activities due to biosafety concerns. The funding was paused to allow a new framework to be drawn up for such research.

Why does Dr Fauci reject this charge?

Dr Fauci told the Senate hearing the research in question “has been evaluated multiple times by qualified people to not fall under the gain-of-function definition”. He also said it was “molecularly impossible” for these viruses to have resulted in the coronavirus, although he did not elaborate.

The NIH and Eco Health Alliance have also rejected suggestions they supported or funded “gain-of-function” research in China. They say they funded a project to examine “at the molecular level” newly-discovered bat viruses and their spike proteins (which help the virus bind to living cells) “without affecting the environment or development or physiological state of the organism”.

One of the US scientists who collaborated on the 2015 research on bat viruses with the Wuhan institute, Dr Ralph Baric from the University of North Carolina, gave a detailed statement to the Washington Post.

He said the work they did was reviewed by both the NIH and the university’s own biosafety committee “for potential of gain-of-function research and were deemed not to be gain-of-function”. He also says that none of the viruses which were the subject of the 2015 study are related to Sars-Cov-2, which caused the pandemic in 2020.

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