Impacts of Trump’s Strategy on Trading

  • FX: The impacts on US dollar are complicated. On one hand, the US economy is underwent rate cut before the election, aiming to help the economic growth. On the other hand, Trump’s policy (high tariffs and inflationary wages policies) would result in higher inflation, so that Fed might be pressure to rise rate against the greater price increase. The US dollar index would be largely affected by the above mentioned polices.

    Trump states that the US trade deficits have reached to over $1 trillion, implying the imbalance trade condition. The monetary department (Fed) might depreciate US dollar, through which US exports might be accelerated. To make US dollar depreciate, FFR might go downward.

    However, The independence of Fed matters. As Fed’s goal might diverge from Trump’s policy, Jerome Powell’s insight of fighting inflation might not be coincident with the campaign strategy. If wages rise, pushing up inflation, Fed would increase rate again.

    In sum, there is an uncertainty on FX changes. The majority of the market consider Trump’s policy would outperform, so USD appreciates after election.

  • Commodity:

    • Gold: As USD appreciates, gold price decrease.
    • Metals: Coppers might experience uncertainty. USD appreciates, commodity price shall decrease. However, the infrastructure plan increase the demand of related commodities as well such as coppers. Thus, the price change of coppers are uncertain.
    • Energies: similar to metals. Two-way effects.
    • Cryptos: Simple logic. Boosting cryptos.
  • Stocks: tax cuts definitely benefit firms. Stock price raises.

  • Bonds: money flows to stocks, less demand on bonds. Thus, bond price decreases, and yield increases.

About Trump’s Campaign Statement

  1. Seal the border and stop the migrant invasion
  2. Carry out the largest deportation operation in American history
  3. End inflation, and make America affordable again
  4. Make America the dominant energy producer in the world, by far!
  5. Stop outsourcing, and turn the United States into a manufacturing superpower
  6. Large tax cuts for workers, and no tax on tips!
  7. Defend our constitution, our bill of rights, and our fundamental freedoms, including freedom of speech, freedom of religion, and the right to keep and bear arms
  8. Prevent world war three, restore peace in Europe and in the middle east, and build a great iron dome missile defense shield over our entire country — all made in America
  9. End the weaponization of government against the American people
  10. Stop the migrant crime epidemic, demolish the foreign drug cartels, crush gang violence, and lock up violent offenders
  11. Rebuild our cities, including Washington DC, making them safe, clean, and beautiful again.
  12. Strengthen and modernize our military, making it, without question, the strongest and most powerful in the world
  13. Keep the U.S. dollar as the world’s reserve currency
  14. Fight for and protect social security and Medicare with no cuts, including no changes to the retirement age
  15. Cancel the and cut costly and burdensome regulations
  16. Cut federal funding for any school pushing critical race theory, radical gender ideology, and other inappropriate racial, sexual, or political content on our children
  17. Keep men out of women’s sports
  18. Deport pro-hamas radicals and make our college campuses safe and patriotic again
  19. Secure our elections, including same day voting, voter identification, paper ballots, and proof of citizenship
  20. Unite our country by bringing it to new and record levels of success

The above 20 statements are listed in Trump’s Republican Party’s Website, https://www.donaldjtrump.com/platform. Combining with the Table of Content, here are some assessments.

Table of Content Campaign Statements Implication
CHAPTER ONE: DEFEAT INFLATION AND QUICKLY BRING DOWN ALL PRICES Defeat inflation, Unleash American Energy Trump plans to lifting restriction on Energy Production, and terminate the Green New Deal, continuing the usage of low cost energies such as oil, natural gas, and coal. US has turn from the largest Oil importer to Oil exporter, and Trump will extend this road. This policy would affect the oil price, the status of US dollar, and the commodities price, and further cooperation agreements.
CHAPTER TWO: SEAL THE BORDER, AND STOP THE MIGRANT INVASION Stop Immigrants Reduce labour supply, potentially pushing up wages. Might be harmful to inflation.
CHAPTER THREE: BUILD THE GREATEST ECONOMY IN HISTORY Tax Cuts; Support using Crypto and AI Prioritising American producers over foreign outsourcers. De-globalisation, increase production cost, but help resolve employment problems. Stabilise the social development. Support using Crypto and AI innovation.
CHAPTER FOUR: BRING BACK THE AMERICAN DREAM AND MAKE IT AFFORDABLE AGAIN FOR FAMILIES, YOUNG PEOPLE, AND EVERYONE Stabilise housing price; accessible education; affordable healthcare Social Stability, making welfare available for people.
CHAPTER FIVE: PROTECT AMERICAN WORKERS AND FARMERS FROM UNFAIR TRADE Higher Tariff; stop outsourcing; save Auto Industry; reduce trade deficit Place higher tariffs, protect US industries and manufacturing powers. Save Traditional Auto industries, cancel supports to EV. Trade independence from China, including vehicles imports. Keep supply chain, and maintain internal economic cycle.
CHAPTER SIX: PROTECT SENIORS Medicare, Social Security, Cares for Seniors. Social Welfare. Same as CHAPTER 4.
CHAPTER SEVEN: CULTIVATE GREAT K-12 SCHOOLS LEADING TO GREAT JOBS AND GREAT LIVES FOR YOUNG PEOPLE Children; Teachers; Schools; Knowledge; Gender Indoctrination Social Welfare. Similar to CHAPTER 4. Adding the gender things.
CHAPTER EIGHT: BRING COMMON SENSE TO GOVERNMENT AND RENEW THE PILLARS OF AMERICAN CIVILIZATION. Rebuild Cities Infrastructure Construction
CHAPTER NINE: GOVERNMENT OF, BY, AND FOR THE PEOPLE
CHAPTER TEN: RETURN TO PEACE THROUGH STRENGTH

Trump’s campaign strategies seem self-containing.

  • Fiscal Revenue and Expenditure Balance: In most of case, fiscal expenditure need to be supported by fiscal revenues. Both (1) the reduction of corporate tax, (2) the increase in infrastructure construction, and (3) upgraded social welfare would be financed by increase in Tariffs.

    However, to what degree the revenue could cover the expenditure might need specific clauses of policies to be confirm and need further evaluation of the post-policy impact.

  • Labour Market Implication: Stop immigrant would reduce the labour supply. However, Trump’s strategies aim to remain the manufacturing power insider the U.S.. Stop outsourcing and keep the supply chain in America would provide job opportunities, increasing the employment demand. Those policies together would increase the employment level and be helpful for the social stability.

  • Inflation: Oil supply increase would decrease commodity price, relieving inflation. Labour market actions (stop immigrant and outsourcing, increase wages) would increase inflation. Hard to say the inflation would go upward or downward.

  • International trade: Policies would downgrade the globalisation. Definitely harmful to all exporting countries. Exporters might need to find other large goods importers, or need to consume the excess supply power themselves. However, not just America, but the EU are all implement tariff protection, keep the pricing and competitive advantages to the local companies.

    Theoretically, de-globalisation/trade protection would harm the economic efficiency as relevant parties did not implement the comparative advantage. However, US, as the largest importers, would actually extract productions from others, and take the benefits from the trade protection. In addition, US decides to contain the manufacture power, and exports its production

Recent Insights of Trump Trade

Trump Trade is tied with Trump’s policy, and the potential of Trump’s victory.

Trump’s policy is likely to result in higher inflation (as he advocates high tariffs, low tax, looser fiscal). The Fed is expected to react to the increase in inflation by raising EFFR. Therefore, the US Dollar Index is expected to increase, based on the Trump trade and so on policies. Trump’s website illustrates polices such as Tax Cuts, Trade Protect to remain manufacturing power in the US. This year, there are people predicting that the Fed might not react by increasing interest rate, but the MoTreasury might react by increase the fiscal deficits.

Based on Trump’s previous policy in 2018, he loosened bank regulation and capital requirements. Leave the Paris Agreement and cut green energy that reduces the manufacturing efficiency. Related industries might be affected. For instance, Banking and Financial industries and Crude Oil related commodities might be accelerated, but Green Energy Industries might be less considered. Also, lower corporate tax, higher earnings per share equals higher stock market. Cryptos, through usually experiences the similar moves as Gold, might increase, because of the support from Elon Mask.

In sum, With the Trump Trade, the inflation is expected to increase, so the Fed or MoTreasury react by increasing FFR. Subsequently,
– US dollar index is expected to increase (as rate increase),
– Gold and Crude Oil are expected to decrease (as USD appreciate, rate increase, and debt increase), and
– US Stock price increase (and US corporates benefit from tax cut), and
– Cryptos increase (because of the support of Elon Mask, however there is downside power on it),
– Debt price is expected to decrease, yield increase (as FFR increase target rate).

End.

The Fine Art of Small Talk

by Debra Fine

A book that teach you how to overcome the fear of start a conversation, and how to delicately continue the talk, making others comfortable.

1. What’s the Big Deal about Small Talk

We become better conversationalists when we employ two primary objectives.

  1. Take the risk, starting a conversation with a stranger.
  2. Assume the burden. It’s our responsibility to come up with topics to discuss, to remember people’s name and to introduce them to others, to relive the awkward moments or fill the pregnant pause.

2. Get over Your Mum’s Good Intentions.

  • In safe situations, make it a point to talk to strangers. Start it!

    To expand your circle of friends and colleagues, you must start engaging strangers and acquaintances in conversation. There is no other way. Strangers have the potential to become good friends, long-term clients, valued associates, and bridges to new experiences and other people. Start thinking of strangers as people who can bring new dimensions to your life, not as persons to be feared.

  • Introduce yourself.

    People expect you to mingle on your own, introduce yourself, and take the initiative to get acquainted.

  • Silence is impolite

    Start to talk, silence is not golden.

    Don’t risk being taken as haughty or pretentious by keeping silent; it can cost you dearly. Start small talking and let others see your personality. You know how much you appreciate the efforts others put forth in conversation. Make the same effort. Contrary to what your elders taught you, silence is not golden.

  • Good things come to those who go get them!

    Don’t spend another minute thinking that if you just keep waiting, interesting people will introduce themselves.

    We end up paying twenty pounds to attend an event and then seek out people we already know because it’s less threatening. Yet the purpose of the event was to make new contracts.

  • It’s up to you to start a conversation

    When you walk into a luncheon or a cocktail party, more people there are scared to death to talk to you. Fear of rejection keeps many of us from risking conversation, but the probability of rejection is actually quite small.

    You will be the hero if you start the conversation. You will gain stature, respect, and rapport if you can get the conversation going.

  • It’s up to you to assume the burden of conversation

    You cannot rely on the other person to carry the conversation for you. One-word answers to questions do not count as shouldering your share of the burden.

    To become a great conversationalist becoming invested in the conversation and actively working to help the other person feel comfortable.

    Ask icebreaker questions. Such as “What do you do for a living?”

3. Take the plunge: Start a conversation!

When someone gives you a smile, you are naturally inclined to smile back. Be the first to smile and greet another person. Just a smile and a few words, and it’s done. Be sure that you make eye contact. That simple act is the beginning of establishing rapport.

Mingle with the people in the audience, making a personal connection with as many as possible.

The best way to get people comfortable enough to open up and express themselves was to look them in the eye and ask “What’s your name?” Making eye contact and placing the emphasis on the word your, rather than the word “name”, signaled to the person that they were important.

  • What’s in a name?

    Learning and using names is probably the single most important rule of good conversation.

    Focus on the name, repeat it, and then formulate your answer.

    Don’t go through the while conversation pretending you know the person’s name. Say something like “Excuse me, I’m not sure I got your name”. It’s always preferable to have the other party repeat it than to fake it. Never, ever fake it!

    Individuals with foreign or unusual names get slighted more than the rest of us. Make it a point to learn the proper pronunciation, even if it means that the other person repeats it a few times.

    Learning names is part of hosting the conversation. A host is always expected to know and use every person’s name, since the host is responsible for making introductions as new individuals enter the conversation.

    Acting as the host puts everyone at ease and creates an atmosphere of warmth and appreciation that naturally encourages conversation. It also positions you as a leader in the group.

  • It’s better to give than to receive.

    Give your name when you meet someone. Extend your hand. “Hi XX. Fanyu Zhao. How are you?” By stating my name.

4. Keep the conversation going!

Instead of sitting back and waiting for another kind soul to start a conversation, take the lead. Try to make your guest as comfortable as possible.

The approachable person is the one who makes eye contact with you and who is not actively engaged in a conversation or another activity such as reading a newspaper or working at a computer.

Not only are icebreakers a good way to start conversation, but some of the statements are accompanied by questions you can ask to keep the ball rolling. Don’t use a statement alone. Using a statement by itself is like lobbing the conversational ball blindfolded, not knowing where it will land or whether it will get tossed back.

  • Tips for Starting with a Conversation
    1. What a beautiful day. What’s your favorite season of the year?
    2. I was truly touched by that movie. How did you like it? Why?
    3. This is a wonderful restaurant. What is your favorite restaurant? Why?
    4. What a great conference! Tell me about the sessions you attended.
    5. I was absent last week. What did I miss?
    6. That was an interesting program after lunch. What did you think?
    7. Presidential campaigns seem to start immediately after the inauguration. What do you think of the campaign process?
    8. I am so frustrated with getting this business off the ground. Do you have any ideas?
    9. • I am excited about our new mayor. How do you think her administration will be different from her predecessor’s?
    10. Your lawn always looks so green. What is your secret?
    11. We’ve been working together for months now. I’d like to get to know you better. Tell me about some of your outside interests.
    12. You worked pretty hard on that stair stepper. What other equipment do you use?
    13. You always wear such attractive clothes. What are your favorite stores?
    14. What a beautiful home. How do you manage to run a house with four children?
    15. I read in the newspaper that our governor has taken another trip overseas. What do you think of all his travel?
  • Easy Openers: You will be successful if you just take the initiative and give it a try. You’ll be surprised by how easy it is and at the positive reinforcement you get from people when you start a conversation. Remember the following four steps and you are well on your way to an excellent chat.
    1. Make eye contact.
    2. Smile.
    3. Find that approachable person!
    4. Offer your name and use theirs.
  • Break into a group of five conversation:
    1. Show interest in the speaker, but stand slightly away from the group. A group this size is slow to warm, so first let them become accustomed to seeing you. Slowly, they will shift to bring you into the circle.
    2. Ease into the group by demonstrating that you’ve been listening. Look for welcoming signs such as them asking your opinion or physically shifting positions to better include you.
    3. Initially, it is best to find a point of agreement; barring that, just acknowledge the speaker. Wait before rocking the boat with a big wave of radical opinions. Before offering your views, let the group warm to you. If you come on too strong too fast, the group will resent your intrusion and disband. Then you have to start all over again, looking to chat with someone you haven’t just offended!

5. Let’s Give ’Em Something to Talk About

Your mission is to get your conversation partners talking about themselves. Most people enjoy the opportunity to share their stories, and if you give them the chance, they’ll start talking. This is a no-brainer route to small talking success.

  • Asking.

    By asking open-ended questions, you offer your conversation partner the opportunity to disclose as much or as little as she wants. These questions demand more than a simple yes or no answer, yet they make no stressful demands.

  • Digging Deeper

    After asking the greeting type question such as “How are you?”, follow up with deep question.

    These everyday inquiries are just a few other ways of saying hello. It’s almost universally understood that these questions are a form of greeting, not a sincere inquiry.

    Digging in deeper indicates you truly desire a response and are prepared to invest time in hearing the response.

Dig in deeper based on your observation.

6. Hearing Aids and Listening Devices

Scientific research has shown that people are capable of listening to approximately 300 words per minute. On the flip side, most of us can only speak at 150 to 200 words per minute.

The dilemma is that we have the capacity to take in much more information than one person can divulge at any given time.

Attentive listening has three parts: visual, verbal, and mental. Combine these elements, and powerful listening results.

  • Listening is seen, not just heard

    Listening is more than just hearing. In a normal two-person conversation, verbal components carry less than 35% of the social meaning of the situation, while nonverbal components account for over 65%. It’s critical to maintain eye contact when you are listening to another person.

    Gestures show what the counterpart’s attitude.

  • Verbalise your listening

    There are numerous verbal cues to let the speaker know you are fully engaged in the conversation. These brief comments tell the speaker that you are interested and want to know more. You can use verbal cues to show that you have a positive response, that you disagree, or that you want to hear more about something in particular.

If you want to show that you are: Say:
Interested in hearing more … Tell me more. What was that like for you?
Taking it all in… Hmmm, I see …
Responding positively… How interesting! What an accomplishment!
Diverging… On the other hand, what do you think … ?
Expanding on the idea… Along that same line, do you … ? Why?
Arguing/refuting… What proof do you have of that?
Involving yourself … Could I do that? What would it mean to me?
Clarifying … I’m not sure I’m clear on your feelings about…
Empathising… That must have been tough/frustrating, et cetera.
Probing… What do you mean by that? How were you able to manage?
Seeking specifics… Can you give me an example?
Seeking generalities… What’s the big picture here?
Looking to the future… What do you think will happen next?
Reviewing the past… What happened first?
Seeking likenesses / differences Have you ever seen anything like this? What’s the opposing point of view?
Seeking extremes / contrasts What’s the downside? / What’s the optimum?

Other verbal listening cues function to redirect the conversation by transitioning to another topic. Examples of cues that offer a seamless segue include:

  • That reminds me of…
  • I’ve always wanted to ask you…
  • I thought of you when I heard…
  • Do you mind if I change the subject?
  • There’s something I’ve wanted to ask of someone with your expertise.

    All these verbal cues indicate that you are fully present. Just as important, these cues encourage others to continue speaking. Imagine someone asks you a question, and you respond with a one-sentence answer. You are uncertain as to how much information they are truly interested in learning. Added verbal cues as you respond assure you that their interest is sincere.

    • Tips for Tip-Top Listening
  1. Learn to want to listen. You must have the desire, interest, concentration, and self-discipline.
  2. To be a good listener, give verbal and visual cues that you are listening.
  3. Anticipate excellence. We get good information more often when we expect it.
  4. Become a **“whole body” listener: Listen with your ears, your eyes, and your heart. **
  5. Take notes. They aid retention.
  6. Listen now, report later. Plan to tell someone what you heard, and you will remember it better.
  7. Build rapport by pacing the speaker. Approximate the speaker’s gestures, facial expressions, and voice patterns to create comfortable communication.
  8. Control internal and external distractions.
  9. Generously give the gift of listening.
  10. Be present, watch the tendency to daydream. Don’t drift off from conversations.

7. Prevent Pregnant Pauses with Preparation

  • Do not let old acquaintances be forgotten

    Seek out what’s new and keep the conversation rolling with questions. Like…

    • Bring me up to date on . . .
    • What’s been going on with work since I last saw
      you?
    • What has changed in your life since we spoke last?
    • How’s your year been?

    But do not ask about other’s wife / jobs / children, if you do not know the person well

  • Preparing for the long haul

    When there is nothing to talk about! Here are
    some examples of interviewing questions you can customise to fit your own personality: (the book gives the following examples)

    • What do you enjoy most about this season of the year?
    • What got you involved in this organisation/event?
    • If you weren’t here, what would you be doing at this very moment?
    • If you could meet any one person, whom would you choose?
    • Tell me about an issue that matters a great deal to you.
    • What has been your most important work experience?
  • Limelight Etiquette

    First, disclose information about yourself that is comfortable and uncontroversial. Lead with easy, positive, and light information. Building trust and intimacy over time creates friendships. Having a conversation is a little like peeling an onion—you want to proceed in layers, matching the level of intimacy shared by your partner.

    You aren’t limited to talking about events and experiences. You can share feelings, opinions about books you’ve read, restaurants you’ve visited, and movies you’ve seen.

    Speak no evil: Barring exceptional circumstances, avoid these often controversial topics that can stop a conversation in its tracks:

    1. Stories of questionable taste
    2. Gossip
    3. Personal misfortunes, particularly current ones
    4. How much things cost!
    5. Controversial subjects when you don’t know where people stand
    6. Health (yours or theirs). The exception is when you’re talking with a person who has an obvious new cast, crutches, or bandage. In that situation, the apparent temporary medical apparatus is free information. If you skirt the issue, it’s a bit like having an elephant in your living room and ignoring it.

    When in doubt, leave it out. Avoid any area that is likely to offend your conversation partner

Conversation Clout

  • Can you spell your name for me? Most of us know how to spell our names, we do not need to be asked first if we know how!

    Instead: Please spell your name for me.

  • If I can find out … A low expectation is established when you use the word if. Raise expectations. Instill confidence.

    Instead: I will look into this and get back to you one way or the other.

  • I’m only the… Everyone’s role or job is important. This is demeaning to oneself. Define the capabilities and responsibilities in
    your area of expertise.

    Instead: My responsibilities are focused on Website development. I will be glad to check with sales about your order.

  • I can’t meet with you this morning. This projects an unwillingness to deliver the best possible outcome. Or it projects a burden. In either
    case say what you can do, not what you cannot.

    Instead: I can be there by three this afternoon.

  • I’ll try to get this back to you this week. The word try conveys the underlying message that this is not something that is dependable.

    Instead: I’ll get to you no later than next week.
    Tell people what you will do, not what you hope to do.

  • You’ll have to call me tomorrow. This is a busy time for me. This sounds like a person giving orders and placing another burden on my already heavy load! And I don’t like to be bossed around.

    Instead: *You can call me tomorrow. That’s a better time for me.

    No say no, but say what you can.

9. Crimes and Misdemeanours

  • Don’t be interpreter.

    Do not interpret. The interrupter is
    characterised by high drive, determination to make her point, and a lack of patience.

    There are only three good reasons for interrupting. The first is that you need to exit immediately. The second is that the topic of conversation is too uncomfortable to bear, and you need to change the subject right away. And the third is if you are in the company of a monopoliser who has refused to offer you a natural break in the conversation for more than five minutes.

10. The Graceful Exit

There are ways to artfully exit a conversation that leave the other person’s ego intact. I find that many people remain in a conversation longer than they should for two reasons: they feel trapped, especially if it’s just a two-person dialogue, or they are so comfortable that they don’t want to leave.

  • When you prepare to depart a conversation, recall why you originally connected with your conversation partner and bring the conversation back to that topic.

    For example:

    Tom, (1) it’s been wonderful talking with you about the changes impacting the health-care industry. (2) I need to catch up with another client before she leaves. (3) Thanks for sharing your expertise.

    Notice that the author didn’t make excuses for my leaving. The author didn’t say I had to call the babysitter or that I needed to return a page. That well-known adage “honesty is the best policy”

    You clearly state that the reason you are leaving the conversation is that you need to do something. There is no mistaking the fact that you have a specific agenda that you are trying to accomplish.

  • A Little Appreciation goes a long way

    Ending a conversation by showing appreciation for the interchange provides an upbeat way to leave on a positive note. Thanking others for their time, expertise, or the sheer joy of the conversation is always welcome.

    Remember to end the conversation the same way you began it—with a smile and a handshake. Even if you have to get up and walk around the table to do this, make sure you do. You make a lasting impression when you seal a conversation with a handshake.

  • Parting is such sweet sorrow

    If you’ve met someone with whom you’d like to further a relationship, the best way to exit is to ask to see him again.

11. The conversational Ball is in your court!

A cheat sheet of tips here. Take the risk and assume the burden, and do start to talk.

Fifty Ways to Fuel a Conversation

  1. Be the first to say hello.
  2. Introduce yourself to others.
  3. Take risks and anticipate success.
  4. Remember your sense of humour.
  5. Practice different ways of starting a conversation.
  6. Make an extra effort to remember people’s names.
  7. Ask a person’s name if you’ve forgotten it.
  8. Show curiosity and sincere interest in finding out about others.
  9. Tell others about the important events in your life. Don’t wait for them to draw it out.
  10. Demonstrate that you are listening by restating their comments in another way.
  11. Communicate enthusiasm and excitement about your subjects and life in general.
  12. Go out of your way to try to meet new people wherever you are.
  13. Accept a person’s right to be an individual with different ideas and beliefs.
  14. Let the natural person in you come out when talking with others.
  15. Be able to succinctly tell others—in a few short sentences—what you do.
  16. Reintroduce yourself to someone who is likely to have forgotten your name.
  17. Be ready to tell others something interesting or challenging about what you do.
  18. Be aware of open and closed body language.
  19. Smile, make eye contact, offer a handshake, and go find the approachable person.
  20. Greet people that you see regularly.
  21. Seek common interests, goals, and experiences with the people you meet.
  22. Make an effort to help people if you can.
  23. Let others play the expert.
  24. Be open to answering common ritualistic questions.
  25. Be enthusiastic about other people’s interests.
  26. See that the time is balanced between giving and receiving information.
  27. Be able to speak about a variety of topics and subjects.
  28. Keep up to date on current events and issues that affect our lives.
  29. Be willing to express your feelings, opinions, and emotions to others.
  30. Use “I” when you speak about your own feelings and personal things, rather than “you.”
  31. Visually show others that you are enjoying your conversation with them.
  32. Be ready to issue invitations to others to join you for other events/activities to further the relationship.
  33. Find ways to keep in touch with friends and acquaintances you meet.
  34. Seek out others’ opinions.
  35. Look for the positive in those you meet.
  36. Start and end your conversations with the person’s name and a handshake or warm greeting.
  37. Take the time to be friendly with your neighbours and coworkers.
  38. Let others know that you would like to get to know them better.
  39. Ask others about things that they have told you in previous conversations.
  40. Listen carefully for free information.
  41. Be ready to ask open-ended questions to learn more.
  42. Change the topic of conversation when it has run its course.
  43. Always search for the things that really get another excited.
  44. Compliment others about what they are wearing, doing, or saying.
  45. Encourage others to talk to you by sending out positive signals.
  46. Make an effort to see and talk to people you enjoy.
  47. When you tell a story, present the main point first and then add the supporting details.
  48. Include everyone in the group in conversation whenever possible.
  49. Look for signs of boredom or lack of interest from your listener.
  50. Prepare ahead of time for each social or business function.

12. Make the most of networking events!

Do you dread receptions, banquets, and other business-related social events? Does attending another open house make you want to run inside your own and lock the door? You’re not alone. Many of us are apprehensive about these situations, because most of us either hate entering rooms where we don’t know anyone or hate spending time with people we don’t know well. Keeping a conversation going during such occasions is an ordeal.

But for business professionals, these occasions represent opportunities to develop business friendships and broaden our networks. Whether you realise it or not, networking happens all the time.

Everyone learns the technical skills required for their jobs, but not everyone places importance on conversational skills. The ability to talk easily with anyone is a learned skill, not a personality trait. Acquiring it will help you develop rapport with people and leave a positive impression that lasts longer than an exchange of business cards.

  • A few tips:
    • Be the first to say hello!
    • Introduce yourself. Act as if you’re the host and introduce new arrivals to your conversation partner or partners.
    • Smile first and always shake hands when you meet someone.
    • Take your time during introductions! Make an extra effort to remember names, and use them frequently in the conversation.
    • Maintain eye contact in any conversation. Many people in a group of three or more look around in the hope that others will maintain eye contact on their behalf. Yet people don’t feel listened to if you’re not looking at them.
    • Get somebody to talk about why they’re attending the event. You are now on your way to engaging them in conversation.
    • Show an interest in every person. The more interest you show, the more wise and attractive you become to others.
    • Listen carefully for information that can keep the conversation going.
    • Remember, people want to be with people who make them feel special, not people who are “special.” Take responsibility to help people you talk to feel as if they’re the only person in the room.
    • Play the conversation game. When someone asks How’s business? or What’s going on? answer with more than Not much. Tell more about yourself so that others can learn more about you.
    • Be careful with business acquaintances. You wouldn’t want to open a conversation with: How’s your job at? What if that person just got fired or laid off? Be careful when you’re asking about an acquaintance’s spouse or special friend; you could regret it.
    • Don’t act like you’re an FBI agent. Questions like What do you do?, Are you married?, Do you have children?, and Where are you from? lead to dead-end conversations.
    • Be aware of body language. Nervous or illatease people make others uncomfortable. Act confident and comfortable, even when you’re not.
    • Be prepared. Spend a few minutes before an anticipated event preparing to talk easily about three topics. They will come in handy when you find yourself in the middle of an awkward moment . . . or while seated at a table of eight where everyone is playing with their food.
    • Show an interest in your conversation partner’s opinion, too. You’re not the only person who has opinions about funding the space program or what will happen to the stock market.
    • Stop conversation monopolists in their tracks. If possible, wait for the person to take a breath or to pause, then break in with a comment about their topic. Immediately redirect the conversation in the direction you wish it to go.
    • Be prepared with exit lines. You need to move around and meet others.
    • Don’t melt from conversations. Make a positive impression by shaking hands and saying good-bye as you leave.

13. Surviving the singles scene

  • Don’t think of what you’re doing as “singles” socialising. Just think of it as networking.

    You have something to offer others, and they have something to offer you: connection to humanity.

  • You don’t have to make small talk immediately upon entering.

    Stand in the doorway and survey the scene. This accomplishes two things: You get a moment to stabilize yourself and get your bearings, and you are framing yourself for everyone to see; they will perceive you as a selfconfident person and unconsciously hope for the chance to speak with you. Self-confidence is probably the single most powerful magnet, right after good looks.

  • Follow up the conversation.

    With creative usage of these three elements (questions, follow-up comments, follow-up questions), the possibilities and variations in conversation are virtually limitless. As long as you stay focused on the conversation, you can keep it going.

15. Feel-Good Factor

Here’s how to build rapport that leads to success in every business relationship.

  • Use small talk as a picture frame around business conversations. Begin and end with small talk when making a presentation to a client, selling a widget, negotiating a contract, providing a service, or conferencing with your child’s teacher. A study conducted with physicians showed those who spend a few minutes asking patients about their family, their work, or summer plans before and/or after an examination are less likely to be sued than those who don’t.

    People don’t sue people they care about. And we care about people who show they care about us.

  • Express empathy. Everyone is entitled to be listened to, even when in the wrong. Consider the client who sees the stock market rise 30 percent but not his own portfolio. The stockbroker knows the client insisted on picking the stocks himself, but it would be a mistake to make the client “wrong.” It’s better to say, I realize it’s frustrating to experience this. What can we do from here? That goes a long way to defusing negative emotions and helping the client feel better about this relationship—rather than tempted to move on to another stockbroker.

  • Greet people warmly, make eye contact, and smile. Be the first to say hello. Be careful, you might be viewed as a snob if you are not the first to say hello. People often go back to their favourite restaurants because the host greets them with a sincere smile, looks at them directly, and welcomes them with warmth.

  • Use the person’s name in conversation. You are more likely to get special treatment by using the person’s name. If you don’t know someone’s name, take a moment to ask, and then repeat it. Be sure to pronounce it correctly. And never presume your conversation partner has a nickname. My name is Debra, not Debbie. I don’t feel good when people call me Debbie. It’s a little thing that has big importance.

  • Show an interest in others. In response to our high-tech environment of e-mail and fax broadcasts, we need “high touch” more than ever. That’s what you create when you show an interest in the lives of your customers/clients/patients every chance you get.

  • Dig deeper. When you engage in a conversation, don’t leave it too quickly. If your customer / client / patient mentions her vacation, pick up on the cue and dig deeper. Ask where she went, what she did, what the highlight was, if she would go back. You’ll make her feel good about her life and about taking time with you.

    Always follow up a question like How’s work? with What’s been going on at work since the last time we spoke? This way he or she knows you really want to hear about what is going on with work.

  • Be a good listener. That means making eye contact and responding with verbal cues to show you hear what the speaker says.

    Verbal cues include the phrases: Tell me more, What happened first?, What happened next?, That must have been difficult, and so on. Using them makes people feel actively listened to.

  • Stop being an adviser. When you mention a problem you might be having with an employee or an associate, do people offer advice without asking any questions? Have you ever put together a résumé and, as soon as you sent it out, someone told you it was too long or too short or too detailed or not detailed enough? Jumping in with unsolicited advice happens annoyingly often. Instead of advice, give understanding with simple phrases like I know you can work out a solution or I hope the job hunt goes well for you. Offer advice only when you are specifically asked for it.

    People say something does not mean they are asking for an advice. Probably, people are just want to speak, and want you to listen. So, do not give advice if people is not asking for.

The Interview about the Principles for Changing World Order

by Ray Dalio

Five Factors:

  1. Economy, Debt, Money, Market
  2. Internal Order or Disorder/Conflict
  3. External Order or Disorder (Power Rivalries)
  4. Acts of Nature (Impact of Climates)
  5. Technologies (the advance of productivity)

Cycles Factors, as the below three, generate the cycle. (, are marked by wars. Starting the cycle at the end of WW II.)

  1. Internal Order – Productivity increase
  2. Debt raises relative to Incomes. (Debt is money, and debt means more buying power.) Increase the gaps of wealth, -> Internal Conflicts start to emerge
  3. External Conflict:

Climates, and Technologies (Mans inventiveness, new technologies)


Apply those five factors into the current world.

  • The current Debt Climate condition:

    Currently,

    Private debt sectors (individuals) get more and more indebted.

    Public debt sector take on the debt, and the central bank is supporting that effort.

    On a cyclical basis, total debt relative to GDP continuing to rise near its high.

    Debt service cost (a function of interest rate) increase, and public sector takes the burden.

    Then, Public sector starts to get indebtedness.

    That is the short-term cycle.


The cycle for development, Ray considers there are four stages.

  1. A poor country that has no capital accumulation starts to recognise the poverty.

    Country gets money to get capital formation, and conduct infrastructure (such as build roads). Do not waste that money, and put money into productive uses.

  2. Mentality. As the country getting richer, it still think it is not rich enough, is still poor.

  3. The country keeps getting richer, and start to realise it do not have to work that hard, and start to enjoy the life.

  4. As there are less works, the country gets poor, but still think itself is rich. So start to borrow money.


How to create a portfolio.

  • has a diversified portfolio that is able to absorb risks and unforeseen.

  • The types of assets in the portfolio might include

    1. Inflation index bonds
    2. Gold
    3. Real Rates
    • Avoid the credit risk. (The above three are the government obligations, so less credit risks are there)
    • Such as, we short Inflation index bond and long Gold (we could avoid the credit risks, and diversify the portfolio with certain target)

The Delusion about the Fed

by Professor Aswath Damodaran who disclose some myths in this note.

Myth 1. The Fed as Rate Setter.

The Fed sets only one interest rate, the Fed Funds rate. FFR is an overnight intra-bank borrowing rate, and that none of the rates that we face in our lives, either as consumers (on mortgages, credit cards or fixed deposits) or businesses (business loans and bonds), are set by or even indexed to the Fed Funds Rate.

The Federal Open Market Committee (FOMC) has the power to change this rate, which it uses at irregular intervals, in response to economic, market and political developments. FOMC meets 8 times each year.

The table below lists the rate changes made by the Fed in this century:

FEdActions

FFR is a range such as 5.00%-5.25%, so we usually use the effective FFR, which shrink to a figure.

The Figure below shows the move of effective FFR over time.

There are two periods that stand out.

  • The first is the spike in the Fed Funds rate to more than 20% between 1979 and 1982, when Paul Volcker was Fed Chair, and represented his attempt to break the cycle of high inflation that had entrapped the US economy.
  • The second was the drop in the Fed Funds rate to close to zero percent, first after the 2008 crisis and then again after the COVID shock in the first quarter of 2020. In fact, coming into 2022, the Fed had kept the Fed Funds rates at or near zero for most of the previous 14 years, making the surge in rates in 2022, in response to inflation, shock therapy for markets unused to a rate-raising Fed.

FedFundsRate

As noted that the Fed only set FFR, there are undoubtedly other interest rates you will encounter, but are not set by the Fed. Those other rates will fall into one of three buckets – (1) market-set interest rates, (2) rates indexed to market-set rates and (3) institutionally-set rates. None of these rates are set by the Federal Reserve, thus rendering the “Fed sets interest rates” as myth.

Myth 2. The Fed as Rate Leader

Although the Fed does not set rate directly, you may still believe that the Fed influences these rates with changes it makes to the Fed Funds rate.

AllRatesChart

The rates all seem to move in sync, though market-set rates move more than institution-set rates, which, in turn, are more volatile than the Fed Funds rate. The reason that this is a superficial test is because these rates all move contemporaneously, and there is nothing in this graph that supports the notion that it is the Fed that is leading the change. In fact, it is entirely possible, perhaps even plausible, that the Fed’s actions on the Fed Funds rate are in response to changes in market rates, rather than the other way around.

Some Statistics are provided by Professor Damodaran, as the Table below. To test whether changes in the Fed Funds rate are a precursor for shifts in market interest rates, a simple (perhaps even simplistic) test is provided. At the 249 quarters that compose the 1962- 2024 time period, each quarter was broken own into whether the effective Fed Funds rate increased, decreased or remained unchanged during the quarter. It seems undeniable that the “Fed as leader” hypothesis falls apart. In fact, in the quarters after the Fed Funds rate increases, US treasury rates (short and long term) are more likely to decrease than increase, and the median change in rates is negative. In contrast, in the periods after the Fed Fund decreases, treasury rates are more likely to increase than decrease, and post small median increases.

Fed Funds and Market Rates (Table new)

Findings how that the Fed is more like an follower rather than a leader, when it comes to interest rate. What is the cause of the those interest rate then? How else can you explain why interest rates remained low for the last decades, other than the Fed?

The answer is recognizing that market-set rates ultimately are composed of two elements: (1) expected inflation rate and (2) expected real interest rate, reflecting real economic growth. In the graph below, which the professor have used multiple times in prior posts, he compute an intrinsic risk free rate by just adding inflation rate and real GDP growth each year:

IntrinsicRiskfreee

The figure is like the Taylor Rule. Interest rates were low in the last decade primarily because inflation stayed low (the lowest inflation decade in a century) and real growth was anemic. Interest rates rose in 2022, because inflation made a come back, and the Fed scrambled to catch up to markets, and most interesting, interest are down this year, because inflation is down and real growth has dropped. As you can see, in September 2024, the intrinsic risk-free rate is still higher than the 10-year treasury bond rate, suggesting that there will be no precipitous drop in interest rates in the coming months.

Myth 3. The Fed as Signalman

There are two major macroeconomic dimensions on which the Fed collects data,

  • (1) real economic growth (how robust it is, and whether there are changes happening), and
  • inflation (how high it is and whether it too is changing).

The Fed’s major signaling device remains the changes in the Fed Funds rate, and it is worth pondering what the signal the Fed is sending when it raises or lowers the Fed Funds rate.

  • On the inflation front, an increase or decrease in the Fed Funds rate can be viewed as a signal that the Fed sees inflationary pressures picking up, with an increase, or declining, with a decrease.
  • On the economic growth front, an increase or decrease in the Fed Funds rate, can be viewed as a signal that the Fed sees the economy growing too fast, with an increase, or slowing down too much, with a decrease.

These signals get amplified with the size of the cut, with larger cuts representing bigger signals.

The 50bp cut on the 18th of Sep means the mix. If you are an optimist, you could take the action to mean that the Fed is finally convinced that inflation has been vanquished, and that lower inflation is here to stay. If you are a pessimist, the fact that it was a 50bp decrease, rather than the expected 25bp, can be construed as a sign that the Fed is seeing more worrying signs of an economic slowdown than have shown up in the public data on employment and growth. There is of course the cynical third perspective, which is that the Fed rate cut has little to do with inflation and real growth, and more to do with an election that is less than fifty days away.

In sum, signaling stories are alluring, and you will hear them in the coming days, from all sides of the spectrum (optimists, pessimists and cynics), but the truth lies in the middle, where this rate cut is good news, bad news and no news at the same time, albeit to different groups.

Myth 4. The Fed as Equity Market Whisperer

The Fed’s capacity to influence the interest rates that matter is limited, but you may still hold on to the belief that the Fed’s actions have consequences for stock returns. In fact, Wall Street has its share of investing mantras, including “Don’t fight the Fed”, where the implicit argument is that the direction of the stock market can be altered by Fed actions.

Based on the professor’s data, the S&P 500 did slightly better in quarters after the FFR decreased than when the rate increased, but reserved its best performance for quarters after those where there was no change in the FFR. Stock markets will be better served with fewer interviews and speeches from members of the FOMC and less political grandstanding (from senators, congresspeople and presidential candidates) on what the Federal Reserve should or should not do.

Myth 5. The Fed as Chanticleer

The Fed is like Chanticleer, with investors endowing it with powers to set interest rates and drive stock prices, since the Fed’s actions and market movements seem synchronized. As with Chanticleer, the truth is that the Fed is acting in response to changes in markets rather than driving those actions, and it is thus more follower than leader. That said, there is the very real possibility that the Fed may start to believe its own hype, and that hubristic central bankers may decide that they set rates and drive stock markets, rather than the other way around.

Conclusion

The delusion shall be broken. The Fed did not lead the market but follow the market. Analyse the instruction of Fed might miss the cause and effect. Should do analyse the following factors.

It has distracted us from talking about things that truly matter, which include growing government debt, inflation, growth and how globalisation may be feeding into risk, and allowed us to believe that central bankers have the power to rescue us from whatever mistakes we may be making.

The Fed Delusion has destroyed enough investing brain cells for those who holding on to the delusion cannot let go. Do not hear talking among this group about what the FOMC may or may not do at its next meeting (and the meeting after that), and what this may mean for markets, restarting the Fed Watch. The insanity of it all!

Reference

https://aswathdamodaran.blogspot.com/2024/09/fed-up-with-fed-talk-central-banks.html

Non-Violent Communication

by Marshall B. Rosenberg, PhD

The book is discussing about how to do compassionate communication, or Non-Volent Commutation. The abbreviation NVC.

1. Giving from the Heart

There raise two questions:

  1. What happens to disconnect us from our compassionate nature, leading us to behave violently and exploitative?
  2. What allows some people to stay connected to their compassionate nature under even the most trying circumstances?

NVC is a way of communicating that leads us to give from the heart.

We perceive relationships in a new light when we use NVC to hear our own deeper needs and those of others.

Generally, the book gives a NVC model with four components.

  1. (Part One) Observations. We observe what is actually happening in a situation.

    The trick is to be able to articulate this observation without introducing any judgement or evaluation — to simply say what people are doing that we either like or don’t like.

  2. (Part One) Feeling. We state how we feel when we observe this action, are we hurt scared, joyful, amused, irritated?

  3. (Part One) Needs. We say what needs of ours are connected to the feelings we have identified.

  4. (Part Two) Requests. The fourth component, requests, address what we are wanting from the other person that would enrich our lives or make life more wonderful for us.

We connect with people by first sensing what they are observing, feeling, and needing; then we discover what would enrich their lives by receiving the fourth piece — their request.

2. Communication That Blocks Compassion

  • Moralistic Judgements.

    One kind of life-alienating communication is the use of moralistic judgements that imply wrongness or badness on the part of people who don’t act in harmony with our values. (Don’t judge Good or Bad for others)

    Don’t judge. Don’t do judgement, like “who is what”.

    Analyses of others are actually expressions of our own needs and values.

    It is important not to confuse value judgements and moralistic judgements. (We don’t do moralistic judgement, but can do value judgement).

    • All of us make value judgements as to the qualities we value in life: for example, we might value honesty, freedom, or peace. Value judgements reflect our beliefs of how life can best to be served.

    • We make moralistic judgements of people and behaviours that fail to support our value judgement: for example, “Violence is bad. People who kill others are evil”

    • Classifying and judging people promotes violence.
  • Make Comparisons.

    Comparisons are a form of judgement. Making comparison blocks compassion.

  • Denial of Responsibility.

    The use of the common expression have to, as in “There are some things you have to do, whether you like it or not”, illustrates how personal responsibility.

    The phrase makes one feel, as in “You make me feel guilty”, is another example of how language facilitates denial of personal responsibility for our own feelings and thoughts.

  • Other Forms of Life-Alienating Communication.

    Communicating our desires as demands is yet another form language that blocks compassion.

    A demand explicitly or implicitly threatens listeners with blame or punishment if they fail to comply. It is a common form of communication in our culture, especially among those who hold positions of authority.

    Thinking based on “Who deserves what” blocks compassionate communication.

    Most of us grew up speaking a language that encourages us to label, compare, demand, and pronounce judgements rather than to be aware of what we are feeling and needing.

Four Components of NVC: Self-expression

3. Observing without Evaluating

The first component of NVC entails the separation of observation from evaluation.

  • Observations are an important element in NVC, where we wish to clearly and honestly express how we are to another person. When we combine observation with evaluation, we decrease the likelihood that others will hear our intended message. Instead, they are apt to hear criticism and thus resist whatever we are saying .

  • NVC does not mandate that we remain completely objective and refrain from evaluating. It only requires that we maintain separation between our observations and our evaluations.

  • Don’t label even for positive words.

  • The highest form of human Intelligence.

    The Indian philosopher J. Krishnamurti once remarked that observing without evaluating is the highest form of human intelligence.

  • Distinguishing Observations from Evaluations.

    • The words always, never, ever, whenever, etc. express observations when used in the following ways

    Whenever I have observed Jack on the phone, he as spoken for at least thirty minutes.

    I cannot recall your ever writing to me.

    • Sometimes such words are used as exaggerations, in which case observations and evaluations are being mixed:

    You are always busy.

    She is never there when she’s needed.

    • When these words are used as exaggerations, they often provoke defensiveness rather than compassion.

    Words like frequently and seldom can also contribute to confusing observation with evaluation.

4. Identifying and Expressing Feelings

The second component of NVC is to express how we are feeling.

  • Feelings versus Non-feelings. The confusion, generated by the English language, is our use of the word feel without actually expressing a feeling.

    Conversely, in the English language, it is not necessary to use the word feel at all when we are actually expressing a feeling: we can say, “I’m feeling irritated”, or simply “I’m irritated”.

    So, distinguish between what we feel and what we think we are. Distinguish feelings from thoughts. For example,

    • “I feel misunderstood“. The word “misunderstood” indicates the assessment of the other person’s level of understanding rather than any actual feeling.
    • “I feel unimportant to the people with whom I work”. The word “unimportant” describes how I think others and evaluating me, rather than an actual feeling, which in this situation might be “I feel sad” or “I feel discouraged“.
    • “I feel ignored”. The word “ignored” expresses how we interpret others, other than how we feel.

By developing a vocabulary of feelings that allows us to clearly and specifically name or identify our emotions, we can connect more easily with one another. Allowing ourselves to be vulnerable by expressing our feelings can help resolve conflicts.

5. Taking Responsibility for Our Feelings

The third component of NVC entails the acknowledgement of the root of our feelings.

NVC heightens our awareness that what others say and do may be the stimulus, but never the cause, of our feelings.

We see that our feelings result from how we choose to receive what others say and do, as well as from our particular needs and expectations in that moment. With this third component, we are led to accept responsibility for what we do to generate our own feelings.

  • Four options for receiving negative messages:
    1. Blame ourselves
    2. Blame others
    3. Sense our own feelings and needs
    4. Sense others’ feelings and needs

    We accept responsibility for our feelings, rather than blame other people, by acknowledging our own needs, desires, expectations, values, or thoughts.

  • The more we are able to connect our feelings to our own needs, the easier it is for others to respond compassionately.

    Connect your feeling with your needs: “I feel … because I need …”

  • Distinguish between giving from the heart and being motivated by guilt.

    The basic mechanism of motivating by guilt is to attribute the responsibility for one’s own feelings to others.

  • The needs at the Roots of Feelings.

    Judgements of others are alienated expressions of our own unmet needs.

    If someone says, “You never understand me,” they are really telling us that their need to be understood is not being fulfilled.

    When we express our needs indirectly through the use of evaluations, interpretations, and images, others are likely to hear criticism. And when people hear anything that sounds like criticism, they tend to invest their energy in self-defense or counterattack.

    So, what shall we do is to express our needs, and we would have a better chance of getting the needs met, as it would be easier for others to respond to us compassionately. And, if we don’t value our needs, others may not either.

  • From Emotional Slavery to Emotional Liberation.

    • Stage 1: Emotional Slavery. W see ourselves responsible for others’ feelings.

    We think we must constantly strive to keep everyone happy. Taking responsibility for the feelings of others can be very detrimental to intimate relationships.

    • Stage 2: The obnoxious stage. We feel angry; we no longer want to be responsible for others’ feelings.

    We become aware of the high costs of assuming responsibility for others’ feelings and trying to accommodate them at our own expense.

    We tend toward obnoxious comments like, “Thant’s your problem! I’m not responsible for your feelings” when presented with another person’s pain.

    • Stage 3: Emotional Liberation. We take responsibility for our intentions and actions.

    We respond to the needs of others out of compassion, never out of fear, guilt, or shame.

6. Requesting That Which Would Enrich Life.

The fourth and final component of this process addresses what we would like to request of others in order to enrich life for us.

  • Using positive Action Language.

    We express what we are requesting rather than what we are not requesting. Do not request a “don’t”. Because “How do you do a don’t”? All I know is I feel won’t we I’m told to do a don’t.

  • Tell others what to do, while requesting. Don’t be vague.

    In addition to using positive language, we also want to word our requests in the form of concrete actions that others can undertake and to avoid vague, abstract, or ambiguous phrasing.

    Making requests in clear, positive, concrete action language reveals what we really want. Don’t make vague language, as vague language contributes to internal confusion.

    For example, instead of saying “I want you to feel free to express yourself around me” , “I’d like you to tell me what I might do to make it easier for you to feel free to express yourselves around me”.

    The first sentence do not actually tell the other to express what.

  • Making Requests Consciously.

    When we simply express our feelings, it may not be clear to the listener what we want them to do.

    We are often not conscious of what we are requesting. We talk to others or at them without knowing how to engage in a dialogue with them. We toss out words, using the presence of others as a wastebasket. In such situations, the listener, unable to discern a clear request in the speaker’s words, may experience the kind of distress.

    Requests may sound like demands when unaccompanied by the speaker’s feelings and needs.

    The clearer we are about what we want, the more likely it is that we’ll get it.

  • Asking for a Reflection.

    To make sure the message we sent is the message that’s received, ask the listener to reflect it back.

    Express appreciation when your listener tries to meet your request for a reflection.

    When we first begin asking others to reflect back what they hear us say, it may feel awkward and strange because such requests are rarely made. When I emphasize the importance of our ability to ask for reflections, people often express reservations. They are worried about reactions like, “What do you think I am — deaf?” or, “Quit playing your psychological games.” To prevent such responses, we can explain to people ahead of time why we may sometimes ask them to reflect back our words. We make clear that we’re not testing their listening skills, but checking out whether we’ve expressed ourselves clearly.

  • Requesting Honesty

    After we express ourselves vulnerably, we often want to know:

    1. What the listener is feeling.

      We’d like to know the feelings that are stimulated by what we said, and the reasons for those feelings. For example, by asking. “I would like you to tell me how you fell about what I just said, and your reasons for feeling as you do”.

    2. What the listener is thinking.

      Specify which thoughts we’d like them to share. For example, we might say, “I’d like you to tell me if you predict that my proposal would be successful, and if not, what you believe would prevent its success.” rather than simply saying, “I’d like you to tell me what you think about what I’ve said.” When we don’t specify which thoughts we would like to receive, the other person may respond at great length which thoughts that aren’t the ones we are seeking.

    3. Whether the listener would be willing to take a particular action.

      For example, by asking, “I would like you to tell me if you would be willing to postpone our meeting for one week.”

  • Requests versus Demands

    Requests are good, while Demands are bad.

    Our requests are received as demands when others believe they will be blamed or punished if they do not comply. When people hear a demand, they see only two options: submission or rebellion. Either way, the person requesting is perceived as coercive, and the listener’s capacity to respond compassionately to the request is diminished.

    The more we have in the past blamed, punished, or “laid guilt trips” on others when they haven’t responded to our requests, the higher the likelihood that our requests will now be heard as demands. We also pay for others’ use of such tactics. To the degree that people in our lives have been blamed, punished, or urged to feel guilty for not doing what others have requested, the more likely they are to carry this baggage to every subsequent relationship and hear a demand in any request.

    It’s a demand if the speaker then lays a guilt trip.

    We can help others trust that we are requesting, not demanding by indicating that we would only want them to comply if they can do so willingly. Thus we might ask, “Would you be willing to see the table?” rather than “I would like you to set the table.” However, the most powerful way to communicate that we are making the most powerful way to communicate that we are making a genuine request is to empathise with people when they don’t agree to the request.

  • Defining our objective when making requests.

    Expressing genuine requests also requires an awareness of our objective. If our objective is only to change people and their behaviour or to get our way, then NVC is not an appropriate tool.

    The objective of NVC is not to change people and their behaviour in order to get our way; it is to establish relationships based on honesty and empathy that will eventually fulfill everyone’s needs.

    Our objective is a relationship based on honesty and empathy.

Four Components of NVC: Apply to others

7. Receiving Emphatically

We refer the communication process that contains observing, feeling, needing, and requesting, as receiving emphatically

  • Empathy is not just hearing.

    The hearing that is only in the ears is one thing. The hearing of the understanding is another. But the hearing of the spirit is not limited to any one faculty, to the ear, or to the mind.

    Bad: give advice or reassurance and to explain our own position or feeling.

    Good: The true empathy requires us to focus full attention on the other person’s message. We give to others the time and space they need to express themselves fully and to feel understood.

    Intellectual understanding blocks empathy. Questions such as, “when did this begin?” constituted the most frequent response; they give the appearance that the professional is obtaining the information necessary to diagnose and then treat the problem. In fact, such intellectual understanding of a problem blocks the kind of presence that empathy requires.

    The key ingredient of empathy is presence: we are wholly present with the other party and what they are experiencing.

  • Listening for feelings and needs.

    No matter what words people use to express themselves, we listen for their (1)observations, (2)feelings, (3)needs, and (4)requests.

    To listen to what people are needing rather than what they are thinking. People would be less threatening if you hear what they’re needing rather than what they’re thinking about you. Instead of hearing that he’s unhappy because he thinks you don’t listen, focus on what he’s needing by saying, “Are you unhappy because you are needing…”

  • Paraphrasing.

    After we focus our attention and hear what others are observing feeling, and needing and what they are requesting to enrich the lives, we may wish to reflect back by paraphrasing what we understood.

    Advantages:

    1. If we have accurately received the other party’s message, our paraphrasing will confirm this for them. If, on the other hand, the paraphrase is incorrect, we give the speaker an opportunity to correct us.
    2. Paraphrasing offer people time to reflect on what they’ve said and an opportunity to delve deeper into themselves.

    How to Do: Paraphrasing take the form of questions that reveal our understanding while eliciting any necessary corrections from the speaker.

    Questions may focus on these components:

    1. What others are observing: “Are you reacting to how many evenings I was gone last week?”
    2. how others are feeling and the needs generating their feelings: “Are you feeling hurt because you would have liked more appreciation of your efforts than you received?”
    3. what others are requesting: “Are you wanting me to tell you my reasons for saying what I did?”
    • Do the questions like above, not the followings, as the above invite others’ corrections.

    1.“What did I do that you are referring to?” 2. “How are you feeling?” “Why are you feeling that way?” 3. “What are you wanting me to do about it?”

    This second set of questions asks for information without first sensing the speaker’s reality.

    When asking for information, first express our own feelings and needs. Because schoolteacher types questions are too straight forward. People would prefer questions that reveals the feelings and needs within ourselves, and show feelings make people feel safer.

    i.e. Instead of asking “What did I do?”, we might say, “I’m frustrated because I’d like to be clearer about what you are referring to. Would you be willing to tell me what I’ve done that leads you to see me in this way”

  • Sustaining Empathy.

    I recommend allowing others the opportunity to fully express themselves before turning our attention to solutions or requests for relief. When we proceed too quickly to what people might be requesting, we may not convey our genuine interest in their feelings and needs; instead, they may get the impression that we’re in a hurry to either be free of them or to fix their problem.

    By maintaining our attention on what’s going on within others, we offer them a chance to fully explore and express their interior selves.

    We know a speaker has received adequate empathy when (1) we sense a release of tension, or (2) the flow of words comes to a halt.

8. The Power of Empathy

Empathy allows us “to re-perceive [our] world in a new way and to go on.”

  • Empathy and the Ability to Be Vulnerable

    Because we are called to reveal our deepest feelings and needs, we may sometimes find it challenging to express ourselves in NVC.

    Self-expression becomes easier, however, after we empathise with others, because we will then have touched their humanness and realized the common qualities we share. The more we connect with the feelings and needs behind their words, the less frightening it is to open up to other people.

  • Empathy for Silence

    Empathise with silence by listening for the feelings and needs behind it.

9. Connecting Compassionately with Ourselves

  • Translating Self-Judgements and Inner Demands.

    Self-judgements, like all judgements, are tragic expressions of unmet needs.

    A basic premise of NVC is that whenever we imply that someone is wrong or bad, what we are really saying is that he or she is not acting in harmony with our needs. If the person we are judging happens to be ourselves, what we are saying is, “I myself am not behaving in harmony with my own needs.” I am convinced that if we learn to evaluate ourselves in terms of whether and how well our needs are being fulfilled, we are much more likely to learn from the evaluation.

  • NVC Mourning

    Mourning in NVC is the process of fully connecting with the unmet needs and the feelings that are generated when we have been less than perfect. It is an experience of regret, but regret that helps us learn from what we have done without blaming or hating ourselves.

    We can train ourselves to recognise judgemental self-talk and to immediately focus our attention on the underlying needs.

  • Self-Forgiveness.

    When were listen emphatically to ourselves, we will be able to hear the underlying need. Self-forgiveness occurs the moment this emphatic connection is made.

    NVC Self-Forgiveness: connecting with the need we were trying to meet when we took the action that we now regret.

    The process of mourning and self-forgiveness frees us in the direction of learning and growing.

  • Don’t Do Anything That Isn’t Play

    Do things that are playful. We want to take action out of the desire to contribute to life rather than out of fear, guilt, shame, or obligation. Here are some possible ways:

    1. Translating “Have to” to “Choose to”

      With every choice you make, be conscious of what need it serves.

    2. Cultivating Awareness of the Energy Behind Our Actions.

      Consider the statement “I choose to … because I want …”. Be careful with the important values behind the choices you have made.

    • For Money
    • For Approval
    • To Escape Punishment
    • To Avoid Shame
    • To Avoid Guilt
    • To Satisfy A Sense of Duty

10. Expressing Anger Fully

  • The Core of Anger

    All angers are as a result of life-alienating, violence-provoking thinking. At the core of all anger is the need that is not being fulfilled. Thus anger can be valuable if we use it as an alarm clock to wake us up — to realise we have a need that isn’t being met and that we are thinking in a way that makes it unlikely to be met.

  • Four Steps to Expressing Anger.

    1. Stop and do nothing except to breathe. We refrain from making any move to blame or punish the other person. We simply stay quiet.
    2. Identify the thoughts that are making us angers
    3. Connect with our needs. We know that all judgements are tragic expressions of unmet needs, so we take the next step and connect to the needs behind those thoughts.
    4. Express our feelings and unmet needs. We open our mouth and speak the anger — but the anger has been transformed into needs and need-connected feelings.
  • Offering Empathy First.

    Another step needs to take place before we can expect the other party to connect with what is going on in us. Offer Empathy First.

    • The more we hear them, the more they’ll hear us.

    • Stay conscious of the violent thoughts that arise in our minds, without judging them.

    • When we hear another person’s feelings and needs, we recognise our common humanity.

11. Conflict Resolution and Mediation

This topics is regarding addressing how to apply NVC in resolving conflicts.

  • Human Connection.

    Create connection between the people who are in conflict is the most important thing.

  • Steps.

    1. Express our own needs.
    2. Seek the real needs of the other person. Seek the need behind their words, the need underneath what they are saying.
    3. Verify that we both accurately recognise the other person’s needs.
    4. Provide as much empathy, mutually hearing each other’s needs accurately.
    5. Propose strategies for resolving the conflict.

    P.S. Avoid the use of language that implies wrongness. Listen to each other with utmost care.

  • On Needs, Strategies, and Analysis.

    Fundamentally, needs are the resources life requires to sustain itself. Consider difference between a person’s needs and his or her strategy for fulfilling them, and make strategies.

    Sensing others’ needs, no matter what they’re saying.

    Using present and positive action language to resolve conflict.

The use of NVC to resolve conflict differs from traditional mediation methods; instead of deliberating over issues, strategies, and means of compromise, we concentrate foremost on identifying the needs of both parties, and only then seek strategies to fulfill those needs.

We start by forging a human connection between the parties in conflict. Then we ensure that both parties have the opportunity to fully express their needs, that they carefully listen to the other person’s needs, and that once the needs have been heard, they clearly express doable action steps to meet those needs. We avoid judging or analysing the conflict and instead remain focused on needs.

When one party is in too much pain to hear the needs of the other, we extend empathy, taking as long as necessary to ensure that the person knows their pain is heard. We do not hear “no” as a rejection but rather as an expression of the need that is keeping the person from saying “yes”. Only after all needs have been mutually heard, do we progress to the solution stage: making doable request using positive, action language.

When we assume the role of mediating a conflict between two other parties, the same principles apply. In addition, we keep careful track of progress, extend empathy where needed, keep the conversation focused on the present, moving it forward, and interrupting where necessary to return to the process.

With these tools and understanding, we can practice and help others resolve even long-standing conflicts to their mutual satisfaction.

12. The Protective Use of Force

In situations where there is no opportunity for communication, such as in instances of imminent danger, we may need to resort to the protective use of force. The intention behind the protective use of force is to prevent injury or injustice, never to punish or to cause individuals to suffer, repent, or change. The punitive use of force tends to generate hostility and to reinforce resistance to the very behaviour we are seeking. Punishment damages goodwill and self-esteem, and shifts our attention from the intrinsic value of an action to external consequences. Blaming and punishing fail to contribute to the motivations we would like to inspire in others.

13. Liberating Ourselves and Counselling Others.

Apply the NVC to ourselves, in order to enhances inner communication by helping us translate negative internal messages into feelings and needs. Our ability to distinguish our own feelings and needs and to empathise with them can free us from depression.

14. Expressing Appreciation in Nonviolent Communication

Research shows that if a manager compliments employees, they work harder. And the same goes for schools: if teachers praise students, they study harder. The author have reviewed this research, and find that recipients of such praise do work harder, but only initially. Once they sense the manipulation behind the appreciation, their productivity drops.

When we use NVC to express appreciation, it is purely to celebrate, not to get something in return.

  • The Three Components of Appreciation
    1. the actions that have contributed to our well-being;
    2. the particular needs of ours that have been fulfilled;
    3. the pleasureful feelings engendered by the fulfilment of those needs

    The sequence of these ingredients may vary; sometimes all three can be conveyed by a smile or a simple “Thank you.” However, if we want to ensure that our appreciation has been fully received, it is valuable to develop the eloquence to express all three components verbally.

  • We shall overcome the reluctance to express appreciation.

  • When we receive appreciation expressed in this way, we can do so without any feeling of superiority or false humility—instead we can celebrate along with the person who is offering the appreciation.

Atomic Habits

by James Clear

The book tells how to cultivate habits.

The author states the following. As changes that seem small and unimportant at first will compound into remarkable results if you’re willing to stick with them for years. We all deal with setbacks but in the long run, the quality of our lives often depends on the quality of our habits. With the same habits, you’ll end up with the same results. But with better habits, anything is possible.

The backbone of this book is the author’s four-step model of habits–cue, craving, response, and reward–and the four laws of behaviour change that evolve out of these steps.

The Fundamentals – Why Tiny Changes Make a Big Difference

1 The Surprising Power of Atomic Habits

  • The relentless commitment to a strategy make a Cycling Coach outstanding than others (referred as “the aggregation of marginal gains”, which was the philosophy of searching for a tiny margin of improvement in everything you do). The whole principle of this coach is if you broke down everything you could think of that goes into riding a bike, and then improve it by 1 percent, you will get a significant increase when you put them all together.

  • As these and hundreds of other small improvements accumulated, the results came faster than anyone could have imagined.

    But when we repeat 1 percent errors, day after day, by replicating poor decisions, duplicating tiny mistakes, and rationalising little excuses, our small choices compound into toxic results.

    Making a choice that is 1 percent better or 1 percent worse seems insignificant in the moment, but over the span of moments that make up a lifetime these choice determine the difference between who you are and who you could be. Success is the product of daily habits–not once-in-a-lifetime transformations.

  • Time magnifies the margin between success and failure. It will multiply whatever you feed it. Good habits make time your ally. Bad habits make time you enemy.

  • Forget about goals, focus on systems instead.

    What’s the difference between systems and goals? Goals are about the results you want to achieve. Systems are about the processes that lead to those results.

    Goals are good for setting a direction, but systems are best for making progress.

    A handful of problems arise when you spend too much time thinking about your goals and not enough time designing your systems.

    • Problem #1: Winers and losers have the same goals.

    Goal setting suffers from a serious case of survivorship bias. People who end up with winning–the survivors–and mistakenly assume that ambitious goals led to their success while overlooking all of the people who had the same objective but didn’t succeed.

    Nobody has the goal of losing, but only winners prove with the goal.

    • Problem #2: Achieving a goal is only a momentary change.

    When you solve problems at the results level, you only solve them temporarily. In order to improve for good, you need to solve problems at the systems level. Fix the inputs and outs will will fix themselves.

    • Problem #3: Goals restrict your happiness. Goals create an “either-or” conflict: either you achieve your goal and are successful or you fail and you are a disappointment. Do not link goals with happiness, instead link with the process. When you fall in love with the process rather than the product, you don’t have to wait to give yourself permission to be happy. You can be satisfied anytime your system is running.

    • Problem #4 Goals are at odds with long-term progress. A goal-oriented mindset can create a “yo-yo” effect. Many runners work hard for months, but as soon as they cross the finish line, they stop training. The purpose of setting goals is to win the game. The purpose of building systems is to continue playing the game. Have a long-term thinking, and do not be goal-oriented.

  • If you’re having trouble changing your habits, the problem isn’t you. The problem is your system. Focusing on the overall system rather than a single goal, is one of the core themes of this book.

    The atomic habit refers to a tiny change, a marginal gain, a 1 percent improvement. Atomic habits are the building blocks of remarkable results.

2 How Your Habits Shape Your Identity (and Vice Versa)

Few things can have a more powerful impact on your life than improving your daily habits. However, once your habits are established, they seem to stick around forever–especially the unwanted ones.

  • There are three layers of behaviour changes:
    • The first layer is changing your outcomes/results.

    • The second layer is changing your process, changing the habits and systems

    • The third and deepest layer is changing your identity, changing the beliefs, the worldview, the self-image, etc.

    • Outcomes are about what you get. Processes are about what you do. Identity is about what you believe.

    • Many people begin the process of changing their habits by focusing on what they want to achieve. This leads us to outcome-based habits. The alternative is to build identity-based habits. With this approach, we start by focusing on who we wish to become.

  • The ultimate form of intrinsic motivation is when a habit becomes part of your identity. True behaviour change is identity change. You might start a habit because of motivation, but the only reason you’ll stick with one is that it becomes part of your identity. i.e.

    • The goal is not to read a book, the goal is to become a reader/

    • The goal is not to run a marathon, the goal is to become a runner.

    • The goal is not to learn an instrument, the goal is to become a musician.

  • The Shaping Identity is a double-edged sword. The deeply a thought or action is tied to your identity, the more difficult it is to change it.

  • A two-step process to changing your identity.

    1. Decide the type of person you want to be.
    2. Prove it to yourself with small wins.
    • The more you repeat a behaviour, the more you reinforce the identity associated with the behaviour.

    • The more evidence you have for a belief, the more strongly you will believe it.

    The process of building habits is actually the process of becoming yourself.

    • Small habits can make a meaning full difference by proving evidence of a small identity.
  • Use the feedback loops. Once you have a handle on the type of person you want to be, you can begin taking small steps to reinforce your desired identity. Your habits shape your identity, and your identity shapes your habits.

  • To cultivate a habit. The first step is not what or how, but who.

3. How to Build Better Habits in 4 Simple Steps

Scholar, Thorndike, described the learning process, “Behaviours followed by satisfying consequences tend to be repeated and those that produce unpleasant consequences are less likely to be repeated”

  • Why the Brain builds habits?

    Whenever you encounter a new situation in life, the brain has to make a decision. Neurological activity in the brain is high during the period.

    As habits are created, the level of activity in the brain decreases. When a similar situation arises in the future, you know exactly what to look for. There is no longer a need to let the brain think and make decision and analyse every angle of a situation.

    In short, habits are mental shortcuts learned from experience.

    Habits reduce cognitive load and free up mental capacity, so you can allocate your attention to other tasks.

    Habits do not restrict freedom. They create it. In fact, the people who don’t have their habits handled are often the ones with the least amount of freedom, because the brain is always overloaded.

    When you have habits dialed in and the basics of life are handled and done, your mind is free to focus on new challenges and master the next set of problems.

  • The process of building a habit.

    Four simple steps: cue, craving, response, and reward.

    1. Cue triggers your brain to initiate a behaviour.
    2. Cravings are the motivational force behind every habit.
    3. Response is the actual habit you perform, which can take the form of a thought or an action.
    4. Rewards are delivered by Response. There are two purposes of reward. (1) Reward satisfy your craving. (2) reward teaches us which actions are worth remembering in the future.
    • The author would illustrate those four steps in details later.
    • The four steps make a loop, and reinforce the process. The cue triggers a craving, which motivates a response, which provides a reward, which satisfies the craving and, ultimately, becomes associated with the cue.
  • The four laws of behaviour change.
    1. The 1st Law (Cue) <– Make it obvious.
    2. The 2nd Law (Craving) <– Make it attractive.
    3. The 3rd Law (Response) <– Make it easy.
    4. The 4th Law (Reward) <– Make it satisfying.
    • For bad habits, do the reveres. Make the cue invisible, make craving unattractive, make response difficult, and make reward unsatisfying.

The 1st Law: Make it Obvious

4. The Man who didn’t Look Right

  • With enough practice, your brain will pick up on the cues that predict certain outcomes without consciously thinking about it.
  • Once the habits become automatic, we stop paying attention to what we are doing.
  • The process of behaviour change always starts with awareness. You need to be aware of your habits before you can change them.

5. The Best Way to Start a New Habit

  • The 1st law of Behaviour Change is make it obvious.

  • Two most common cues are time and location. Create the Implementation Intention, which is a plan you make beforehand about when and where to act. That is, how you intend to implement a particular habit. Like “When situation X arises, I will perform response Y”. Or, I will [BEHAVIOUR] at [TIME] in [ LOCATION].

  • Many human behaviours follow a chain reaction cycle. You decide what to do next based on what you have just finished doing (Bayesian). No behaviours happen in isolation. Each action becomes a cue that triggers the next behaviour.

  • Habit Stacking. Inspired by the above, when it comes to building new habits, you can use the connectedness of behaviour to your advantage. One of the best ways to build a new habit is to identify a current habit you already do each day, and then stack your new behaviour on the top. In a word, linking one behaviour with the other.

  • Tie your desired behaviour into something you already do each day. Once you have mastered this basic structure, you can begin to create larger stacks by chaining small habits together. The habit stacking allows you to create a set of simple rules that guide your future behaviour.

    In short, After I [CURRENT HABIT], I will [NEW HABIT].

6. Motivation is Overrated, Environment Often Matters More

People Often choose products not because of what they are, but because of where they are. Environment is the invisible hand that shapes human behaviour.

In this way, the most common form of change is not internal, but external: we are changed by the world around us. Every habit is context dependent.

By psychologist Kurt Lewin (1936): Behaviour is a function of Person in their Environment, B=f(P,E).

  • In humans, perception is directed by the sensory nervous system. We perceive the world through sight, sound, smell, touch, and taste. And other ways of sensing stimuli, some are conscious, but many are non-conscious. Receptors in your body pick up on a wide range if internal stimuli. One of the most powerful human sensory abilities is vision. A small change in what you see can lead to a big shift in what you do.

  • The environments where we live and work often make it easy not to do certain actions because there is no obvious cue to trigger the behaviour. What we do is to make it visually obvious. We shall change the environment.

  • Environment design is powerful not only because it influences how we engage with the world but also because we rarely do it.

  • Create the the Context of Cue.

    Over time, your habits become associated not with a single trigger but with the entire context surrounding the behaviour.

    The behaviour is not defined by the objects in the environment but by our relationship to them. Thank in terms of how you interact with the spaces around you.

    The power of context reveals an important strategy: habits can be easier to change in a new environment.

    Whenever possible, avoiding mixing the context of one habit with another. The inspiration is to split the Space to Work, and the Space to Study and Live.

    If your space is limited, divide your room into activity zones: a chair for reading, a desk for writing, a table for eating, etc.

7. The Secret to Self-Control

When scientists analyse people who appear to have tremendous self-control, it turns out those individuals aren’t all the different from those who are struggling. Instead, “disciplined” people are better at structuring their lives in a way that does not require heroic willpower and self-control. In other words, they spend less time in tempting situations.

  • Bad habits are auto-catalytic: the process feeds itself.

    One of the most practical ways to eliminate a bad habit is to reduce exposure to the cue that causes it.

    The practice is an inversion of the 1st Law of Behaviour Change. Rather than make it obvious, you can make it invisible (for the bad habit).

The 2nd Law: Make it Attractive

8. How to Make a Habit Irresistible

Scientists refer to exaggerated cues as supernormal stimuli, which is a heightened version of reality and elicits a stronger response than usual. They exaggerate features that are naturally attractive to us, and our instincts go wild as a result, driving us into excessive shopping habits, social media habits, porn habits, eating habits, and many others. Hereafter are some biological response.

  • The Dopamine-Driven Feedback Loop

    Dopamine is not the only chemical that influences your habits, but it is the one that provide a window into the biological underpinnings of desire, craving, and motivation that are behind every habits.

    For years, scientists assumed dopamine was all about pleasure, but now we know it plays a central role in many neurological processes, including motivation, learning and memory, punishment and aversion, and voluntary movement.

    When it comes to habits, the key takeaway is this: dopamine is released not only when you experience pleasure, but also when you anticipate it.

    The more attractive an opportunity is, the more likely it is to become habit-forming.

  • Use the Temptation Bundling to make your habits more attractive.

    Temptation bundling works by linking an action you want to do with an action you need to do.

9. The Role of Family and Friends in Shaping Your Habits

  • The Seductive Pull of Social Norms: Humans are herd animals. We want to fit in, to bond with others, and to earn the respect and approval of our peers.

    Those who collaborated and bonded with others enjoyed increased safety, mating opportunities, and access to resources.

    We imitate the habits of three groups in particulars:

    1. The close.

      As a general rule, the closer we are to someone, the more likely we are to imitate some of their habits. Our friends and family provide a sort of invisible peer pressure that pulls us in their direction. We soak up the qualities and practices of those around us.

      One of the most effective things you can do to build better habits is to join a culture where your desired behaviour is the normal behaviour. Join a culture where (1) your desired behaviour is the normal behaviour and (2) you already have something in common with the group.

      Conversely, peer pressure is bad only if you’re surrounded by bad influences.

    2. The many.

      The normal behaviour of the tribe often overpowers the desired behaviour of the individual.

      Humans are similar. There is tremendous internal pressure to comply with the norms of the group. The reward of being accepted is often greater than the reward of winning an argument, looking smart, or finding truth.

    3. The powerful.

      We try to copy the behaviour of successful people because we desire success ourselves.

      High-status people enjoy the approval, respect, and praise of others. And the means if a behaviour can get us approval, respect, and praise, we find it attractive.

10. How to Find and Fix the Causes of Your Bad Habits

  • Habits are all about associations. There associations determine whether we predict a habit to be worth repeating or not. The brain is continually absorbing information and noticing cues in the environment. Every time you perceive a cue, your brain runs a simulation and makes a prediction about what to do in the next moment.

    The cause of your habits is actually the prediction that precedes them.

    There predictions lead to feelings, which is how we typically describe a craving — a feeling, a desire, an urge. Feelings and emotions transform the cues we perceive and the predictions we make into a signal that we can apply.

    To summaries, the specific cravings you feel and habits you perform are really an attempt to address your fundamental underlying motives. Whenever a habit successfully addresses a motive, you develop a craving to do it again.

    Habits are attractive when we associate them with positive feelings, and we can use this insight to our advantage rather than to our detriment.

  • Reprogram Your Brain to Enjoy Hard Habits.

    Changing just one word: You don’t “have” to You “get” to.

    Transition from seeing there behaviours as burdens and turn them into opportunities.

    Re-framing your habits to highlight their benefits rather than their drawbacks is a fast and light wight way to reprogram your mind and make a habit seem more attractive.

    If you want to take it a step further, you can crate a motivation ritual. You simply practice associating your habits with something you enjoy, then you can use that cue whenever you need a bit of motivation.

    ​ Three deep breaths. Smile. Ped the dog. Repeat.

    ​ Eventually, you’ll begin to associate this breathe-and-smile routine with being in a good mood. It becomes a cue that means feeling happy.

    The key to finding and fixing the causes of your bad habits is to re-frame the associations you have about them. It’s not easy, but if you can reprogram your predictions, you can transform a hard habit into an attractive one.

The 3rd Law: Make it Easy

11. Walk Slowly, but Never Backward

When you’re in motion, you’re planning and strategising and learning.

Action is the type of behaviour that will deliver an outcome.

If you want to master a habit, the key is to start with repetition, not perfection. You don’t need to map out every feature of a new habit. You just need to practice it.

Get start, try and protect, get exploration, not prepare for perfection.

  • How long does it actually take to form a new habit?

    The more you repeat an activity, the more the structure of your brain changes to become efficient at that activity. Neuroscientists call this long-term potentiating, which refers to the strengthening of connections between neurons in the brain based on recent patterns of activity. With each repetition cell-to-cell signaling improves and the neural connections tighten.

  • Repetition is a form of change

    An English philosopher George H Lewes noted, “In learning to speak a new language, to play on a musical instrument, or to perform unaccustomed movements, great difficulty is felt, because the channels through which each sensation has to pass have not become established; but no sooner has frequent repetition cut a pathway, than this difficulty vanishes; the actions become so automatic that they can be performed while the mind is otherwise engaged.”

  • All habits follow a similar trajectory from effortful practice to automatic behavior, a process known as automaticity. Automaticity is the ability to perform a behaviour without thinking about each step, which occurs when the non-conscious mind takes over.

    image-20240814131117739

In practice, it doesn’t really matter how long it takes for a habit to become automatic. What matters is that you take the actions you need to take to make progress. Whether an action is fully automatic is of less importance.

12. The Law of Least Effort

  • Habits like scrolling on our phones, checking email, and watching television steal so much of our time because they can be performed almost without effort. They are remarkable convenient.

  • You don’t actually want the habit itself. What you really want is the outcome the habit delivers. The greater the obstacle — that is, the more difficult the habit — the more friction there is between you and your desired end state. This is why it is crucial to make your habits so easy that you’ll do them even when you don’t feel like it. If you can make your good habits more convenient, you’ll be more likely to follow through on them.

  • The less friction you face, the easier it is for your stronger self to emerge. The idea behind make is easy is not only do easy things. The idea is to make it as easy as possible in the moment to do things that payoff in the long run.

  • Reduce the friction associated with good behaviours. When friction is low, habits are easy. Increase the griction associated with bad behaviours. When friction is high, habits are difficult.
  • Prime your environment to make future actions easier.

13. How to Stoop Procrastinating by Using the Two-Minute Rule

  • The Two-Minute Rule. Even when you know you should start small, it’s easy to start too big. When you dream about making a change, excitement inevitably takes over and you end up trying to do too much too soon. The most effective way I know to counteract this tendency is to use the Two-Minute Rule, which states, “When you start a new habit, it should take less than two minutes to do”.

    A new habit should not feel like a challenge. The actions that follow can be challenging, but the first two minutes should be easy. What you want is a “gateway habit” that naturally leads you down a more productive path.

  • For Example: You can usually figure out gateway habits that will lead to your desired outcome by mapping out your goals on a scale from “very easy” to “very hard”. For instance, running a marathon is very hard. Running a 5K is hard. Walking ten thousand steps is moderately difficult. Walking ten minutes is easy. And putting on your running shoes is very easy. Your goal might be to run a marathon, but your gateway habit is to put on your running shoes. That’s how you follow the Two-Minute Rule.

  • focusing on just the first two minutes and mastering that stage before moving on the next level. Eventually, you’ll end up with the habit you had originally hoped to build while still keeping your focus where it should be: on the first two minutes of the behaviour.

14. How to Make Good Habits Inevitable and Bad Habits Impossible

  • Usecommitment device, a choice you make in the present that controls your actions in the future.

  • The best way to break a bad habit is to make it impractical to do. Increase the friction until you don’t even have the option to act.

  • Onetime choices — like buying a better mattress or enrolling in an automatic savings plan — are single actions that automate your future habits and deliver increasing returns over time.

The 4th Law: Make It Satisfying

15. The Cardinal Rule of Behaviour Change

We are more likely to repeat a behaviour when the experience is satisfying. Conversely, if an experience is not satisfying, we have little reason to repeat it.

  • The first three laws of behaviour change — make it obvious, make it attractive, and make it easy — increase the odds that a behaviour will be performed this time. The fourth law of behaviour change — make it satisfying — increases the odds that a behaviour will be repeated next time. It completes the habit loop.

  • However, there is a trick. Your human nature live in what scientists call an immediate-return environment because your actions instantly deliver clear and immediate outcomes. Yet, you, per se, live in what scientists call a delayed-return environment because you can work for years before your actions deliver the intended payoff.

    The world has changed much in recent years, but human nature has changed little. The world becomes more Rewards-Delayed, but human nature needs Rewards-Immediate.

    The brain’s tendency to prioritise the present moment means you can’t rely on good intentions.

  • Every habit produces multiple outcomes across time. Unfortunately, these outcomes are often misaligned. With our bad habits, the immediate outcome usually feels good, but the ultimate outcome feels bad. With good habits, it is the reverse: the immediate outcome is enjoyable, but the ultimate outcome feels good.

    In other words, the costs of your good habits are in the present. The costs of your bad habits are in the future.

  • Cardinal Rule of Behaviour Change: What is immediately rewarded is repeated. What is immediately punished is avoided.

  • You need to work with the grain of human nature, not against it. The best way to do this is to add a little bit of immediate pleasure to the habits that pay off in the long-run and a little bit of immediate pain to ones that don’t/ Cultivate habits by artificially rewards yourself to the human nature.

    To select short-term rewards that reinforce your identity rather than ones that conflict with it.

  • In summary, a habit needs to be enjoyable for it to last.

16. How to Stick with Good Habits Every Day

Making progress is satisfying, and visual measures — like moving paper clips or hairpins or marbles — provide clear evidence of your progress. As a result, they reinforce your behaviour and add a little bit of immediate satisfaction to any activity.

  • Use habit track. Habit tracking (1) creates a visual cue that can remind you to act, (2) is inherently motivating because you see the progress you are making and don’t want to lose it, and (3) feels satisfying whenever you record another successful instance of your habit.
  • What can we do to make tracking easier? First, whenever possible, measurement should be automated. Second, manual tracking should be limited to your most important habits. Finally, record each measurement immediately after the habit occurs.
  • How to recover quickly when your habits were interrupted? Never miss twice. Try to not break the Chain.

17. How an Accountability Partner Can Change Everything

  • The more immediate the pain, the less likely the behaviour. If you want to prevent bad habits and eliminate unhealthy behaviours, then adding an instant cost to the action is a great way to reduce their odds.

  • An accountability partner can create an immediate cost to inaction. We care deeply about what others think of us, and we do not want others to have a lesser opinion of us.

  • A habit contract can be used to add a social cost to any behaviour. It makers the costs of violating your promises public and painful.

    Just as governments use laws to hold citizens accountable, you can create a habit contract to hold yourself accountable.

Advanced Tactics: How to Go from Being Merely Good to Being Truly Great

18. The Truth About Talent (When Genes Matter and When They Don’t)

The secret to maximising the odds of success is to choose the right field of competition. In short: Genes don’t determine your destiny. They determine your areas of opportunity.

  • How your personality influences your habits:
    1. Openness to experience
    2. Conscientiousness
    3. Extroversion
    4. Agreeableness
    5. Neuroticism

    Our habits are not solely determined by our personalities, but there is no doubt that our genes nudge us in a certain direction.

    The Takeaway is that you should build habits that work for your personality. You don’t have to build the habits everyone tells you to build. Choose the habit that best suits you, not the one that is most popular.

  • How to find a game where the odds are in your favour:

    1. In the beginning of a new activity, there should be a period of exploration. The goal is to try out many possibilities, research a broad range of ideas, and cast a wide net.
    2. After this initial period of exploration, shift your focus to the best solution you’ve found — but keep experimenting occasionally.
    3. In the long-run it is probably most effective to work on the strategy that seems to deliver the best results about 80 to 90 percent of the time and keep exploring with the remaining 10 to 20 percent.

    When you can’t win by being better, you can win by being different. By combining your skills, you reduce the level of competition, which makes it easier to stand out.

  • How to getthe most out of your genes:

    The genes do not eliminate the need for hard work. They clarify it. They tell us what to work hard on. Once we realise our strengths, we know where to spend our time and energy.

In summary , one of the best ways to ensure your habits remain satisfying over the long-run is to pick behaviours that align with your personality and skills. Work hard on the things that come easy.

19. The Goldilocks Rule: How to Stay Motivated in Life and Work

The way to maintain motivation and achieve peak levels of desire is to work on tasks of “just manageable difficulty”.

The human brain loves a challenge, but only if it is within an optimal zone of difficulty.

  • The Goldilocks Rule states that humans experience peak motivation when working on tasks that are right on the edge of their current abilities. Not too hard. Not too easy. Just right.

    When you’re starting a new habit, it’s important to keep the behaviour as easy as possible so you can stick with it even when conditions aren’t perfect.

    Once the habit has been established, it is important to continue to advance in small ways.

    image-20240828123048848

  • How to stay focused when you get bored working on your goals

    The greatest threat to success is not failure but boredom.

    Variable rewards won’t create a craving, but they are a powerful way to amplify the cravings we already experience because they reduce boredom.

  • Professionals stick to the schedule; amateurs let life get in the way. Professionals know what is important to them and work toward it with purpose; amateurs get pulled off course by the urgencies of life.

    The only way to become excellent is to be endless fascinated by doing the same thing over and over. You have to fall in love with boredom

20. The Downside of Creating Good Habits

Habits are necessary, but not sufficient for mastery. What you need is a combination of automatic habits and deliberate practice.

\text{Habits} + \text{Deliverate Practive} = \text{Mastery}

  • Mastery is the process of narrowing your focus to a tiny element of success, repeating it until you have internalised the skill, and then using this new habit as the foundation to advance to the next frontier of your development.

image-20240828124248013

  • Improvement is not just about learning habits, it’s also about fine-tuning them. Reflection and review ensures that you spend your time on the right things and make course corrections whenever necessary.

  • Perform annual review, in which reflect on the previous year, reflect on my progress by answering three questions:

    1. What when well this year?
    2. What didn’t go so well this year?
    3. What did I learn?

    Answer three questions in the yearly Integrity Report:

    1. What are the core values that drive my life and work?
    2. How am I living and working with integrity right now?
    3. How can I set a higher standard in the future.

    Never reviewing your habits is like never looking in the mirror. Periodic reflection and review is like viewing yourself in the mirror from a conversational distance. You can see the important changes you should make without losing sight of the bigger picture.

  • How to break the beliefs that hold you back:

    The more scared an idea is to us — that is, the more deeply it is tied to our identity — the more strongly we will defend it against criticism.

    One solution is to avoid making any single aspect of your identity an overwhelming portion of who you are.

    “Keep your identity small”. The more you let a single belief define you, the less capable you are of adapting when life changes you. In other words, don’t be overconfident about your identity, Be acceptable to things.

  • When you spend your whole life defining yourself in one way and that disappears, who are you now?

    The key to mitigating these losses of identity is to redefine yourself such that you get to keep important aspects of your identity even if your particular role change. I.E.

    • Instead of saying “I’m the CEO”, say “I’m the type of person who builds and creates things”

    • Not “I’m a great soldier”, Yes “I’m the type of person who is disciplined, reliable, and great on a team”

    Habits deliver numerous benefits, but the downside is that they can lock us into our previous patterns of thinking and acting — even when the world is shifting around us. Everything is impermanent. Life is constantly changing, so you need to periodically check in to see if your old habits and beliefs are still serving you.

  • A lack of self-awareness is poison. Reflection and review is the antidote.

    Don’t let the Identity obstacle your belief. Be a Open Person.

Men are born soft and supple; dead they are stiff and hard.

Plants are born tender and pliant; dead, they are brittle and dry.

Thus whoever is stiff and inflexible is a disciple of death.

Whoever is soft and yielding is a disciple of life.

The hard and stiff will be broken.

The soft and supple will prevail.

人之生也柔弱,其死也坚强。草木之生也柔脆,其死也枯槁。故坚强者死之徒,柔弱者生之徒。是以兵强则灭,木强则折。

《道德经》– 老子

小岛经济学

by Peter D. Schiff and Andrew K. Schiff

本书用一个假象的世界——小岛,讲述很多经济和社会现象的起源和影响,隐喻了很多现实中的事件和历史节点。从底层展示了经济的运行规律。

Good Book, but mixed with authors’ personal (something fair) feelings and emotions.

Chapter 1 经济一始

  • Scenario 1

    假设:在一个岛上(美索尼亚岛,后续11章会提及),三个人,每个人每天可以捕一条鱼,自给自足。没有货币、没有金融etc。

    Life = Work + Consume

    24h = Working + Leisure

    Life = Fishing + Eating

    生活相当于 <=> 工作(捕鱼) + 享受(吃鱼)。每天有24个小时,用一定的时间捕鱼,用剩下的时间吃鱼和享受Leisure。

  • Scenario 2

    其中一个人A研制出了一个捕鱼工具——渔网。为此,他花了一天时间制作渔网,也挨了一天饿。

    He takes the risks of starving, and create a “Capital 渔网” that can increase efficiency of working for long time.

    “Tech” <-> Capital is created, which increase the efficiency.

    他通过技术,制造了工具,提高了生产效率,可以在同样时间内,用渔网捕更多的鱼。但同时他每天仅需要吃一条鱼,那么用工具补的鱼可以被存起来变为 “Saving”;或者可以花更少的时间捕鱼,获得更多时间 Leisure

    P.S. 以下均假设鱼Saving 不会变质,可以理解为是经济体的产出 Economic Outputs

Chapter 2 分享经济产出

  • 小岛上的其他人也想要获得渔网,提升效率的工具。为此,他们可以选择

    • 自己也挨饿一天制作渔网。可能有做不出渔网的方法。

    但是由于 A 有储蓄,岛上的其他人可以向 A 借鱼吃,以免自己制作网的当天要挨饿。

  • 但是对于 A 来说,他也有不同的 Options:

    1. No share saving.

      不借给其他人吃,防止他们做不出渔网,或者还不上 A 借给他们的鱼。

      这样 A 不会承担风险,但是经济体也不会增长。

    2. Share saving ( with Interests or no interest ). 金融也因此产生了

      把鱼借给其他人,同时收取“利息”,如:要求借出一条鱼,还两条(即利息是一条)。

    • If 设置利息为0,那么就是再免费 share saving,
    • If 设置利息不为 0,那么 charge interest,对方可能不还钱,那么 A 就亏了,也可以对方还钱,A 就挣了额外收入。
    • The cost of the interests is the game, and we do not talk about that further. just now.

      • Invest the Saving.

    A 还可以自己多制造更多的渔网,通过用现有渔网捕更多鱼 Saving,然后之后消费 Saving 制造更多的渔网。

    A 可以开设自己的租鱼公司,将多余的渔网可以用于出租给其他人,挣租金。如果 A 制作渔网的技术无法被其他人学会,那么 A 的公司将能永远盈利。

    • Other Options.
  • 我们假设,最终,无论中间经过了哪个 options,每个人都掌握了制作渔网的技术,因为模仿和抄袭的成本和难度远远比创新低。

  • 每个人都获得了渔网,整个岛上所有人的生产效率都提升了,整个岛的 efficiency, 和 economic output 都提高了。

  • A 通过 tech,成为了岛上最初的富人,他可以为其他人提供有价值的东西。尽管此后所有人都有了 tech,他的 tech 变得不再特殊,无法再挣额外的利润。

  • 在社会的角度,如果 A 有持续的获取利润的能力,或者如果 A 通过自己的利润持续压迫其他人,那么社会可能变得不稳定 instable。起义、变革,直到社会变得公平。The edge A have the ability of making profits is also a sociology game.

Chapter 3 Credit and Loan (Inserted)

In the case,A 有储蓄,可以选择投资 investment,把储蓄以贷款的形式投资出去,挣投资收益。

  • 商业贷款:选择能还钱的借款人,有正向收益的项目等,都是为了保证贷款能收回。但是一旦外部力量以各种里有鼓励或者要求储蓄者借出款项,不考虑实际还款的可能性,那么贷款人就难免要承受较大的损失。

    因为政府没有储蓄,只有个人才有,加入在政府的激励下,贷款流向了无法还款的个人和企业,那么个人的储蓄就被牺牲了。

  • 消费贷款:消费贷是风险更高的贷款品种,因为 borrower 拿着钱去消费、度假了,没有用来获得正向现金流。Creditors 会因此承受不必要的风险,此时对 borrower 和 creditor 来说都是一笔负担。

  • 应急贷款:为应对紧急情况而提供的贷款,可能 borrower 收不到这笔钱就完蛋,也可能 borrower 因为快完蛋了才需要这笔钱,收到了也得完蛋。但是当 borrower 处于不能,或者由外部因素让 borrower 不能完蛋的情况,可能不得不借。社会生死攸关之际,储蓄格外重要。

Chapter 4 How Economy Grows?

基于 Chapter 2 的结尾,每个岛民制造了渔网,大家捕鱼的效率都提升了,每天捕两条吃一条,岛上有了更多的 saving (Outputs, fishes)

他们花费 saving 的鱼,有更多时间开发新的设备,更强的捕鱼机器,etc

Technology boosts the Economy Growth.

Saving 储蓄发挥了作用:1. 给人们机会投资,用 tech 创造;2. 起到缓冲器的作用,应对自然灾害 crisis etc

Saving 创造了资本,资本使生产扩大成为了可能,所有储蓄起来的一美元对经济产生的积极影响要大于消费掉一美元。

Chapter 5 Service, Money, and Comparative Advantage

  • 通过储蓄、贷款,人们有机会拓宽投资领域,扩张商业。

  • Service:当需要层次到达一定阶段,服务业应然而生(厨师,教培)

  • Money:为了满足不同人有不同的需求,如当制矛师向厨师买饭,而厨师不许要买矛时,货币(鱼)产生了,作为普适的交易媒介。

  • Comparative Advantages:在这个经济体中,人们发挥不同职能,如有的人擅长体力,他可以搬运更多的鱼,有更高的搬运效率,可以因此挣更多的钱。

  • Tech & Productivity:同时,有的人研发新的 devices,用车运输,而非人力运输,再次提高了生产效率 productivity,成本也因此降低了,利润提升了。

    技术创新是个单向过程,除非人们失忆,否则生产效率提升会随时间越来越多。价格随时间降低。持续降低的价格还给人们更多空间储蓄

  • Employment: 劳动价值通常取决于劳动者所使用的资本,资本的便利,可以提升劳动的价值。如推土机推的土比人铲效率高得多。

    • 劳动者在市场中可以扮演不同的角色:
    • 制造渔网的人:创新者承担风险, start you own business
    • 贷款买鱼网的人:加杠杆承担风险
    • 为有渔网的人打工的人:打工人,稳定收入,风险低。
    • 最低工资标准:政客通常表示,最低工资制度使员工获得了权益,但实际上也剥削了部分人获得工作的权力。如最低工资为 ¥8,而一个人的效率只值得 ¥6,那么他们会失业,员工选择的权力被剥夺了。政客提出的很多权益,如医保、产假等,实际上并未给员工提供好处,反而让员工失去了选择的权力(主动用自己工资去买这些权益的权力)。但是对政客来说,这么做可能意味着社会稳定性。
  • Deflation 通缩:

    作者认为通货紧缩是当今经济学中最成功的宣传册。经济学家认为通缩会对经济带来负面影响。

    但是如作者此前观点,当efficiency提升,成本降低,价格会降低,那么必定会带来“通缩”。即,生产率的提升会促使价格下降。但这对经济体来说实际上是好事。

    作者说,现代经济学错误的认为:消费促进经济增长,一旦通缩,人们不愿消费(价格会继续下降,spiral accelerate的负向),如果人们继续消费,价格下降的影响会减弱。

    作者认为,起决定作用的不是消费,而是生产,不需要劝说人们消费,因为人类的需求永远不会得到猫族。如果人们不想要某样东西,那么一定是有理由的,要么商品不够好,要么买不起。

    作者认为,政治家宣传通缩不好,是因为通缩是政治家的好朋友。

Chapter 6 What does Saving do?

  • Banker create a location, the bank, to accumulate indiviudal’s saving. 人们不愿意在家存放过多的鱼,于是把鱼存到银行。银行同时用吸纳的储蓄放贷,挣贷款利息。

    • 储户:Banker 为储户支付利息,吸引他们把钱存到银行。
    • 储户存的越久,Banker 给储户的利率就越高,因为 bank 获得了更稳定的鱼(钱),可以用来房贷款·。

    • 放款:放贷款的时候,Banker 选择可靠的借款人,收取低利率。对风险高的借款人,收取高利率。

    • 同时,如果鱼存量多,bank 会主动降低利率,因为 bank 承担损失的能力比较强。。

    • 当储蓄过量,银行就不需要吸引新的储蓄,贷款利率也比较低,存款利率也比较低。这样也一定程度的抑制了储蓄。
      • 一旦储蓄少了,银行想要吸引更多储蓄,给更多利率,同时流动性低,放贷款也要charge more interests。
      • bank 作为中间金融机构实现了 equilibrium
  • Fund:

    银行吸引相对稳定的钱,同时放贷给相对风险低的项目。但是市场中有不同的储蓄者(投资者)和项目。如:有点人能承担更多风险,想把鱼存下来,挣更多的收益。有点项目风险高,银行不愿意给放贷款。此时 Fund 出现了,吸纳 individual 有更高风险偏好的钱,把钱投给有更高预期收益,但是同时更高风险的项目。

    • Fed:作为美国财政部的延申,负责制定基准利率,美国市场的利率结构都是建立在基准利率之上的。Fed 被授予这种权力,是为保证经济在繁荣期和萧条期能稳定运行。作者认为,这个机制存在两个缺陷:
    1. 需假设Fed 的人更了解市场,因此可以通过 ffr 来调整市场,
    2. Fed 的决策基于政治考量,而非经济因素,如:虽然低利率可以降低市场成本,但同时低利率还能帮时任总统获得更多支持度,因为刺激经济。
    • 也因此,Fed 在 covid 之前大多时候都执行低利率的政策。这也推动美国市场长期保持低利率的状态,市场整体利率低,吸引不到储蓄(因为收益少),同时刺激了 loan (因为成本低)

Chapter 7 Infrastructure & Business

  • Infrastrucutre Investment

    人们意识到缺少基础设施(如没有水源,没路),岛民想寻求解决方案。

    岛民决定融资建自来水厂,一方面解决当地缺水的问题,同时自来水厂的收益可以偿还贷款和利息。

    基建投资 infrastructure 不光保证贷款能偿还,还提升了社会生产率,甚至推升出新的产业。

    但是在项目发起时,投资者会权衡 opportunities cost,毕竟钱被用来投资自来水厂了,就不能用来投资其他项目了。这时投资不同项目就取决于投资者和gov(作为 social planner)的选择。

  • Business and Trading – (Comparative Advantages)

    随着基建提升了的生产效率,新的产业也产生了。岛屿岛之间开始产生贸易,有些岛把自己过剩的产品出口,刚好有其他岛对此些产品有需求。每个人,每个岛和国家都会利用自己的优势实现利益最大化。

    在自由贸易的情况下,在 international trading (岛与岛之间的交易)中,不同国家发挥自己的 comparative advantage

    In reality, 在自由贸易中,政治考虑会使情况变得负责。如:自由贸易的反对者会为了保护美国的就业岗位,不受海外竞争影响,而限制低价商品进口,使本国产品在本国市场中任有竞争力。但是 in this case,反对者保护了供给侧,但是需求侧的消费者不得不承受更高的商品价格。Deadweight loss 产生了 (Economics 101)

Chapter 8 How the Government Forms

岛上最开始没有政府,但是当有外敌入侵时,individuals 独自往往难以面对,需要集体反馈。此时 gov 的重要性体现了,岛民决定组建一个对人民负责的政府,政府无权剥夺人们的自由。

岛民中需要选出 leader 来做决策。Assume 岛上的 gov中,由12名议员组成参议院,包括一名能行使行政权力的议长。

同时,为了维护社会稳定,也是为了保护岛民的生命权、自由权和财产权,参议院设立了一套法院体系来解决纠纷,同时成立警察小队执行法官的法令。

gov 建立国防用的基建。

岛民同意每年缴纳一些鱼作为税款,用于 gov 对整个岛的集体花费。

为保证税款不被乱用,人们制定宪法,明确了 gov 应有哪些权益。

法院系统设置了最高法法官,负责维护宪法的权威,并督促议员的行为。

一个政府成立了。

政府用税费雇佣了一些人,如灯塔看守、治安官、法官、海军桨手。大家明白如果没有向政府纳税的社会生产者,这些职位根本不会吃饭,如果没有生产者缴税,政府官员都吃不上饭。

Chapter 9 Evolution of the Govenment

社会保持平稳运行,基础设施完善,社会生产率逐渐提升。当需要层次达到一定阶段,劳动密集型产业的部分labour转去做服务业或者新型产业,如装修公司、巫医医院、剧院 etc。

政府换届时,议员为了获得选票,演讲说要采取刺激的财政计划,支持经济发展。但是政府没有这么多钱(收入、税收、鱼),岛上的 saving 储蓄池不够政府完成支出计划,政府决定发行“鱼联邦储备券”,即可以用来去 bank 自由兑换鱼的纸币,一块钱 = 一条鱼。 政府控制了纸币的发行,就可以自由决定政府支出了。人们以后可以用纸币自由兑换鱼,也因此可以用纸币交易商品和服务。

鱼就像黄金,纸币就像美元。

Days later,政府超发了纸币用于财政支出,但是并没有足够的税收收入(真很正的鱼)来pay the fiscal expenditures,而是用纸币pay。市场的纸币越来越多,多过saving 鱼,导致不再是一块钱纸币能换一条鱼,而是每10块纸币只能换9条鱼。政府也意识到:当人们意识到银行美元足够的saving鱼用来兑换纸币,那么人们会去挤兑,run,去银行兑换鱼,政府就无法兑现 1-to-1 的承诺。

政府要做的,是让人们相信政府还有足够的saving 鱼,来满足兑换的关系。那么当政府超发纸币,人们就不会去挤兑。

In the story,政府研制了一种技术,可以把鱼拆分重组,用两条鱼制造三条鱼(鱼变小了,但是变多了)用来满足纸币兑换的需求。也因此,政府不再担心挤兑,开始肆意的印钱,欺骗人们有足够的 saving 做支撑政府做投资。

  • In reality, 美联储早期建立布雷顿森林体系,指定35美元可以兑换1盎司黄金。但是美元不断超发,实际上美国储备的黄金并不能维持 1 盎司金 = 35 dollar 的关系。政府为了防止挤兑,就要用各种方式阻止提款,如限制兑换黄金的银行,禁止私人兑换黄金等。当时脱钩的关系不能阻止,直到一天,布雷顿森林体系瓦解。

Chapter 10 Fish Shrinks with Money Printed

政府不断用拼接鱼的技术来制造 saving (而不是真正的税收,或者output带来的saving),然后印钱,通过government spending 制造新的产业(无用,无意义的 bullsit jobs)用于保证就业,给人们发工资,维持社会稳定。这样的政府也获得了民众的支持,获得了选票,政府实力得到延续。

但问题是,鱼拼接技术,使 2条鱼 – 4条 – 8条 -16条 etc,虽然数量变多了,但是鱼变得越来越小、越来越小,直到人们意识到了问题。

因为纸币能换的鱼越来越小,物价必须上涨已弥补损失的营养价值。通胀问题产生了,尽管生产率提高会使物价下降,但是超发的货币 deduct that。物价上涨了。

简化这个过程,政府超发货币,为了满足社会问题,制造就业,创造了很多inefficient 无效的工作,给人们发工资,涨工资,但是真实产出(捕鱼数量没多,而是通过拼接变多了)并没有随超发货币的节奏,通胀问题产生了。物价上涨。

人们意识到了通胀问题越来越严重,鱼越来越小,通胀真正伤害的是需要养老的人,因为他们存的纸币能换鱼越来越小了,不能满足生活。

通胀问题越来越严重,人们选择把纸币花了买东西,而不是存钱,因为钱越来越不值钱了。通胀抑制了储蓄。储蓄少了,可以用来投资的钱也少了,新的产业在萎缩,企业削减成本,工人失业。社会不稳定的问题产生了。

此时新的政府选举来临,新的竞选者许诺要用 helicopter drop 的方式给人们发钱,满足消费需求。这种选举口号迎合了大众,当选,发钱。但是实际上 output resulted saving 没有提升,反而印了更多钱,通胀的问题更加严重了。

  • In reality, espeically Keasian Economists 印钱来解决 recession 的问题,导致了 stagflation,通胀和失业同时出现。

    人们认为失业时,需求会下降,物价会降低,导致通胀问题缓解,经济回到动态平衡的水平。但是人们没有意识到,失业,产业生产也减少了,供给减少了,物价也上升了。价格不会因为 unemployment 回落,因印钱导致的通胀不能缓解。

Chapter 11 External Player

作者假想:在一个新的经济体“中岛帝国”,经济体有更多的劳动力(人)labour,更集中的统治,人们捕鱼,上缴(缴税)。民众媒体只能吃到半条鱼,足以生活,但是国王和官员每天能吃到号线。中岛帝国没有储蓄、没有银行、没有信贷、没有企业,经济处于黑暗时代。经济没有持续发展。

中岛帝国的王得知美索尼亚岛后,打算学习银行、借贷和贸易系统,希望以此帮助自己的岛富裕。他认为货币是重要的因素,于是中岛帝国开始用鱼换美索尼亚岛的货币,因为货币可以保证随时在美索尼亚岛换取鱼,同时便捷交易。双方签订合约,中岛帝国定期提供鱼,换取美索尼亚岛的货币。

  • 对于中岛帝国来说,他们用换取的货币,买美索尼亚岛上的产品。同时由于中岛帝国没有银行,他们只能把货币存在美岛挣取利率收益。

  • 对于美索尼亚岛来说,中岛的购买力来买美岛的商品,为美岛提供了流动性。同时,中岛存入银行的鱼使可用的贷款大幅增加,岛上获得了额外的实物资本,已支撑岛内超发的货币。大量真鱼出现使货币换来的鱼的肉变多了,货币有了实物的支撑,物价上涨(通胀)的问题缓解了。

然而在中岛帝国,国王意识到,过多的税收,即让人们上交所有捕获,只留每天半条吃的量)阻碍了人们的生产动力。于是中岛开始向美岛买渔网,提高人们捕鱼效率。此前,每人每天捕一条,上交半条。现在每天捕两条,上交一条。win-win。

同时,一段时间后,中岛税收增加,持续用税收的鱼买美岛的货币,用货币买资本设备,持续扩大生产。

逐渐的中岛的企业家通过copy past,和创新,也产生了二产,有能力生产勺子、碗等基础产品。他们再把产品卖到美岛,换取货币。

Chapter 12 Evolution of Industrisation

中岛的储蓄(鱼)大量涌入美岛换取货币,储蓄被存入美岛银行,贷款利率随之降低,美岛企业家的投资热情也变得高涨。

  • 美岛:由于中岛劳动力多,劳动成本低,美岛把大多捕鱼和制造业外包给中岛。而美岛发展和保留相对localised服务业,和附加值更高的产业。商业计划也更加青睐需要本地员工提供服务的项目,这些工作无法外包,且需要的资本少(轻资本、服务业),技术培训、艺术等。

  • 中岛:中岛通过引入捕鱼技术,捕鱼效率大大提升,建造很多巨大捕鱼器(部分涉及通过copy past)。美岛告法院说中岛侵犯专利权,但是这个官司在中岛打不可能打赢。

    中岛员工24小时工作,疯狂工作捕鱼,不发展服务业。但是对中岛的国王来说,人们整体忙于工作,甚至没有对服务业有需求的时间,社会稳定,不需要额外的改变。

    中岛捕鱼效率高了,持续用捕的鱼,换美岛的货币。为美岛提供实物输血。中岛的人相信货币意味着产出和储蓄,而实际上这些被送往美岛的鱼被用来填补美岛超发货币的窟窿。

In reality,

过去20年,全球经济失衡(即美国贸易逆差)变为常态。相当于美国净获得了全世界的实物生产转为自己的消费,而全世界在用实物生产换美元。

美元储备货币的地位很大程度上导致了贸易逆差的扩大,如果没有全球经济体对美元的内在需求,任何国家都无法长期维持这种状态。

正常情况,贸金差额和货币价值应该处于一种动态平衡equilibrium的状态。一国的生产力更强,其他国家多这个国家的商品有需求,那么强势的贸易地位就会使一国的货币坚挺,弱势贸易地位的国家货币就会贬值。货币坚挺升值,产品的价格也变高了,需求少了,货币价值自然会降下来。

但是此前,中美货币之间的peg打破了这种关系,动态平衡的机制被破坏。

Chapter 13 The Breach of “Gold/Fish” Standard

即使有中岛定期的真鱼输入,美岛仍在超额印钱。开始有外岛的人质疑美岛货币的价值,质疑是否货币能兑换真鱼。于是人们开始去美岛银行兑换真鱼。

美岛银行显然没有足够的鱼来满足兑换,哪怕使用第10章的鱼拼接技术。

美岛政府决定打破鱼和货币的关系,暂停了银行兑换窗口。“鱼本位”瓦解。美岛货币的价值大幅降低。但是即使如此,美岛货币在岛与岛(国际)间交易的地位仍然存在。

In reality,这件事对应着Bretton Woods的瓦解。

Chatper 14 How Housing Price Increases?

银行不愿意投资服务业,业务风险高,而是更愿意寻找稳妥的项目,棚屋贷款,因为棚屋可以作为天热的抵押物。

此前,人们需要储蓄很多钱,然后一笔买棚屋。现在,人们通过贷款,直接买房,跳过了储蓄的时间。

然而银行还是会对人做挑选,富人更容易获得贷款,穷人被认为信用或还款能力较差,不那么容易被授予。

政府为了推动让更多岛民获得贷款,创立了“房利美”&“房地美”为棚屋贷款担保。有了担保,银行就不必担心贷款违约了,于是降低利率和放贷标准,更多贷款被制造出来。

银行开始允许“以小换大”贷款,低首付和棚屋利润免税政策。对棚屋的需求旺盛,推动供给侧更多的棚屋被生产出来,制造业的产业链被塑造,房地产吸收了越来越多的产能。

随着贷款刺激,棚屋价格开始上扬,棚屋的投资属性提升。Price Spiral Accelerately increased。

同时,中岛的钱也涌入美岛,进一步推动棚屋需求,价格进一步上涨。Bubbles Emerge

Chapter 15 Housing Bubble Collapses

由于岛民有限,对房屋的需求终究有尽头。

One day, 新房开始滞销。人们开始发现房屋的价格和价格、供需脱钩。

房屋数量多余人们的真是需求,人都开始想脱手,房屋价格开始大规模下跌。

消费者不再投资房屋,其他相关产业也陷入了困境。建筑工人、设计院、房处Sales,电器Sales纷纷失业。看似不相干的产业也同时收到了冲击。

小岛陷入了经济危机。

政府决定开展经济刺激援助计划。首先向“两房”注入资金(印钱),已保证房产有抵押,或者发消费券。政府希望持续放松信贷,提高市场对房产的需求,阻止价格下点。但显然由于供求失衡,这样做并没有效果。

同时,由于棚屋价格暴跌,人们觉得自己没有以前富裕,所有停止消费。

印钱显然无法从根部组织 bubble collapses 的问题,美岛政府希望寻求更多的鱼注入经济体,支撑超额印钱,已弥补房产市场。

于是美岛开始尝试卖自己的基建产业,如卖掉自来水系统,换取鱼。但美岛的反对派表示如此做会威胁到国家安全,让核心产业离开自己掌控。所以此做法也无法实现。

最终,政府只是提出了所谓“经济刺激援助计划”,但实际什么也没能做,不能改善经济环境。

Chapter 16 The Scenario Gets Even Worse

岛国房产行业崩塌,消费停滞。

新任政府通过“变革”的口号拿到了更多选票,再次扩大了经济刺激计划,并设计了其他新的计划,将新印刷的货币注入市场,增加助学贷款,开展超量基建建设并雇用人员运维,发展新能源等,

但是由于美岛已经没有鱼了,他们所有的开销背后都要依靠外国的资金支持。

经济层面,美岛人们可以有以下选择:1. 减少消费,用储蓄还债。2. 增大产量,卖掉多余的货物还债。3. 追加贷款,旁氏骗局,保持现有消费水平。

给予上述三种选择,前二都需要美岛人“吃苦”,而第三个option可以通过让外国人买新债来转嫁债务。于是美岛的官员选择了3。

Author’s View: 一国的经济不会因为人们的消费而增长,而是经济增长带动人们消费。

Chapter 17 IMF & PIGS

与美岛类似的剧情发生在了其他更“小”的岛,经济体量更小,但是没有美岛的货币在国际交易中的影响力。小岛经济逐步崩溃,经济危机。此时IMF,作为多国出资组建的机构,为小岛提供了大量的美岛货币(目前仍被视为最可靠的货币),希望帮助小岛度过危机。

IMF提供的援助贷款利息很低,但仍需要真是的鱼(output)用于到期偿还。同时,IMF强制小岛政府接受一系列的“刚性”计划,包括提高税收、减少政府支出等。此计划被当地居民强烈抵制,因为居民觉得自己的岛屿被不怀好意的外岛人控制了。

Another Real-world Scenario

2010年,PIGS时陷入债务危机,他们作为欧盟成员,国家维系着丰厚的社会保障体系,但是国家债务水平远超本国经济发展能力。

政府想用量化宽松政策来修复萎靡的经济,就好像企图用汽油去救火,汽油越多,火势越旺。

Chapter 18 What Does/Did CB do?

美岛QE,CB开始Operation Squish的操作,将长期联邦贷款替换短期的,将还款期限延长。虽然始终没有真是的鱼(output)做支撑,但是民众被“无限期债”的计划带来了正向的预期,该计划再次短期抬高了房价,人们追求趋势再次投入资金。然而,CB的操作并没有为市场带来真正的output,当房价暴跌的时候没有人幸免。

In reality,

  • at the end of 2008, CB conducted QE, purchasing about 2 triilion USD debts (Open Market Operation).

  • 2010Q1, after CB reduces purchasing, the stock market collasped. CB conducted the second round of QE , and was coined as “Monetaisation of those Debts”

  • 2011Q2Q3, after the end of the second round QE, Fed did Operation Twist, replacing short-term debt with long-term ones. That conduction results in the booming housing market, but is less helpful for the “real” term economy. Stock price hiked but employment went worse.

Chapter 19 The End

中岛逐步打造自己的内循环经济体系后,逐步发现不再需要美岛发行的货币,逐步与美岛脱钩。于是中岛逐步减少向美岛输送output,用来换货币。

中岛继续捕鱼、制造商品、储蓄,这些都是促进其经济增长的因素,中岛也未陷入经济危机。

而美岛因为过度发展服务业和金融业,国内逐渐丧失了制造能力。更多的货币,和更少的output,通胀更加严重。钞票贬值、商品稀缺、物价飞涨。

中岛带着大批的鱼&货币来美岛采购,买基础设施买固定资产,然后离开…

In reality,

The author summarised that 政府总会因为入不敷出而陷入困境,一旦loss累计到一定程度,政府就会面临艰难的选择。

  • Option 1. 提高税收。但是人民不喜欢税收,高税收会抑制生产、降低经济活力。税收过高,人们会停止巩固走,甚至发生暴乱。
  • Option 2. 削减政府开支。但是这种做法往往会有更多人(利益相关方)反对。
    • P.S. 政客为了赢得选举做出无数承诺,而选民从不考虑纳税人是否为这些承诺买单。
  • Option 3. 政府拒绝缓债,如果债权人是外国人,那么从政治上,与其增加税收并掠夺国人利益,不如失信于外国人。
    • 对于政客,拒绝还债往往令难堪,因为需要承认自己没有偿付能力。为了避免这个情况,政客索性选择印钱,引起通胀,使债务贬值,还债。但以通胀作为代价往往是最次的选择。