My Blog Is Also Paying My Bills

Casting the digital equivalent of a message-in-a-bottle into the Internet’s vast sea of content, many people start Web sites or blogs hoping that they will find an appreciative audience for their precocious parrot videos, cupcake recipes or pithy commentary on everyday life. The dream, of course, is that they will develop a large and loyal following — and potentially profit from it.

While most of these self-publishers don’t attract the attention of anyone other than indulgent family and friends, there are those who find wider recognition and some income. What the successful have in common is a passion for their subject and a near-compulsion to share what they know. Advertising, merchandising, offline events, book deals, donations and sometimes sheer luck also play a part.

“My advice is to choose a topic you’ll never get tired of,” said Stephanie Nelson, 47, of Atlanta, a homemaker who founded CouponMom.com in 2001 to share tips on saving money by using coupons. “The first three years I made no money at all, so I had to love what I was doing to keep going.”

Ms. Nelson said her Web site now has more than 3.8 million visitors a month, and the income it generates supports her family of four — allowing her husband to retire early from his corporate job five years ago. “I’m still not tired of it,” Ms. Nelson said.

Half of the site’s revenue comes from Google’s AdSense service, and the other half is from companies like Groupon and LivingSocial that buy ads directly from her. AdSense generates ads based on the words that appear on Web pages. For example, if a blog post is about dogs, ads for dog food or dog grooming might appear beside it.

Many of the Google ads generate income only if people click on them — usually yielding a fraction of a cent per click. It’s also possible to get paid every time a Google ad appears on a page. Rates are determined in part by advertisers bidding in an online auction.

Other companies like BuySellAds.com and BlogAds allow self-publishers to determine what they want to charge for placing an ad on their sites. They then match sites with eager advertisers for a percentage of ad sales — 14 to 30 percent is typical.

Federated Media, which is a sort of Web talent management company, is more selective, negotiating rates on behalf of independent content creators it agrees to represent. In general, online ad rates vary widely, from $54,000 a day for an ad on a popular blog like PerezHilton.com to $10 a month for an ad on the cartoon blog The Soxaholix. (The New York Times Company is an investor in Federated Media.)

Clayton Dunn, 32, and Zach Patton, 31, the bloggers behind The Bitten Word, make around $350 a month from pay-per-click Google ads, and in commissions from Amazon.com when readers follow links to cooking gadgets, books and magazine subscriptions they recommend. Mr. Dunn and Mr. Patton, who live in Washington and blog about recipes they have tried from popular magazines, started the site in 2008 and now have about 150,000 visitors a month.

“It more than pays for the groceries,” said Mr. Dunn, who added that they are further compensated by readers who may give them delicacies like fresh avocados and Hawaiian ginger syrup.

For those who want to generate more income through advertising, Jonathan Accarrino of Hoboken, N.J., founder of the technology news and how-to blog MethodShop.com, advises having contextual ads, which are highlighted words in posts that provide a link to the vendor of a relevant product or service. A commission is paid on resulting sales.

Adding video to a post is another strategy that Mr. Accarrino said contributes to his blog’s six-figure yearly income: “I’ll record video walk-throughs of my tutorials and upload them to Blip.tv,” a video sharing service similar to YouTube. And like YouTube, Blip.tv gives users the option to run ads with their videos. These generate $1 to $10 for every thousand views, depending on the advertiser.

Indeed, many video bloggers, or vloggers, make money this way. Sheila Ada-Renea Hollins-Jackson, a 22-year-old makeup artist in Farmington, Mich., makes up to $200 a month from the 63 videos about beauty treatments she has posted on YouTube since 2008. “It pays my cellphone bill,” she said. Vloggers either apply or are invited by YouTube to display ads based on demonstrated viewership or outstanding content.

Selling merchandise on a vlog, blog or personal Web site can bring in even more cash. Darren Kitchen, 28, of San Francisco said he makes $5,000 a month selling stickers, T-shirts, baseball caps and computer hacking tools on his Web site, Hak5.org, which offers a weekly video show about computer hacking.

“It’s crazy how many people want the stickers,” said Mr. Kitchen, who started Hak5 in 2005 and says he has 250,000 monthly viewers.

Book deals are the ultimate goal for many bloggers who are aspiring writers. Molly Wizenberg, 32, of Seattle, started her blog, Orangette, in 2004 as a way to hone her writing skills after dropping out of a Ph.D. program in anthropology.

Her musings about food and life attracted 350,000 visitors a month and the attention of Simon & Schuster, which led to the publication last year of her book, “A Homemade Life: Stories and Recipes From My Kitchen Table.” Last month she signed a contract to write another book. “It’s beyond what I ever imagined,” Ms. Wizenberg said.

Some people simply ask their fans and followers to make donations to support their creative efforts. Kelly DeLay of Frisco, Tex., said he gets $200 to $400 a month from visitors to his Web site, The Clouds 365 Project, where he posts a daily photograph of cloud formations. “People can be very generous,” said Mr. DeLay, who began taking pictures of clouds after he was laid off from his job as an interactive media director in 2009.

Charging for content is also an option. Collis Ta’eed, 31, of Melbourne, Australia, founded FreelanceSwitch.com, which gives practical advice to freelancers, and Tuts+, which offers technology-related tutorials. He said he brought in $150,000 a month from his sites, most of it from premium content — primarily tutorials and e-books.

“People will pay for content if you offer them something of value that is authentic and is generally useful,” said Mr. Ta’eed, who said his two blogs together have 6.4 million visitors a month. One example of useful content is FreelanceSwitch’s job board, which brings in $7,000 a month, he said. Job posters pay nothing; job seekers pay $9 a month.

And sometimes people will pay to attend events organized by bloggers they admire. Steve Pavlina of Las Vegas said he made $40,000 from weekend workshops that were an outgrowth of his blog, StevePavlina.com, which focuses on issues related to personal development. He started the blog in 2004 and says it has 2.5 million visitors a month. Besides workshops, he said he made about $100,000 a month in commissions from sales of products like speed-reading courses and high-speed blenders that he recommends on his blog.

“I tell people if they want to start a blog just to make money, they should quit right now,” Mr. Pavlina said. “You have to love it and be passionate about your topic.”

http://www.nytimes.com/2011/05/26/technology/personaltech/26basics.html?partner=rss&emc=rss

Inflation? What is inflation? What the heck is it?

If you are interested in economics, you may realize that three most important figures are employment rate, interest rate and inflation rate. Frankly, I see these rates every single day, especially inflation one. More terrible, newspapers keep bombing us with fear and greed about inflation. I do not believe so. I just read a very good comprehensive article about inflation. I would like to put it into my blog for further reference. Inflation is not as fearful as we, normal people, have thought.

In a high-profile research paper titled "Understanding the Evolving Inflation Process," published recently, a group of private-sector and academic economists have endorsed the Fed's policy of price stability and transparency as an important tool in keeping inflation at bay.[1]
Economists have however, warned the Fed not to rely too much on inflationary expectations as the main tool for controlling inflation. The writers of the paper maintain that their research shows that inflationary expectations actually don't cause inflation, but that things are the other way around.
The heart of their analysis is a modified Phillips Curve equation, which is labeled the New Keynesian Phillips Curve (NKPC). What drives the inflationary process in this way of thinking is expected inflation, past inflation, the real output gap and some disturbances, i.e., irregular events. In this way of thinking an increase in the output gap — i.e. a relative increase in actual output versus potential output — gives rise to inflationary pressures.
Using the NKPC and two other equations that deal with the output gap and interest rate determination, the researchers have made an attempt to explain the reason behind the great inflation between the mid-1960s and the late 1970s. The economists have also produced an explanation for the fall in the pace of inflation since the early 1980s. The reason for the great inflation, according to the paper, is the lack of willingness on behalf of Fed officials back then to stick to the goal of keeping prices stable. While the reason for moderate inflation since the 1980s, according to these economists, is central bankers commitment to price stability.
Despite the use of sophisticated mathematical and statistical techniques, the research paper never gets to the heart of the phenomenon of inflation. Also, the paper deals with the description of price changes without acknowledging any role that money might have had in these changes. The entire framework is based on a dubious modified Phillips curve and a black-box, time-series analysis. Whilst the research paper mentions extensively the word "inflation," it never even attempts to define this term. The lack of a clear identification of what inflation is all about casts doubt on various conclusions that the writers of this paper have reached. Covering undefined terms with mathematical dressing cannot make the analysis more meaningful if the object of the analysis is not clearly identified.
Defining inflation
The subject matter of inflation is the debasement of money. For instance, historically inflation originated when a ruler would force the citizens to give him all the gold coins under the pretext that a new gold coin was going to replace the old one. In the process, the king would falsify the content of the gold coins by mixing it with some other metal and return to the citizens diluted gold coins. On account of the dilution of the gold coins, the ruler could now mint a greater amount of coins for his own use. (He could now divert real resources to himself). In short, what was now passing as a pure gold coin was in fact a diluted gold coin. The expansion in the diluted coins that masquerade as pure gold coins is what inflation is all about. As a result of inflation, the ruler could engage in an exchange of nothing for something.
Under the gold standard, the technique of abusing the medium of the exchange became much more advanced through the issuance of paper money unbacked by gold. Inflation therefore means here an increase in the amount of paper receipts that are not backed by gold yet masquerade as true representatives of money proper, gold. Again the holder of unbacked money can now engage in an exchange of nothing for something.
In the modern world the money proper is no longer gold but rather paper money hence inflation in this case is purely the increase in the stock of paper money. Please note we don't say as monetarists are saying that the increase in the money supply causes inflation. What we are saying is that inflation is the increase in the money supply.
Once it is established that the subject matter of inflation is the expansion of the money stock, we can attempt to ascertain whether the Fed is an inflation fighter.
Monetary inflation and prices
Most economists and commentators define inflation as a general rise in prices, which is summarized by the so-called consumer price index (CPI). While a general rise in prices may be associated with inflation, it is however not inflation. What is the price of a good? It is the amount of money asked per unit of a good. (Observe that without money one cannot even begin to discuss what prices are.)
Now, if for a given stock of goods an increase in the money supply occurs, this would mean that more money is going to be exchanged for a given stock of goods. Obviously then the purchasing power of money is going to fall, i.e., the prices of goods are going to increase (more money per unit of a good). In short, in this case inflation is associated with the general increase in prices.
But now consider the following case: the rate of growth in money is in line with the rate of growth in goods. Consequently, there is no change in prices of goods. Do we have inflation here or don't we?
For most economists, if an increase in the money supply is exactly matched by the increase in the production of goods, then this is fine, since no increase in general prices has taken place and therefore no inflation has emerged. We suggest that this way of thinking is false since inflation has taken place, i.e., the money supply has increased. This increase cannot be undone by the corresponding increase in the production of goods and services.
For instance, once a king has created more diluted gold coins that masquerade as pure gold coins he be able to exchange nothing for something irrespective of the rate of growth of the production of goods. In short, regardless of what the production of goods is doing, the king is now engaging in an exchange of nothing for something, i.e., diverting resources to himself by paying nothing in return. The same logic can be applied to money paper inflation. The exchange of nothing for something that the expansion of money sets in motion cannot be undone by the increase in the production of goods. The increase in money supply — i.e., the increase in inflation — is going to set in motion all the negative side effects that money printing does, including the menace of the boom-bust cycle, regardless of the increase in the production of goods.
For mainstream economists, an increase in economic activity is almost always seen as a trigger for a general rise in prices, which they erroneously label inflation. But why should an increase in the production of goods lead to a general increase in prices? If the money stock stays intact, then we will have here a situation of less money per unit of a good — a fall in prices. This conclusion is not affected even if the so-called economy operates very close to "potential output" (another dubious term used by mainstream economists). Only if the pace of money expansion surpasses the pace of increase in the production of goods will we have a general increase in prices. Note that this increase is only on account of the inflation of money and not on account of the increase in the production of goods.
Another popular explanation for a general rise in prices is the increase in wages once the economy is close to the potential output. If the amount of money remains unchanged then it is not possible to raise all the prices of goods and wages. So again the trigger for a general rise in prices has to be monetary expansion.
Having established that inflation means monetary expansion, we suggest that the key factor behind the acceleration in prices in the period of mid '60s to late '70s is  the strong monetary expansion in that period.
In relation to its 12-month moving average, our measure of money AMS followed an exponential path (see chart). For instance, in August 1969 the differential between the AMS and its 12-mma stood at negative 0.5 against positive differential of 21 in December 1979. It is therefore not a big surprise that the gap between the CPI and its 12-month moving average jumped to 4 by December 1979 from 0.9 in August 1969 (see chart).
In contrast, since 1980 monetary expansion has not been as aggressive relative to its 12-month moving average. In relation to its 12-month moving average, AMS has been trend-less (see chart). So it is not surprising that the CPI in relation to its 12-month moving average has also been trend-less (see chart). The introduction of new technology has probably given a boost to the production of goods, which in turn has contributed to the lowering of the general increase in prices. Another positive is the strong increase in the supply of goods from various economies such as the former Soviet block and China.
Contrary to popular thinking, the Fed's preoccupation with price stability, by keeping the rate increases in the CPI at a particular acceptable range, can actually generate nasty surprises. For instance, as a result of strong monetary expansion and a correspondingly strong increase in the production of goods, prices remain stable. Notwithstanding this stability, various nasty side effects that emanate from monetary expansion are likely to emerge. Hence we suggest that Fed policy makers should pay close attention to the sources of monetary inflation rather than focusing on the symptoms of inflation.

$29

On this Rothbard wrote,

The fact that general prices were more or less stable during the 1920s told most economists that there was no inflationary threat, and therefore the events of the Great Depression caught them completely unaware.[2]

Similarly Mises explained in his essay "Inflation: An Unworkable Fiscal Policy,"

Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term "inflation" to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. …  As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation.[3]

But if the Fed were to acknowledge that inflation is actually printing money, then it would mean that the US central bank is not an inflation fighter but is itself the key source of inflation. After all, without the Fed's monetary expansion, the whole machinery of inflation would have fallen apart.

http://mises.org/daily/2525

China’s Dollar Problem

CAMBRIDGE – When will China finally realize that it cannot accumulate dollars forever? It already has more than $2 trillion. Do the Chinese really want to be sitting on $4 trillion in another five to 10 years? With the United States government staring at the long-term costs of the financial bailout, as well as inexorably rising entitlement costs, shouldn’t the Chinese worry about a repeat of Europe’s experience from the 1970’s?

During the 1950’s and 1960’s, Europeans amassed a huge stash of US Treasury bills in an effort to maintain fixed exchange-rate pegs, much as China has done today. Unfortunately, the purchasing power of Europe’s dollars shriveled during the 1970’s, when the costs of waging the Vietnam War and a surge in oil prices ultimately contributed to a calamitous rise in inflation.

Perhaps the Chinese should not worry. After all, the world leaders who just gathered at the G20 summit in Pittsburgh said that they would take every measure to prevent such a thing from happening again. A key pillar of their prevention strategy is to scale back “global imbalances,” a euphemism for the huge US trade deficit and the corresponding trade surpluses elsewhere, not least China.

The fact that world leaders recognize that global imbalances are a huge problem is welcome news. Many economists, including myself, believe that America’s thirst for foreign capital to finance its consumption binge played a critical role in the build-up of the crisis. Cheap money from abroad juiced an already fragile financial regulatory and supervisory structure that needed discipline more than cash.

Unfortunately, we have heard leaders – especially from the US – claim before that they recognized the problem. In the run-up to the financial crisis, the US external deficit was soaking up almost 70% of the excess funds saved by China, Japan, Germany, Russia, Saudi Arabia, and all the countries with current-account surpluses combined. But, rather than taking significant action, the US continued to grease the wheels of its financial sector. Europeans, who were called on to improve productivity and raise domestic demand, reformed their economies at a glacial pace, while China maintained its export-led growth strategy.

It took the financial crisis to put the brakes on US borrowing train – America’s current-account deficit has now shrunk to just 3% of its annual income, compared to nearly 7% a few years ago. But will Americans’ newfound moderation last?

With the US government currently tapping financial markets for a whopping 12% of national income (roughly $1.5 trillion), foreign borrowing would be off the scale but for a sudden surge in US consumer and corporate savings. For the time being, America’s private sector is running a surplus that is sufficient to fund roughly 75% of the government’s voracious appetite. But how long will US private sector thrift last?

As the economy normalizes, consumption and investment will resume. When they do – and assuming that the government does not suddenly tighten its belt (it has no credible plan to do so) – there is every likelihood that America’s appetite for foreign cash will surge again.

Of course, the US government claims to want to rein in borrowing. But, assuming the economy must claw its way out of recession for at least another year or two, it is difficult to see how the government can fulfill its Pittsburgh pledge.

Yes, the Federal Reserve could tighten monetary policy. But they will not worry too much about the next financial crisis when the aftermath of the current one still lingers. In our new book This Time is Different: Eight Centuries of Financial Folly , Carmen Reinhart and I find that if financial crises hold one lesson, it is that their aftereffects have a very long tail.

Any real change in the near term must come from China, which increasingly has the most to lose from a dollar debacle. So far, China has looked to external markets so that exporters can achieve the economies of scale needed to improve quality and move up the value chain. But there is no reason in principle that Chinese planners cannot follow the same model in reorienting the economy to a more domestic-demand-led growth strategy.

Yes, China needs to strengthen its social safety net and to deepen domestic capital markets before consumption can take off. But, with consumption accounting for 35% of national income (compared to 70% in the US!), there is vast room to grow.

Chinese leaders clearly realize that their hoard of T-Bills is a problem. Otherwise, they would not be calling so publicly for the International Monetary Fund to advance an alternative to the dollar as a global currency.

They are right to worry. A dollar crisis is not around the corner, but it is certainly a huge risk over the next five to 10 years. China does not want to be left holding a $4 trillion bag when it happens. It is up to China to take the lead on the post-Pittsburgh agenda.

http://www.project-syndicate.org/commentary/rogoff61