The damage spans the globe.

Thailand’s baht. Kazakhstan’s tenge. South Africa’s rand. Peru’s nuevo sol.

In emerging markets worldwide, currencies are plunging over fears that developing economies are on the verge of a crippling fall. Success stories until recently, emerging economies are seen as casualties now — of slower growth in China, plunging prices for commodities like oil and iron ore, the prospect of higher U.S. interest rates and homegrown threats.

The damage has spilled across oceans, with the turmoil jolting investors in New York, Tokyo and Europe. Investors there worry that China and other major emerging economies will reduce their imports. They also fear a trade-disrupting currency war as some countries desperately lower their currencies’ value to gain a competitive edge. A lower-priced currency makes a country’s goods cheaper for foreigners.

The Dow Jones industrials plunged 400 points, or 2.4 percent, in afternoon trading Friday on top of a 358-point drop Thursday. It’s down more than 6.5 percent in the past month. Tokyo’s Nikkei index shed 3 percent Friday.

For all the markets’ jitters, many economists say they remain confident that the U.S. economy is resilient enough to withstand a slowdown in the developing world. And Europe’s economy appears to be emerging from its long slump.

Even so, the trouble in emerging markets is a surprising and unsettling reversal.

“It’s remarkable just how things turned around so quickly,” says Neil Shearing, an economist at Capital Economics and a former British Treasury official.

Consider Peru. Three years ago, its capital, Lima, was chosen to host an International Monetary Fund’s meeting of global finance officials in what was seen as a celebration of Latin America’s arrival in the economic big leagues.

But with the event six weeks away, Latin America’s outlook has descended from boom to gloom. Peru’s economy has steadily slowed, and its currency, the nuevo sol, has plunged 2.5 percent against the U.S. dollar in the past month.

And Peru boasts one of the region’s healthiest economies. Brazil’s economy is expected to shrink this year and next. Its currency, the real, is down 7 percent the past month and more than 30 percent the past two years.

It’s hardly just Latin America. Kazakhstan’s currency plummeted this week after the government decided to let it trade freely. The South African rand fell this week to a 14-year-low against the U.S. dollar. Turkey’s lira hit a record low against the dollar this week.

Hung Tran, an executive managing director at the Institute of International Finance, expects developing countries to post 3.8 percent economic growth this year, down from 4.3 percent in 2014. The institute is on the verge of cutting that forecast further.

Analysts point to a primary culprit:

“It’s all coming from China,” says Masamichi Adachi, an economist with JP Morgan Chase in Tokyo. “Brazil, South Africa, many countries are commodity exporters, and the final destination is all going to China.”

The Chinese economy is slowing more sharply than most people had expected from the double-digit growth rates of the mid-2000s. The world’s second-biggest economy is expected to grow 7 percent this year, which would be its slowest pace since 1990.

Beijing is trying to manage a transition from rapid growth based on exports and often-wasteful spending on factories, real estate and infrastructure to slower, steadier expansion based on consumer spending.

That transition means China would need fewer raw materials — Chilean copper, Nigerian oil, Brazilian iron ore. That helps explain why China’s pullback has loosed carnage in global commodity prices: The Standard & Poor’s GSCI commodity index, which tracks 24 commodities prices, is down nearly 20 percent this year.

Emerging markets were already feeling the squeeze last week, when China devalued its currency, the yuan. That step ignited a semi-panic.

“The devaluation is a red flag about China’s current economic situation,” says Kurt Braybrook, who runs a Shanghai company that does quality control work. A falling yuan raises the risk that other countries will devalue their currencies to catch up.

Most countries can’t blame China and the vagaries of the global commodities market for all their problems.

South Africa is battling labor strife. Brazil is contending with a corruption scandal at state-owned oil giant Petrobras. Turkey is struggling to form a government while its military battles the Islamic State extremist group and Kurdish separatists.

Adding to the pressure: America’s Federal Reserve is expected, perhaps at its September meeting, to raise the short-term rate it controls from near zero. Investors could respond by moving even more money out of emerging markets to seek higher U.S. rates. That would lift the dollar higher and emerging market currencies even lower.

A Fed rate hike could also squeeze emerging market companies that have borrowed in U.S. dollars. Those companies would struggle to accumulate enough local currency to pay their now-more-expensive dollar-denominated debt.

Tran at the Institute for International Finance says dollar borrowing by emerging market companies surged from $700 billion in 2010 to $2 trillion through March.

The rising dollar and the hoard of dollar loans recall the 1997-1998 Asian financial crisis. Back then, a currency sell-off triggered an emerging market debt crisis that became a disaster for countries such as Indonesia and South Korea.

But the picture is less alarming now, analysts say. For one thing, developing countries have stockpiled foreign reserves that they can use to buy their own currencies and stop a crisis.

What’s more, emerging market companies that borrowed in dollars in recent years tended to take out longer-term loans, notes Joaquin Cottani, Standard & Poor’s chief economist for Latin America. During the ’97-’98 crisis, companies had taken out short-term loans and couldn’t refinance when the loans came due during a panic.

“Countries have learned from their experiences,” says Monica de Bolle, visiting fellow at the Peterson Institute for International Economics.

If you queried American citizens as to whether they would support a monetary experiment conducted by the Federal Reserve to stimulate economic growth — an unorthodox approach that would mostly benefit the government, large corporations and wealthy investors at first, but would ultimately help everyone else — would they approve?

And if you explained that it might take some time to deliver the desired outcome of higher employment at higher wages, and that people in the vast majority of households would have to accept much lower rates of return on their savings in the meantime, wouldn’t a few perceptive respondents tilt their heads and ask: How long?

So why does such a reasonable question raise such ire from former Fed Chairman Ben Bernanke? Responding to a recent editorial in The Wall Street Journal citing persistent low economic growth as perhaps an indication that the Fed’s unconventional monetary policies are not working as intended, Bernanke fairly bristled with indignation, writing in his Brookings Institution blog that he never promised monetary policy would be a “panacea” for our economic troubles — and besides, “nobody claims that monetary policy can do much about productivity growth.”Such defensiveness is not reassuring. It’s been nearly six years since the recession officially ended in June 2009. Still, the Fed continues to pursue its zero-interest-rate policy in the name of supporting the recovery, even as the negative aspects of this approach are imposing significant economic costs.

According to a report issued in March by Swiss Re, the world’s second-largest reinsurance company, the Fed’s policy of financial repression has cost U.S. savers roughly $470 billion in lost interest income. Other unintended consequences described in the report include “crowding out viable private markets” and “lowering the funds available from long-term investors to be used for the real economy.”

Bernanke’s riposte to those who would question the wisdom of perpetuating zero rates is to assert that the inflationary consequences predicted by some have not materialized. But after so much pumping, subdued inflation is hardly grounds for crowing; it’s further proof that the Fed’s policies are not working. Cheap money is not expanding production and raising wages as planned, it’s not increasing demand — and thus not raising prices for goods and services. Inflation is the dog that’s not barking.

Something is wrong. The monetary stimulus theory behind zero interest rates is not playing out in reality. Where’s the economic growth? This mystery will not be solved by former Fed prima donnas refusing to acknowledge that American citizens and their representatives in Congress have every right — indeed, Congress has a constitutionally mandated responsibility — to call to account those who have been appointed to the task of regulating U.S. money.

No one is accusing anyone of less-than-noble intentions or less-than-heroic efforts in utilizing central bank powers to influence economic outcomes. But when monetary authorities themselves are repeatedly stymied by less-than-optimal results, it’s time to consider changing course. An accountable Fed would accept the notion that its monetary stimulus strategy needs to be examined because it has not delivered anticipated results, by the Fed’s own projections, within a reasonable time period.

Maybe the problem stems from the Fed’s enhanced regulatory scrutiny over banks’ lending decisions in the wake of the crisis. Overregulation may have had an especially inhibiting effect on community banks. Before the Dodd-Frank bank regulation law passed in 2010, an average of more than 100 new banks opened each year; in the five years since 2010, only one new bank has opened. Fear of violating regulations has caused many hometown banks to reject loan applications from traditional customers — with the result that small business lending has been dampened. And that factor alone is a blow to economic growth.

Then, too, the normal money multiplier has not been functioning properly due to banks’ massive buildup of excess reserves, which have gone from $1.9 billion in August 2008 to a staggering $2.6 trillion currently. A study issued by the Cleveland Fed in February states that banks now find it “both easier and more attractive” to hold excess reserves than make loans. Why? Fed policies have altered the terms of the trade-off; the marginal benefit of holding reserves has increased because the Fed now pays interest on them, while the marginal cost in terms of forgone interest on loans has decreased under the low-rate conditions engineered by the same Fed.

So in crafting its monetary strategy to stimulate economic growth, it seems the Fed has given short shrift to the middle-income Americans who fuel the private sector — the true engine of productive economic growth. How much has consumer demand decreased because personal savings accounts pay zilch? How much has employment and production suffered because entrepreneurs can’t get loans from their local banks?

Yet, even as business investment languishes and manufacturing has hit the skids, and with America’s annual growth rate coming to a near halt at 0.2 percent for this year’s first quarter, our monetary authorities seem clueless about the impact of their own policies. Indeed, the Fed’s instinctive position is to call for more government intervention in the economy. Don’t expect any initiatives to scale back regulatory burdens or liberate market forces to spur real economic growth.

Instead, you can expect increasing calls from Fed officials to give themselves more room to maneuver by raising their target rate of inflation to 4 percent or higher — never mind that such monetary mischief utterly confounds business planning and leads to the misallocation of investment resources. And you can expect further demands for massive government spending on “public infrastructure development” to create jobs. It’s what Bernanke recommends in his blog post, insinuating that some other part of government needs to join the Fed’s stimulus party to attain economic growth.

But shouldn’t we start by figuring out the reasons for the Fed’s own lack of success?

Shelton, author of Money Meltdown, is a senior fellow at the Atlas Network and co-director of the Sound Money Project.

by Virgil Vaduva

“I think the Keurig is a great machine but it is a HUGE SHAME that the company decided to remove the ability to use your own coffee grounds in the home brew k-cup” — Top reviewer on Amazon.com

Less than two years after announcing the release of Keurig 2.0 and the introduction of DRM (Digital Rights Management) into their new coffee makers, Keurig Green Mountain announced lagging sales, sending the company’s stock down 12%.  Revenues are low, sales are down 23% and consumers are apparently tired of Keurig’s bullshit.

All this started when Keurig introduced features in their 2.0 brewers aimed at keeping third party “counterfeited” coffee pods manufacturers out of the market. Their 2.0 pods contain proprietary ink or RFID tags which are used by the coffee making device to identify Keurig-made coffee pods and allow the machine to brew only Keurig-licensed coffee.  Third party pods are rejected by the machine, meaning that customers who have purchased after market pods are now stuck with pods they cannot use and machines which only work with very expensive, Keurig-only pods.

In version 2.0 Keurig introduced the ability for customers to brew a carafe as well, using larger pods. The “anti-counterfeiting” system doubles as a method to distinguish between carafe-size pods and regular ones. If the sensor detects a green dot that identify the carafe cups, it brews a larger pot. If it detects black symbols on the standard pod, it brews a smaller cup. If it doesn’t detect a Keurig-approved marking at all, it will not brew anything and will display an “Ooops” message to the user. The only thing missing is a big middle finger and a “F**k you!”

It’s impossible to imagine what transpired in Keurig board rooms and behind the doors of their engineering department when this system was designed, but one thing is certain: there was an underlying assumption that consumers were too stupid to understand how this system works or lack the ability to subvert it.

Within weeks, people were already posting online work-arounds, videos and instructions on how to defeat the system, making the entire R&D work and manufacturing costs associated with it pointless. Not only did Keurig spend time and money developing a DRM system that does not work, but in the process they pissed off a bunch of customers, vendors and partners who had in place channels for using and selling cups compatible with their machines.

Keurig blamed the lagging sales and lower profits on slow adoption of their 2.0 brewers and claimed that customers love their products so much that they are holding onto them for dear life. This would be like Honda blaming customers for using older vehicles too long and not buying new ones. Is anyone really buying this?

The Keurig Green Mountain CEO Brian Kelley said, “Quite honestly, we were wrong. We underestimated the passion the consumer had for this.” He cited “complex product transition” as another reason for the sales decline, and the company now is reversing course and trying to save face by announcing plans to bring back the My K-cup accessory to allow customers to brew other brands of coffee. But what customer will go and buy a DRM brewer just on the empty promise of a company who just screwed them over just a year ago?

Oh how quickly things change. Just a year ago, the same CEO was fawning over the DRM feature, bragging about how customers will fall over themselves to adopt a newer, crappier product:

In reality, customers are not adopting 2.0 brewers because they don’t want to be locked into a market that lacks flexibility and lacks the ability to purchase third party pods. One important reason for Keurig’s initial success was the consumers’ ability to go out to either Walmart or a local flea market and pickup third party K-cups at low cost. Keurig calls them “counterfeited” pods. They are not counterfeited; they are simply not made by Keurig and can be legally manufactured by anyone with the ability to do so.  The pods could be purchased cheaply, and the Keurig machines provided the brewing convenience.

By introducing DRM in a coffee manufacturing process, Keurig killed their customers’ ability to save money, and are killing their own business in the process. The arrogance of not listening to the voices of customers is shining through their words and excuses, and while Keurig will likely be around for a long time, it will not be them, but the free market who will decide success.

Virgil Vaduva is a Libertarian security professional, journalist, photographer and overall liberty freak.  He spent most of his life in Communist Romania and participated in the 1989 street protests which led to the collapse of the Ceausescu regime. He can be reached at vvaduva at truthvoice.com.

The Momentum Machines website is low-key right now, but that may have something to do with high-profile arguments in the press and protests in the streets demanding that fast-food chains pay workers $15 an hour to do the job the company’s robots are designed to fill. Even before those placard-wielders decided to raise their costs in terms of dollars and grief, the San Francisco-based start-up announced that they were obsolete.

Momentum Machines’ old, boastier website claimed:

Fast food doesn’t have to have a negative connotation anymore. With our technology, a restaurant can offer gourmet quality burgers at fast food prices.

Our alpha machine replaces all of the hamburger line cooks in a restaurant.

It does everything employees can do except better:

*it slices toppings like tomatoes and pickles only immediately before it places the slice onto your burger, giving you the freshest burger possible.

*our next revision will offer custom meat grinds for every single customer. Want a patty with 1/3 pork and 2/3 bison ground after you place your order? No problem.

*Also, our next revision will use gourmet cooking techniques never before used in a fast food restaurant, giving the patty the perfect char but keeping in all the juices.

*it’s more consistent, more sanitary, and can produce ~360 hamburgers per hour.

The labor savings allow a restaurant to spend approximately twice as much on high quality ingredients and the gourmet cooking techniques make the ingredients taste that much better.

Separately, the company noted, “An average quick service restaurant spends $135K every year on labor for the production of hamburgers. Not only does our machine eliminate nearly all of that cost, it also obviates the associated management headaches.”

Even before Momentum Machine started mechanizing the burger-flipping process, McDonald’s moved to make ordering a task that could be accomplished untouched by human stupidity. The fast-food chain is bringing self-order kiosks to the United States after deploying thousands of them overseas.

I’m guessing that workers in the streets demanding that their pay be hiked by fiat to $15 per hour do not erode Momentum Machine’s competitive edge, or its attractiveness as an alternative to human employees. Those kiosk makers are probably warming up the production line, too.

Ron Bailey recently noted that “Defying the law of demand will end up harming lots of the people minimum wage proponents aim to help.”

Yep. But the robots appreciate the effort.

Originally published on reason.com