The economic recovery is probably more robust than we realize. It is possible that the standard of living for many members of the middle class is improving while their incomes shrink. Many economists, policy makers, and politicians think otherwise, because they are using 20th-century methods to analyze our 21st-century economy.

The problem is caused by the fact that we live in two worlds, physical and virtual.

The physical economy is anemic, struggling, biased toward inflation, and shrinking in many developed countries. Almost everything we do in the physical economy is paid for with money. We use dollars to measure most of the activity. If more dollars are spent or earned, we conclude that the economy is growing.

The virtual economy is robust, biased toward deflation, and growing at staggering rates, everywhee.  The Virtual Economy