It's New Year's Day. What did you want – "Y2K bug still not here"?

Good points regarding the statistics and selective reporting.

Economists routinely use highly complicated mathematical models on stuff like this, and are just as routinely criticised for it because their simplifying assumptions aren't close enough to reality. Then along comes this bloke and uses a model that's not even based on human behaviour: the economy as a heat engine. No wonder he's been panned. Criticise economic models all you like, but at least the modern ones* have a foundation in human behaviour.

I can see why this gets a run here – scientists are cool nerds; economists are not – but in the end it's a guy doing research outside of his field. Sometimes you get tremendous insights, but most of the time (as in this case) you don't.

* I'm not talking about the physiocrats here, okay?

Disclaimer: I am an economist.

How does the sentence, "The group lost an average of a little more than seven pounds [from exercise], and many lost barely half that" get parsed into "Exercise does not lead to weight loss"? This is a geek news site, and the editors of a story posted in science section can't do maths? FFS...

Is there actually a "right" level of reserves that can withstand crises, though?

There is, but unfortunately it's not the same level that's "right" for the non-crisis time. Ideally the financial sector would see the crises (or rather, the change in demand for or supply of reserves) coming and adjust, but that obviously doesn't happen when external shocks occur.

That's for the battery. Oh, wait...

"As real as real? Macroeconomic behavior in a large-scale virtual world" (links to the abstract with option to download)

Mod parent up! He's like some academic type or something.. with understanding of statistics, economics and stuff.

[T]he way fractional reserve banking in general and the Federal Reserve in particular is set up, there is always more debt built into the system than there are dollars in circulation. That's because debt is attached to money the moment it is created; i.e. for every X dollars in circulation there is always X+Y debt. This system is just not sustainable. How could it ever do anything but ultimately fail?

Dear Parent, I presume you understand the fractional reserve system so you can skip down to paragraph 4 whilst I provide an Economics 101 refresher for the gallery (and this really is first-semester stuff; I taught it earlier this year):

You and all your friends deposit money at the bank. The bank holds a fraction of the money in reserve (hence the name), at minimum the amount the law specifies, usually plus some amount X. We'll come back to this. The rest of the money it lends to people who want to borrow it; they pay interest, you get interest, the bank takes a cut, hooray.

These borrowers spend the money, and the people who get it stick some of it back into the bank, where the cycle starts afresh. It depends on how much money the bank holds in reserve and how much the populace deposits but, yes, usually there is more debt around than originally produced currency.

Now, you claim that this is a Bad Thing (TM). You don't state why. Presumably you are relying on the intuitive logic that having more debt than official assets can't be good. That intuition relies on the following crucial point: having more debts than assets is only a problem when people try and collect on their debts. Amazingly, this very rarely happens.

You have the absolute right to go to the bank and demand your money, in bar. All of it. Buy who does that? Practically no-one. You ask for a portion of it; some here, some there, more at Christmastime and during the holidays. So long as the banks have enough money to give everyone what they want – and this is the amount X from above – holding the rest of it would just be inefficient, since none of the depositors want it and there are plenty of borrowers who can do productive things with it. Fact: if the banks decided to hold more money in reserve, the government/central bank would simply create more 'original' dollars until the effective level of money is back where it was.

The fractional reserve system does have its problems. But the problems lie in deciding how high the reserves should be – too low, and when people do decide they want their money everything comes crashing down (e.g. AIG). Too high, and businesses can't borrow money and productive potential lies wasted (e.g. the current situation in much of Europe and the US). But the system is not inherently flawed. If the right level of reserves are held – and this is usually the case – the system provides a much more flexible and efficient supply of money than a representative currency.

Surely "Where does X come from?" is always a science question?

Not where I come from. Where do you come from?

Q.E.D.

The Economist's latest figures have the unemployement rate at 9.8% Sweden, 3.8% Denmark and 3.1% Norway. Sweden's rate is not seasonally adjusted.

Where are your 2% figures from?

Anyone wishing to actually do a proper comparison of unemployment and education should probably look at Eurostat's Unemployment rates of the population aged 25-64 by level of education (at least for Europe).

I have been to the concerts of three big acts and forked over almost $500 in tickets and merchandising. A large proportion of that money will go straight to the artists' pockets - far more so than if I had spent $500 on their CDs/DVDs.

That used to be true, but isn't any more. From personal conversations with successful bands (The Living End and Hilltop Hoods) I know that the days of bands being screwed around by record labels – the Courtney Love model – are in decline. Bands can now make plenty of money off CD/electronic music sales. Plenty of bands even use tours as "loss leaders" to promote themselves in areas where their exposure is low to guage reception and generate music sales. As example I again refer to the two aforementioned bands' tours in (continental) Europe.

Conclusion: some bands make more from touring, others from music sales. The relationship varies from band to band, from tour to tour, and even from album to album depending on what sort of contract they have. The popular generalisation that merch and concerts support bands more than CD sales isn't as true now as it was 10 years ago.

(As an aside: the rest of your post is insightful and I agree with near all of it)

Edit: first sentence should read: "My friends may be good for recommending ITEM_1, but they're no good for recommending ITEM_2"

Several posts I've read here say things like "My friends may be good for recommending , but they're no good for recommending ", or "I don't want recommendations from people, who are prone to errors, but from algorithms, which are objective and logical."

I can't really understand that argument: the primary difference between Facebook's and Google's search models is the level of data aggregation.

Want to find a website that sells digital cameras? A Facebook search would "ask" your friends, and perhaps their friends, and maybe members of groups and networks you're in, whatever. Then it combines the answers and recommends one or more websites for you.
A Google search differs in that it "asks" everyone.

I've put "asks" in quotations marks because, obviously, there is no directing questioning occurring: the search engines are simply aggregating information from user behaviour. But the process is the same for Facebook as it is for Google. Everything eventually goes back to what users do, which in turned in a result of their subjective choices.

Let's assume a search function that simply returns the most popular site. If my group of Facebook friends visits the top-ranked digital camera page twice as often as the second ranked page, is that result more or less useful to me than if all internet users (whose traffic Google can track) visit Page A twice as often as Page B? The answer depends on how you regard your friends' suitability to make those recommendations.

People who say they prefer Google's results are, at root, saying they prefer the recommendation of the masses over the recommendation of their friends. Sure, there's algorithms that adjust the numbers so that links from more frequented pages count more than links from less frequented pages – but let's not kid ourselves: there is no expert opinion involved here. Google hasn't hired consumer experts to check out digital camera pages and rank them, and neither will Facebook. The important thing is whose data is being used as basis for the calculations.

Now, there is quite clearly a place for "social searching". All of us have, at some point or another, asked people we know to recommend products or services. We don't ask all of our friends, though, just the ones we think know what they're talking about. So Facebook's problem is going to be evaluating the responses of all of our friends to the "question" of "What is the best digital camera website". Comparing its algorithms with Google's is a little (or possibly even a lot) like comparing Google's with Bing's.

What it will (should) come down to for most of us is, "Do I trust my friends or the masses more to give me a good recommendation?". Based on that answer, we'll choose Facebook search or Google, respectively.

The reverse of that would be so much cooler.