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Comment Re:What people really need to undersand (Score 1) 642

But there is one additional quality that money must have in order to fully serve its purpose: it must hold its value over reasonably long periods of time.

If you really worry about inflation you can buy TIPS (Treasury Inflation-Protected Securities) and keep your money inflation-invariant.

The 2-3% inflation target is not there to mess with people who already earned money: they have lots of inflation-neutral opportunities to invest their monies and they always had them. (If you are keeping your dollars under the mattress you are an idiot and the long-term effects of inflation should be the least of your worries.)

Inflation is there to avoid deflation which is a nasty condition that is a lot harder to get rid of than higher-than-usual inflation. (because during deflation the central bank has no power to influence the monetary base via setting rates: nobody is going to put money into the bank at a negative interest rate ...)

So the zero bound (0% interest rate) is the dangerous blade of the sword, and the Fed is trying to keep a 2-3% inflation target to not hit that blade, so to speak.

Comment Re:That is true (Score 1) 642

The central bank is unable to control the situation mostly because the US economy is in a liquidity trap, which is a special condition where the economy contracts so quickly that the central bank setting rates to 0% does not avoid deflation and where the central bank "printing money" does not drive up rates because that money does not flow into the real economy.

So the economy goes into a stalemate and experiences a long period of deflation and suffering as a result.

Japan has spent two decades in such a liquidity trap and it's not pretty.

The Chicago school (and other freshwater economists) cannot acknowledge that fact because they spent half a century arguing that such a thing is impossible, so they are coming up with excuses about how it's "structural unemployment" or "missing confidence" or the "bond vigilantes". Them acknowledging a liquidity trap and in general acknowledging that new keynesian economics describes reality while their neoclassical model does not would be equal to Microsoft dropping Windows and using Linux instead: ain't gonna happen.

Comment Re:BitCoins are simply a hobby, not a currency (Score 1) 642

The point of the CPI graph was to show that growth != inflation. Inflation was more or less flat throughout the 19th century, and yet during that same period we had the entire industrial revolution.

You are missing two historic facts.

Firstly, inflation was not flat: look at the graph, you can see the business cycles playing out: inflation went up during growth periods and there was deflation and very high unemployment in busts like the Panic of 1893, which was triggered by bank failures that snowballed into a full-blown banking crisis that quickly crashed the stock market and then spilled over into the real economy and caused a real depression that lasted several years with peak unemployment of 14%:

Effects in the U.S.

The failure of the Jay Cooke bank, followed quickly by that of Henry Clews, set off a chain reaction of bank failures and temporarily closed the New York stock market. Factories began to lay off workers as the United States slipped into depression. The effects of the panic were quickly felt in New York, more slowly in Chicago, Virginia City, Nevada and San Francisco.[11][12]

The New York Stock Exchange closed for ten days starting September 20. Of the country's 364 railroads, 89 went bankrupt. A total of 18,000 businesses failed between 1873 and 1875. Unemployment reached 14% by 1876. Construction work halted, wages were cut, real estate values fell and corporate profits vanished.

Secondly, you are missing the historic fact that in the 18th century US there was a form of inflation not measured via the price level in dollars: the inflation of the gold monetary base in the 18th century, via mining 60 metric tons of new physical gold per year on average.

That gold is a small amount today compared to the size of the highly sophisticated US economy of 300+ million people, but in 1820 there were only about 10 million people in the US so new gold mined amounted to a significant portion of the GDP and it also provided a constant influx of "new money" increasing the effective monetary base, printed out of thin air - erm, printed out of hard rock formations. This free liquidity provided fluid investments and relatively easy credit.

Once the "gold simulus" ended, near the end of the 18th century, when the economy became much bigger for gold mining to have an effect, the negative effects of deflation started causing real bad depressions (see the link above - there were several other crashes in the "gilded age" era): people valued hoarding money over production and this started a positive feedback loop of contraction, which took years to recover from in most of the cases.

So historic facts are not very sympathetic to your hard money arguments I'm afraid. Today returning to the gold standard would be like basing an economy on bitcoins: economic suicide.

Economies want to grow, population wants to grow and people want to produce more value - those kinds of dynamics are not compatible with the concept of a rigid, static amount of gold representing money. Why should money not grow together with the size of the economy?

Comment Re:Central planning doesn't work. (Score 1) 422

Or Eritrea, with 47.8%, or Zimbabwe, with 97.8%, or Libya, with 43%, or Angola, with 41.6%.
  But hey, you feel free to misrepresent my argument, that it is as bad as "some" (quite different from "all") African nations.

There's more than 50 countries in Africa, most of the poor and under-developed ones have a very low government expenditure index. I said "most" and I stand by that qualifier, if you check the list you'll see that most African countries spend less than 40% on offering civilization to their citizens.

Also funny that you seem to think that we have somehow bought better healthcare with our spending, or that our education system isn't a laughing stock, or bought a better university system than we had twenty years ago, rather than a worldwide war machine that kills millions of people for no real reason, other than to feed the military-industrial complex.

No, if you read my post you will see that I listed the advantages that those European countries have over the US - those which spend even more on public expenditures than the US.

Citizens of those countries generally get more bang for the buck, obviously.

Also funny that you think that the level of civilization in the US in 1910 was less than than that of those nations you mention. As if less government spending is the same as civil war. Who is being disingenuous here?

I replied to the point made about today's Africa. If you want to argue about how the US was 100 years ago then we can certainly do that but it obviously cannot be compared to today's situation directly.

I might add that corporations HATE libertarianism.

Corporations don't "hate" anything - they are legal entities representing a group of people.

If they didn't, libertarians would be a much larger part of the existing parties, or their own party would be a major one.

By that argument nazis would also be a much larger part of existing parties as historically owners and executives of corporations certainly liked nazi ideologies, as it was hugely profitable to them.

So that argument of yours fails too. I think you are failing to consider the fact that there can be many other reasons as well why a given ideology is not main-stream, beyond them not being corporate-friendly.

Indeed, many libertarians, including myself, call for the eradication of the corporate form, as it is an artifice created by government intervention in the markets (ie it forbids those wronged by a corporation from suing shareholders of said corporation, even if they knew what the company they owned was doing--legalized, even MANDATED sociopathy).

If we go back to the 1910 example, Rockefeller's company (Standard Oil) cornered many strategic US markets with little to no government help and centrally planned vast portions of the US economy for decades, right from his mansion. There was no free market where Standard Oil was present: either you "partnered" with them, giving them much of your profits, or you were driven out of the market by being price-dumped and by rail companies (also controlled by Rockefeller) refusing to transport your products.

Rockefeller was a non-elected plutocrat. Is that the kind of free-market future you envision for the US? If yes then I disagree. If not then please explain how monopolies will be avoided.

But hey, if your ideology is so weak that you have to hide behind lies, then so be it. Just know that you and your party of choice are in fact slaves to your corporate masters.

I just pointed out a false statement and mentioned a few facts - that is not an ideology, unless you consider "truth" an ideology.

Comment Re:BitCoins are simply a hobby, not a currency (Score 1) 642

Mod parent up: +5 Funny

You have not actually countered any of the grandparent and the great-grandparent post's points, so why do you want to mark it +5 Funny? The CPI graph you posted confirms their points.

It's a historic fact that deflation is hurting productive investments big time while rewarding unproductive money hoarders, while moderate inflation (emphasis on moderate) helps grow civilization. What facts can you offer against that?

Comment Re:Central planning doesn't work. (Score 5, Informative) 422

Prior to the opening of the Federal Reserve, the US fluctuated between 2 and 5%. Today, it's greater than 40%. That is as bad as many African nations.

FYI, that's a false statement, most African nations spend much less than 40% of their GDP on providing civilization to their citizens: Burkina Faso (21.6%), Cameroon (18.5%), Côte d'Ivoire (19.7%) - you name it.

The countries you wanted to compare the US with is Germany (43.7%), Finland (49.5%) or Sweden (52.5%).

What does that spending buy their citizens: universal health-care for all citizens, as a birthright. High quality public education that almost all eduction happens in public schools and universities. Well-developed public transportation systems shipping children to school which transportation system I'm sure you'd enjoy as a tourist as well. Pervasive unemployment insurance and various protections for job-takers and their families: no hire-and-fire. Compare German unemployment during the crisis with US unemployment and guess which one spends more of its GDP on common good services for its citizens?

And you want the US to move to the same level of civilization as Burkina Faso or Côte d'Ivoire? Corporate donors will love it but good luck selling that to your fellow citizens ...

Comment Re:Maybe Corporate America Should Loose Up the Pur (Score 1) 275


Also, the grandparent misses the fact that a lot of the costs are not only linear but superlinear: the baby boomers are retiring and the world did not become more peaceful.

What it is certainly not is what he claimed, i.e. a shrinking proportion of the whole pie:

Instead the truth is we've got about 100 million more people (and many more businesses) in the US than we did in 1980, and with more people you can lower the burden on all.

And this is the false claim I took issue with. With more people you cannot lower the burden on all, as more people means more costs and shifting demographics (people getting older) it means even more costs.

Comment Re:Maybe Corporate America Should Loose Up the Pur (Score 1) 275

Instead the truth is we've got about 100 million more people (and many more businesses) in the US than we did in 1980, and with more people you can lower the burden on all.

That claim is false: the overwhelming majority of US government spending is proportional to the number of people - and in particular, a significant chunk of it is proportional to the number of old US citizens.

Think of the US government as an insurance company for the old, which has an army. That single sentence describes roughly 50% of all US government spending.

Much of the rest pays for equal-chance education (teachers), unemployment insurance (which cost goes up during crises and goes down during booms), poor families/children, roads and other infrastructure - none of those have fixed maintenance costs but go up linearly with the number of people.

So an income proportional tax rate which gets progressively larger for the luckier (richer) people is a very natural model if you think about it rationally: those should pay for civilization who benefit from it financially.

Comment Re:Can't they tie them down? (Score 1) 236

But that does not prove your point - sulphur oxide pollution is just a very small part of what cars emit: CO2 is the main greenhouse gas that cars emit, and US cars emit several orders of magnitude more CO2 than just 15 container ships ...

Nice trolling in any case.

Comment Re:Judge's don't understand technolog (Score 1) 162

Yeah, I was afraid of that.

How about applying 'unreasonable seizure' to collecting royalties or removing a 'potential infringer' from the market prior to determination of infringement?

That's a reasonable observation but this would bring an end to almost all lawsuits in the US, not just patent suits: the fact that an attacked party must still pay legal costs (and has to do that for years at times), even if he wins the lawsuit, is a form of unreasonable seizure in itself.

The judicial system is not about fairness, it's about applying the rule of law. If you want our laws to represent (your version of) fairness, talk to your fellow citizens and make sure that the congressman you elect represents you.

Comment Re:why did you post this? (Score 1) 235

I don't think we disagree about executives.

A good executive, while not having expert knowledge in every field he supervises, will have a much better idea about what his limitations are, and he won't "simplify" the world and believe that this simplified model is reality .

Instead he'll use a simplified model to make decisions, in full knowledge of the risks that this brings with it. He'll trust good experts around him to tell him when he messes up - but he won't (and can't) expect the experts to be able to produce (nearly) the same rate of average-to-good decisions that he can do.

A good executive will also generally have pretty good emotional intelligence - there's many forms of intelligence and not all are well recognized.

So an executive is in stark contrast to what the general population does when it comes to understanding the world and making decisions.

Also, did you mean to suggest that I insulted someone with my last paragraph? I think it's a factual statement and it's not really shaped (or intended) as an insult.

Comment Re:Florian is not a blogger, he is a troll (Score 2) 166

Btw., his motivation is probably financial: he wrote bits of the Linux kernel networking stack and for years he not written any new code but has been suing companies via GPL violation lawsuits, which is probably a very lucrative business.

If Google is not using his specific code he perhaps sees Android as taking away his standing to sue, and hence it takes away his livelihood. It is in his direct financial interest to see Android go down.

Just speculating.

Comment Re:Timespan and other details (Score 1) 202

As long as these events can be legally treated as unpredictable "acts of God"

Until you can provide timely and reliable predictions (which you admit you can't) then they are unpredictable acts of God and should be treated as such.

He mentioned the prediction in his post: a Quebec type event every 10 years (a week of blackout coupled with a few hundred deaths) and a 1859 type event every 100 years (a month long blackout coupled with tens of thousands of deaths and after-effects for years (in addition to a big recession)).

Do you need a specific date and precise position for landfall to convince you that it's worth protecting your house in a hurricane affected area, or are past precedents enough for you to protect yourself pro-actively?

Comment Re:why did you post this? (Score 1) 235

What's faster than the speed of light?

(Other then the hypothesized expansion of the early universe as current theory stands.)

The current expansion of the universe is faster than the speed of light.

Distances between the out-most galaxies at opposite ends of the universe is growing faster than the speed of light and current models suggest that this process is accelerating.

Some quick (and hopefully not totally bogus!) back of the envelope calculations: the latest value for the Hubble constant is 71 km/sec (with about 5% of accuracy), which means 71 km/sec expansion of the universe, per megaparsec of space. Given that the current size of the universe is about 28,000 psec, this means that the universe is expanding about 2 million kilometers per second. That's moving opposite boundaries away from each other more than 6 times faster than the speed of light. (which is 0.3 million kilometers per second)

That does not mean that any physical matter can move faster than the speed of light, sadly.

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