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Imagine a society on a gold standard where the supply of gold is fixed. As the economy grows, more goods and services become available. Because the supply of money (gold) is constant, gold constantly rise in value, and prices of everything drop steadily.
Economists of today would call this "deflation", and some of them would claim that it's a Bad Thing. I don't think it would be a Bad Thing--seems perfectly natural to me--but that's not the point of this post.
Imagine further that you lent someone an ounce of gold. How much interest would you charge him?
This is pretty much the greatest story ever:
A flight attendant who was arrested after arguing with a passenger on a JetBlue flight -- making a grand exit from the aircraft by grabbing some beers and pulling the emergency chute -- posted $2,500 bail and is out of jail.
Jet Blue employee Steven Slater, 38, of Belle Harbor, Queens, was arraigned Tuesday on reckless endangerment and other charges after the dramatic incident Monday afternoon. Despite the felony charges, Slater's been elevated to folk-hero status by thousands who shrugged off allegations that he endangered others and praised him for his take-this-job-and-shove-it moment.
Slater's mother, Diane, even went so far as to seem proud of her son for his outburst.
"I can understand why he snapped. I would have snapped too," Diane Slater said Tuesday after Steven pleaded not guilty to the various charges against him. "I think he just had a very small meltdown, and I think he deserve to be able to have that meltdown."
Following a heated exchange, the flight attendant told off the entire plane on the public address system, activated an emergency chute near the back of the plane and jumped down the evacuation slide and ran for it.
The Assistant District Attorney said the altercation began before the plane left Pittsburgh, when two passengers got in an argument over an oversized piece of luggage and the overhead compartments.
At the arraignment, defense attorney Howard Turman said Slater was under stress because his mother has lung cancer. Afterward, he provided reporters with a different account of what happened aboard the aircraft than the version initially offered by authorities.
Police had said Slater became angry when after a rule-breaking passenger defied requests to stay seated then accidentally hit him in the head with her luggage.
Turman said the dispute had begun earlier, when the flight was still waiting to take off from Pittsburgh, when two female passengers got into an argument over space in the overhead bins. That's when Slater was struck in the head, Turman said.
The dispute flared up again after the plane landed in New York when one of the women, who had been asked to gate-check her bag, was enraged that it wasn't immediately available.
"The woman was outraged and cursed him out a great deal," Turman said. "At some point, I think he just wanted to avoid conflict with her."
Slater asked for an apology but the irate passenger cursed him out, saying in effect "go f--k yourself" and calling him a "mo-fo," according to law enforcement source
Turman said the woman "cursed him out using the f-word both as a verb and an adjective."
Prosecutors said that at some point, Slater addressed the passengers on the intercom.
"Those of you who have shown dignity and respect these last 20 years, thanks for a great ride," he said, according to prosecutors.
Slater then activated the aircraft emergency slide on door R-2, proceeded to the chute, looked down to ensure that nobody was below it as he had been trained to do, and he deployed the device and went down it safely, his attorney said.
He also grabbed some beer from the galley before he took the plunge and then headed for the AirTrain, where other passengers from the flight reportedly saw him on the way home.
Slater was later arrested at his home in Belle Harbor by Port Authority officials. Police sources said that when authorities found Slater he seemed to be in the midst having sexual relations.
The above article is written in a manner that's ostensibly just-the-facts, but the author is clearly going for comedic effect, and cleverly pulls it off without being too obvious.
There's an interview with Peter Thiel on the Business Insider website in which he provides his outlook on the global economy. (I hate it when you can't embed a video.) Briefly, he expects deflation, dislikes equities and gold, and is okay with dollars and government bonds.
Thiel is at least a hundred times smarter than me, but I think he's wrong on gold. By inference, I believe he sees gold as a commodity, not as money. Sure, in an inflation, commodities do well, and in a deflation, they do poorly while money is your best bet. However, if gold is money, then in a deflation, it will do well.
I agree that the economic system is deflating: leverage is being wrung out of the system, credit is being destroyed, risk is being punished. In such an environment, money is king. But our government is hell-bent on destroying the dollar, and people will lose faith in dollars eventually. Where do you turn when your government-decreed money is being burned? Nature's money.
I've seen some of these austerity measures that countries like Greece are taking. I'm not impressed. By extension, I don't think there are any politically feasible austerity measures that will prevent either a true US default or a default-by-proxy (hyperinflation). To prevent these things, you'd have to do something like the following:
* Abolish Social Security, or at least, raise the age of benefits to, say, 75+
* Abolish government involvement in health care including Obamacare, Medicare, Medicaid, subsidized employee-provided insurance
* Abolish the current income tax and either institute a low rate flat tax (on income) or a fair tax (on consumption)
If those things happened, I could believe real austerity was being enacted. But I'm willing to bet that none of that is politically possible, and after this brief lull is over, the Euro nation crises will be in the news once again as these milqetoast austerity measures fail.
BTW, the funniest quote from the interview is:
The model of the US economy is that we are the country that does new things. But over the past few decades, that's changed. Now we have people that do crazy things, like weigh 600 pounds. We have to get back to being the country where people do things that are new.
Things to do:
1) Write Grand Unified Theory post on Inflation vs Deflation and how pretty much everyone is wrong.
2) Respond to nobody.really's post from a month ago.
An entertaining article at American Thinker exposed me to a bit more Krugman than is allowed by my physician. It really doesn't cover the myriad ways of why the perennial priest of Keynesianism is wrong, it is assumed the reader knows that already, it just goes into how his blog has become a cult compound now that Krugman has started moderating responses to avoid being exposed for the charlatan he is.
What little I know of Krugman was from bits I read here at the DR and via an excellent article I came across while eating sushi, coincidentally. So, I was pleased to see the retreat of Krugman from the relentless barrage of common sense and logic that his commenters had began to issue.
What better than people taking apart his doubleplusunlogic? His double-thinking supporters.
Here is a brief excerpt:
By July, Krugman had lost his "Battle of the Blog." On July 23, Latrina commented, "Who is this Sean from Florida? He takes everything that [the] Professor [says] and shreds it, piece by piece. He shouldn't be allowed to post his comments on this blog since he seems to be winning all the debates. We progressives need to stick together and embellish our talking points without someone from the outside pointing out fallacies in our ideology."
Enjoy, or not. As usual with Krugman, self-dosing can be dangerous. Please consult a physician.
The US is intent on printing money to stave off "deflation." For the moment, people all over the world still demand dollars. But the day will surely come when they no longer do.
In the meantime, why doesn't some forward-thinking government (I know, I know) buy a bunch of gold and issue a currency backed by that gold? Such a currency would, in my humble opinion, be an immediate competitor to the dollar. I would also think such a move would attract investment capital to that country.
What good is having a bunch of nations if they all act the same and issue fiat?
Frankly, I was expecting the fate of the North Korean soccer team to be much worse after losing three straight games in the World Cup.
Get a load of this:
WASHINGTON — A record high number of Army suicides are linked to an increasingly "permissive" environment in the service where soldiers take personal risks in their lives by using alcohol and drugs, committing crimes and refusing to get psychological help and do not enough to curb the behavior, according to a sweeping internal investigation released by Army officials today.
Internal investigations by government agencies always seem to turn out this way. It's not the multiple deployments, the stress of fighting in a conflict where you can't tell who wants to kill you until they're doing it, the moral burden of shooting at innocent people, the vagueness of the goals of the conflict, or any of that. In other words, it's not the essential part of what soldiers do these days.
It's that, for some reason, without any causes, soldiers are engaging in risky behavior, and their commanders are just too darn earnest about prosecuting the war to notice.
I know that someone involved in this investigation realized how insultingly stupid this conclusion was, but I also know that mainstream American political consciousness is so pro-war that most people won't be insulted.
A fascinating look at how public sector unions broke the California budget.
California voters, predominantly members of the left-wing political tribe, believe that the only problem with the state's fiscal health is that it is too hard to raise taxes due to a right-wing ballot measure that passed in 1978. Yes, California is a high-tax state.
You have a sample population of 10,000 people whose opinion on a global warming prevention policy you wish to ascertain. However, you are not permitted to ask any question which has a direct reference to global warming in any way.
What question can you ask which will have the highest probability of a correct inference from its answer?
For example, a 'yes' answer to the question below seems likely to produce a greater than 75% correct inference of support for the GW prevention policy.
Question : Do you support a legal minimum wage?