Author: VD

Mailvox: Minds do change

It sometimes seems as if human minds are about as capable of changing as rocks; only high explosives and slow erosion over vast quantities of time are capable of effecting it. But, as this email from a longtime regular demonstrates, it does, on occasion, happen:

At risk of sounding all fawning and shit, I want to thank you, and the Ilk, for aiding in my political transformation. When I went to law school, then started frequenting your blog, I began to appreciate the ramifications of political ideology, particularly the dangers of expanded and intrusive federal government. The fact that you and yours have ALWAYS afforded me a deal of respect, even when I was toting the Democratic party line, speaks volumes about the character of not only yourself but the cabal at Vox Popoli. Even Nate and the dearly departed Bane treated me with respect, a rarity indeed. So, just let me extend my thanks for always being honorable in a time when the concept of honor has seemingly been forgotten.

He is welcome, of course. The reason I chose to share this email is that a common and completely false accusation is that this blog is some sort of echo chamber where disagreement and criticism are not permitted. The reality is that the readers, and to a lesser extent, regular commenters, here represent a wide variety of ideologies and very few of them entirely share my idiosyncratic political and religious beliefs. While the dominant intellectual strain is unsurprisingly libertarian and protestant Christian, there are no shortage of those who do not share either perspective and their opinions are no less regarded for being different. And as the emailer testifies, so long as one abides by the rules of the blog, even the most vehement critic will be treated exactly same as the most fawning sycophant. In fact, I probably pay far more attention to the critics than I do to those who have no criticism to offer; after all, the truly arrogant require no praise.

Wikipedia and the warming scammers

The latest editing scandal underlines the inherent problem with Wikipedia and why it is intrinsically unreliable:

Through his role as a Wikipedia administrator, Connolley is said to have created or rewritten 5,428 unique Wikipedia entries.

“When Connolley didn’t like the subject of a certain article, he removed it – more than 500 articles of various descriptions disappeared at his hand,” Solomon wrote. “When he disapproved of the arguments that others were making, he often had them barred – over 2,000 Wikipedia contributors who ran afoul of him found themselves blocked from making further contributions.”

….A Wikipedia arbitration committee has stated in the past: “William M. Connolley has, on a number of occasions, misused his administrator tools by acting while involved.”

If Wikipedia doesn’t immediately remove Connolley’s administrative privileges and ban him from ever editing Wikipedia again, this will conclusively prove that it is nothing more than a propaganda device, not an encyclopedia. When one dishonest ideologue is permitted to run roughshod over 2,000 other individuals, the pretense of democratic openness simply cannot be maintained. Any doubts about the fictional nature of global warming should not be difficult to see by this point, as is the left-wing nature of the charlatans. Those who are telling the truth are seldom interested in scrubbing the history books, and rewriting accurate history is the one of the Left’s signature characteristics.

UPDATE: The good news is that apparently Wikipedia hasn’t entirely given up on the idea of providing accurate information to the masses:

In September 2009, the Wikipedia Arbitration Committee revoked Mr. Connolley’s administrator status after finding that he misused his administrative privileges while involved in a dispute unrelated to climate warming.

A rational metric

Karl Denninger proposes one at the Market Ticker:

[T}his is where government and regulatory interests align to the detriment of economy stability: Governments want to see big GDP increases, and increasing leverage (amount of borrowing outstanding in the economy for a given GDP level) is one way to do this.

The best way to control this trend would be to mandate (by law) that GDP be adjusted to reflect leverage changes in the economy – that is, if debt goes up by 4% of GDP then the 4% has to come off the reported GDP numbers.

The reason this isn’t tenable, of course, is that it would make it clear that we’re well into the economic contraction of massive proportions that is beginning to become visible despite the best efforts of the governments and banks to statistically obfuscate.

Explaining debt-deflation

This article should help explain why “printing” money is not necessarily inflationary in a monetary system where most of the money is created through fractional-reserve lending:

The following chart shows that bank reserves held at the Fed have increased 100-fold over the past 14 months — from around $10B in August of 2008 to around $1000B ($1T) today. It is important to understand that while this explosion in the reserves of US depository institutions has rightfully prompted much discussion and consternation, it hasn’t directly added to the total supply of US dollars (bank reserves are not counted in monetary aggregates such as M1, M2, M3, MZM and TMS). The reason that bank reserves aren’t added to the money supply is that they do not constitute money available to be spent within the economy; rather, they constitute money that could be loaned into the economy or used to support additional bank lending in the future.

If even bank reserves can’t be counted as money, it should be obvious that mere Federal Reserve printed notes can’t be counted either. The money has to go into the system before it can be spent; this is why increased bank reserves are considered to be deflationary. This does not mean, however, that the Fed can simply force the banks to force lending, as some have suggested. Mike Shedlock explains why:

1) Lending comes first and what little reserves there are (if any) come later.
2) There really are no excess reserves.
3) Not only are there no excess reserves, there are essentially no reserves to speak of at all. Indeed, bank reserves are completely “fictional”.
4) Banks are capital constrained not reserve constrained.
5) Banks aren’t lending because there are few credit worthy borrowers worth the risk.

The long-prophesied government

The outlines are beginning to become clear:

The word “global” has taken on sacred connotations. Any action taken in its name must be inherently virtuous, whereas the decisions of individual countries are necessarily “narrow” and self-serving…. There is a whiff of totalitarianism about this new theology, in which the risks are described in such cosmic terms that everything else must give way. “Globalism” is another form of the internationalism that has been a core belief of the Left: a commitment to class rather than country seemed an admirable antidote to the “blood and soil” nationalism that gave rise to fascism.

There is more than “a whiff of totalitarianism” about it; globalism is an intrinsically more deadly threat to Man than fascism, Communism, and Nazism combined. The sacred connotations it has taken on should cause every religious and non-religious individual alike to question just what, precisely, is the nature of the religious spirit behind it. As for me, I think it stinks of sulfur.

VPFL Playoffs Round One

Judean Front (10-4)
Bane Silvers (7-6-1)

Alamo City Spartans (10-4)
Mounds View Meerkats (8-6)

It looks like another one-and-out for the Meerkats, although that’s less disappointing this year. Getting no performance out of two of my three keepers – Clinton Portis and Greg Jennings – and making a terrible blunder by picking up Mario Manningham instead of Steve Smith (NYG) left me scrabbling to fill my roster from week to week. With every starter but one playing on the road and the Spartans up 30-7 already thanks to early points from MJD and Miles Austin, I’m just hoping to keep it halfway respectable. Besides, everyone would be disappointed to miss the big showdown between the Spartans and the Front.

The Saints have blown their perfect season, I expect the Colts will next week. I’m just hoping the Saints drop another one while the Vikes win out and claim home-field advantage.

Bank failures: the grim prognosis

Those who are skeptical of the economic negativity expressed in RGD may wish to keep in mind that I projected failed bank deposits would reach 1.4 percent of total deposits in 2009. After the seven bank failures yesterday, including four large banks with more than $1.5 billion in nominal assets each, that percentage has now reached 1.84 percent. If next week’s Bank Failure Friday is of similar size, the 2009 percentage will reach 2 percent. The chart below compares the historical failed deposits of 1929-1931 to 2008-2010; the 2010 estimate is based on 400 banks failing with the same deposit average of the 2009 failures.

While the widespread rumors of 400 banks being projected to fail next year may be exaggerated, it’s fairly obvious that more than 150 are expected to collapse since the FDIC is expanding its work force by 1,600, an increase of nearly one-fourth, in order “to help with bank closings and examinations.”

Mailvox: science is a thing of the past

A mathematician/physicist writes of the negative effect peer review has on science:

I am writing concerning some pieces of yours I’ve seen which appear to be examining the peer review process in science. There can be little doubt that the peer review system presently in place is flawed, to the extent that it is doing science a grave disservice. I have now retired after being a senior lecturer at an English university in mathematics until 2002, before transferring to physics where I remained until retirement in 2008. In that time I have seen the reviewing standards in many of the so-called prestigious physics journals, as well as more general journals such as Nature, slump. I have also noted a difference in attitude from editors. Now they usually refuse to discuss any submission; if a paper is rejected, that is normally the end of the matter.

I catalogued cases in a number of areas of physics in a book “Exploding a Myth: ‘Conventional Wisdom’ or Scientific Truth?” There is little doubt, although I cannot prove it, that those controlling science and scientific funding in the UK would not have wanted this book publicised since, if the general public became aware of what is really going on, they might be less inclined to fund these hugely expensive dubious projects like the Large Hadron Collider and LISA. Incidentally you might be interested in some of the cases I discussed, particularly the one where I and a colleague took Nature to the Press Complaints Authority – and won. It’s worth noting that “Against the Tide” by Martin Corredoira and Carlos Perelman is similarly not as well known as it should be. It too reveals much of what’s going on in science. It should be realised that everything simply supports the status quo; anything that might rock the boat is buried. Hence, truly original science is becoming a thing of the past.

It sounds like a pair of interesting books, well worth checking out. What far too many scienthologists fail to understand is that it is not the critics of science who pose a real and present danger to science, but rather the very scientists whose abuse and misuse of it are being criticized. If the public begins to tire of funding science, which is a probability in the more negative economic scenarios, scientists will have no one to blame but the charlatans and ideologues in their midst.

Krugman defends

Or, at least, tries to defend himself.

Oy. Rajiv Sethi tries to make sense of the arguments of Bryan Caplan and Tyler Cowen. So I went and looked — and what’s immediately clear is that Caplan, at least, is simply assuming that a rise or fall in nominal wages is equivalent to a rise or fall in real wages.

This was exactly Keynes’s starting point: as he said, by taking it for granted that the bargain over nominal wages sets real wages for the economy as a whole, classical economists had “slipt into an illicit assumption.”

And look: if you work through my little AD/AS exercise it should be immediately clear that in the case I was concerned with, changes in W lead to equal changes in P, so that real wages don’t change. Simple microeconomic logic doesn’t help here at all.

The problem with Dr. Krugman’s defense here is that a) microecnomic logic is not relevant, and b) he has committed his own illicit assumption, for as he stated: “in liquidity trap conditions, the interest rate isn’t affected at the margin by either the supply or the demand for money – it’s hard up against the zero bound.”

But this means that even if one accepts his AS-AD model, it is obvious that he was incorrect to state that economy in the 1930s was hard up against the zero bound. As proof of this, he cites historical interest rates on 3-month Treasury bills as being 0.14%, and forgets that present interest rates on 3-month T-bills are around 0.005%. Moreover, his own calls for quantitative easing indicate that the zero bound cannot be the firm barrier that his model requires them to be.

On a less theoretical level, it is simply not credible to assert that a lower minimum wage is going to magically cause the Fed to raise interest rates. Japan’s highest minimum wage is lower than the U.S. federal minimum and this has obviously not caused Japanese interest rates to increase in 20 years.

Keep this in mind

Should you ever find yourself pondering the probability of evolution by natural selection being true:

PZ Myers: “Yes, it is quite probable that global warming has a significant anthropogenic component. About as probable as the idea that HIV causes AIDS, species diversity is driven by evolutionary processes, and that the world is round.”

For once, I quite agree with the chicken-hearted biologist.  The idea that global warming exists and has a significant anthropogenic component IS about as probable as the idea that evolution by natural selection creates new species.  It’s also about as probable as the reported economic recovery being anything more than a short-term statistical artifact caused by the fiscal and monetary authorities pumping a massive amount of liquidity into the financial system.