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Sophisticated economics

Lest you be under the impression that the Federal Reserve is in control of anything, consider this informal Q&A with Ben Bernanke:

RUHLE: … you recently had dinner with Ben Bernanke. What went down? We didn’t get to be there.

EINHORN: Well, it was — I watched him for years in front of Congress and speaking and watched him on TV and “60 Minutes” and —

RUHLE: And what was your opinion of him before you had dinner?

EINHORN: I was — I’ve been critical. I’ve been critical of him for a very long time. And the dinner for me, in one way it was cathartic because I got to ask him all these questions that had been on my mind for a very long period of time, right? And then on the other side, it was like sort of frightening because the answers weren’t any better than I thought that they might be.

SCHATZKER: What did you ask him?

EINHORN: I asked several things. He started out by explaining that he was 100 percent sure that there’s not going to be hyperinflation. And not that I think that there’s going to be hyperinflation, but it’s like how do you get to 100 percent certainty of anything? Like why can’t you be 99 percent certain and like how do you manage that risk in the last 1 percent? And he says, well, hyperinflations generally occur after wars and that’s not here. And there’s no sign of inflation now and Japan’s done a lot more quantitative easing than we’ve done, and they don’t have it. So if there is a big inflation, the Fed will know what to do. That was kind of the answer.

RUHLE: What did you say?

EINHORN: That was it. Then it went to the next question. So then a few minutes later it came back and I got to ask him about the jelly donuts. And my thesis is that it’s like too much of a good thing. Like lowering rates and quantitative easing and these stimulative things, they help but with a diminishing return. And eventually you go too far and it’s like eating the 35th jelly donut. It just doesn’t help you. It actually slows you down and makes you feel bad. And my feeling has been that by having rates at zero for a very, very long time the harm that we’re doing to savers outweighs the benefits that might be seen elsewhere in the economy. So I got to ask him about this.

SCHATZKER: Okay, and what did he say?

EINHORN: Well first of all he says, you’re wrong. That it was good. And then he said the reason is if you raise interest rates for savers, somebody has to pay that interest. So you don’t create any value in the economy because for every saver there has to be a borrower.

And what I came back to him was I said, but wait a minute. You said for a long time we haven’t had enough fiscal stimulus, and who’s on the other side of the low interest trade? It’s the government. And so if the government — if we raise the rates, the government would have to pay more money to savers. You’d have the bigger deficits. You’d create the stimulus, the fiscal stimulus that you’ve been complaining that Congress wouldn’t give to you, right? And savers would benefit from the higher rates and because savings is spent at a very high rate in terms of interest — interest income on savings is spent at a high percentage, you’d get a real flow through into the economy.

It gets incredibly tiresome hearing these idiot Keynesians – and yes, monetarists are Keynesians – constantly reminding everyone that for every buyer, there has to be a seller. Although Bernanke’s formulation is technically incorrect, as there does NOT have to be a borrower for every saver because not all savers are lenders.

We can cut him some slack on that; it was an informal conversation and since the discussion concerned interest rates, only savers who are lenders, (which is to say depositors), were in context here. But what we cannot cut him any slack on is the idea that this statement of the obvious actually addressed the issue.

The real reason there isn’t a risk of hyperinflation is the same reason rates have been keep artificially low for years: we are in an ongoing state of credit disinflation. All that cheap credit has gone into the banks and the equity markets to prop them up, but as Einhorn has noted, the law of diminishing returns is beginning to take effect.

Karl Denninger explains the problem with quantitative easing:

The basic economic equality is MV = PQ; that is, “Money”(ness) X Velocity (times each unit of “moneyness” is spent in a given amount of time) = Price (of each item or service produced) X Quantity (number of goods and/or services sold.)

This is a fact and nothing can change it.

Now here’s the problem — we state “PQ” (otherwise known as GDP) in units of “M”.

If you don’t understand the problem that QE presents (indeed, that any borrowing presents) with this you’re not very bright.

Short-term borrowing — that is, a loan that is quickly extinguished — doesn’t change “M”.  It time shifts a transaction but economically is otherwise a non-event from a monetary perspective.  If I borrow $100 from you to buy a night at the bar, get paid on Friday and give you back your $100 (with or without interest) I have simply changed the night at the bar’s economic event from Friday to Tuesday; further, the event Tuesday now cannot happen on Friday (as well) because the $100 has already been spent.

I have not changed whether it happens at all.

QE, however, is a permanent change in “M”.  It is intended to “make up” for private borrowing for which there is either no demand or no supply.  That is, in the market today there is insufficient incentive for private capital to be loaned either because the interest rate that can be earned doing so is unattractive for the risk inherent in the loan or there is nobody willing and able to borrow at the offered rate.

But since “QE” is not “paid back” and withdrawn it permanently changes the amount of “M” in the system.  Since GDP is stated in “M” to get an accurate account of GDP you must subtract back off any permanent change in “M” from GDP.

QE, on a rolling 12 month basis, is about $1 trillion.  The US Economy is about $17 trillion.  Therefore you must subtract the amount of QE added back out, which is about 5.9% of the total economy!

In other words with the current GDP “growth” of effectively zero (0.1%) the economy is in fact in deep recession as the actual “growth rate” is currently -5.8%.

This is caused by QE.

Perhaps a ribbon is in order

Strangely enough, all the Senatorial tears and Nicolas Kristof columns don’t appear to have convinced Boko Haram to stop targeting girls:

Suspected Boko Haram gunmen kidnapped eight girls from a village near one of the Islamists’ strongholds in northeastern Nigeria overnight, police and residents said on Tuesday. The abduction of the girls, aged 12 to 15, followed the kidnapping of more than 200 other schoolgirls by the militant group last month, whom it has threatened to sell into slavery.

Lazarus Musa, a resident of the village of Warabe, told Reuters that armed men had opened fire during the raid.

“They were many, and all of them carried guns. They came in two vehicles painted in army color. They started shooting in our village,” Musa said by telephone from the village in the hilly Gwoza area, Boko Haram’s main base.

A police source, who asked not to be identified, said the girls were taken away on trucks, along with looted livestock and food.

This can only mean one thing: a ribbon campaign. That will show the anti-educationists!

Subhuman action

“Take one monkey, train it to
wear a fedora and hypnotise it in to believing it is a Towering Literary
Intellect. I give you N.K. Jemisin.”
– Damien Walter

Shocking stuff! A straight white male calling an African-American woman a monkey! I am as agog as I am aghast! Oh, wait a minute… it seems there was a minor typo there.

“Take one monkey, train it to
wear a fedora and hypnotise it in to believing it is a Towering Literary
Intellect. I give you John C. Wright.”
– Damien Walter
Upon further review, it appears the illustrious Mr. Walter was only calling a white man a monkey. That’s COMPLETELY different, of course. It is acceptable to call a straight white male what one cannot call a gay black female. Because equality. And privilege.

In any event, it is more than a little amusing to see such a complete non-entity striking a pose as the literary superior to one of the greatest living science fiction masters. I would direct you to Mr. Walter’s work for the purposes of fair comparison, but unfortunately, he hasn’t published so much as a single novel. This behavior might appear inexplicable to the rationally minded, but it is in fact entirely predictable.

Because Damien Walter illustrates the primary point made in “Restless Heart of Darkness”, the final essay in John C. Wright’s brilliant and #1 bestselling TRANSHUMAN AND SUBHUMAN:

I realized why it is that the current mainstream modern thought, despite its illogical and pointless nature, is so persistent, nay, so desperate. I realized why these Moderns never admit they are wrong no matter how obvious the error, nor can they compromise, nor hold a rational discussion, nor a polite one, nor can they restrain themselves. They can neither win nor surrender….

The unwillingness of the Progressives to discuss their beliefs is because one of their beliefs (the most outrageously false of all, and most easy to prove false) is that they are superior beings, superior by virtue of their greater intelligence, broader open-mindedness, higher education, finer sentiments, and greater compassion, surrounded by yowling and filthy yahoos. These Progressives, who have never read a word of Aristotle, much less read him in Greek, boast that they cannot discuss philosophy honestly with a psychotic yet retarded Neanderthal like me, due to my inferior nature. Well, I cannot argue with their assessment of my education, except to say ἀντικεῖσθαι δ᾽ ὁ ἀλαζὼν φαίνεται τῷ ἀληθευτικῷ· χείρων γάρ.

Tom Simon adds some not inapt comments after dealing with a different individual exhibiting very similar tendencies to Damien Walter:

I used to deal with trolls for a living (saddest job I ever had), and I can tell you that it probably isn’t masochism. More likely, he is so socially inept and so incapable of reading emotional clues from text, he actually thinks that his words are inflicting righteous damage upon us, the heinous foe, and that he is returning to his lair covered in glory after causing us all to writhe in soul-deep agony at the sudden exposure of our horrible, horrible guilt. And he is so plug ignorant of the art of dialectic that he actually believes he is winning his arguments with us.

Moreover, as a person who despises religion, theology, philosophy, and history, who knows nothing about art, literature, science, technology, or any of the useful trades, he is gloriously unequipped to appreciate any mode of thought but his own – and his own mode contains no actual thought, just an angry clashing of slogans without ground or consequent, like Nietzsche on cheap drugs. Therefore (hello again, Dunning and Kruger) he imagines that his own mental slush is superior to all our thoughts; that we disagree with him is, to him, proof of our imbecility.

At least Mr. Simon’s troll was willing to attempt to engage in discourse, however ineptly. Which does put him ahead of Damien Walters, the current president of the SFWA, the former 3x president of the SFWA, and numerous other would-be luminaries of the field.

Post-constitutional America

So much for the theory that transforming the racial and cultural demographics of America was not tantamount to turning America into not-America:

Pulitzer prize winning reporter Chris Hedges – along with journalist Naomi Wolf, Pentagon Papers whistleblower Daniel Ellsberg, activist Tangerine Bolen and others – sued the government to join the NDAA’s allowance of the indefinite detention of Americans.

The trial judge in the case asked the government attorneys 5 times whether journalists like Hedges could be indefinitely detained simply for interviewing and then writing about bad guys. The government refused to promise that journalists like Hedges won’t be thrown in a dungeon for the rest of their lives without any right to talk to a judge.

The trial judge ruled that the indefinite detention bill was unconstitutional, holding:

    This Court rejects the government’s suggestion that American citizens can be placed in military detention indefinitely, for acts they could not predict might subject them to detention.

But the court of appeal overturned that decision, based upon the assumption that limited the NDAA to non-U.S. citizens:

    We thus conclude, consistent with the text and buttressed in part by the legislative history, that Section 1021 [of the 2012 NDAA] means this: With respect to individuals who are not citizens, are not lawful resident aliens, and are not captured or arrested within the United States, the President’s [Authorization for Use of Military Force] authority includes the authority to detain those responsible for 9/11 as well as those who were a part of, or substantially supported, al-Qaeda, the Taliban, or associated forces that are engaged in hostilities against the United States or its coalition partners—a detention authority that Section 1021 concludes was granted by the original AUMF. But with respect to citizens, lawful resident aliens, or individuals captured or arrested in the United States, Section 1021 simply says nothing at all.

The court of appeal ignored the fact that the co-sponsors of the indefinite detention law said it does apply to American citizens, and that top legal scholars agree. Last week, the U.S. Supreme Court declined to hear an appeal of the case, thus blessing and letting stand the indefinite detention law stand unchanged.

 Now, do you really think it is an accident that a post-Christian and multiracial America just happens to also be post-constitutional? Do you really think it is nothing more than pure coincidence that those who reject the strictures of the Natural Law also reject the limits imposed by Constitutional Law?

The men who wrote and signed the Constitution were, for the most part, straight white male Protestants of English descent. There is not a single straight, white, male Protestant of English descent on the U.S. Supreme Court that just granted the military and the executive branch agencies extra-judicial powers over the American citizenry. If you do not believe that the differing population demographics that distinguish European culture from aboriginal culture are irrelevant, why do you assume that the different population demographics between the authors of the Constitution and the current Supreme Court must be irrelevant?

The lethal economics of asthma

Medical malpractice is more dangerous to children in the UK than guns:

Asthma sufferers are dying needlessly because of failings by GPs and health services, a national review has found. The report, led by the Royal College of Physicians, found that two thirds of deaths from the condition — including almost all of those involving children — might have been prevented. Experts warned of “a tragic waste of life”.

The UK has one of the highest asthma death rates in the Western world — third only behind Estonia and Spain — and the number of fatalities is rising rapidly.

In 2012, 1,250 people died from asthma — a 10 per cent rise in three years. The review suggests more than 800 such deaths could have been avoided with the right care.

Considering that there were fewer than 100 gun deaths per year even prior to the UK’s ill-advised crackdown on gun ownership, the statistics suggest that the British would have done better to ban GPs than guns. It is evident that children in the UK are at least 100x more at risk from their doctor than they are from guns.

AWAKE IN THE NIGHT free on Amazon

In case you’re wondering what all the fuss is about, or despite the many excellent reviews you still have not been moved to put John C. Wright at the front of your reading list, today opportunity knocks as today and tomorrow, AWAKE IN THE NIGHT is free on Amazon.

The novella was included in the Years Best Science Fiction anthology published in 2004. It makes for an marvelous introduction to the terrors of the Night Land, as well as to the dark beauty of Mr. John C. Wright’s pen.

In not entirely unrelated news, I would like to thank you all for an astonishingly successful launch of Mr. Wright’s TRANSHUMAN AND SUBHUMAN. I expected it to be of significant interest to many of you, but I can’t honestly say that I expected this:

  • #1 in Books > Science Fiction & Fantasy > Science Fiction > History & Criticism
  • #1 in Kindle Store > Kindle eBooks > Nonfiction > Politics & Social Sciences > Philosophy > Good & Evil
  •  #1 in Kindle Store > Kindle eBooks > Literature & Fiction > History & Criticism > Criticism & Theory

Tom Kratman, columnist

This should strike fear into Tranzi hearts everywhere. Tom Kratman has a new column, which he inaugurates with an argument for better service rifles:

In the last 40 years there have been a number of attempts at replacing the M16 family. All, prior to 2008, have failed or been rejected. All were too ambitious. For example, the rifle project for the 1980s, the Advanced Combat Rifle, demanded a 100% improvement over the M16. A 100% improvement? That means that we will never have a rifle that’s 99% better. I’ve read that it only cost $300 million by the time it was canceled. What a bargain.

A little aside here, when something calls for nothing less than a 100% improvement in a weapon, be very skeptical. Does that mean 25% more accurate, 25% lighter, 25% cheaper, and with 25% better aesthetics for public relations?

Would 100% better PR be enough? Or is 100% more accurate necessary? What if it were 100% more accurate, but twice as heavy? And if it cost a hundred times more? All in all, wasn’t it really just an attempt to set a goal nobody could measure? I suspect so.

In any case, in killing the ACR, the Infantry School reported that rifles had reached their peak and only exploding bullets could improve matters. Never mind, of course, that this begged the question of whether the M16 family was that peak. Also, Fort Benning wasn’t serious about the exploding bullets, actually; they’re illegal. As for rifles having reached their peak, no, they haven’t and the only way someone could claim they had was by discounting any improvement that was less than a doubling. More on that a bit later.

Someone, however, apparently took that exploding bullet idea to heart. The next attempt was the OICW, the Objective Infantry Combat Weapon, a combined rifle and (semi) smart, fairly flat shooting, 20mm grenade launcher. This effort, while not reaching the previous attempt’s stated goal of 100% improvement in the rifle, still managed to chop the length of the rifle barrel down to something that even an M4 could sneer at, while allowing for the launching an utterly and preposterously inadequate 20mm grenade, albeit with great accuracy.

On the other hand, OICW did at least manage a more that 200% increase… in the weight… before being killed… after spending… well… nobody seems willing to admit what was spent. One suspects that the sunk and lost cost of OICW was just staggering, beyond belief.

And you know what’s really scary there? This is scary: The French PAPOP-2 seems to actually do most of what OICW was supposed to, without either castrating the rifle or making it a joke in poor taste, and while tossing a 35mm grenade that is actually pretty lethal, while keeping the weight within something more or less tolerable. That’s right, the French. Savor the taste of that one for a while.

It’s just as well DoD hasn’t hired John C. Wright as a consultant. Forget exploding bullets, they’d be blowing billions on AI bullets smart enough to argue with the shooter over the windage.

TRANSHUMAN AND SUBHUMAN

Castalia House is deeply honored to announce the publication of what we believe is the most important book about science fiction in years, TRANSHUMAN AND SUBHUMAN: Essays on Science Fiction and Awful Truth by John C. Wright. The 369-page book is comprised of sixteen essays originally written by Mr. Wright for his journal, which have been edited, and in a number of cases, collated from more than one journal posting, by Mr. Wright.

The essays are brilliant and thought-provoking. They inspire, they inform, they educate, they entertain, and they will more than likely enrage a few readers. They provide fascinating insight into the mind and methods of one of science fiction’s greatest living masters. From beginning to end, Mr. Wright shows himself to be as able an essayist as he is a novelist.

Following an introduction by science fiction author Michael Flynn, Mr. Wright addresses everything from technological transhumanity to theological Gnosticism. He examines SF authors from H.G. Wells to Ted Chiang, and explains why it is A.E. van Vogt, and not Arthur C. Clarke or Ray Bradbury, who is the third of the Big Three of science fiction. And he explains why science fiction is fundamentally more important to humanity than what presently passes itself off as mainstream literature.

In “Science Fiction: What is it Good For?” Wright writes:  

“Stories serve several quotidian purposes. I listed them above: they are fables to instruct the young and epics to preserve the memory of the great, and ghost stories to tell about campfires to give us all a sense of proportion and remind us (like the charioteers of Caesars during their triumphs and ovations) that all men are mortal. But there is something more that they serve, a purpose which is utterly unworldly, and utterly inexplicable to the Morlocks, who have no imagination, and need none.
 
“We sons of Adam are exiles here on this world. It does not suit us. We are not comfortable here, and those who say they are comfortable in this world of injustice and disease and death are not more sane and more well adapted to the environment than we who dream; they are merely inert in their souls, too dull to hear the horns of Elfland softly blowing.”

To read TRANSHUMAN AND SUBHUMAN is to not only hear the horns of Elfland blowing, but to understand why they must be blown.

In the company with TRANSHUMAN AND SUBHUMAN, we are also announcing the publication of a second ebook by Mr. Wright. AWAKE IN THE NIGHT is the first novella that is contained in the anthology-novel AWAKE IN THE NIGHT LAND. We are publishing it separately in order to be able to periodically give it away via Kindle Select and thereby introduce unsuspecting individuals to the epic horrors and forlorn hopes of the Night Land. It is also an attempt to address the surprising price elasticity of ebooks, as we have noticed that more than a few people prefer to take a chance on a $2.99 ebook that they will not take on a much longer $4.99 ebook. Since we are but humble servants of the market, we are happy to accommodate those economic preferences.

Exploding orthodoxy

Charles Murray anticipates that “A Troublesome Inheritance: Genes, Race and Human History” by Nicholas Wade, is going to explode more equalitarian minds than his own landmark work did:

The orthodoxy’s equivalent of the Nicene Creed has two scientific
tenets. The first, promulgated by geneticist Richard Lewontin in “The
Apportionment of Human Diversity” (1972), is that the races are so close
to genetically identical that “racial classification is now seen to be
of virtually no genetic or taxonomic significance.” The second,
popularized by the late paleontologist
Stephen Jay Gould,
is that human evolution in everything but cosmetic differences
stopped before humans left Africa, meaning that “human equality is a
contingent fact of history,” as he put it in an essay of that title in
1984.

Since the sequencing of the human genome in 2003, what is known by geneticists has increasingly diverged from this orthodoxy, even as social scientists and the mainstream press have steadfastly ignored the new research. Nicholas Wade, for more than 20 years a highly regarded science writer at the New York Times, has written a book that pulls back the curtain….

At the heart of the book, stated quietly but with
command of the technical literature, is a bombshell. It is now known
with a high level of scientific confidence that both tenets of the
orthodoxy are wrong.

Mr. Lewontin turns out to have been mistaken
on several counts, but the most obvious is this: If he had been right,
then genetic variations among humans would not naturally sort people
into races and ethnicities. But, as Mr. Wade reports, that’s exactly
what happens. A computer given a random sampling of bits of DNA that are
known to vary among humans—from among the millions of them—will cluster
them into groups that correspond to the self-identified race or
ethnicity of the subjects. This is not because the software assigns the
computer that objective but because those are the clusters that provide
the best statistical fit. If the subjects’ ancestors came from all over
the inhabited world, the clusters that first emerge will identify the
five major races: Asians, Caucasians, sub-Saharan Africans, Native
Americans and the original inhabitants of Australia and Papua New
Guinea. If the subjects all come from European ancestry, the clusters
will instead correspond to Italians, Germans, French and the rest of
Europe’s many ethnicities. Mr. Lewontin was not only wrong but
spectacularly wrong. It appears that the most natural of all ways to
classify humans genetically is by the racial and ethnic groups that
humans have identified from time out of mind.

Stephen Jay Gould’s
assurance that significant evolution had stopped before humans left
Africa has also proved to be wrong—not surprisingly, since it was so
counterintuitive to begin with.

Those who still stubbornly cling to their antiscientific belief in human equality are the Flat Earth Society of our day. There is truly nothing surprising here except the name of the author; for a New York Times columnist to abjure liberal race orthodoxy is like a sitting cardinal of the Catholic Church publishing a book declaring that God does not exist.

All the dogma goodthink with which we were raised, all the statements about “race is only skin deep” and “it’s not genetics, its the culture” and “deep inside we’re all the same” are nothing more than children’s tale meant to obscure the frightening truth. Science is gradually peeling away the orthodox falsehoods; soon it will be impossible to conceal the important and necessary discussions about reality under nonsensical accusations of racism.

It will be interesting to see how science-loving equalitarians react to the discovery that they will have to choose between science and their faith. I expect that most of them will react as they did when economics made incontrovertibly clear the intrinsic contradictions of socialism and stubbornly cling to their antiscientific beliefs without admitting that they have openly rejected science.

Criticism

I found this pair of tweets by government-funded wannabe Damien Walter to be more than a little amusing:

You should feel a little pity for Vox Day. He will never have the self-awareness to admit he can’t write, and so he’ll never learn.

I stayed in bed TWO WHOLE DAYS to read the 5th and final volume of The Malloreon. Felt grief, like all my friends had died, when I finished.

It’s always fascinating to see this sort of supercilious superiority from people who aren’t able to publish and sell books themselves. About the only way I could be less concerned about the opinion of someone who considers David Eddings to be the crème de la crème of literature would be if he also turned out to be a particular admirer of Dan Brown.

It would be bad enough if it was The Belgariad that Walter had so admired. My first thought after reading The Malloreon was: “I liked it better when it was called The Belgariad.” My second thought was: “How did he talk his publisher into paying him twice for writing the same thing?”

And then, there is this:

As far as fantasy novels go, I think Pratchett is a better role model for new writers than Tolkien.

The Colour of Magic vs The Hobbit. Ye cats. You have to feel sorry for the poor would-be writers being taught by this poseur. In any event, there is only one real answer to these anklebiters, and that is to simply keep doing what you’re doing. That’s the beauty of writing and publishing these days. You don’t need anyone’s permission anymore.

In any event, since I have the very good fortune to read some of John C. Wright’s work fresh from the pen, it’s not as if I’m under any illusions with regards to my own writing.