Posts tagged with 'Economics'
Jun 28, 2007
Fiat currencies in the 20th century: monetary catastrophes unfolding at varying speed since the birth of the Federal Reserve.

The currency system is based on coercion: directly via the legal tender laws (which decree that fiat currency must be used/accepted for all payments of debt) and indirectly via the value imputed to government debt which rests on the faith in the government’s ability to extort enough future tax revenue to be able to repay its debt.

Government bonds are the tally sticks of our age, and serve as the main ‘backing’ of bank notes and their digital counterparts in circulation. They are what is tying the government and the banking system together, via the central bank. The central bank has the power to ‘monetize’ such debt by creating money out of thin air. This roundabout way of going about it is an essential part of the confidence game, the creation of the illusion of value.

Inflation is nothing but a cleverly disguised tax. If the government had to actually raise taxes instead of borrowing the staggering sums of money it uses, it would have to raise taxes by so much that it would face a rebellion.

Fiat currencies in the 20th century: monetary catastrophes unfolding at varying speed since the birth of the Federal Reserve.

The currency system is based on coercion: directly via the legal tender laws (which decree that fiat currency must be used/accepted for all payments of debt) and indirectly via the value imputed to government debt which rests on the faith in the government’s ability to extort enough future tax revenue to be able to repay its debt.

Government bonds are the tally sticks of our age, and serve as the main ‘backing’ of bank notes and their digital counterparts in circulation. They are what is tying the government and the banking system together, via the central bank. The central bank has the power to ‘monetize’ such debt by creating money out of thin air. This roundabout way of going about it is an essential part of the confidence game, the creation of the illusion of value.

Inflation is nothing but a cleverly disguised tax. If the government had to actually raise taxes instead of borrowing the staggering sums of money it uses, it would have to raise taxes by so much that it would face a rebellion.

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Jan 13, 2008
The person we pass on the street sees our sneakers but would have a harder time inferring how much we’re spending teaching our kids to read.
Ray Fisman on wealth signalling

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Jun 21, 2007
Secondary stock markets are zero-sum. They don’t produce anything, just set prices. I think it’s really sad that so many of the best and brightest minds are drawn into competing with each other instead of creating value for others.

Some sort of stock market, with decent liquidity and abundant information, is necessary for proper functioning of the economy. But the stock market we have, where hedge funds colocate boxes on the exchange so that they can execute trades within milliseconds of new information coming in, is overkill.

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Jun 13, 2007
The free market is socialism for the rich—free markets for the poor and state protection for the rich.

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Jun 13, 2007
Consider two countries A and B that trade in two goods. One striking result of the theory of comparative advantage: Even if A is technologically superior to B in producing both goods, one of the two industries in A will go out of business in an atmosphere of free trade.

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Jun 13, 2007
Mercantilism is an economic theory that holds that the prosperity of a nation depends upon its supply of capital, and that the global volume of trade is unchangeable.

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Sep 9, 2008
I get asked every day to invest in private companies. I always ask the same couple questions. How soon till I get my money back, and how much cash can I make from the investment? I never ask what the PE ratio will be, what the Price to Sales ratio will be. Most private investors are the same way. For some reason buyers of stocks have lost sight of the value of companies paying them cash for their investment. In today’s markets, cash isn’t earned by holding a company and collecting dividends. It’s earned by convincing someone to buy your stock from you.

If you really think of it, when a stock doesn’t pay dividends, there really isn’t a whole lot of difference between a share of stock and a baseball card. Put your Mickey Mantle rookie card on your desk, and a share of your favorite non-dividend paying stock next to it, and let it sit there for 20 years. After 20 years you would still just have two pieces of paper sitting on your desk. The difference in value would come from how well they were marketed.

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Dec 25, 2007
The question that should be asked is not: “Who among the regulators is corrupt or so selfishly motivated as to disregard the ‘public interest?‘” The question that should be asked is: “Who among us is the most powerful and most capable of deeply capturing our exteriors and interiors and, even, of capturing what we mean by the ‘public interest?‘

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Nov 10, 2007
The easier a piece of software is to write, the worse it’s implemented in practice. Why? Easy software projects can be done by almost any random person, so they are.

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Jun 28, 2007
In a nation of debtors, inflation is the politically most palatable form of monetary policy. After all, everybody is focused on the short term: politicians and bureaucrats on their terms of office, consumers on their debt and their desire to buy more things they don’t need with money they don’t have, and so forth. In the long run this policy means ruin. Over time, the middle and lower classes will see their real incomes and living standards shrink, while the true beneficiaries of inflation – those who get first dibs on every dollop of newly created fiat money – amass more and more of the wealth that is stolen from its producers by inflation.

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