notes jan 10
January 11, 2009 § Leave a comment
The stuff we do that creates ill will and dedicated enemies. if we declare war on them, which this is, have we not implicitly accepted their war on us?
By DAVID E. SANGER3:22 PM ET
President Bush deflected a request by Israel last year for help in an attack on Iran’s main nuclear site and told the Israelis about new covert action against Iran.
the confusions in economics are gross.
Take for example
Debt and Wealth
Does an increase in debt mean a decrease in wealth? There’s the accounting question, which should help us keep our heads straight. But there’s also an economic question: what is the causal relation between debt and wealth?
Let’s start with the accounting. For an individual, with given assets, a $100 increase in debt means a $100 decrease in net worth, or wealth. If we add up all the one million individuals in the country, we get the same result: for a country, with given assets, a $100 million increase in debt means a $100 million decrease in net worth.
Pasted from <http://worthwhile.typepad.com/worthwhile_
Note that he avoids the fact that when one person is in debt, so someone else has their assets increased. And they benefit from the interest to be paid. Large debt means large flow of cash to some few.
He then says :The only way we could increase debt by $100 million, and hold assets constant, is if the whole of that $100 million was borrowed from foreigners.” but of course it could be held by private US citizens, and much of it is.
He sort of redeems himself from then on, by recognizing this debt as asset, but it comes after the first assumptions. One of the commentators adds
There is an implied assumption here that there is a limited supply of money to lend. It is true that some financial institutions (e.g., banks) do have reserve requirements that limit their ability to create money but it is also true that they create money when they create a loan. If banks can “sell” their loans to financial institutions that have no reserve requirements (e.g., hedge funds) then there is no practical limit to the amount of money they can create.
and another commentator,
he above scenario happens in a closed economy. It encapsulates the “tail risk” described above.
What is happening now is that the Federal Reserve is attempting a “fire break” of the animal spirits. Their goal is to make the financial sector “feel secure” about its leverage by providing a bid for their levered assets. The thought is the financial sector will not shrink, but instead choose to keep leverage constant by extending loans to businesses (and consumers). The problem, of course, is that the more the Fed effectively “de-levers” banks by buying their assets, the more liquidity the banks have that can potentially leak into unproductive activities such as speculation. Take the case of Brazil: Brazilian banks kept loan-to-asset ratios at around 60% for much of the 80’s and 90’s. The other 40% of its balance sheet was geared towards speculating on inflation, and that is where most of the bank sector’s profits came from. The result of this speculation was, of course, a soaring velocity of money that contributed to chronically high inflation.
the following is a good discussion of infrastructure stimulus., lots of issues.
There’s been a lot of discussion about how the lack of “shovel-ready” infrastructure projects puts a constraint on government investment spending as a mode for delivering stimulus, since most infrastructure projects take a long time to plan and build. But what if the negative output gap is going to be deep and long-lived? Is this concern so pertinent? I don’t think so.
Pasted from <http://www.econbrowser.com/archives/2009/
Let’s go back to North.
The revolution in technology of the past several centuries has made possible a level of human wellbeing of unimaginable proportions as compared to the past, but it also has produced a world of interdependence and universal externalities, nee a whole new set of uncertainties.
a tradeoff? only if one accepts that well being is so increased. This shows a lack of irony about the complexities of lived social life, and the quality of relationships, time, etc.
The rationality assumption underlies economic (and increasingly social science) theory….There is an immense literature on both the usefulness and the limitations of this behavioral assumption.1 T See Hogarth and Reder (1987) for the proceedings of an interdisciplinary conference held on the subject.
The implication of this assertion for social science theorizing is that much os the basses for rational choice is not so much individual cogitatior as the dementedness of the thought process in the larger social and institutional context. > people are, in effect, interchangeable cogs in a larger machine. The larger machine extends way outside the individual, incorporating large-scale social, physical, and even geopolitical structures. And it is the diffused reasoning and behavior of this larger machine mat traditional economic theory often succeeds in modeling.”
see Edelman, Gerald M. and Guiiio ibnoni. 2001. Consciousness: How Matter Becomes Imagination. London: Penguin Books.
subjects predict which of two i, the appearance of a T symbol or the appearance of a ‘0’ symbol ext in a sequence of two hundred trials where the experimenter could control whether 1 or 0 appeared next…. Feldman found :each subject was quick to spot patterns in the sequence of 1’s and form hypotheses on the process generating the sequence. resting point is that the sequence of 1’s and O’s used was per. Yet each subject could ‘see’ patterns to act upon, albeit different ones as the experiment progressed,”
An important conclusion from much game theory is that cooperation is less favored when the costs of coordination -like lots of people – are high. Implies that cooperating around Obama’s program is less likely.
He moves to human memory and two models classical data storage and connectionist. Both imply fixed elements and so are only true, in my view, in rather trivial cases where the person is already performing in a machine role.
he, in looking for “operating mechanisms” of the mind, has already narrowed his repertoire to what is mechanical, ie elementals, in practice.
connectionist models ttend to deal with perceptual primitives and hence avoid the mathematics of transformational groups. probably an impossible path in cost and efficacy.