First of all, what is money? It is anything that is widely accepted as a medium of exchange. Here in the USA it's paper fiat, aka the dollar bill and its many derivatives. If I buy bread from you, and you buy eggs from Jon, and finally Jon buys apples from me, then it's a three way trade. We all accept money, so any two corners of the triangle don't have to concern themselves about the last and such trades and infinitely more complex trades can be accomplished smoothly without involving all suppliers and consumers in complex negotiations. Hence we have money.
How does money multiply? Well, it's kind of like shared libraries. When you use shared libraries it's like you have more memory. You don't really, but more of your programs fit into memory as if you did. Same thing with money, there's not really more of it, but it's as if there was. I have an ounce of gold in a bank. I want a laptop. I trade my gold for a laptop, but instead of physically handing over the gold, it is simply deducted from my account and applied to the laptop guys account. Meanwhile the bank doesn't actually have my gold, it just promises to provide it for me should I ask for it, same now holds for the laptop guy. The gold is out making interest for the bank. It's as if the bank has it's own gold and I have my own, too, but it's the same gold.
At any time there is a certain amount of total actual money in circulation, and a percentage of that money is double dipping, far more than double in fact. Remember how the bank didn't actually have that gold? It's in the hands of some investor making interest. Well the investor doesn't have it either, at least not all of it. Some of it is invested in Green Sparks Bubble Gum, making interest. Well Green Sparks doesn't have it either, not all of it. Some of it bought the cutters for the wrapping machine. And so on, et cetera, ad nauseum.
There's a simple mathematical formula for figuring out just how much total multiplication ensues. First we have x deposited somewhere. On average y is the percentage loaned out. First round, x + x*y. Second round, x + x*y + (x*y)*y, and so on. This works out to x * (1 + y + y2+ y3+ y4... + yinf). The part in parentheses is a geometric series, and works out to 1 / (1 - y). In economics, that (1-y) is referred to as the reserve ratio, and measures the money kept _in_ the bank rather than what is loaned out, we'll call it r. If you didn't follow all that math, no worries. Suffice to say that for x real dollars, there are x * 1/r virtual dollars. An r you can expect to see in the wild might be 75% or so. The Federal Reserve with its monopoly on money makes possible a 10% reserve ratio, which we actually have. That makes the money multiplier a whoppin' 10! So when the Fed loans out $2 trillion, it ends up expanding to $20 trillion. This system of holding very small actual reserves is called fractional reserve banking. Without help it falls apart very quickly. With the help of the Fed and things like the FDIC it thrives and bustles.
So, why can't your money multiply? It does. You just don't get to keep it.
Last fall I wrote about what I see coming down the pipe. I gave a glossed over explanation of why I fear we may see hyperinflation, and how I came to that conclusion.
Well, since then I have taken a university course on economics. I have a deeper and more solid understanding of those notions I had then. I also have the vocabulary to articulate it better. So, if you've taken economics and understand such terms as CPS, velocity of money, fractional reserves and money multipliers, then jump right in. If not, then I'll try to give a little guidance and some links to further reading.
The purpose of this particular post is two fold: to kick off the coming series and let my readers (really? I must mean myself) know that I haven't given up writing, and to act as an impetus, a commitment, to actually write the rest of it in a timely fashion.
Edit: I got confused on the dates of my sources, which then used relative dates to refer to the event. It was in fact on Wednesday, 18 Mar 2009, that the Fed's actions took place.
Last ThursdayWednesday, as Glenn Beck calls it, was history. Not good history, no this is bad. Remember Zimbabwe? Ever heard the phrase "Not worth a continental"? Well welcome to the future, hyperinflation.
What happened ThursdayWednesday? $1 trillion dollars, new dollars, were printed, IN ONE DAY! The Federal Reserve "bought" a bunch of IOU notes from the US Treasury, and for it paid $1 trillion, in money it just printed out of thin air. "What?? " you say? Yes, the Fed bought debt the US Government didn't have, using money the Fed didn't have, all so that we can be poorer for it.
On ThursdayWednesday gold shot up over 6% in one hour. Likewise silver shot up over 8% in one hour. This is not because the value of gold and silver went up. The value of the dollar went down, dramatically. If you thought your 401K evaporated with the banking crisis, you ain't seen nothin' yet. Get out of the dollar, and then like me you can welcome the inevitable collapse, and finally a return to sanity!
Probably the coolest VIm plugin since netrw, welcome CSApprox! Just put this in your .vim/plugin and away you go with completely transparent and automatic 256 color themes for your terminal vim that look amazingly not unlike the GUI versions of those themes. Just make sure your terminal properly reports 256 colors, and that your vim binary is compiled with gui support (debian flavors do this, but apparently not red hat flavors). If either of these are missing it will give you a little message and delay opening vim, if this is a problem you might want to suppress that output.
I also highly recommend enabling 256 colors via Xresources rather than setting TERM=xterm-256color, this will save headache when sshing in from a less fine terminal or when logging in at the console. A quick google turns up plenty of info on how o set your Xresources with one caveat; if you use uxterm like any sane person would, you need s/Xterm/UXterm/. I’ve also found cases where I need xterm as well, so I simply put all three in there to be safe.
Xterm*termName: xterm-256color
UXterm*termName: xterm-256color
xterm*termName: xterm-256color
Some time ago, being the no good visual designer I am, I decided to put together a mutt color theme. This was no ordinary theme, I’m talking 256 colors! No, don’t worry, the theme doesn’t use all 256 colors.
Aaron’s post prompted me to put up my theme for consumption, enjoyment, and comment. If you want details on how to make the colors work, follow the link above, he did a good job of that already.
Now, the theme and screenshots.
In a refreshing break from political posts, I’m going to rejoice in the bounty that is white-space airwaves made free and open. With all TV broadcast going digital, there will be many chunks of EM spectrum between digital TV channels. This is known as white-space, or unused digital TV spectrum. The FCC voted 5-0 to make these unused frequencies available in the same sense CB, 802.11 and walkie talkie frequencies are. What does this mean? Why the big fuss? Well, not only does it mean more frequencies available for wireless internet and other uses, it also means longer range for wireless internet and other things. These are the same frequencies that TV signals are broadcast long distances on, remember. It is very exciting. Some call it wifi on steroids. Along those lines, think Digis (or insert wireless provider here) on steroids. Room for more wireless ISPs and at greater range, therefore less base stations, more customers, more competition, and lower costs all around! But it’s not just about wireless providers, or even just internet, my brother wants to build a GPS receiver that transmits the raw data home for actual position calculation, offloading the hard work, making the mobile unit simpler and cheaper. The newly available spectrum means for him more range and less interference. Exciting times!
James 1:6
bq. 6 But let him ask in faith, nothing wavering. For he that wavereth is like a wave of the sea driven with the wind and tossed.
There’s been some talk about something happening in October that will shape the imminent election. For any interested on what these events might be, this is an interesting article. That article is probably pretty strongly conspiratorial to a lot of my readers, but my point isn’t to point out any conspiracies or to lend credence to particular theories.
My objective today is to say “stand firm” and go into this election with much prayer and faith. Regardless of what happens, how accurately it was predicted, or how complicit any parties may be… the point remains that if it does affect the election then it doesn’t matter who was behind it, if anyone. So I beg of you, all of you, have faith and do not waver! I’m not going to presume to tell you who to vote for. However, don’t be tossed about, prayerfully make a decision and then stick too it, whatever happens.
I’m not saying a nuke will detonate, or that I believe we’ll endure some kind of attack. I don’t know even that anything will happen. We might not even realize as subtle winds toss us, so let us be watchful and prayerful, and seek the Lord’s guidance.
As a side note, when you’re studying out your decision, keep in mind that there are more choices than two.
I’m no economist, but I know some basics and I have been thinking a lot about things since the whole credit crisis and the bailout. Now I’m going to make some predictions. Take them with a grain of salt.
Stocks have been crashing, markets have been freezing, mortgages and loans of all kinds defaulting, all in a interdependent way. Additionally, silver and gold have seen a dramatic drop in price against the dollar, and have really stayed remarkably low for a while now, going on week two. This is the brunt of all my thinking, why in the world, in times of economic trouble, are the traditional securities, gold and silver, so darn low?? Real estate prices are low. Gas prices are low. Stock prices are low. Just about anywhere you look you find more low prices.
The only conclusion I could come to is that indeed it is not the stocks that are crashing or the values of gold and silver going down. What we are really seeing is the value of the DOLLAR going up! Absolutely remarkable IMO. Of course there’s an explanation, it goes back to the interdependencies of the last paragraph. There is a credit crunch, or credit freeze, or credit crisis. Whatever you call it, short answer: people are hoarding money. Nobody wants to let it go, nobody wants to lend it out not knowing if it’ll ever come back. This produces a scarcity of the dollar, and what is scarce and in demand becomes more valuable.
The take home point is that you can look at things from a different point of view. In Newtonian physics you might take a particularly hairy problem, transform it into another frame of reference, and come out with a much easier problem. I’ve followed this financial crisis with intensity, and I’ve spent a lot of brain power trying to wrap my head around it. I understood that housing prices were down because of defaulted mortgages, I understood that businesses were having a hard time getting loans because these credit default swaps permeated the market. What I couldn’t wrap my head around is how it’s so darn far reaching, even to gold and silver, and, well, everything.
This is where I found it useful to change my frame of reference. Instead of asking why everything else is so cheap, instead I ask “why is the dollar so uncharacteristically high valued?”
What we have is an artificially scarce dollar. The dollars are there but nobody is trading them. Normally, this would result in the same thing we are seeing, dollar value goes up, price of everything else goes down, and eventually things play out, people learn who to trust, money flows again, and everything goes back to normal. Arguably, if the crisis is big enough, things might not get to normal, or at least not converge to normal in any orderly fashion. If and when things get back to relatively normal, those who acted when the dollar was artificially valued high will have made a killing.
However, we have an additional variable, a big one, to the tune of near $1 trillion dollars pumped into the system in a very short time period. Dollars are guarded jealously, the government pumps tons of dollars out, those also are hoarded and the value of the dollar remains at this high point. Now, when people finally decide to trade their dollars again, and this they will do, we won’t ONLY go back to the original value of the dollar, but instead the dollars value will go back down PAST its original value. Prices will sky-rocket. Gas will return to $4/gallon AND THEN SOME. Same story with everything else with fluctuating prices. Gold and silver will go back to their pre-crisis points AND THEN SOME, perhaps even stocks will come out way better than they were pre-crisis.
Perhaps if things get really bad, what people might perceive is a horrifying devaluation of dollars, getting the message to get rid of their dollars. This would serve to exacerbate the falling price of the dollar. You go from hoarding to hot potato. We just might yet see hyperinflation in our boastful US of A. Just maybe the Lamanites CAN get into Zarahemla.
My brother points out that $1 trillion is not a very large percentage of the total money supply. However, it is enough to push the dollar below it’s previous trend line, and coupled with peoples interpretations and resulting actions, it could be enough to be devastating.
How long till this all goes down? That I’m not so sure of, nor how fast it will happen. I’ve heard others quoting as long as a 5 year ‘recovery’ period. All in all, the slower the recovery the better off we’ll be. If the recovery happens too fast, watch out for hyperinflation.
The bailout could in fact perform favourably, it might actually serve to broaden the recovery curve I mentioned. Then again it might not, I don’t pretend my analysis is that detailed. As an aside, I’m not opposed to the idea of using money to solve this problem, what I am opposed to is using taxpayer money. And what I think is particularly dangerous is using money in a way that increases the money supply. This easy credit, $1 trillion of “new” debt against the American people, is a huge gamble to make.
Word to the wise, take advantage of the high dollar value right now. Some speculate (in different terms) that the dollar will be at it’s highest mid-winter. But if you want to be safe, buy now. If you have stocks DO NOT SELL THEM.
You might ask, “but if we all go buy right now, won’t that bring on the ‘too fast’ adjustment you were talking about?” That’s a good question, the answer is the more that buy now the better, because I guarantee you that “everybody” is not going to be doing that. The vast majority of people will buy when things get ugly. So the more that buy now, the more that serves to spread the distribution. So not only is it the best thing for you to do, it also serves to help the economy overall.
I don’t claim to be prophetic by any means, but I reserve the right to say “I told you so.” I also reserve the right to be wrong. :)
The blogosphere is rife with discussion on gay marriage and the LDS Church’s involvement in California. I would like to do my part in the battle for family. I pray this post will have positive effect in that battle, however modest it might be.
First of all, I’ve already said how I feel about group rights. Gays don’t have rights. Human beings have rights. Gays happen to be human beings. Good, we’re on the same page.
That said, this isn’t really about gay rights as much as it is about gay marriage, but it brings me to my first point.
##Marriage is not a right.
For all the talk about gay rights you can mostly chalk it up to human rights that need to transcend prejudice. In other words, instead of clamoring for “gay rights” they should instead be insisting that they be afforded the already existing human rights. Gay marriage, on the other hand, is a prime example of a group inventing new rights so they can feel the same as everyone else regardless of their decisions. It’s like a people with dreadlocks inventing a right to lay their heads on your table simply because you don’t mind another person without dreadlocks doing it.
##Marriage is fundamental to society.
This is entirely incident to marriage not being a right, but is yet a powerful argument against the thought that marriage should be a right. Marriage is the very institution by which children have parents, both mother and father. It is the core of the fundamental unit of society—family.
##Marriage involves more than the couple.
Intimate relations are not just about consenting adults having a good time. There is ever present the possibility of new life. This new life has rights just the same. It has needs, physical, emotional, spiritual.
bq. Husband and wife have a solemn responsibility to love and care for each other and for their children. “Children are an heritage of the Lord” (Psalms 127:3). Parents have a sacred duty to rear their children in love and righteousness, to provide for their physical and spiritual needs, to teach them to love and serve one another, to observe the commandments of God [etc.]
bq. Children are entitled to birth within the bonds of matrimony, and to be reared by a father and a mother who honor marital vows with complete fidelity.
—The Family: A Proclamation to the World
It is because of this sticky situation that marriage is instituted. The very purpose of marriage is to give children stable homes, to assure where possible that when children are created they have a mother and a father. Once you realize this, you realize that gay marriage isn’t the only thing you ought to be worried about. Fornication, adultery and divorce come to mind. Alas, this post is about gay marriage. Indeed, homosexual relations cannot result in offspring, so the very reasons for instituting marriage don’t even apply to the deviants. Yet they insist they have a right to marry. Again I propose it’s merely about them feeling the same as everyone else, regardless of their personal choices. It’s validation, nothing more.
##Government should be involved in marriage.
Many of my libertarian friends throw around the idea that government should step out of marriage completely, leaving it a private and religious matter concerning only those involved. This is one of few places where I diverge from the libertarian camp (though not necessarily libertarian ideals). As stated previously, marriage inherently involves more than the parties involved. It involves family and new life; it involves society as a whole. It is in the interests of everyone involved (and everyone is involved, who among us was not born of a mother and a father?) and we should take every opportunity to encourage marriage over promiscuity and counseling over divorce. We should take every opportunity to afford children the privilege of being born into the marriage relation, and where that’s not possible to be adopted into such (no, I’m not saying single parents should give up their children, though they shouldn’t be discouraged to do so). The government is the vehicle by which the people are governed. Whereas the people deem it in society’s interest to afford children the opportunity to develop under the guidance of bonded mother and father, encouraged to stay together, for better or for worse, in sickness and in health, thus is born the state sanctioned institution of marriage.
Please, Von, please, next time you set up a samba mount, just use cifs and not smbfs. Save yourself a lot of headache.
