Friday, November 21, 2008
Did the trade deficit cause the economic collapse?
Was it a policy matter beyond the Fed's control? I don't buy it. If the Fed had simply stood pat with the money supply, the newly-opened markets would have drained dollars, causing a stable deflation resembling the situation of the late 1800s. Dropping American prices would have increased exports, while resource competition would have inflated commodities and choked off excessively fast growth in imbalance. The arrangement is reasonably self-stabilizing.
The losers would have been those who had borrowed lots of money for enterprises with thin profit margins. But on a long-enough time scale they are doomed anyway—an inevitable market fluctuation will eventually wipe them out—deflation just blows them up a little sooner. They can only survive with eternal credit expansion. Naturally, this is what the Fed did. The mistake was not treating Chinese goods as a windfall, but propping up marginal enterprises and mistaking the results for efficiency. The more they inflated the money supply, the more illusory "efficiency" sprang out of the woodwork.
Take a look at these charts of the monetary base, the denominator of our fractional reserve monetary system.
Look at the bottom chart. In 1985, the monetary base was growing on a dead steady exponential curve: fractional reserve banking was causing inflation, but the system was net profitable, and the profits were being reinvested in the basis of the system.
Now look at 1995. The monetary base jumped off the tracks as the effective reserve fraction was dialed up. Money was being created fast, but not producing profits fast enough to maintain the new rate of creation. The dot-com bubble promptly inflated and burst from the pressure of all that money creation.
That should have been a wake up call to dial up the effective reserve fraction, but Greenspan decided to try it again, only harder this time.
Now look at early 2008, the last data on the graph. The monetary base actually shrank ever so slightly! Malinvestment was finally destroying money faster than it was being created. That marks the point where our economic system went off the edge of the abyss. The Fed has since manipulated the system so that the graph went vertical, but it is far too late to avoid tremendous destruction of productivity.
Thursday, November 20, 2008
Congressional immunity: blessing or plague?
Firehand thinks that Congressional immunity from extra-Congressional prosecution is a bad idea.
Utter bastard though he might be, Murtha is exactly right about immunity: if lawmakers can be prosecuted at will, then the faction with the sleaziest lawyers can make them write whatever laws they want, and we will be ruled from the shadows. The FBI and DEA are nearly as good at blackmail as the Stasi was, and if they start routinely using those techniques on senators, then the final death of the Republic will be at hand. It is by far the lesser evil to let a few of The Elect get away with retail crime for a few years, and vote them out in due course. The Founders designed a large Congress with immunity and frequent elections for exactly this reason.
Damn the country club Republicans for setting this wolf loose with their perpetual legal campaign against the Clinton administration. The professional ass-clowns would never have figured out how to do it on their own if Gingrich's misguided children had not written a how-to manual and rubbed their noses in it for eight long years.
Thursday, November 13, 2008
Toss 'em back, God will know his own.
Barone's comment was not "much too close to the truth", it was the truth. I was flabbergasted to see numerous people writing about how giving birth to Trig was unfair and immoral, to the gleeful approval of other lefties. And it wasn't couched in elliptical or insinuating terms, people were coming right out and saying he should have been aborted to prevent his suffering, or so that society would not be burdened with a useless eater. For a moment the mask slipped and we saw their true ethos of tolerance and acceptance: certain people are disposable. It was no lesson from a dusty history book or a wry Vonnegut story—the door of the eugenics oven stood open and we could feel the heat.
It opened my eyes about something that had been a mystery to me: Why does the Left Reich have such a violent, reactive hatred of IQ tests? Because, according to their ethos, if there existed a group of people with an average IQ of 70, there would be nothing to do but plow them under as fertilizer. And that must not be said out loud.
Monday, November 10, 2008
Why do matter and anti-matter annihilate?
Trivially, it is because the particles have a "matter charge" that is conserved. Add a particle to its anti-particle and they cancel out the matterness, leaving the more ephemeral aspects to come squirting out, often in the form of simple, energetic force carriers.
Why matterness should be conserved is an open question in physics. Things like momentum are conserved because of symmetries. If all positions in space are equivalent, then the rate of change of position has to be constant in the absence of "action". Thus momentum is conserved.
What the symmetrical thing might be for matterness/antimatterness is not obvious, nor is "action" in this context. The Schrödinger wave equation does not explain any sort of substructure we can sink our hooks into. Surely particles must get their properties for reasons, but clues as to how they do it are few.
Particle models based on topology and shape are attractive because they allow complicated relationships to flower from simple foundations. For example, we can pick two knots that fall apart into a simple loop when cut and spliced to each other. Or a pair of complementary Möbius strips that untwist when spliced together. Alas, deducing fields and forces from tangles seems to be a hard problem.