As a self-admitted hardware geek, I had to wipe the drool from my mouth when I saw the Mozilla Seabird concept phone designed by Billy May. In a traditional open-source fashion, May created the idea based on user community feedback in terms of features, form and function. Seabird has all three, as you can see in the video overview: It’s a phone from the future. While the technology used for Seabird impresses, what stood out even more for me is how Seabird illustrates the growth of the smartphones as the central device in our lives and how such a device will become even more useful.
Frederic Bastiat lampooned protectionism back in 1845 when he penned his ‘Petition of the Candle Makers‘. The candle makers are incensed that the light of the sun can be had for free. The sun’s ‘unfair trade advantage’ surely needs to be curtailed somehow!
We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly we suspect he is being stirred up against us by perfidious Albion (excellent diplomacy nowadays!), particularly because he has for that haughty island a respect that he does not show for us.”
Replace ‘perfidious Albion’ with China, and you have Krugman. Krugman makes the same mistake he always makes – the one mark of a truly bad economist if you will – he neglects the ‘unseen’ effects of his policy advice. It may well be true that a small group of domestic producers would benefit from a higher yuan (which ones? We’re not quite sure, actually…). Alas, every single consumer would suffer for their betterment by having to pay higher prices. This in turn means that consumers will either have to cut back on their consumption, or lower their rate of saving. It seems obvious that this entails a lower standard of living for everyone but the favored few. Since less money will be available for either consumption or saving, there will also be less money available for investment. Capital formation is thus likely to slow, further impinging on future growth.
a thoughtful genius shares his geo-political-financial views
Don’t compare it to the iPad. Just don’t.
The Kindle 3 is not in the same class as the iPad, so don’t compare them. The Kindle has a different form factor, is in a massively different lower price range, uses different technology E Ink and does one thing reading really well. That’s all I want the Kindle to do. Spoiler alert: the Kindle does that single function amazingly well.
James Chanos of Kynikos Associates says China is the next Enron. Of course, this would sound ridiculous if Chanos hadn’t been one of the original people to uncover the Enron scandal. Chanos is a master short seller, accountant and hedge fund manager. He essentially believes the Chinese economy is one big government run ponzi scheme. He thinks it will end very badly:
Inflation/Deflation Definitions Once Again
- Inflation is a net expansion of money and credit, with credit marked to market.
- Deflation is a net contraction of money and credit, with credit marked to market.
Those are my definitions. I cannot force anyone to accept those definitions but they do explain what is happening quite nicely.
Those who think prices are what matters, even those who have no debt and no assets, are simply missing the boat about the importance of credit expansion and credit contraction in fiat credit-based financial system. As shown above, a credit contraction affects everyone, in many ways, and in far more important ways than simple price changes.
The stimulus and bailouts helped the financial economy (for a while), but not the real economy. Because credit dwarfs money supply, trillions of dollars of so-called stimulus vanished into thin air, with no lasting impact on the jobs market.
The inflationists and hperinflationists who ignored credit and focused on money supply alone (or consumer prices) never saw the plunge in interest rates coming or the massive pounding in global equity markets.
Those who knew a credit implosion was coming, got treasury yields correct, the equity crash correct, the rise in the dollar correct, and the strength in gold correct.
Gold does well in times of economic stress, especially in the senior currency – in this case the US dollar. It is the only commodity whose long term trendline is intact from 2000. Gold is money and as money it should do well in deflation in the country of the senior currency. It did.
In credit-based system, especially where credit dwarf money supply, credit itself (and the value of credit marked-to-market on the balance sheets of banks) is of paramount importance.
Those who insist inflation is about prices, as well as those who view inflation as an increase in money supply alone (ignoring credit), are going to continue to get the economic picture wrong.
If you are focused on prices or money supply alone, you are focused on the wrong thing.
In a fiat credit-based economy, where credit dwarfs money supply, changes in credit is what’s important, not changes in money supply, not nominal changes in prices.
A great explanation of those other people we just can’t understand. Based on excerpts of speeches by Alan Watts. Produced by Trey Parker and Matt Stone. It’s only a minute long.