Assorted links

by on September 29, 2009 at 12:44 pm in Web/Tech | Permalink

1. Profile of Zero Hedge.

2. Health care expenditures, in graphic form.

3. The Law of One Price: Costco vs. Manhattan.

4. "These factors combine to make our era the most consistently and consequentially deluded and unadaptive of any era ever.": Robin Hanson is on a roll.  Or how about this:

Our dreamtime will be a time of legend, a favorite setting for grand
fiction, when low-delusion heroes and the strange rich clowns around
them could most plausibly have changed the course of history.  Perhaps
most dramatic will be tragedies about dreamtime advocates who could
foresee and were horrified by the coming slow stable adaptive eons, and
tried passionately, but unsuccessfully, to prevent them.

1 farmer September 29, 2009 at 1:10 pm

i wonder if the costco van guy tells girls he “works arbitrage in Manhattan” and lets them assume lol. Honesty and the gentle waftings of old money all at the same time!

2 JackTrade September 29, 2009 at 1:28 pm

Re 4…intriguing, but I’m always skeptical when visions of the future say things like “by this time, everything worth knowing will already be known.”

3 smack September 29, 2009 at 2:26 pm

The funny thing about the Big Box delivery guy is that his delivery zone encompasses those Manhattan residents with the greatest wealth and ability to pay full Manhattan prices.

4 zz September 29, 2009 at 3:40 pm

Is there anyone more full of crap than Hanson. That guy is so desperate to make people think he is smart that it just comes off as pathetic.

Also, it’s hilarious that he refers to himself as a polymath on his website. What next? Is he going to declare himself the “voice of a generation”? This guy is like the Kanye West of public intellectuals.

5 Mr. Econotarian September 29, 2009 at 4:51 pm

So what made the health expenditures in France, Canada, the UK, and Germany start to accelerate in 2003?

I know 2002 was the mass doctor strike in France…

http://news.bbc.co.uk/2/hi/europe/1776719.stm

6 Barkley Rosser September 29, 2009 at 5:37 pm

josh,

It is legal and possible to speculate on gold right now. That is why we are currently seeing a
price that is about five times about the fundamental of the industrial use price of about $200.
This is the peak of a bubble that is struggling to stay up and keep going, but that is in an
extended period of financial distress, the last of the noughty decade bubbles to crash (go check
how after gold went over $800 per ounce in 1979 it went down to below $300 and then stayed there
for a solid two decades).

As for China or Singapore linking to gold, you have to be kidding. Is this what they are saying
on Zero Hedge or some of these other wacko blogs? China is rather quietly letting its currency
float upwards and appears to be shifting somewhat to holding more euros than US dollars. But why
would it want to tie itself to a commodity that could easily crash hard at any minute? And if by
pegging to it they fixed its price, would not that be the end of speculation in it rather than
the beginning? The gold bugs are seriously out of touch with reality, deeply so.

7 Barkley Rosser September 29, 2009 at 11:53 pm

BKarn,

The go-to guy on that was Brad Setser, but he went silent when he went to work for Larry Summers at the WH.
Last I saw, they still hold way more dollars than euros (or anything else), but it appears that they (and
some others) are making adjustments to raise the euro/dollar ratio in their portfolio. However, last data
I saw was some months ago when Setser was still blogging. He is a real loss.

8 babar September 30, 2009 at 7:43 am

i would really LIKE to think that Robin Hanson is Tyler Durden … is this a testable hypothesis?

9 Barkley Rosser September 30, 2009 at 11:45 am

josh,

Where is there a paper that shows that it is a Nash equilibrium for there to be only one good that
people “hoard” for savings? Hoarding is just one of the parts of the “store of wealth” or “store of
value” functions of money, which any asset can serve that may also not serve any of the other functions
of money, such as medium of exchange or numeraire, neither of which gold serves (and is not going to).

Fiat money is a bubble, but one that is stable. This was the main point of Samuelson’s 1958 paper
on overlapping generations, which allowed for the existence of a stable positive price for something
whose true fundamental is zero. Some of this rubs off on anything that comes to serve as “money” in
one or another of its functions, its price will be above its fundamental (and the current fundamental
for gold is probably around $200 per ounce, tied to its industrial use).

Regarding the Singapore and Chinese currencies, the gossip I hear from Asian central bankers is that
the Singaporeans peg to a basket of currencies, not publicly announced. The Chinese clearly manage
their forex rate, but appear to be letting it drift gradually upward, something many have long been
calling for, but do not seem to be noticing particularly now that they are doing it.

One of the reasons that some people think gold still is “money” is because there are large amounts of
it still sitting in the vaults of some central banks (mostly the US, UK, France, and Russia). That is
a leftover residue of the long-defunct gold standard. Reports have it that some of this is being
gradually sold off (no yield, no purpose), but it would appear that the central bankers do not wish
to arbitrarily “crater” the market. Given how much they hold, they could easily do so,

10 Barkley Rosser September 30, 2009 at 2:26 pm

josh,

You jump from claimed Nash equilibria to Menger. Why must there be
only one “stable bubble”? What about the prices of all kinds of
collectibles that produce no income yield: baseball cards, Rembrandt
paintings, rare postage stamps, and so on and so forth (I recognize
that occasionally unstable bubbles erupt in these things, but much
of the time their prices do not go running up and down all that much,
and as we well know, negative bubbles can easily erupt for fiat monies).

11 anonymous September 30, 2009 at 4:20 pm

Hanson’s prediction that “truly new and important discoveries will be quite rare” in the distant future risks immortalizing him alongside the 19th-century head of the patent office who insisted that everything had already been invented.

There will always be scope for creativity: consider the wild flourishing of “not even wrong” string theory in physics in the face of decades of apparently knowing nearly everything there is to know about particle physics. Or consider the fact that nearly every love song in history that’s ever been written says pretty much the same thing but finds a new way to say it that captures our interest.

If there is truly nothing left to discover at some point, we will still not have “slow stable eons”; instead, people will busy themselves with ephemeral microfads and viral memes (“for the next 60 minutes, let’s all talk in 21st-century Basque”).

There will also be many opportunities to see a world in a grain of sand. Wouldn’t it be nice, for instance, to somehow figure out the “strategy” behind a 517-move chess win from the endgame tablebases, for which the world chess champion and someone who just learned the rules of chess an hour ago are on precisely the same footing of complete incomprehension. I rather suspect we will find many other examples in the millennia to come where we will watch a highly non-random plan (threading a needle a few hundred times in a row) unfold in front of our eyes but be helpless to understand it as anything but seemingly a series of purely random events. There will not be enough atoms in the universe to build a computer large enough to figure out some mysteries; there will always be scope for inquisitive thought and wonder.

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