Assorted links

1. Why is this an equilibrium (video of cheetahs)?

2. The real Hayekian answer should be, and sometimes was, nominal gdp targeting, to minimize price distortions.  There is much more on Hayek and nominal gdp here (pdf).

3. Via Chris F. Masse, Pepsi Social Vending System Spam Markets in Everything.  Egads, can’t you just buy a soda?  What’s wrong with monetary exchange?

4. Extending Tim Harford’s idea, are economic facts disappearing (Hernando de Soto)?

5. Brazil is massively violating PPP, I can attest to this.


Its interesting that in the link "upper class income tax cuts" is the only thing Hayek is in favor of, but in reality that just a republican thing. I have a feeling Hayek would favor a complete the payroll tax holiday.

Why is that an equilibrium? Because there was an entire camera crew there, not just a single woman?

Surely the cheetah were well-fed before the video was shot.

Also, is there something strange about there being so many around? My understanding is that cheetah require a lot of hunting territory. I counted at least eight cats, which seems like quite a concentration.

Maybe they were in fact attracted by food, even over a number of days.

2.: In the paper "The Hayek Rule" which Tyler links to, the authors seem to suggest that with a monetary policy goal of stabilizing MV, in the case of productivity growth (higher y, lower P) the central bank would have to increase the circulating money supply MV. See last paragraph of page 33: "The main problem is that growth in real GDP (y) due to productivity gains would imply falling prices. To offset this effect, the Fed has to expand the circulating money supply (MV) by the same amount as the growth in real output (y)."

Why does the central bank have to counteract a falling price level, if its goal is explicitly to stabilize MV? Does somebody understand this? If the fall in P is balanced by a rise in real output y, to me there seems to be no need for a change in MV.

My error. In the paragraph I quote, the authors were referring to a goal of increasing MV at an economy's long run growth rate, not stabilizing it. The needed increase in MV would thus result from the goal itself, and not from a falling prices due to rising productivity.

Regarding the central thesis of the paper, the authors seem to favor stabilizing MV a a constant level over stabilizing the growth path of MV. To me, it seems that the latter solution would not necessarily be worse than the first, as long as no unexpected deviations from the monetary growth rule occur. With MV rising at a constant rate, there would be no distortions in relative prices ad factor allocation as long as all market participants could base their long run expectations on that growth path.

The major price control (other than interest rates) in the economy is the ultimate government enforcement of debt contracts at nominal dollars. What I don't get is that they really get price effects, but don't seem to get cost effects. Or maybe they do.

The pepsi link title should read: Social Media is a Bubble, Ready to Burst.

Regarding Brazil. This is nothing, in Sydney, Australia it's possible to spend AU$34.50 on a movie ticket. AU$1.00 = US$1.09.

I'm not surprised. Australia is benefiting a lot from China and a few other neighboring countries with both high domestic investment in capital goods and much higher domestic savings, but without knowing the numbers I bet that Australia's domestic savings are at best marginally higher than its domestic investment (and likely S lower than I). Australia has become too dependent on China.
As Australia, Brazil is also benefiting from the high demand for commodities in China, India, and other countries and its domestic savings have become too low in relation to its high domestic investment so it cannot invest a surplus abroad as China and a few other countries have been doing for several years. Let me copy what I said yesterday in a comment to a Tyler's post on Brazil:

Much more important than Tyler’s quote is the FT journalist’s statement that “The Brazilian real is the most overvalued major currency in the world”. The short-run problem of Brazil and several other commodity-exporting LA countries is how to avoid a severe overvaluation of their currencies. The value of their currencies has increased sharply against the dollar and to a lesser extent against the euro–the increase started in mid 2003, then there was a sharp but brief reversal between September and November 2008, and since then it has been increasing again. But their governments cannot allow further increases because many exportable manufactures and import-substitute manufactures will not be able to survive (another example of the Dutch Disease problem). So de facto, the nominal exchange rates between each of these currencies and the dollar are becoming fixed at a time in which the current inflows of foreign exchange are putting pressure on their central banks to expand their supplies of local currencies and therefore on inflation (savings rates are low to absorb the large inflow of foreign exchange–these countries are not China). For example, in Chile, today the market closed at 460 CH pesos per US$ despite the Central Bank policy announced last January to buy a large amount of US dollars (at that time the exchange rate was just above 460, well below the record high of 750 in mid 2003). Don’t expect the exchange rate to go below 450 because there is too much political pressure to prevent it, while the government will continue struggling to persuade all enterprises other than mining companies that this is temporary (most likely, however, the high price of copper, gold and other metals will continue to pressure for further increases in the value of the CH peso). In other words, the overvaluation of their currencies at a de facto fixed nominal exchange rate implies an accelerating inflation and a declining growth of output. Will their governments rely on fiscal policy to save large amounts of foreign exchange? I doubt it.

Footnote: Between the devaluation of January 2002 and mid 2010, Argentina allowed the nominal exchange rate to depreciate against the dollar, but since then it has “delayed” the depreciation despite a domestic inflation rate of over 20% –now over 30%– per year. The October election means that there will be further delays in depreciating the nominal exchange rate and therefore the probability of another foreign exchange crisis after the election is high.


It's been a couple years since I've been in Sydney, but I don't think you are comparing apples with apples here. Those $35 movie tickets are for the Dendy 'gold class' tickets or equivalent. Standard tickets are $13-15 (still not cheap!)

Standard tickets in Perth are $18.

That is, $19.74 USD at current rate.

I confirm that $34.50 is the Gold Class ticket - big armchairs, lots of space, waiter service - you can book beforehand to have a latte or a liqueur delivered to your seat at the 45-minute mark in the movie, or whatever. Local multiplex tickets: $11 at a 6.30pm session, comparable to US prices.

Australian savings are lower than investment; the country has run a current account deficit for almost its entire history. That said, savings at the moment are quite high by historical standards - but business investment is through the roof.

The Dutch Disease problem is real here, though.

Q: What do you do in a deflation?

A: Insist we’re in an inflation.

This had me rolling!

Re: Cheetas

Because most animals don't full on attack things they don't know much about. There's so much to risk and they don't really know what's to gain. That's at least part of the equation.

Also, my guess would be that because Cheetahs are designed for speed they have no interest in fighting since they can pick and choose whoever they want to kill. That they didn't all turn and run may indicate they were defending territory.

In other words, it's kind of a scam in the vein of high diving or lion taming. We react to our instincts (fear of heights or being eaten) rather than our logical understanding of the instincts of the animal or the physics of the kiddie pool. I wouldn't climb into a pack of cheetahs, but if I'm right about about cheetah behavior, the lady isn't being as brave as we think she is, just asymmetrically informed.

That doesn't sound right to me. Cheetah can't really kill whatever they want. Size and distance are factors. Besides, they are not particularly strong, and often lose kills to other animals. There is no reason to think that if they were hungry they wouldn't have attacked the reporter.

I still think the simplest explanation is the best. They were not at all hungry. Notice, by the way, that not only did they not attack her, they were not looking around for other game, which they would normally do.

"Because most animals don’t full on attack things they don’t know much about. There’s so much to risk and they don’t really know what’s to gain. That’s at least part of the equation."

humans&human like creatures have been roaming arround that places for 2+ million years. I'm not sure how much more contact time cheetas would need to know we're not much less tasty than zebras.

#4. The original article makes a very interesting read.

de Soto de God!

"Hayekian Targeting", "Keynesian Liberalism"

Woa... Onion news should beware

"humans&human like creatures have been roaming arround that places for 2+ million years. I’m not sure how much more contact time cheetas would need to know we’re not much less tasty than zebras."

Most animals have learned that humans are not to be trifled with. They have been taught this lesson by generations of people with sharp implements.

It is not only humans who have ways of defending themselves against attacks from other sorts of animals.

Horns and hooves work pretty well also.

the cheetah link should read: is there any better proof for the out-of-Africa hypothesis than the diversity of mammals in Africa (compared to the rest of the world) today? They learned to stay away from us well before we got as smart as we currently are. QED

" I’m not sure how much more contact time cheetas would need to know we’re not much less tasty than zebras"

Zebra are far too big for cheetahs, they generally attack only small antelope. (Wikipedia says under 40kg, which sounds about right.) I don't think I've ever heard of cheetahs attacking humans. Leopards and lions are far more dangerous, of course.

There Goes the Data: Major Cuts at EIA Washington -- One of my greatest concerns coming out of the financial crisis of 2008 was that, eventually, free services like government data would be reduced or lost altogether. This afternoon I learned from EIA Washington that one of the cornerstones of my own work, and also the work of others globally, is about to be suspended: the gathering of International Energy Statistics. For me professionally, this is among the most important gateways to monthly data on global oil production. As I said, after 2008 I came to recognize my own professional dependency on this free data. But, I never actually expected to lose my access. Well, that’s always the way, isn’t it? Below is a portion of today’s EIA Press Release: While I’ve not had time to look through the entire list of cuts, I did place a phone call to EIA Washington before publishing this post. I confirmed with an EIA spokesperson, Paul, that the cuts are immediate. While I may post again on this issue, the loss of such a large array of data is going to make work difficult for professionals across the energy, energy policy, environmental policy, and industrial and financial sectors. While we will still have IEA Paris data on a monthly basis—and BP Statistical Review data that comes once a year—EIA Washington produced alot of unique data of their own. This is big news. And, it’s bad news.

I too noted that Hayek favored stabilization of nominal income as his policy norm in my comment responding to Frums error-filled article. We actually had a line referencing nominal income targeting in the rap but cut it for time in part because it’s a very challenging idea to simply throw in amid this flow of the argument we were laying out.

Oh well. It sure is cool to our rap video sparking so much debate, even if so much of it is, ehem, dubious. Mission accomplished.

While being fair to Hayek, let's also be fair to Keynes, who (unlike many of his devotees) was never an outright advocate of inflation. Keynes, on the other hand, came very close to endorsing something like nominal GNP targeting in the GT, only to cop-out at the last moment and instead advocate price-level stabilization on rather slippery "pragmatic" grounds. Finally, let's remember that Hayek effectively abandoned his stable MV norm in favor of a price stabilization norm when he wrote "Denationalisation of Money." Those interested in the details concerning these points can read about them in my 1999 HOPE paper, "Hayek versus Keynes on How the Price Level Ought to Behave"

If you put a copy of the article on your personal website, Duke may not mind. Academics seem to provide ungated copies all the time these days.

thanks for the links !!

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