Claims about gold
From a new paper by Claude B. Erb and Campbell R. Harvey:
Gold objects have existed for thousands of years but gold has only been an actively traded object since 1975. Gold has often been described as an inflation hedge. If gold is an inflation hedge then on average its real return should be zero. Yet over 1, 5, 10, 15 and 20 year investment horizons the variation in the nominal and real returns of gold has not been driven by realized inflation. The real price of gold is currently high compared to history. In the past, when the real price of gold was above average, subsequent real gold returns have been below average. As a result investors in gold face a daunting dilemma: 1) seek inflation protection by paying a high real gold price that almost guarantees a decline in future purchasing power or 2) avoid gold and run the risk of a decline in future purchasing power if inflation surges. Given this situation is it time to explore “this time is different” rationalizations? We show that new mined supply is surprisingly unresponsive to prices. In addition, authoritative estimates suggest that about three quarters of the achievable world supply of gold has already been mined. On the demand side, we focus on the official gold holdings of many countries. If prominent emerging markets increase their gold holdings to average per capita or per GDP holdings of developed countries, the real price of gold may rise even further from today’s elevated levels.
Caveat emptor! Here is a photo gallery about gold.
*The New New Deal*
That is the new book about ARRA and fiscal stimulus, by Michael Grunwald, available here with the subtitle The Hidden Story of Change in the Obama Era. Excerpt:
…it was an astonishingly big bill, In constant dollars, it was more than 50 percent bigger than the entire New Deal, twice as big as the Louisiana Purchase and Marshall Plan combined. As multibillion-dollar items were being erased and inserted with casual keystrokes, Obama aides who had served under President Bill Clinton occasionally paused to recall their futile push for a mere $19 billion stimulus that seemed impossibly huge in 1993, or their vicious internal battles over a few million bucks for beloved programs that suddenly seemed too trivial to discuss.
Critics of ARRA will not agree with everything in this book, but putting mood affiliation aside for a moment, the writing, research, and conception of the work are all excellent.
Raghu Rajan update
Finance minister P Chidambaram is learnt to have cleared the appointment of noted economist Raghuram G Rajan as the chief economic advisor.
The approval from the finance minister will pave the way for the government to complete the appointment process although Rajan, who is a professor at the Chicago University Booth School of Business, is unlikely to take up the assignment for the next few months given his academic commitments.
Here is more, hat tip goes to James Crabtree. Here is further detail.
The forward march of progress takes another step
Google announced a new phase of its self-driving car project Tuesday. The test vehicles, of which there are “about a dozen on the road at any given time,” have so far logged 300,000 miles of road testing without a single accident under computer control. In the next phase of testing, team members will start commuting to work solo, with the robot at the wheel.
The link is here, hat tip to @PaymonFarazi.
My departure from Manila was a timely one
At least a third of this overpopulated capital and its suburbs were submerged on Tuesday as torrential rains battered the city and floodwaters poured in from almost all sides. An overflowing lake in the south sent water coursing into a river that slices through Manila; water poured from the open floodgates of a dam to the north, and high tide brought flooding from the bay to the west.
“It’s like Waterworld,” said Benito Ramos, who heads the government’s disaster relief agency, referring to the movie with Kevin Costner depicting a submerged earth.
Here is more, and I wish the best to all those left behind.
Brink Lindsey’s *Human Capitalism*
The new book by Brink Lindsey is out, namely Human Capitalism: How Economic Growth has Made us Smarter — and More Unequal. I am a big fan of Brink’s and of the book.
Assorted links
1. Tim Worstall has a Kickstarter book project.
2. How restaurants talk about their customers.
3. Can an entire Japanese firm switch to the English language? (also a story of flexible nominal wages)
4. The influence of Latin America on Tagalog (article is in Spanish), and I was wondering where all that Manila rain was going to go.
The Medicaid wars continue
Sandra Decker, an economist with the Center for Disease Controls, recently poured over the 2011 National Ambulatory Medical Care Survey, which asks doctors whether they would accept new Medicaid patients.
What she found could spell trouble for the health care law: More than three in ten doctors – 31 percent – said no, they would not.
Her research, published this afternoon in the journal Health Affairs, is the first that has ever given a state-by-state look at doctors’ willingness to accept Medicaid.
The problem, of course, is that higher demand will be pressing against a relatively fixed supply.
What predicts when an Olympic record will fall?
It turns out that if the current holder also set the record in the past, the record is more likely to be broken at the next games.
If the current Olympic record is also the world record, it is less likely to be broken in the next games.
A change in the number of countries competing in an event is also an important indicator of whether the record will fall.
And most surprising of all, the percentage by which the existing record improved on the first Olympic record, is also a significant indicator.
There is more here, and the original paper is here. For the pointer I thank Michelle Dawson.
A misquotation episode
Brad DeLong and David Warsh criticize a quotation from me on the origins of the internet. But in fact the quotation is not from me, it is from Brian Carnell. The WSJ link, offered by Warsh but not by DeLong, has a correction to this effect.
At least one Greek wage is proving itself flexible
“While the crisis has not reduced corruption itself, it has reduced the price of corruption,” Rakintzis told Skai TV after publishing his annual report.
“They (civil servants) have lowered their price,” he added.
Here is more, and for the pointer I thank Ken Feinstein.
Assorted links
Twenty questions?
Or forty questions, as the case may be. One of my favorite methods of giving a talk is to have the audience write out questions in advance, and then during the talk I have to try to answer them (without peeking at them beforehand). The goal is not only to address the queries, but also to weave the answers together into the form of a broader talk with underlying themes.
I did this recently, and I thought the best question was something like this:
“If you were designing a ten question True-False test to fool the American public and induce the greatest number of wrong answers, which questions should go on the test? Which question would people get wrong the most often? How many questions of the ten would the American public get right on average?”
I also was asked which of my habitual errors I would most want to change, looking forward in life.
I was asked about Jeremy Lin, and whether he or LeBron James did more to maximize global wealth. I suggested that Lin did more to maximize utility, as his fame in Asia did not much detract from the fame of any other NBA player, but that LeBron did more to maximize wealth, in part through endorsement income.
Another good question was “How far do you think real interest rates will fall into negative territory?”, or something like that.
Can you pass this Turing test?
What did they think about the weather that morning?
Three different responses came from a male human, a female human and a machine. Which is which? Keep in mind that the event was held in October 2008 and they all knew it was autumn/fall in England. The responses were:
A.”I do tend to like a nice foggy morning, as it adds a certain mystery.”
B. “Not the best, expecting pirates to come out of the fog.”
C. “The weather is not nice at the moment, unless you like fog.”
So which is which?
That is from a paper by Kevin Warwick, “Not Another Look at the Turing Test.” I will offer the answer when I get back home. For the pointer I thank Michelle Dawson.
Has India solved the problem of banking regulation?
Forget Glass-Steagall:
The branches are run almost entirely by and for the children, with account holders electing two volunteer managers from the group every six months.
“Children who make money by begging or selling drugs are not allowed to open an account. This bank is only for children who believe in hard work,” said Karan, a 14-year-old “manager”.
During the day, Karan earns a pittance washing up at wedding banquets or other events. In the evening, he sits at his desk to collect money from his friends, update their pass books and close the bank.
“Some account holders want to withdraw their money. I ask them why and give it to them if other children approve. Everyone earns five per cent interest on their savings.”
This system now has over two hundred branches in half a dozen countries. The article is here, hat tip goes to Kottke. If I understand the account correctly, it is also run largely by street children.