You all have to watch the music video for Animal Collective's My Girls ASAP.
http://www.myanimalhome.net/
Tuesday, February 24, 2009
Animal Collective
You all have to watch the music video for Animal Collective's My Girls ASAP.
http://www.myanimalhome.net/
Thursday, February 19, 2009
Extraodinary Uncertainty
With all due respect I believe that the logical fallacy that Drew is making is the same as those who propose tax cuts as a dominant form of stimulus. What usually catalyzes a free market need not work in times of extraordinary uncertainty. We must remember that stimulus packages are enacted at unique economics times; times when people (on aggregate) are not willing to spend, times when firms have bleak outlooks about future profits, and therefore are much less willing to make large investments, even if Drew does buy their stock, and times when banks regardless of how much money we put in them are either unwilling or unable to loan it back out to people willing to spend it. This last point is especially relevant to today. Despite massive excess reserves, banks are currently either unwilling or unable to make loans.
I think the graph I have just made makes this blatantly clear. The green line is required reserves held by banks; where as the blue line is the excess reserves, those not being loaned out. As you can see as the Federal Reserve has drastically increased the money supply, by nearly a trillion dollars, by injecting money directly into banks all that they have been able to accomplish is increasing banks reserves. No one is willing to lend, no one is willing to borrow, and no one is willing to spend. Therefore the government must step in and be the borrower and consumer of last resort.
Just to make this even more staggering, in the wake of 9/11 the Federal Reserve in pumped nearly $25 billion dollars into the banking system out of fear that financial markets might seize up. That increase is hardly distinguishable given the monetary injections of the past few months.
Cheers,
Phil
Sunday, February 15, 2009
Regarding taxes and related matters.
I think Marv's take on lying idiot politicians is relatively accurate. Does it seem backwards to anyone that people who make careers in politics and have never worked for a commercial enterprise are trying to take control over the largest and most important banks in the country?
In general, I would prefer the government not tax me much, if any. I should note that aside from rent, I taxes comprise the biggest area of my personal budget. Here is what I would do with my money and how it would impact the economy, using no statistics or economics; just my basic understanding of what happens with money:
1) I would buy things. "Things" could include food (money goes to grocery workers and farm workers who then go buy "things"), video games (money goes to programmers and hardware designers who then go buy "things"), or clothes (money goes to garment makers, designers, advertisers, store salespeople who then go buy "things"). That sounds fairly stimulating.
2) I would invest in ownership units (ie stock) of companies that could then use said capital to invest in equipment (buying "things") or labor (people, who then use their earnings to buy "things").
3) I would save the money in a bank. For the bank to afford to give me and the other savers an adequate return on our capital (so we don't do 1 or 2 above) they need to pay me an interest rate. However banks are for-profit entities (unlike the government). Therefore, the banks will need to invest in promising companies either through loans or ownership stakes, which will provide capital to companies that could then use said similarly as described above.
That sounds like a flawless plan to me.
Additionally, if there are concerns about losing tax revenues from lower taxes, I have thought of 2 new sources of taxes that politicians haven't seemed to have considered. I believe in these "trying economic times", we need to think outside the box.
1) Prostitution. I have 2 sub-arguments for this point.
First, I have a feeling there is plenty of demand for prostitutes and perhaps plenty of supply. About 7% of the country is unemployed, and if we estimate that half of the unemployed are women, which would be consistent with the most recent census, then that means there are about .07*.03*300,000,000=630,000 eligible workers for this newly regulated industry. Now, I imagine demand exceeds supply in this case, which would drive the price high, thus significant pre-tax profit, thus significant tax revenues.
Second, I go to a bar to meet a girl and I need to spend money on expensive designer jeans, a trendy haircut, an expensive bar cover, and finally expensive drinks so that she might talk to me. We could reduce a lot of this inefficiency by simply tying my costs directly to the product I am trying to buy – the company of an attractive young woman. I have a feeling with better safety regulation (similar to car safety regulations) and well-managed infrastructure in place like eHarmony and www.littlepeoplemeet.com, we could match the workers and customers much more appropriately. This would lead to better morale, leading to happier workers of all industries, leading to higher productivity, leading to a stimulated economy (in more ways than one.)
2) Legalize marijuana. This may sound strange coming from a person not known to partake in said activity. However, I believe it fits well with 2 government initiatives.
First, revenue generation. I don't have any solid figures on how many people use marijuana, nor how much marijuana actually costs, but let's just make guesses. Let's say there are 20 million people in the country who would use 1/16 (oz? grams? how does one measure marijuana volume?) of marijuana per week, at government regulated price of $20 per 1/16. The government could then add a 50% tax on top of this and make $10*(1 person/week)*20,000,000=$200,000,000/week*52 weeks=$10.4billion/year. Note, this is a conservative estimate (ie I literally know nothing about this market, and could be way off). Factors that could increase this estimate include higher quality product through corporate R&D divisions making better product which would increase the price which would increase taxes, and also, if it were legal, more people might be inclined to use the substance, so this could double or triple without much risk to the fundamental argument.
Second, tobacco kills. The government appears to be anti-tobacco, but can't kill the companies as it relies on them for the penalties it charges Big Tobacco for producing a "killer" product and the tax revenues generated from said product. Therefore, it would in the nation's best interest to allow tobacco companies to introduce marijuana subsidiaries to offset revenue lost from shutting down tobacco operations. Marijuana has been known to be less harmful and perhaps even beneficial when compared to the health impacts of tobacco. People would live healthier lives and be happier both as a result of the side-effects of marijuana use and by not having to watch "Truth" commercials
I have not presently considered running for public office, but if you should support my political platform, feel free to send me money so I can kickstart my campaign with a sweet "fundraising" party.
In general, I would prefer the government not tax me much, if any. I should note that aside from rent, I taxes comprise the biggest area of my personal budget. Here is what I would do with my money and how it would impact the economy, using no statistics or economics; just my basic understanding of what happens with money:
1) I would buy things. "Things" could include food (money goes to grocery workers and farm workers who then go buy "things"), video games (money goes to programmers and hardware designers who then go buy "things"), or clothes (money goes to garment makers, designers, advertisers, store salespeople who then go buy "things"). That sounds fairly stimulating.
2) I would invest in ownership units (ie stock) of companies that could then use said capital to invest in equipment (buying "things") or labor (people, who then use their earnings to buy "things").
3) I would save the money in a bank. For the bank to afford to give me and the other savers an adequate return on our capital (so we don't do 1 or 2 above) they need to pay me an interest rate. However banks are for-profit entities (unlike the government). Therefore, the banks will need to invest in promising companies either through loans or ownership stakes, which will provide capital to companies that could then use said similarly as described above.
That sounds like a flawless plan to me.
Additionally, if there are concerns about losing tax revenues from lower taxes, I have thought of 2 new sources of taxes that politicians haven't seemed to have considered. I believe in these "trying economic times", we need to think outside the box.
1) Prostitution. I have 2 sub-arguments for this point.
First, I have a feeling there is plenty of demand for prostitutes and perhaps plenty of supply. About 7% of the country is unemployed, and if we estimate that half of the unemployed are women, which would be consistent with the most recent census, then that means there are about .07*.03*300,000,000=630,000 eligible workers for this newly regulated industry. Now, I imagine demand exceeds supply in this case, which would drive the price high, thus significant pre-tax profit, thus significant tax revenues.
Second, I go to a bar to meet a girl and I need to spend money on expensive designer jeans, a trendy haircut, an expensive bar cover, and finally expensive drinks so that she might talk to me. We could reduce a lot of this inefficiency by simply tying my costs directly to the product I am trying to buy – the company of an attractive young woman. I have a feeling with better safety regulation (similar to car safety regulations) and well-managed infrastructure in place like eHarmony and www.littlepeoplemeet.com, we could match the workers and customers much more appropriately. This would lead to better morale, leading to happier workers of all industries, leading to higher productivity, leading to a stimulated economy (in more ways than one.)
2) Legalize marijuana. This may sound strange coming from a person not known to partake in said activity. However, I believe it fits well with 2 government initiatives.
First, revenue generation. I don't have any solid figures on how many people use marijuana, nor how much marijuana actually costs, but let's just make guesses. Let's say there are 20 million people in the country who would use 1/16 (oz? grams? how does one measure marijuana volume?) of marijuana per week, at government regulated price of $20 per 1/16. The government could then add a 50% tax on top of this and make $10*(1 person/week)*20,000,000=$200,000,000/week*52 weeks=$10.4billion/year. Note, this is a conservative estimate (ie I literally know nothing about this market, and could be way off). Factors that could increase this estimate include higher quality product through corporate R&D divisions making better product which would increase the price which would increase taxes, and also, if it were legal, more people might be inclined to use the substance, so this could double or triple without much risk to the fundamental argument.
Second, tobacco kills. The government appears to be anti-tobacco, but can't kill the companies as it relies on them for the penalties it charges Big Tobacco for producing a "killer" product and the tax revenues generated from said product. Therefore, it would in the nation's best interest to allow tobacco companies to introduce marijuana subsidiaries to offset revenue lost from shutting down tobacco operations. Marijuana has been known to be less harmful and perhaps even beneficial when compared to the health impacts of tobacco. People would live healthier lives and be happier both as a result of the side-effects of marijuana use and by not having to watch "Truth" commercials
I have not presently considered running for public office, but if you should support my political platform, feel free to send me money so I can kickstart my campaign with a sweet "fundraising" party.
Friday, February 13, 2009
On A Lighter Note
On a lighter note, is anyone else stoked about the new Grizzly Bear album coming out in May?
A Short Rant About The Stimulus Package
I don’t expect politicians to always tell the truth. I know they have to please a diverse group of people who don’t all agree, which leads to a substantial number of half truths. But what I can’t stand is when politicians consistently make factually untrue statements. This past Sunday I was sitting at home enjoying a cup of coffee and a bowl of cereal, trying to relax by watching Meet the Press before going to work, but before I knew it I was literally yelling at my computer (I don’t have a TV).
The subject being discussed was the current stimulus package going though the house and senate. The two republicans on the panel were making claims that anyone who has taken macro econ 101 knows are factually incorrect. Republicans appose this bill because they believe it is too dependent on government spending and doesn’t have enough tax cuts. Republicans in both the House and Senate claim that the bill is full of wasteful government spending that will not stimulate the economy and tax cuts are the only real way to stimulate the economy. This is false.
Let’s ignore for the moment that the $787 billion bill is actually about 42% tax cuts. The claim that tax cuts are more effective than government spending is just untrue. Why? It’ simple, stimulating the economy simply means stimulating demand. Currently demand is shrinking, which means productions decreases, which means people get laid off, which means demand fall more…get the idea. Government spending directly stimulates demand for goods and services in the economy, especially when the government spends money on labor intensive things like public works projects, which generates lots of employment. The problem with tax cuts is that they just don’t create as much demand for good and services per dollar. The problem is that people just don’t spend all the money we give back to them, we’d like them to, but they save some of it, which dampens the effect on aggregate demand.
This isn’t just theory either (because we have a knack for getting that wrong). Moodys.com calculates the multipliers for various types of fiscal stimulus. According to them, for ever dollar of tax cuts aggregate demand goes up by $1.02, for every dollar spent by the government on infrastructure investment aggregate demand goes up by $1.59. It’s not even close! Besides after the stimulus plan is done with we have better roads and bridges instead of just a few more Xbox 360’s (which is what I’ll spend my refund on).
Opponents of this bill also claim the government spending won’t work because the spending is on wasteful things, that the bill is full of earmarks and pork barrel spending. I can’t really comment on how wisely the money is being spent (I of course haven’t looked at the bill) but I don’t have to. The claim that government spending only stimulates the economy when it is worthwhile, smart spending is also completely false. To paraphrase Keynes, we could literally pay people to dig holes and fill them back up again and it would stimulate the economy. Now of course we’d prefer not to, and I don’t think we will, but the point is that we could.
I have so far not been completely fair to the proponents of tax cuts, because they do serve a very important purpose in stimulating the economy in situations like today. They work fast. As effective as government spending is, it has to be spent before we can stimulate the economy, and simply put its hard to spend $787 billion dollars. There are only so many projects that are ready to break ground today. Quite a bit of this money won’t be spent for at least 16 months. Therefore it does make sense to couple the spending with some tax cuts, but like I already said the current bill is about 42% tax cuts, more than enough given the vast difference in their multipliers . But I won’t concede this point to the Republicans because if this was really their argument, they would be just as happy to increase transfers as decrease taxes. Unfortunately they were less keen on increasing transfers, specifically funding for food stamps (something they fought to get removed from the bill). Oh and by the way, guess what type of fiscal stimulus has the highest multiplier. Yep, food stamps. For every dollar we spend on food stamps aggregate demand increase by $1.73.
I don’t expect our elected officials to stop letting half truths. But wouldn’t it be great if when discussing something as vital as the state of our economy we could stop them from telling blatant lies that directly affect our material well being?
In the spirit of truth and factual accuracy I have tried to be as fair as possible to both sides, if any of you disagrees with me please let me know.
Phil
The subject being discussed was the current stimulus package going though the house and senate. The two republicans on the panel were making claims that anyone who has taken macro econ 101 knows are factually incorrect. Republicans appose this bill because they believe it is too dependent on government spending and doesn’t have enough tax cuts. Republicans in both the House and Senate claim that the bill is full of wasteful government spending that will not stimulate the economy and tax cuts are the only real way to stimulate the economy. This is false.
Let’s ignore for the moment that the $787 billion bill is actually about 42% tax cuts. The claim that tax cuts are more effective than government spending is just untrue. Why? It’ simple, stimulating the economy simply means stimulating demand. Currently demand is shrinking, which means productions decreases, which means people get laid off, which means demand fall more…get the idea. Government spending directly stimulates demand for goods and services in the economy, especially when the government spends money on labor intensive things like public works projects, which generates lots of employment. The problem with tax cuts is that they just don’t create as much demand for good and services per dollar. The problem is that people just don’t spend all the money we give back to them, we’d like them to, but they save some of it, which dampens the effect on aggregate demand.
This isn’t just theory either (because we have a knack for getting that wrong). Moodys.com calculates the multipliers for various types of fiscal stimulus. According to them, for ever dollar of tax cuts aggregate demand goes up by $1.02, for every dollar spent by the government on infrastructure investment aggregate demand goes up by $1.59. It’s not even close! Besides after the stimulus plan is done with we have better roads and bridges instead of just a few more Xbox 360’s (which is what I’ll spend my refund on).
Opponents of this bill also claim the government spending won’t work because the spending is on wasteful things, that the bill is full of earmarks and pork barrel spending. I can’t really comment on how wisely the money is being spent (I of course haven’t looked at the bill) but I don’t have to. The claim that government spending only stimulates the economy when it is worthwhile, smart spending is also completely false. To paraphrase Keynes, we could literally pay people to dig holes and fill them back up again and it would stimulate the economy. Now of course we’d prefer not to, and I don’t think we will, but the point is that we could.
I have so far not been completely fair to the proponents of tax cuts, because they do serve a very important purpose in stimulating the economy in situations like today. They work fast. As effective as government spending is, it has to be spent before we can stimulate the economy, and simply put its hard to spend $787 billion dollars. There are only so many projects that are ready to break ground today. Quite a bit of this money won’t be spent for at least 16 months. Therefore it does make sense to couple the spending with some tax cuts, but like I already said the current bill is about 42% tax cuts, more than enough given the vast difference in their multipliers . But I won’t concede this point to the Republicans because if this was really their argument, they would be just as happy to increase transfers as decrease taxes. Unfortunately they were less keen on increasing transfers, specifically funding for food stamps (something they fought to get removed from the bill). Oh and by the way, guess what type of fiscal stimulus has the highest multiplier. Yep, food stamps. For every dollar we spend on food stamps aggregate demand increase by $1.73.
I don’t expect our elected officials to stop letting half truths. But wouldn’t it be great if when discussing something as vital as the state of our economy we could stop them from telling blatant lies that directly affect our material well being?
In the spirit of truth and factual accuracy I have tried to be as fair as possible to both sides, if any of you disagrees with me please let me know.
Phil
Tuesday, February 3, 2009
Now all I need is a plot of land.
http://www.theage.com.au/ffximage/2007/10/22/DrainPipeHotel_gallery__470x381.jpg
PS. I'm making some nasty beats (in the sense that they're unpleasant) on Fruity Loops. Once I figure out how to record stuff, you can all be subjected to the unpleasantness.
PS. I'm making some nasty beats (in the sense that they're unpleasant) on Fruity Loops. Once I figure out how to record stuff, you can all be subjected to the unpleasantness.
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