Archive for May, 2010

A common refrain I hear from Chartalists is that there exists an accounting identity relating the public sector expenditure versus income to private sector expenditure income, such that the sum of government expenditures less revenue is equal to the sum of aggregate private expenditures less income.  Naively, this seems true, but I’ve always been leery of obviousness, particularly in economics.  The EMH seemed quite simple and obvious, and we see where that’s gotten us.

My first problem is that this disallows for private sector revenue growth at any time versus some prior time, or for any period, in a fully private economy.  That is, it asserts that no aggregate cash flow expansion can occur in a strictly private economy, as there is no government to supply surplus cash flows to fund this.  However, that seems a limited realization of a fiat money system, which is a historical accident, and not a necessary economic truth.

For example, let’s imagine an economy with a gold-backed currency and no credit whatsoever.  Now, it is trivially the case that, for all given transactions in this economy, the sum of expenditures versus receipts must be 0.  Someone has to be handing currency to someone else for a transaction to occur, so someone is having their currency stock reduced while someone else is having their currency stock increased.  However, between periods, we can imagine that the rate of exchange (the money velocity) may increase, thus producing surpluses over time periods.  That is, as the velocity of money grows, then the sum of all transactions during a period must also be increasing versus prior periods.  There doesn’t seem to be anything asserting, though, that the aggregate velocity expansion will impact all sectors equally, so the size of deficits/surpluses between various sectors, even sectors with flows between each other, may not sum to zero.

Of course, perhaps the assertion here is that the entire economy at any point must be at a zero sum for transactions.  However, I believe that any notion of credit throws that out the window.  That is because credit allows for the creation of assumed cash flows, without their direct realization in terms of hard currency.  For instance, imagine I place a deposit with a bank which pays interest.  The bank pays that interest off a cash flow ostensibly generated through the use of capital purchased through the loan my deposit represents.  Due to the way bank loans work (borrow short, lend long), at any given time, when the bank credits money to my deposit total, it may do so ex nihilo.  Before I take out my cash, when the bank credits my account, I have gained an effective capital surplus, without necessarily impinging the bank’s own capital position.  In fact, the bank operates almost entirely on a system of ever-increasing capital outlays on financial products; that is, in order to grow revenues, a bank must lend more, and to do this, it must borrow more…without having to realize the amount borrowed, except insofar as it impacts the balance sheet.  Thus a bank may see increased revenue, issue increased credit, and borrowers may see increased cash flows (and thus surplus), due to credit-as-money.  In a sense, this is predicated on deficit spending by the bank itself, though I’m not sure if this can ever be properly represented on a statement of cash flows.  That is, there are easily times when a bank might show positive cash flows while other economic actors do as well, due to the above mentioned velocity effects.

All of this is to wonder: if it is the case that the deficit of the government is the surplus of the private sector, can we fully explain the combined public and private sector deficit on the basis purely of foreign credit offerings?


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It’s annoying to not really have anything to write about.  Well, that’s not entirely accurate.  It’s more approriate to say that I haven’t seen anything I want to divert my attention to writing on.  I’ve seen plenty of interesting tidbits, like the ongoing Facebook descent into madness, or the launch of a variety of Red Dead Redemption (which I haven’t purchased), or the little pieces of info put out about Cataclysm and Guild Wars 2.

But I haven’t really had a good way to frame anything I wanted to say about them.  Amidst the ongoing trek down the leaf-littered path of my life, distracted by the foliage surrounding me and the clouds above, the ravens which cackle and caw about me have elicited little more than a singe upraised eyebrow.

I’ve perhaps become a tad apathetic.

WoW has offered up no interesting math for me.  The mobile Auction House is worthy of no more than a yawn.  Cataclysm is still so far out that we can expect no more than a little trickle of information, like a wink from a pretty face.  We’ll have to wait until beta for the burlesques to make their way on stage, their kicks flashing a wealth of information for eager eyes.

Various tech bits of news have hit and passed, like the Google Web App store, which zipped past me like an incrompehensible dream of a butterfly.  I’m to be expected to…buy webpages?  Fascinating.  Really, google is offering apps built using various web technologies.  I get where they’re coming from, I really do.  Having done my share of web programming, though, I’m bemused by this concept.  Of all the various software bits out there, web programs are the least well controlled.  Putting things online is asking for people to copy them; everything facilitates it.  For this reason, everyone shares all their tech online.  You can’t avoid it, it just doesn’t allow for any notion of locking out the prying eyes of curious hackers.

Further, web technologies aren’t particularly well suited for anything responsive.  Ever seen that google demo of Quake running in javascript/html5?  Yeah, so browser tech is, as a friend put it, only 15 years behind the current leading edge of computing power.  That is, we have to put 15 years of computer development to work in order to get things to run in a browser.

That’s not terribly promising.  Javascript is a fun language, which I really enjoy.  It isn’t speedy, and it doesn’t at all lend itself to the development of strong, consistent frameworks.  IT has strange constraints, and no constraints on APIs.  It’s odd, I think, to call its flexibility a weakness, but it is.

For instance, when I write a function, I need users to submit very specific types of data to it.  Building functions that have to handle the case of being supplied data which they don’t expect is expensive.  For instance, let’s say I write a vector math library.  I can’t overload ‘+’, so I make a VectorAdd(vector1, vector2) function.  But I can’t guarantee that Vectors are what get passed in here.  I need to verify  that I’m not being handed null or undefined or NaN.  I need to verify that the objects I’m passed have the properties I expect, and that those properties are of the right type.  Or I need to do introspection on the supplied values, which is expensive in itself.  Importantly, I can’t guarantee that people are using this function in a way to guarantee that they’re giving me values I can use and that I am returning values they expect.  I can’t constrain usage in a sensible manner.

And all these checks have to be made at runtime.

Heck, Google’s solution was to write it all in java and have that be compiled into javascript.  Seriously.  That’s tantamount to saying that javascript is the wrong solution, and we need a way to run native apps in the browser.  Oh wait, Google is doing just that.

Honestly, I’d like to see something that operates like a dll which can be loaded and run in a web page.  The dll is bootstrapped into place in a manner similar to COM, and is given APIs into the browser (and through the browser, limited OS features).  That way, compiled code could access be run inside a web page, acces the DOM and http communications – along with any other communication the browser allowed – without being a security risk (yeah, yeah, everything is a security risk, but this is no worse than javascript is now).

Ok, enough meanderings.  Au revoir.

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Remote Auction House

Blizzard is introducing the Remote Auction House application for iPhone and Web.  It’s actually a subscription service, providing notifications and access from essentially any web-connected device.  The catch?  $3 a month.

If WoW were Eve, I might consider paying $3/mo. for remote access to the market.  It’s not.  I’m sure people will shell out for it, because there surely are people who want this.  However, gold in-game simply comes to easily to people willing to spend a small amount of time in game.  Heck, Gevlon has been raking in gold with the Auctioneer and logging in every day.

Maybe this simplifies gold gains through transactions.  This certainly allows more rapid access to transactions and improves arbitrage opportunities, and were I a gold seller, I’d leap on this plus some web scripts to pull in money.  It’d be way cheaper than farming.

For me, though, it’s a waste of time and money.

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I’ve been so stupidly late on posting…oi.  Anyway, I picked up Forza Motorsport 3 this weekend and proceeded to spend hours immersed in what turns out to be an absurdly detailed racing simulator.  Seriously, they simulate tire physics, including deformation under heat and pressure from cornering.  And you have to think about this crap to succeed in racing!

Also, taking tight turns at 100+ mph is a recipe for a sudden date with the wall.  I have nothing against walls, but I’d rather my car be more intimately acquainted with the finish line, and consider my romantic matchmaking a failure when my car jaunts off for a private rendezvous with crash fences.

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Maybe it was just a headline for attention, but this article in the BBC on a new paper advocating different policy routes for combating human-induced climate change doesn’t really convince me the paper is all that “radical”.

Granted, the summary of the Hartwell Paper sounds pretty bombastic itself, so I can’t really blame the journalists for continuing its hyperbole.  For instance, the summary claims that “the Kyoto Protocol approach, has failed to produce any discernable real world reductions in emissions of greenhouse gases in 15 years”, yet this may potentially be attributable to the fact that non-signatories in the developing world (such as China) have industrialized to an enormous extent, and their emission rate has swamped any reductions brought about in the more developed world.  I’m not saying that’s the case, but they’re not really going for subtle here, and that’s always a red flag for me.

Nevertheless, the approaches they apparently advocate (no, I haven’t read the paper yet) sound…rather practical to me.  Policies targeting carbon reduction have been a disappointment to activists, and they don’t seem to be gaining any more traction with time.  This is largely due, I think, to plain human inertia.  It takes time to move entire cultures and technological structure onto other systems.  You can whine that people are being short-sighted all you want, but when it comes right down to it, people’s day to day concerns overwhelm any concern they can have for faraway issues.  Life is overwhelming enough in 5 minute increments.

Ultimately, you can re-socialize people…but it takes generations of bombastic talk, of convincing people of the sin of their actions.  Take cigarettes.  At this point in our culture, cigarettes have moved from being something relatively common that is distasteful to a small proportion of the populace to being outright disgusting to a majority.  Anecdotally, children now seem to be socialized even more heavily against smoking than I was, and I was bombarded with the sheer evil of smoking.  Healthy eating appears to be next on the list, though I’m seeing an interesting bit of contention between trying to get people skinnier and trying to make being not-skinny less socially reprehensible.  That’s an interesting contradiction to work out.

And all this amounts to is pure socialization: it’s simply repetitive depictions of something as being of negative value (or positive value) to children, who have little basis for argument.  If this is repeated sufficiently, and properly socially reinforced, children will believe this instinctively through adulthood.  Consider smoking: what if we discover a way to cure smoking-induced lung cancer…and every other associated health problem.  There goes a major reason for the antagonism for smoking.  Will we promptly dismiss our revulsion and welcome its presence back with open arms?  What if we simply cured all the ills of smoking, including the smoke’s ability to annoy anyone around a smoker?  Would people easily cast aside the distaste they learned in their childhood?  I would guess not for a very long time.

The same holds true for climate change.  Keep up the thumping, and eventually you’ll beat it into the heads of a young generation who will grow up simply accepting it as the case, marveling that anyone though otherwise.

That will take time, however.  In the meantime, perhaps battles should be chosen with more…pragmatism.  Granted, that would fly directly in the face of the ardent belief necessary to convince the youth that this really is important, but still…if something really ought to be done, and if other particulates and greenhouse gases can be reduced easier and cheaper, why not do that?  They don’t advocate giving up on CO2 emission reduction, rather, they argue it’s a long-term goal that we must realize will take time.  Until then, the smaller battles carry more bang for the buck.

I guess that’s a radically different approach from what has been taken, but it doesn’t sound radical from a more politically broad perspective; it sounds downright…centrist.

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From Credit Writedowns: Greece is Lehman 2.0.

cryin’ won’t help you, prayin’ won’t do you no good,
When the levee breaks, mama, you got to move.

All three major indices hacked off 11% (O.O) before rebounding to  “only” -6.5-7.5%.  The curve there on the rebound already looks to have plateaued, and there’s still an hour in the trading day, but woosh, that was a tumble of epic proportions.

Also, gold has spiked, probably with other precious metals.  If people thinks this heralds a potential economic crisis for emerging markets, I’d be concerned about industrial commodities, but I’m not a trader so for the love of God don’t take my advice there.

I’m just an economics and tech geek; along those lines, yahoo finance is down!  I’d call that an indicator of a mad rush to something.

UPDATE: I should clarify that the losses I mention above are from the previous day’s close, not from today’s open.  That’s how Google represents them on its chart, and it’s what I was looking when I wrote this.

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Boubouille has posted (and continues to update) a truly massive Cataclysm reveal.  Most of it is screenshots, which are pretty (new water, yay!).  But the big thing for us theorycrafting nerds are the ability and talent changes.  Luckily, he posted a talent calculator that is up to date with the latest build.  Sadly, most of the talents haven’t been updated, it seems.

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