Real or Not?

One note from today’s data on deflation. The headline in the Wall Street Journal says China grew at 6.1% last quarter. That doesn’t sound bad. But what was not in the story is that nominal growth was just 3.7%. The other 2.4% was because of deflation. To get real (after-inflation) growth you subtract inflation and/or add deflation. Growth in China is slowing down more than the headlines suggest.

Since when does real GDP growth count only in an inflationary environment? If economic activity remains constant in a deflationary environment, real GDP should be flat not negative.

Leadership

The World Bank predicts that the global economy will enter recession this year for the first time since the Second World War. The Washington-based bank added that global trade was heading for its steepest decline in 80 years, and that the impact of the downturn would hit developing countries hardest, particularly in Asia. It said poor countries faced a financing shortfall of up to 700 billion dollars because private sector creditors have fled emerging markets due to the financial crisis. The bank’s projections are significantly more pessimistic than those of its sister organisation, the International Monetary Fund, which predicted last month that the world’s economy would continue to expand this year by half a percent.

At least we can count on the years of goodwill that the U.S. has bought to further our international interests rather than relying on the benefits of capitalism and military force. I’m sure that this will in no way affect attitudes toward more open trade and that any adverse effects on trade will be the sole responsibility of Obama.

Giving Back

My first attempt at contributing to the LOLCats culture and the downside to socialized losses in the banking system.

Did I Imagine the Anthrax Attacks?

As President Bush bids farewell to the nation, he appears to be using the reductio ad absurdum arguement to prove that his decisions have made America safer though I have my doubts as to whether he put any thought into his logic selection. The arguement implies several assumptions that the sorry excuses for journalists seem unwilling to challenge: 1) Americans do not travel outside of our borders so attacks on our embassies do not count. 2) Domestic terrorism does not count. 3) Natural disasters should be managed by local authorities (the same people who are evacuating their families). 4) The fact that we have an all volunteer military (not counting stop loss) means that the life of an American soldier, sailor, marine, airmen, or even a coastie is worth less than an American civilian unless the Iraq war saved more than four thousand American civilian lives. Even if we assume that there would have been another equally successful attack equivelant to the September 11th attacks, the Iraq war has still resulted in more Americans dead and we have not prevented the threat of the same attack in the future. I certainly feel safer, but of course I am still alive.

Re: Money as Debt

I find it particularly frustrating that people assume that this information is hidden because it is not spoon fed to them. The basics of the monetary system are explained in the second year of most business and economic college curriculums. People can even take the class as an elective or, God forbid, go to the library and read a book about it. The fact that a large portion of America remains willfully ignorant makes presentations like these appear to be informative rather than be recognized as propaganda. Arguements on the accessablibity of a college education will fall on deaf ears here since I owe my own education to tuition assistance available to any American willing to work for four years. The two solutions to asymptotic monetary growth proposed in the video suffer from a complete lack of forethought on implementation. First, the proposal to link monetary growth to labor assumes that everyone’s labor productivity is equal. I assume that anyone that believes this has never asked for a raise or more vacation because that would imply they believe that their labor is worth more that the guy who was just hired. It would also imply that the value of education is negative since college takes four years to complete during which time you cannot work a full time job and therefor can exchange lass labor hours for goods and services than the guy who flunked out of high school. Second, the proposal for a government that prints money and charges no taxes seems to place an abundance of confidence in the fidelity and skills of the lawyers who run government agencies not to mention the rather dubvious assumption that Congress will forever keep the budget balanced for fear of printing too much moneywhich causes inflation and results in ever increasing taxes on the purchasing power of the country. While we are living in this fantasy world, we can also assume that international trade will be balanced because all that stuff you bought for Christmas probably wasn’t made in the USA.  If you thought your Nikes were expensive now, just wait until they are made by uneducated Americans.