19 Feb 2018

Jeff Deist Interviews Michael Malice About North Korea

Economics No Comments

This is a short but informative interview.

18 Feb 2018

RC Sproul: “What Is Evil and Where Did It Come From?”

Religious 4 Comments

This is a great lecture/sermon, the recently deceased RC Sproul first admits: “I don’t know.” But then he explains why he doesn’t know. Along the way, he shows the inadequacy of popular attempts to answer the problem, and ends with some powerful observations for the believer.

16 Feb 2018

Potpourri

Contra Krugman, Potpourri 1 Comment

==> In the latest Contra Krugman, I’m a hot little tamale when it comes to Big Spending Republicans.

==> I am quoted in this Daily Caller article about Scott Pruitt’s claims that global warming could have benefits.

==> The Idaho State House has passed a bill that would exempt capital gains on gold or silver from state income taxes. However, there are some claims in this enthusiastic blog post that don’t sound right to me. Do people know more about this?

For example, consider this introductory paragraph: “The House of Delegates Revenue and Taxation Committee Committee introduced House Bill 449 (H449) on Jan. 30. The legislation would exclude gains and/or losses on the sale of precious metals coins and bullion reported for federal tax purposes from an Idaho taxpayer’s taxable income. In effect, H449 would allow Idaho taxpayers to offset federal capital gains/losses reported to the IRS on their state taxes.”

It’s that last part (in bold) that doesn’t sound right to me. It’s one thing to say that the State of Idaho won’t charge you income tax on your capital gain if the market value of your gold coins goes up from when you buy/sell them, but that’s not the same thing as saying you can offset the capital gains tax you pay to the federal government, right? And surely the bill just means the Idaho government is doing the former?

Also, this didn’t sound right to me: “H449 would be a revenue neutral policy over the long run. That’s because both precious metals gains and losses are backed out of the calculation of taxable income for Idahoans.”

Is the author saying he expects gold and silver to have a constant price (on average) in terms of dollars over the next century? In that case, what’s the harm in using fiat notes as money?

To be clear, I’m totally on board with H449. Indeed, it’s precisely because I want to write on this, that I’m pausing to make sure I understand the situation, and this particular write-up doesn’t match up with my prior views.

11 Feb 2018

Training in the Desert

Religious 9 Comments

My cousin and I covered this from Numbers 9:

15On the day that the tabernacle was set up, the cloud covered the tabernacle, the tent of the testimony. And at evening it was over the tabernacle like the appearance of fire until morning. 16So it was always: the cloud covered it by daya and the appearance of fire by night.17And whenever the cloud lifted from over the tent, after that the people of Israel set out, and in the place where the cloud settled down, there the people of Israel camped. 18At the command of the LORD the people of Israel set out, and at the command of the LORD they camped. As long as the cloud rested over the tabernacle, they remained in camp. 19Even when the cloud continued over the tabernacle many days, the people of Israel kept the charge of the LORD and did not set out. 20Sometimes the cloud was a few days over the tabernacle, and according to the command of the LORD they remained in camp; then according to the command of the LORD they set out. 21And sometimes the cloud remained from evening until morning. And when the cloud lifted in the morning, they set out, or if it continued for a day and a night, when the cloud lifted they set out. 22Whether it was two days, or a month, or a longer time, that the cloud continued over the tabernacle, abiding there, the people of Israel remained in camp and did not set out, but when it lifted they set out. 23At the command of the LORD they camped, and at the command of the LORD they set out. They kept the charge of the LORD, at the command of the LORD by Moses.

If we take the Bible accounts at face value, it means that hundreds of thousands of adult males (and some 2 million total people) marched around following the Lord. The entire “city” was oriented around God, with everyone’s purpose and plans kept entirely subordinate to His unpredictable lead.

This is amazing, and of course it has all sorts of significance for the believer in terms of how to live, even in our time.

Yet this raised a puzzle for me: How could Moses maintain order like this? With such a group of grumblers, would it really work for them all to keep marching and camping in unison, for four decades, wandering around in the desert? Why didn’t some hotheads talk up new ideas?

One possible explanation is that they were afraid of being executed. After all, there was plenty of corporal punishment on the books. (Incidentally, do Jewish scholars have ideas about the frequency with which these harsh penalties were enforced? For example, what parent would want to kill his kid for being insolent?)

Another possible explanation is that the Jews at this time were dependent on manna from heaven (literally). So perhaps cynics and rebels were afraid to secede, because they worried that the manna wouldn’t appear for them if they left camp?

If that’s right, it makes more sense of the whole situation (at least to me). All of the conditions came together to serve the function of training the children of Israel in the wilderness for 40 years, to raise a new generation who had not lived under slavery, and who were utterly dependent on God. Given their rebellious nature, the other elements of the situation “had to be that way” to make it work.

06 Feb 2018

Krugman Should Love Trump’s Infrastructure Plan

Krugman, Shameless Self-Promotion 2 Comments

Seriously. An excerpt:

Krugman should be a huge fan of this approach. After all, Krugman tells us that sure, the economy seems to be doing OK in the first year under Trump, but that “when the next big shock comes…we’ll need an effective, coherent response from officials beyond the world of central banking.” This is because—Krugman claims—we are dangerously close to the “zero lower bound” world of the liquidity trap, so that the Fed can’t just cut interest rates when the next shock hits us.

In that context, then, Krugman should be ecstatic to learn that the Trump Administration has already gotten the wheels in motion for private investors to put up $1.3 trillion on the front end to build infrastructure, in exchange for revenues to be collected over the following decades. That is exactly the kind of plan to promote investment spending via deficit finance that Krugman thinks is necessary when the Fed is rendered impotent because interest rates hit 0%.

05 Feb 2018

Contra Krugman Ep. 124

Contra Krugman 1 Comment

In this episode, we kinda sorta agree with Krugman’s take on Bitcoin. Then Tom gives a low blow when I say I think Bitcoin is fiat.

We keep it real, kids. This isn’t scripted. It comes from the heart.

05 Feb 2018

CNN’s Reporting Not Holding Up Too Well

Trump 24 Comments

This article from March 2017 refers to Trump’s “baseless wiretap claim,” though the denials quoted in the article now read–with the benefit of hindsight–as non-denial denials. (E.g. they are carefully worded to say that President Obama would not have ordered FBI surveillance on Trump.)

This article from October 2017–just four months ago–did not age well. This is my favorite paragraph:

But even by Trump standards, this morning’s tweet is somewhat remarkable. He is suggesting that a dossier prepared by a former member of British intelligence has not only been totally discredited (it hasn’t — more on that in a minute) but that it might have been funded by some combination of Russia, the Democratic Party and, wait for it, the FBI!

I realize it must be hard for critics of Trump to understand how his die-hard fans can tune out all the evidence that he’s a boor, a liar, incompetent, corrupt, etc. etc. Well, stuff like the above is part of the explanation.

The reason I’m posting these CNN links is that, in the wake of #TheMemo, a bunch of people–such as James Comey–are saying, “This is it? NBD.” They’ve forgotten (or are pretending to forget) that the stuff in that memo was dismissed as paranoid lunacy less than a year ago.

05 Feb 2018

Currency Devaluation, Export Advantage, and Commodity Prices

Economics, Shameless Self-Promotion, Trade No Comments

I am mostly doing this as a placeholder. I wrote this article for Mises back in late 2010. A lot of it is standard stuff, but I got into the step-by-step adjustment to a currency devaluation, showing the sense in which it would shower benefits on certain groups. I vaguely remember that it took me a while to juggle all the figures around, so that in the finished draft, it was a nice smooth exposition with round numbers.

After I wrote it, I had tried several times to find it again, but couldn’t. But the other day I accidentally stumbled upon it, and so now I’m making this post in the hopes that it helps me find it in the future.

Anyway, here’s an excerpt:

At this point, it’s tempting to think that the Fed’s announcement would have no effect on the pattern of global production and trade, and that it would merely tinker with nominal price tags. But this isn’t the case. Because domestic prices have various degrees of flexibility, the devaluation of the dollar in our example would give more than a fleeting advantage to American exporters.

Consider the wheat farmers: After the speculators quickly respond to the Fed’s announcement, the price of wheat rises from $5 to $8 per bushel. It’s certainly not that the wages of the employees working on the farm, or the mortgage payments made to the bank, will jump by a comparable percentage in a few moments. On the contrary, much of the American farmer’s expenses will remain fixed in price even though the sale price of wheat has risen 60 percent. American wheat farmers will therefore find the dollar devaluation to be very lucrative. From their perspective, it will appear as if millers (both domestic and foreign) for some reason have a hankering for American wheat, and the American farmers will increase their output to satisfy the new demand.

Things are the opposite for the European farmers. The demand for their product will collapse, such that the new equilibrium price falls to €4 from its original level of €5. This 20 percent drop in price cannot be simply “passed on” to workers, who have labor contracts specifying how many euros per hour they must be paid. Consequently, European farmers will scale back their production of wheat.

In the grand scheme of things, the Fed’s announcement of its plans to print more dollars will allow American wheat farmers (and other exporters of fungible commodities) to gain market share at the expense of farmers in other countries, whose currencies appreciate against the dollar. This is why Keynesian economists stress the (alleged) virtue of weakening a currency in order to “stimulate exports” and hence boost national output — net exports are a component of GDP in the standard formula.