RSS feed for entries


Two percent inflation is essential to the illusion

Jared Bernstein in WaPo recently said, “Why is 2 percent the Federal Reserve’s inflation target? Because it is.” The idea being that the world’s central bankers and economists and money men pulled this number out of their left ears because they didn’t know what else to say.

But Martin Wolf actually gave a real answer to that question, which had been bothering me for years.

[E]xperience shows that the low inflation targets to which policy makers are committed are not high enough to ensure short-term interest rates can remain above zero in all circumstances….

His article is on another topic — the need for financial reform — but that sentence gave me an Aha! moment.

Interest rates have to be high enough so that people with money feel they’re getting something for it, even if in reality they aren’t.

If, in reality, they’re not getting anything then the honest interest rate would be zero percent. But who wants that? You might as well have kept your money in your mattress and saved yourself the fifteen cents of gas getting to the bank to open an account. Then, of course, nobody could use your money to make money. The powers-that-be are terrified of people deciding to keep their money in mattresses.

So it’s vital to give people the illusion that they’re getting something for their money. Obviously, if the best you can do is zero, a 10% interest rate (and 10% inflation) is a much more exciting illusion than 2%. But the problem with high inflation is it starts running away with itself and the whole economy lands in the shredder. Two percent, on the other hand, seems to be about the lowest return that still motivates people to buy bonds. (Wolf’s point is that 2% isn’t working. The illusion needs to be set higher, at 4% perhaps.) The fact that it’s fictional if there’s matching inflation doesn’t matter. Even professionals buy the things so long as there’s at least a small positive number attached. (They report their year-end results in ordinary numbers, not inflation-adjusted ones.)

It’s a shell game, in which you provide money in the hope of gain. By the time you find out it was all fairy money, it’s too late to do anything about it.

And that’s why there’s a 2% target for inflation.

    Print This Post Print This Post

The worst news about Ebola so far

Eight members of a team trying to raise awareness about Ebola have been killed by villagers using machetes and clubs in Guinea, officials say.

From the BBC.

“[M]any villagers are suspicious of official attempts to combat the disease. … The motive for the killings has not been confirmed, but the BBC’s Makeme Bamba in Guinea’s capital, Conakry, says many villagers accuse the health workers of spreading the disease.

Others still do not believe that the disease exists.

Last month, riots erupted in Nzerekore, 50 km (30 miles) from Wome, after rumours that medics who were disinfecting a market were contaminating people.

When I was a toddler, I was sure the trees made the wind. (They move around, and you feel wind. ‘S obvious, right?) It’s easy to confuse cause and effect when you don’t know anything.

But then you learn. Ignorance is not bliss. Ignorance is hell.

The Witches’ Well near Edinburgh Castle. Commemorates over 300 women burned at the stake there.

    Print This Post Print This Post

Who runs US Mideast policy? Bozo?

Actually, scratch that. Bozo would do a much better job. You couldn’t run a clown show this badly. This is no way to even run a hamster on a wheel. Unless you actually wanted it to fall off and tangle itself up like this:


I, of course, did not listen to Obama’s speech about how he’ll clean up the Stone Age savages calling themselves a Caliphate in Syria and Iraq. Life is too short.

But this morning I did see a headline that I was curious to read: Five potential pitfalls in Obama’s plan to combat the Islamic State.

The first “pitfall” is listed as:

Using Yemen and Somalia as success stories


It does not get better from there. God help us all. Nobody else is about to.

    Print This Post Print This Post

Ebola is not Over There

It’s right here on planet Earth.

Current genomic work shows it’s mutating quite rapidly. So far, none of those mutations has changed how it’s transmitted — that is, only by direct physical contact — but high mutation rates in viruses mean you never really know what they’ll be able to do next.

Which is why articles like this, by a doctor affiliated with Stanford University, no less!, are jaw-droppingly stupid. His main point is that there are plenty of lethal and far more widespread diseases such as malaria and AIDS. So when the WHO estimates five hundred million dollars to contain this Ebola outbreak, all that spending would be a waste of money when there are other more pressing priorities.

No. It means that the fights against malaria and HIV are horribly underfunded. Using the atrocious lack of money for one set of diseases as an excuse to ignore another disease is called compounding the error, not solving it.

The consequence will be that Ebola is not contained, that tens of thousands or many more will suffer and die, and (if you’re the sort of person who worries only about yourself) that the virus keeps merrily mutating until one day controlling it may not even be an option. Then, you who felt too safe to worry about it may die no matter how much money you decide is worth spending then.

The consequence is that tremendous people working to actually do something about this awful and incurable disease have to spend their time drumming up funds instead of, you know, working to actually do something about this horrible disease.

The consequence is that people with the stamina to work against hopeless odds, in heat, packed into layers of sealed plastic, because everything they do can change their life to death in one unnoticed heartbeat — the consequence is that those people have to report scenes like this:

The new patients sometimes arrive eight to an ambulance, those with suspected cases and those with probable cases all mixed together.

That increases infections. That increases the number of people needed encased in plastic in the heat to feed and bathe the patients and carry out and disinfect the dead bodies.

The consequence is that we’ll be seeing the following horrors more and more, maybe even right in your face one day, until enough of us realize that hanging on to money is not the most important thing in the world.

Health workers prepare to remove abandoned corpse in Duwala market, Monrovia, Liberia. Aug 17, 2014.



Trying to enforce quarantine in West Point, Liberia. Aug. 22, 2014. (Very counterproductive. Quarantine order later lifted.)


The future is here. It’s just not evenly distributed.

    Print This Post Print This Post