What I am reading

Reading the Models and Agent post.
Chevelle does a great job of defining the term 'carry' in terms of carry trade, then goes on to make the case that the recent run up in equities is not yet over-leveraged.

Understanding Society on motives for collective action.
Daniel Little talks about what I call the bias toward collective action. Under what conditions will individuals cede their individuality to organized activity. Quantum Mechanical theories of economics rely on finite dimensionality, the sometimes inability of the economy to find smooth paths ahead. (HT Mark Thoma).

Three-Toed Sloth on Shadow Price of Power.
This article talks about a test to determine if a samle came from one of two different collections., say signal from noise. crshalizi derives the separation ration of Signal to Noise (SNR). When a measurements exceeds the ratio, select signal; otherwise select noise. The post then argues that the economy searches for the optimum ration in pricing a good. That is the economy seeks to manage production such that variation in output has enough power to yield the optimum Signal in the market Noise. (HT Brad DeLong)

John Taylor's post on Governmentn failure vs Market failure.
I agree, most of our economic dislocations come from mis-guided government policy.

Brad Zigler in Bottomng of Inflation Data
Brad talks about the Hard Assets Index, explained by Seeking Alpha.





Is the Hard Asset Index a leading indicator of urban price inflation?
"The HAI monetary inflation index is derived by calculating the difference between gold's appreciation rate in dollars versus its euro-denominated gains."
The Urban CPI, which remains negative seems to track the HAI, and that is trending up. Hence, accordingly, one would predict the urban CPI numbers coming out in Nov 15 will show -.5% to 0% change.

Compare the HAI to this post of mine on Gold and Oil. Gold acts like oil until the crash when gold acts like a monetary reserve. So, across that span, gold seems to track the constraining resource. Interesting, and at least allows us to use the gold based HAI over the break.