Racist software

Covered California Upset Not Enough Hispanics Buying High Cost/Inferior Government Health Care

California Health Line, 12/2/13 Fewer than 1,000 Latinos living in California signed up for coverage through the state health insurance exchange during October, McClatchy/Kaiser Health News reports. Background According to McClatchy/ KHN, Latino residents make up 60% of the state’s uninsured population. About 1.2 million of such individuals are eligible for federal subsidies in the exchange.

Obamacare is like Whimpy: "I will gladly pay you tomorrow for a hamburger today"

Fed digital accounts

The idea was floating around the blogs. Our federal reserve bank should create 300 million digital accounts for all the social security holders (and maybe tax id holders).  My addition to the idea was the fed drop $50 per year in any account with less than $1000.

The account technology would be user controlled digital vault, like the encrypted vaults used by Bitcoin. The intent to to get more efficient fiat technology into the market faster, increasing the accuray and productivity of finance all the way around.

The digital vault technology gives holders the ability to transfer their vault, to their banker, their 401k, their smart card, wherever they need it, using the universal Fed account number.  The fed stipulates a maximum account holding, and prohibits interest bearing. Users can make duplicate vaults.   Member banks all recognize the fed account for standard bank card issuance, and in return get a modest deposit insurance. All transactions recorded in the personal computer in Ben's office.

Did QE change the implicit price deflator much?

Summers complains that QE obviously added to asset prices and added some consumer inflation.

This confuses me, as I had thought it was widely understood that QE has been modestly expansionary for nominal spending and inflation.  Recall that markets have responded to QE announcements by changing asset prices in a way that implied higher inflation expectations.

The price deflator is trending down, it does correlates once in a while with growth in the Feds balance sheet. But compare the before and after. The dollar deflator has barely nudged high than .6 percent on a period basis over the whole period of QE, and we are now at .4%, period by period inflation.

I give this round to Williamson, QE is not having nearly the effect  predicted. What Summers misses is that the equity market is offsetting the QE moves because stocks can act like money. The Fed makes a QE move, and just as the deflator responds, the equity brokers perform the counter move.

Williamson describes good one and good two, I made the assignment that good two are equities and good one are consumables. When the Fed disequilibriates money, markets re-equilibrate by performing the offsetting the QE. Think of it as a competitave fiat taking over as the Fed disequilibrates its own fiat business.

Why macroeconomics is still a science

From the United Kingdom:

Manufacturers enjoyed a jump in demand that pushed growth to its fastest rate for more than two years and saw the sector take on thousands of new staff last month.
New orders were the strongest for almost 20 years and job creation accelerated, according to the Markit/CIPS UK Manufacturing PMI survey. Tyler Cowen

There is more here, and I will reiterate that this trend was not very well predicted by any macroeconomic school of thought, including liquidity trap theories, recent emphases on long-run secular stagnation, or for that matter the contrasting “of course there is mean reversion” approaches, which don’t tell us much about timing and which would appear to contradict the slow recoveries seen elsewhere.  Spain, by the way, does not have an equivalent degree of cheer…

Macroeconomics tells us that England likely does not suffer the stagnations. Because we do not know the timing, Macroeconomics tells us the moves are not DSGE compatible (Uneuler) . Macroeconomics also tells us the current liquidity trap theories are incomplete, as Williamson points out. Macro economics tells us the difference between Spain and England is Spain might suffer an over aggregated currency zone.

And the final reason we know Macroeconomics is still a science is this:
The Great Stagnation, a widely read book that describes a (possibly wrong) macroeconomic theory of the stagnations.

Breaking: Emergency session of Catholic Cardinals elect IBM Watson pope

Othernet: Suddenly, over night Pope Francis was committed to an insane asylum suffering a delusion he was Mickey Roarke. The cardinals immediately opened the election process, this being their second pope disaster within a year. The Senior Cardinal Deacon explained: "Well, we looked around the room and most of us are just as nuts. "

Forever marked in history, an artificial intelligence inherits the mantle from God and the goblins.

Pope gives all to the poor

AlterNews:

In the spirit of Saint Farancis of Assisi, the Pope gave all the vatican holdings to poor people in and around Rome. The Basilia of Rome was handed over to a poor pimp and his 20 women, precious art was well received in the slums of Sicily, deliver by the PopeOcopter.  Young children allowed to express themselves on the Sistine chapel.  The pope himself stripped naked like some psycho Mickey Rourke character,  offering himself to lonely men along the highway. Catholics around the world  called upon the cardinals to dig up that John Paul guy.

We know who doesn't benefit from farm and food subsidies

Politics Counts: Who Benefits From Farm Subsidies, Food Stamps

It’s no secret that the current battle over the Farm Bill, which is stalled in Congress, has been a partisan slog. Democratic states and House districts, which hold large urban populations, are fighting to defend food-stamp money against Republican efforts to sharply cut spending. Meanwhile, Democrats and Republicans are also trying to reach a deal on restructuring agricultural subsidies to end direct payments and beef-up crop insurance and other protections instead.Dante Chinni

 

Dante goes through the list of beneficiaries, by state in two tables; one for food stamps, mainly urban centers benefit, and one for farm, mostly rural Hoover states. On each of the top ten list, California is nowhere to be found, even though we are, with respect to living standard, the poorest state in the union, and adding insult to injury, we pay for the subsidies of others.  Odd, I cannot find Texas, New York or Florida.  These are all the Hoover states that run the Senate.

This is the price we pay when California is short its full share of ten Senators.  For all you UC professors who know about value added government under conditions of mal-proportioned voting, you now understand why your budget is flat lined.

For Harkin and the Hoovers, I have a message: Inefficient government is Pareto inefficient, everyone is worse off.

Did Putin bribe Yanukovych?

urden on 12/01/2013 - 20:15

The following seven minutes of mayhem look eerily reminiscent of the violent pre-ambles to the middle-east's recent coups or non-coups. As anti-government protesters demonstrated against the shunning of a European trade agreement (President Yanukovych - "I will not allow any serious economic losses and decline of living standards"); the clashes became ever more violent as the police cracked down. Following heavyweight boxing champion (and opposition leader) Vitali Klitschko's call for a new government - "our main task is Yanukovych’s resignation. But the first step is the resignation of Azarov’s government" - the clashes left at least 265 people injured. The crackdown followed Interior Minister comments that they "won’t allow Ukraine to become another Libya or Tunisia, where uprisings toppled governments in recent years." Of course, the main difference is the Ukraine is now squarely under Putin's sphere of influence.

Of course.

Dan Walters, a California treasure

My favorite pundit in California, Dan Waters has a must read on Jerry Brown's delusional model of California's future:

Dan Walters: Gov. Brown’s vision of California lacks reality and detail

Humorist Garrison Keillor closes his radio show, “A Prairie Home Companion,” with these words: “Well, that’s the news from Lake Wobegon, where all the women are strong, all the men are good-looking, and all the children are above average.” The “Lake Wobegon Effect” has come to mean any inflated – and unrealistic – viewpoint. And it could be applied to a document that’s recently emerged from Gov. Jerry Brown’s Office of Planning and Research about how the state will – or at least should – evolve in the next several decades.

This is a must read. I call it the Doonesbury cartoon version of liberal paradise, a plastic, unrealistic, and fictional view of benevolent, sensitive central planners,

Is the Central Bankers salary permanently sticky?

Delong, Reinhart, Rose and Krugman are having a debate about the when and how the central banker can go bankrupt. Delong is having a separate debate with Reinhart and Williamson.  WIlliamson shows a deflationary equilibrium point in the investment/interest rate model. Reinhart looks at macroeconomic history and finds central bankers going bankrupt. Nick Rowe says the central banker will never allow permanent deflation.

Here is a model to explain the debate.  Inflation is the fee we pay to the monopoly central banker for the utility of the fiat, inflation is a draw the government takes from its fiat money business.  The Taylor rule specifies the pricing schedule. The Taylor rule is a supply demand function, it says when the seigniorage fee is too high we quit working.

When the seigniorage account goes to zero, involuntarily, the central banker is no longer profitable, and the central bank is disbanded.  Carmen Reinharts point is that this has happened many times, and she is attempting to define the model by which governments and its fiat business go bankrupt.

In other words, the central banker does 'go there', involuntarily now and then.  The Taylor rule becomes invalid when the seigniorage account is overdrawn, the central banker can no longer measure, its business gone. When Yellen takes her post during the recession of 2014,  Janet will find no wants to pay her inflation fee, G gets fired.  For a recent example, the German banks abandoned support for European central bank. The central bankers salary may be the stickiest in the land, but it is not permanently stuck.