The Assumption With Gold

The underlying assumption when people say gold is the ultimate store of wealth is that there will always be a market infrastructure in which we can exchange the gold for other things (nutrients, potable water, cell phone chargers, etc.).

Perhaps this assumption is always why I've found discussing the issue with goldbugs so exasperating. A miscommunications about scenario parameters. The term "economic collapse" to them means fiat currency lowering in value so other people eat generic-label cereal while they get to buy Ferraris by trading for a few bracelets. Whereas to me the term "economic collapse" means that there is no food to buy at any price (or medium of exchange), and no gas for Ferraris at any price (or medium of exchange).

In a way, goldbugs are more optimistic about social stability in the future. It just seems to me that in past crises, the planet had a low human population and abundant resources. The peasant farmers may have been poor in terms of cool stuff (silks and toys), but the basics (food and water) were still obtainable. So a stable, tolerable poverty. The planet is at a point now where if the infrastructure fails due to an economic collapse, the basics aren't going to be obtainable. So social instability on a scale never before imagined.

In summary, I now feel a sense of peace with my gold-loving brothers. A miscommunication in perception. They believe in a market after dollar death whereas I am an eternal skeptic. Like with my religious friends who believe in life after death, I disagree but am open to pleasant surprise and will be very happy to be wrong.

Italian and Spanish Debt Yields are Spiking

And that's bad news for Europe.

I've taken to watching the 10-year yields on Italian and Spanish soverign debt as a recent hobby. Apparently, Europe is experiencing a slow motion soverign debt train wreck.

With respect to Italy, it has the third largest bond issuance in the world. I think they normally would simply revalue their currency. But they no longer have their own currency.

I don't quite know how the EU is going to bail out Italy (and Spain). They're going to try something.

And given that the rates are on a rocket ship to the sky (over 6% as of this post), they are going to need to do something immediately.

Oh, and the U.S. may be entering a recession. And the U.S. stock market is tanking.

It's going to be a fun August.

Fair play -- a question of self-image? Researchers explain conditions under which people are prepared to behave fairly

Fair play -- a question of self-image? Researchers explain conditions under which people are prepared to behave fairly

Funny Cartoon

I used to could

"I used to could" is one of Jeff Foxworthy's made-up southern words. As in "Dink, do you remember how to embed images into a blog post?". Well, I used to could. I managed to add the link, anyway.

Strange Days in the World of Educational Finance

It appears, as Jeremy Grantham notes in his most recent missive (1Q 2010), that the Days of Abundant Resources and Falling Prices Are Over Forever.

He is talking, mostly, about the recent apparent paradigm shift in commodity prices. The days of cheap everything is over.

Our obsession with economic growth at all costs is running up against a slight problem in the real world, known to the general public as math. Specifically the feature in math known as compound growth.

Hellasious touches on this with repsect to his various discussions on permagrowth.

The problem is as follows: No compound growth is sustainable.

In terms of debt, this means that no real (non-inflationary) compound growth in debt is sustainable over the long term.

Resources are no longer abundant. Good-bye real compound growth.

What does this have to do with the financing of education? Everything.

The educational finance model permits real compound growth with respect to student loan debt. This is then passed on to colleges and universities in the form of real compound growth in tuition with students taking on the risk of paying this money back.

Put simply, colleges and universities increase tuition faster than inflation. We all know this. Everyone complains about it. But nothing ever happens.

Colleges and Universities use the compound tuition growth model to ratchet up costs, year after placid academic year, with no discernable improvement in anything except massive resort-type facilities for students. However, this idiotic system has never come face to face with a major economic paradigm shift before.

The fuse for the coming major discontinuity in the world of educational finance has been lit.

Let's just wait and see what happens when the now permanent feature of price pressure and shortages of resources hit student loan debt system and the ivory tower.

Hazy Recollections....Awkward Synthesis....

Austerity riots. I'm annoyed by them. First the rioters seem like spoiled children demanding the grown-ups figure out a way to make life a permanent Disneyland when any reasonable person realizes that their wish is logistically impossible. Then I feel annoyed about being annoyed by the rioters because I feel like a reactive pawn of some collective banking industry that has brainwashed me with carefully crafted lies. There is no winning. But the riots have acted as a muse of sorts:

Hazy recollections:

In the late Eighties a friend gave me "Atlas Shrugged" to read right after we graduated high school. It was intriguing. Hazy recollections of feeling that personal responsibility and rugged individualism were the only moral way of life. Absolute fairness! Had to watch out for bad people who wanted to manipulate their way into things they didn't earn.

Was it the mid-Nineties that Bono of U2 argued to some G7 summit that all debts accumulated by third world countries should be forgiven? After all, the debts were created by corrupt leaders of those countries who didn't use the money to help the citizens. On top of that, the payments on these corrupt loans were taking cash needed to finance projects that actually would help the citizens. Clean water and such. Its a very hazy recollection, but I recall thinking "Well that makes sense and seems ethicially to be the right thing to do". Sure, some nameless investors would lose money in the default, but they were bastards who shouldn't have been lending to other bastards who were clearly lying about using the funds for civic endeavors.

About a decade later I came across some mind-bending books on evolutionary biology. Soon, the CDS situation was spiralling out of control. I was curious and learned all sorts of horrendous things about the Federal Reserve system and the US financial system in general. I couldn't believe that educated people in suits created such sloppy work. And that the rest of us weren't even paying attention even though the sloppy work permutated nearly ever aspect of our physical existance. Sobering, no? This research led me to the Sudden Debt blogsite where an insider named Hell explained much of multifaceted horror along with a devotion to alternative energy since (well, one reason was saving the environment which seems like a good idea in general) the thermodynamic accounting wasn't balancing out any more with hydrocarbons. The blogsite also carried a mad genius commenter named Thai. He worked at light speed with complex ideas shooting off in all directions. Fairness perception in game theory experiments. Scaling benefits of cooperation. Zero sum, breaking symmetry, and fractals. It was a blur of mind-bending (mind-breaking at times) idea candy.

Awkward synthesis

So take all these puzzle pieces of knowledge and/or beliefs and fit them into a coherent, flowing picture. Well, not today obviously ;)

On Dreaming

This is from Dr. Robert Godwin's post of December 16, 2010. I copied it from his One Cosmos Blog where he generally posts daily.

"What distinguishes daytime consciousness from night time consciousness is that in the former mode we are separate from the creations of our consciousness -- or at least we weave in and out of them, merging and observing, producing and critiquing, spewing and cleaning up.

At night things are different. Although there is a Dreamer and a dream, we only know this after the fact, upon awakening. We generally cannot experience the distinction when the dream is occurring. This is a fascinating principle of consciousness, because it means that in the most profound sense, we are both the subject (creator) and object (created) of our dreams, even though we identify only with the object pole.

But once you appreciate the protean genius of the Dreamer, you cannot possibly believe that your little ego is anything more than a tiny satellite in the orbit of a higher conscious power. But who is the Dreamer if not you?

However, this You is like the dark side of the moon. I Syd you not. It is always there, even if we cannot see it. Indeed, we cannot see it because it is in a permanent dialectical relationship with the visible side; even if you bring a portion of darkness into the light of consciousness, it is now in the latter world, just as there is a distinction between dreaming vs. recalling and interpreting a dream. Note that the latter activities can never exhaust the Dreamer. Truly, to interpret a dream is like bringing a sponge to the ocean.

Grotstein writes of the unconscious as a sort of alter-ego or background presence with (or in) whom we go through life -- the “stranger within” that shadows our existence in a most intimate, creative, and mysterious way. We don't necessarily notice the relationship, but we would if it weren't there. That is, everything would go suddenly "flat," and be robbed of the extra dimensions that we only apprehend because of the conscious/unconscious resonance and dialectic."

Artificial Intelligence Will Not Lead to a "Singularity"

The singularity is simply a type of immanentized escheaton that is a product of the Western/Faustian Grand Style where we focus on infinity. One way of thinking of Western Culture/Civilization is to view the collective memetic superstructure as having a boundary condition of thoughts that tend toward the infinity.

For example, the entire “faster, stronger, bigger” = Better. Supersize me!

Now, with respect to computer “intelligence”, it helps to remember that what is being addressed is a specific slice of the overall realm of intelligence. Computers are extremely useful tools, but they are tools and useful only in the realm of thought that deals with logic. A better way of thinking about is that computers are basically a form of technological “left brain” that has no underlying personality.

Individuals make decisions based on their underlying personality structure. Individuals also exercise free will. To the extent that computers are given “free will” it will amount to the randomness aspect of the physical universe. That is to say, the free will inherent in a random number generator.

I do not think that the people who deal with AI have even started to look at the real problem, that of artificial personality, or AP. To the extent computers become “more intelligent” than people, I would argue that we already have experience having such people in our midst. I call them autistic savants.

The only thing that AI will accomplish is the creation of mechanical hypersavants, which will be quite useful to helping us solve problems that can be solved by savants. But there will be no “singularity”.

A Pleasant Dream

Sorry if this sounds a bit like transcendental ridiculosity, but I had a dream last night that seemed to indicate that the saloon needed a visit. It was quite a warm, pleasant dream that was apparently strange enough to raise me to a conscious state that I actually remembered it the next morning. These omens should be heeded ;)

And behold, JP and Dr. John had actually responded to my New Year's lament posting!

Dr. John was concerned about the future. As any sane person would be. Humanity has gotten itself into a cluster@#$& economically and politically. I just about start screeching in public (requisite bathrobe donned and donut crumbs in my hair) when people talk about "Recovery". It can't be recovered! The base has been ravaged (i.e. abundant and resiliant natural resources, shadowy NGOs buying untold squidillions of debt, etc.). Bidden or unbidden, change is coming.

Hell, instead of being terrified, let's make it entertaining! Together we can come up with the most outlandish, fantastic, and ingenious method for surviving The Change.

For transport of materials, I suggest the crazy-ass Australian Skylifter .

To which you might ask, "Dink, where the hell are we going?". And this would be a fair question. We'd have to do some reconnaisance at the time and see how stable the local populations were. Assuming, not at all stable (my default assumption), we'll need to stick to isolated areas. Northern Canada in the Summer and Amazon in the Winter? Sure, why not ;)

Then you might ask "What the hell will we be skylifting?". Perhaps you saw this on CNN.com a few weeks ago as well. Behold, The Ark . Apparently, we can "lyophilizize" (sp?) all sorts of food. Get some medium-scale desalinization equipment and we're good to go.

Please do feel free to add on any madness that you like; I'd love to hear about it. Its fun to idea-play. That's what the saloon was always meant for. I'm glad the dream reminded me of that. I better stop writing now before I get all sappy.

Pleasant dreams, y'all ;)

The Dread 2010 Is Now Over

And it is over in all time zones on the planet. I try not to be superstitious, but I could not help but to feel that 2010 cursed in some hugely, actively malevolent way. Though I experienced new levels of anxiety through a few truly nasty individuals, 2010 main method of attack seemed to be stomping on my friends. And being just a standard human creature, I was unable to defend them.

Perceptional bias, you might argue. 2010 wasn't dread for every living entity during every second of the year. I would be too tired to argue the point. I would nod politely to feign agreement so that I continued to appear fair and rational, but I would secretly continue to believe that 2010 was a bastard the likes of which I hope to never come across again. I feel greatly relieved that its 2011.

Clearly It Is Going To Suck....

I just caught up on a few of my favorite econ blogs. And of course we had the recent midterm elections. I am disturbed by the number of people who think that there is a way to avoid a drastic change of our current quality of life.

We are thermodynamic thieves living wholly unsustainable lifestyles. With the magic of easy oil (and the remarkable generosity of outside entities lending us money to fuel astounding social programs) we have built a wonderland of greater and greater complexity. It has been stable for so long that it appears that many have mistaken it for nature; the natural order of things.

I fear that one of the two major political parties believes that we can stop some of this debt (more likely just redirect it) by ending social problems and "nature" will hold. Heck, they believe our lifestyles will actually improve. A wealthy theocracy will ensue!

I fear that the other major political party believes that we can continue things exactly like they are. Heck, maybe we could even have more social programs and "nature" will hold. None will suffer the consequences of their actions!

There seems to be a growing third party that believes that the system will collapse, but their personal lifestyles can continue because they were bright enough to buy metals with strange properties. I got mine, Jack!

But all seem to be denying the interrelated matrix of factors that have provided our fantastic lifestyles. I recently at the grocery store looking for my favorite organic cheese flavored (but no MSG) corn chip indulgence. An entire aisle devoted to brightly colored bags of chips and I was getting surly because I couldn't locate the ones with my very specific qualifications. How lucky! When the poor are rioting and farmer's don't have oil for tractors I suspect my choices in caloric intake will have to be modified.

Perhaps I should start the "Soft Landing" political party. We will seek the smoothest transition into national sustainability. Our motto will be "Clearly It Is Going To Suck, But Let's Try To Be Rational About It".

Advice?

Feeling stressed here in Seattle. Y'all got any philosophy/mantras/tattoos that you get through when you're in a funk?

Race to Nowhere

A recent article from the Washington Post talks about a documentary by a lawyer who is raising kids, kids who are experiencing extreme stress due to pressure to succeed. This is pretty well what I remember from my high school experience back in the 90's.

From the article:

"It was as if their private worries had come to life on screen: Teenagers so pressured to get A's, to fill their college resumes with sports and music and language, they start losing their grip. Long nights of homework leave them exhausted. Stress becomes stomach pain and anorexia and depression. Some turn to cheating or pills. Others just give up...

... The film is attracting notice from New York to California, where mom-turned-filmmaker, Vicki Abeles, a 48-year-old lawyer, launched the documentary project as she set out to understand the stresses her children, now ages 16, 14 and 11, were experiencing.

One daughter had become physically sick as she struggled with the demands of school. Then, several months into Abeles's effort, a teenager in her community committed suicide after getting a failing math grade, a tragedy Abeles says intensified her commitment to making the film.

"I think there is tremendous pressure on all kids to get the grade, to get the test score ... which is creating an epidemic of unhealthy kids who are also arriving at college and at the workplace unprepared," Abeles said in an interview.

Race to Nowhere

Some of this Race to Nowhere has to do with the nature of professional schooling and the fact that you can still make a decent salary in America if you can get into and graduate from the "right" professional school - law school/med school/dental school.

However, the entire American high school - college - law school treadmill has severe problems associated with it, namely that the number of new lawyers minted every year far outstrips the actual demand for lawyers.

In law school, you need to get the highest grades and go to the best schools in order to get a high paying "BigLaw" job ($165,000 in NYC these days) when you get finished. Not that these jobs are pleasant, but they do allow you to pay off student loans.

For many new lawyers it's worse than a Race to Nowhere, given the overproduction of lawyers and the failure of the bubble economy to reflate.

The equation for this economy is Stress (High School) + More Stress (College) + Even More Stress (Law School) + Six Figure Debt = No Job + Six Figure Debt.

And one of the problems is that the higher education system, particularly law schools, only has to worry about the continued issuance of sovereign debt to fund the student loans. Law schools don't have to worry about whether the students can actually repay the debt. So tuition can go up year after year at a significant premium to the rate of inflation.

And the problem is continuing to get worse as the economy continues to fail to recover.

At least interest rates are low these days, right?

Okie can probably add his own insights from his entire law school/law firm adventures.

(Limited) Faster than Light Coordination Is Possible

Anyway, now that we have established that Spooky Action at a Distance exists, there is apparently still general consesus that you cannot have information exchanged faster than the speed of light.

From Wikipedia (Faster-Than-Light-Communication):

"Superluminal communication is the term used to describe the hypothetical process by which one might send information at faster-than-light (FTL) speeds. All empirical evidence found by scientific investigation indicates that it is impossible in reality."

Well, that's not quite right.

You might not be able to have direct superluminal communication, but you sure can have superluminal coordination.

First, you have to remember that we now established that quantum entanglement exists.

From Wikipedia (Quantum entanglement):

"However, in an entangled pair when the first particle is measured, the state of the other is known at the same time without measurement, regardless of the separation of the two particles. This knowledge of the second particle's state is at the heart of the debate. If the distance between particles is large enough, information or influence might be traveling faster than the speed of light which violates the principle of special relativity. One experiment that is in agreement with the effect of entanglement "traveling faster than light" was performed in 2008. This experiment found that the "speed" of quantum entanglement has a minimum lower bound of 10,000 times the speed of light.[5] However, because the method involves uncontrollable observation rather than controllable changing of state, no actual information is transmitted in this process. Therefore, the speed of light remains the communication speed limit."

Oh, and "minimum lower bound of 10,000 times the speed of light" really means that it's acually happening simultaneously regardless of where the entangled particles are located in the universe. This means that if one particle is in one galaxy, and it's entangled counterpart is in another galaxy, they will immediately influnce each other. Physical distance is completely irrelevant.

This expierment shows that there can now be some degree of coordination that occurs faster than the speed of light.

You can't send a message, but you can coordinate actions. Say you have two actors who are one light minute away from each other. Say there are two separate targets that they want each want to hit with a laser at the exact same time and the tagets that are located halfway between them, Target 1 and Target 2. They want to make sure that they each hit a different target, but they have each agreed that they will not decide beforehand which target to hit.

Now, if they each have an entangled particle of a pair, and one is found to have positive spin, the other will automatically have negative spin.

So, if they agree beforehand that they will each target and fire their laser at the same time (assuming their clocks are coordinated to the second) and they agree that they will not determine the spin of the particle until five seconds before their respective laser fires (to give them a few seconds to pick the right target), and they agree that the one who has the particle with negative spin will hit Target 1 and the one who has the particle with positive spin will hit Target 2 they will always each hit a different target.

And there you have faster than light coordination.

Neither actor has picked the target more than five seconds before firing, each target is 30 light seconds away from the lasers, and both targets will always be hit.

Coordination has occured faster than the speed of light.

Wave Men

So Deb wanted to know where the hell everyone was. I suspect we have become Ronin or "wave men". Samurai who have lost their fractal master so now wander the internet aimlessly.

I've read some great books, vacationed, and found some sites to lurk on. But I haven't really found any place to regularly interact. I've considered some posts to create; its satisfying to write even if it goes unread.

I do hope you all are well; especially Dr. John with his gastric scourge.