Saturday, September 4, 2021

Social Security & Medicare trustees 2021 report

Committee for a Responsible Federal Budget article (link) 

Two graphs show the looming financial crisis for the Medicare Part A Hospital Insurance trust fund and the Social Security Old-Age and Survivors Insurance trust fund. 

"The Medicare Trustees project the Medicare Part A Hospital Insurance (HI) trust fund will run out of reserves in only five years, by 2026. Upon insolvency, Medicare Part A spending must be cut by 9 percent, with those cuts growing to 22 percent by 2045."

"The Social Security Trustees, meanwhile, project the Social Security Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2033 and the Social Security Disability Insurance (SSDI) trust fund by 2057. The theoretically combined trust funds will exhaust their reserves by 2034 ... Upon insolvency, all beneficiaries will face a 22 percent across-the-board benefit cut, growing to 26 percent by 2095."

The report does not address Medicare Parts B, C, and D. 

The report doesn't say what "insolvency" exactly means. The first quote above strongly suggests it is when the "reserve" is depleted. The "reserve" is an accounting gimmick. It is the result of the fund's dedicated revenues exceeding benefits paid in prior years. The "reserve" is merely IOUs from the U.S. Treasury. The federal government did not save the excesses, but spent them on other government programs. When benefits exceed dedicated revenues after the "reserve" is depleted, the excess will be paid from general revenues (income taxes, etc.) and/or by the federal government incurring more debt (by selling new U.S. Treasury securities).  

The benefit cuts the article describes is based on existing law. Of course, Congress can change the law before then, and Congress could cut benefits by non-uniform percentages. It could cut higher income benefits by greater percentages than lower income benefits.

Wednesday, September 1, 2021

60 Minutes - microchips

CBS's 60 Minutes on August 29 had a segment about microchips. Link. It was a repeat from May 2, but I did not see it then. The first guest was the CEO of Intel. Very interesting. He said that only 12% of the world's microchips are made in the USA. Many are made in Asia, with Taiwan making the most microchips for cars. Another guest was the Chairman of the largest chipmaker in Taiwan.

New cars sales declined due to the Covid pandemic. Car makers cut back production. When car sales increased again, car makers weren't prepared for the jump in volume due to lack of microchips. The supply chain for microchips is several months.  

Saturday, August 28, 2021

Aristotle's wheel paradox #4

Wikipedia has a page for Aristotle's Wheel Paradox. I edited it substantially during September-December 2018. The page was very poorly written before then. I added two original solutions, the second and third below. The page has been edited many times since then, but only in minor ways. On August 18, 2021 somebody else edited the page, greatly reducing in size two images I had put on the page and putting them into frames on the right side of the page. Wikipedia allows an editor to preview how his or her edits will affect the page's appearance on the device he or she is using. However, the page's appearance on my smart phone -- and likely most or all other smart phones -- is quite different due to its small screen size. For example, the frames do not appear. Their content still shows, but the article's flow and appearance are worse.  

Most Wikipedia pages can be edited by millions of people whenever they get the urge. So I am hereby preserving part of the article as it existed before August 18 in this blog, where presumably nobody but me can modify it. I will not so preserve the section titled History of the paradox, which I did not edit. The following are the introduction and the Analysis and solutions section, which were written near 100% by me. 


Aristotle's wheel paradox is a paradox or problem appearing in the Ancient Greek work Mechanica traditionally attributed to Aristotle. A wheel can be depicted in two dimensions using two circles. The larger circle is tangent to a horizontal surface (e.g. a road) that it can roll on. The smaller circle has the same center and is rigidly affixed to the larger one. The smaller circle could depict the bead of a tire, a rim the tire is mounted on, an axle, etc. Assume the larger circle rolls without slipping (or skidding) for a full revolution. The distances moved by both circles are the same length, as depicted by the blue and red dashed lines and the distance between the two black vertical lines. The distance for the larger circle equals its circumference, but the distance for the smaller circle is longer than its circumference: a paradox or problem.
The paradox is not limited to a wheel. Other things depicted in two dimensions show the same behavior. A roll of tape does. A typical round bottle or jar rolled on its side does; the smaller circle depicting the mouth or neck of the bottle or jar.

There are a few things that would be depicted with the brown horizontal line in the image tangent to the smaller circle rather than the larger one. Examples are a typical train wheel, which has a flange, or a barbell straddling a bench. In this case the the distances moved by both circles with one revolution would equal the circumference of smaller inner circle. A similar but not identical analysis would apply.

Analysis and solutions

First solution

The paradox is that the smaller inner circle moves 2πR, the circumference of the larger outer circle with radius R, rather than its own circumference. If the inner circle were rolled separately, it would move 2πr, its own circumference with radius r. The inner circle is not separate but rigidly connected to the larger. So 2πr is a red herring. The inner circle's center is relevant, its radius is relevant, but its circumference is not.

Second solution

This solution considers the transition from starting to ending positions. Let Pb be a point on the bigger circle and Ps be a point on the smaller circle, both on the same radius. For convenience, assume they are both directly below the center, analogous to both hands of a clock pointing towards six. Pb travels a cycloid path and Ps a curtate cycloid path as they roll together one revolution.

While each travels 2πR horizontally from start to end, Ps's cycloid path is shorter and more efficient than Pb's. Pb travels farther above and farther below the center's path – the only straight one – than does Ps. The image below shows the circles before and after rolling one revolution. It shows the motions of the center, Pb, and Ps, with Pb and Ps starting and ending at the top of their circles. The green dash line is the center's motion. The blue dash curve shows Pb's motion. The red dash curve shows Ps's motion. Ps's path is clearly shorter than Pb's. The closer Ps is to the center, the shorter, more direct, and closer to the green line its path is.
If Pb and Ps were anywhere else on their respective circles, the curved paths would be the same length. Summarizing, the smaller circle moves horizontally 2πR because any point on the smaller circle travels a shorter, more direct path than any point on the larger circle.

Third solution

This solution only compares the starting and ending positions. The larger circle and the smaller circle have the same center. If said center is moved, both circles move the same distance, which is a necessary property of translation and equals 2πR in the experiment. Also, every other point on both circles has the same position relative to the center before and after rolling one revolution (or any other integer count of revolutions). For a wheel with multiple concentric inner circles, each circle's translation movement is identical because all have the identical center. This further proves the circumference of any inner circle is entirely irrelevant (when the outer, larger circle is the one that rolls on a surface).

Thursday, August 19, 2021

Theater of consciousness

In the 17th century Rene Descartes assumed that the pineal gland near the center of the human brain is the "principal seat of the soul." In his book Passions of the Soul, he split man into a body and a soul and emphasized that the soul is joined to the whole body by the small pineal gland through which the spirits in the brain's anterior cavities communicate with those in its posterior cavities.” Link1 Link2

The pineal gland played an important role in Descartes’ account because it was involved in sensation, imagination, memory and the causation of bodily movements. The rest of the body was machine-like. However, he said very little about how the soul interacted with the body. In a different book Descartes expressed the view that everything in the mind must be conscious. In other words, there is no subconscious processing.

Descartes’ theory or model is rejected by most modern philosophers. The prevailing theories of mind are “theater models” of consciousness.

Bernard J. Baars’ In the Theater of Consciousness describes the “theater model” of consciousness as follows.

“The brain seems to show a distributed style of functioning, in which the real work is done by millions of specialized systems without detailed instructions from some command center. By analogy, the human body also works cell by cell; unlike an automobile, it has no central engine that does all the work. Each cell is specialized for a particular function according to instructions encoded in its DNA, its history, and chemical influences from other tissue. And the cell is of course the body’s basic unit of organization. In its own way the human brain shows the same distributed style of organization.

“The theater metaphor is useful because a great array of evidence indicates that consciousness creates access to many knowledge sources in the brain. And yet only a fraction of the brain seems to directly support conscious experience. This consciousness network seems to include the sensory areas of the cortex, perhaps some surrounding areas, and a few subcortical structures; together they provide the stage for the unconscious audience in the rest of the brain. Consciousness seems to the publicity organ of the brain. It is a faculty for accessing, disseminating, and exchanging information, and for exercising global coordination and control” (6-7).

Saturday, July 17, 2021

Intuit will withdraw from IRS Free File program

Intuit, maker of TurboTax, will cease participating in the IRS Free File program (CNBC article). People will still be able to file free using TurboTax, since there is a free version of TurboTax outside the IRS's Free File program. CNBC says, "In the last tax season, Intuit delivered 17 million free tax filings, including roughly 3 million through IRS Free File, according to the company." So 14 million returns, about 82% of the 17 million, were filed using TurboTax's free version outside the IRS's Free File program anyway. The 82% is instead 90% for the latest eight tax seasons. 

Neither the CNBC article nor Intuit's blog mention ProPublica's smear campaign conducted between about April 2019 and February 2020. Regardless, I bet the smearing had something to do with Intuit's decision. I wrote several blog posts about the smearing. At least it gave Intuit a lot of bad publicity and spurred a government investigation (link).

The Intuit blog mentions the limitations and restraints of the IRS Free File program, but does not say what they are. Most or all of these limitations and restraints are ones imposed by the IRS. Very likely one is the IRS's no advertising mandate. Another likely one is the "dead-end street" problem within the IRS Free File program. A user can start using one of the free software offerings and later find out he or she does not qualify due to some obscure criteria. In other words, the software leads the user to a "dead-end street,"  and the user has wasted a lot of time. 

Wednesday, July 14, 2021

USPS pension Ponzi scheme

This Reason magazine article is about the United States Postal Service's pension system. Its pension system has a $50 billion unfunded liability. That's an "accounting term for the gap between what actuaries expect the system to owe current workers and retirees for the rest of their lives and the revenue it's expected to take in from paychecks and investment earnings." 

If a private sector company's pension plan has a severe unfunded liability, the federal government's PBGC will intervene and shut it down. The federal government is not likewise intervening on the USPS pension plan. This shows the federal government's hypocrisy and a double standard. 

The article also refers to the $70 billion unfunded liability of the USPS fund for paying health care expenses for retired workers. There is no PBGC counterpart for private sector plans that pay such expenses. Private sector companies are not required to prefund health care expenses for retired workers mainly because they could, theoretically, eliminate those benefits at any time. If a private company terminates a plan that pays retiree health care benefits, it doesn't make a new gaping hole because the payments it makes are small. Nearly all retirees get most of their health care expenses paid for by Medicare, Medicare Advantage, Medicaid and Medicare supplement insurance. In other words, there are alternative resources. However, there is no different resource for retiree USPS health care expenses. The federal government still has the funding obligation. The only way the federal government could get rid of its liability for USPS retirees is to stop paying their health care expenses. Rest assured that won't happen.

Thursday, June 24, 2021

Nervous system

I post this now because I believe it is relevant to my prior post, What is consciousness for? The sensory or afferent nerves are involved in all awareness. The motor or efferent nerves are involved in all volitional bodily movement -- of legs, arms, hands, fingers, head, jaws, etc. So the nervous system links awareness/consciousness and volitional movement. The article 'What is consciousness for?' also links consciousness and volitional movement, but makes only one brief mention of the nervous system.

Very interesting.

Tuesday, June 22, 2021

What is consciousness for?

'What is consciousness for?' is the title of this excellent article about consciousness and volition. The entire article is there. The abstract follows.

"The answer to the title question is, in a word, volition. Our hypothesis is that the ultimate adaptive function of consciousness is to make volitional movement possible. All conscious processes exist to subserve that ultimate function. Thus, we believe that all conscious organisms possess at least some volitional capability. Consciousness makes volitional attention possible; volitional attention, in turn, makes volitional movement possible. There is, as far as we know, no valid theoretical argument or convincing empirical evidence that consciousness itself has any direct causal efficacy other than volition. Consciousness, via volitional action, increases the likelihood that an organism will direct its attention, and ultimately its movements, to whatever is most important for its survival and reproduction."

Wednesday, June 16, 2021

New Alzheimer drug

The Food and Drug Administration (FDA) recently approved use of a new drug -- Aduhelm or aducanumab developed by Biogen -- for treating Alzheimer’s disease. 

Three medical experts on an FDA advisory panel resigned from the panel after deciding the drug's effectiveness has not been sufficiently shown or that the drug will do more harm than good. Link.

The financial effect of the approval on Medicare and Medicare Advantage programs and beneficiaries will be huge. Only time will tell how huge. Medicare’s long-standing practice is to make coverage determinations without taking cost into consideration.  This article from the Kaiser Foundation puts an expected price tag on the drug of $56,000 per patient per year. Since the drug will be physician-administered, it will be covered by Medicare Part B, for which Medicare covers 80% of the cost and the patient 20% (up to the annual out-of-pocket maximum of $7,550 for in-network care and $11,300 for combined in-network and out-of-network care in 2021).

"[T]he drug’s approval could trigger hundreds of billions of dollars of new government spending, all without a vote in Congress or indeed any public debate over the drug’s value." "If even one-third of the estimated 6 million people with Alzheimer’s in the United States receives the new treatment, health-care spending could swell by $112 billion annually." (The Atlantic).

Social Security, Medicare, and Medicaid are sacred cows to politicians and more than half of federal government spending. 

Sunday, June 6, 2021

Philosophy and science compared

The book The Neural Basis of Free Will by Michael Tse gives an interesting comparison of philosophy and science in the Introduction.

Why has philosophy been unable to make substantial progress in solving the mind-body problem? The root of philosophy’s impasse is that its main tools – logical argumentation, “thought experiments,” “intuition pumps,” and persuasion – are inadequate to the task. By themselves, these tools are incapable of settling basic debates between scholars with conflicting views rooted in incompatible starting assumptions. Logic can derive conclusions for axioms, but it cannot derive axioms, or, for that matter, the assumptions, biases, hunches, or intuitions that seem to underlie so much philosophical argumentation. With no objective way to settle a conflict, it is rare to find a philosopher who has written, “I was wrong and my rivals were right.” Without an objective arbiter of truth such as that imposed by falsifiability, why would a philosopher ever concede, especially when doing so might diminish career standing? A field cannot move forward to the next stage of a problem, and acknowledge that what was once a problem has now been solved, unless those on the wrong side of the debate are forced to concede they were wrong. Science, in contrast, has nature to falsify theories and models, and the scientific method of experimentation and model-correction/abandonment that forces scientists to stand on the shoulders of giants. Whether or not scientists concede they were wrong does not matter in the long run. Nature forces their concessions. Scientists who dogmatically maintain a position despite concrete evidence to the contrary are left behind. Whereas philosophers receive acclaim for occupying a position and defending it persuasively, scientists receive acclaim for making new discoveries that push the field to modify existing models of reality. Science makes astonishing progress year after year, whereas philosophy makes slow progress over centuries – at least concerning mental causation, free will and the mind-body problem – because debates can be objectively settled in science but cannot be objectively settled in philosophy.

One could quibble with some of this, but I believe it is largely accurate. Some might take this to discredit philosophy, but such a critic has to rely on some philosophy when science has no good answer to some questions.

Sunday, May 30, 2021

Uber and Lyft prices

Uber and Lyft prices have sharply increased along with car rental prices. Waiting times are longer, too.

Prepare to Pay More for Uber and Lyft Rides

Friday, May 28, 2021

Car rental prices

There have been several news stories lately about the high prices of rental cars. CBS News example. Prices are especially high in Hawaii, e.g. $700 per day. Revenues and net income of car rental companies plunged in 2020 due to the pandemic curtailing travel. Many companies suffered big losses and sold off inventory, probably to meet cash needs. With the pandemic's decline and travel demand surging, the supply of rental cars is well below demand. So prices have risen sharply.

While I haven't seen stories about "price gouging", I will not be surprised if I see some.  Of course, accusers will likely conveniently ignore what happened in 2020, and the now high prices are enabling paying interest, adding to inventory, and reducing debt rather than producing windfall profits.

Wednesday, May 19, 2021

Major league baseball batting slump

The 2021 major league baseball season is only about one-quarter over. Yet there have been five no-hitters so far, whereas the whole season average is about two. The overall major league batting average so far this year is only .236, the lowest it has been since .237 in 1968. 1968 was dubbed "the year of the pitcher" for the weak hitting (link).  As a result the pitcher's mound was lowered and the size of the strike zone was reduced for 1969.

The number of home runs per team game has not fallen to 1968's 0.61. The overall major league number of home runs per team game this year is 1.14. That is less than the previous two years (1.28 and 1.39) but still well above what it was 2010-15 (range 0.86 to 1.02). Strikeouts are up slightly, 8.97 per team game. This number exceeded 7.0 for the first time in 2010. It exceeded 8.0 for the first time in 2016 and has remained there. 

What's going on? It seem that hitters are trying to swing for home runs more and more. I saw it claimed the lower batting average is mainly due to fewer singles, not fewer extra base hits. The stats I see here don't clearly support that. Extra-base hits have fallen about as much. The number of singles per team game is 5.05 this year. That is about the same as last year (a shortened season due to the pandemic) but less than 2019's 5.34. The statistic has fallen steadily since 2008's 6.02. The number of runs scored per team game is 4.36, down from 4.65 last year and 4.83 in 2019. Runs batted in (RBIs) per team game is 4.13, down from 4.44 last year and 4.63 in 2019. On the other hand, pitchers may have gotten better. The overall average ERA is down and strikeouts per team game are up.

Update 5/20: Corey Kluber pitched the 6th no-hitter of the year yesterday.

Sunday, May 16, 2021

Coronavirus - new mask guidelines

There are lots of news articles about the CDC's (Center For Disease Control And Prevention) new guidelines about wearing masks. Here are examples:

Saturday Night Live satirized the new rules.

Obviously the new guidelines rely heavily on voluntary compliance. They are very difficult to enforce. Is Walmart or any other place going to ask for proof of vaccination if a person is not wearing a mask? How would the enforcer know if the proof of vaccination is fake or borrowed or not? If a person walks in with a mask, is the person going to be watched to assure the person doesn't remove it?

Thursday, May 13, 2021

Cryptocurrency energy usage

This article says Tesla's CEO Elon Musk and former Federal Reserve chairperson Janet Yellen are concerned about the huge amount of energy used for cryptocurrency mining. Tesla has halted purchases of vehicles with bitcoin due to such concern.

The price of Bitcoin (BTC-USD) fell about 13% in the last two days. The price of Ethereum (ETH-USD) fell about 10% in the last two days. I suspect the amount of energy that mining consumes is a major driver for the price drops. The mining -- done by many miners -- is to verify transactions on the blockchain.

For many months I have suspected the amount of energy mining uses is a growing problem and will inhibit the growth of cryptocurrencies unless something is done to require less energy. On the other hand, some are less concerned. Professor Carol Alexander said: “Almost all the trading is not done on the blockchain. It’s done on secondary markets, centralized exchanges. They’re not even recorded on the blockchain.”

I assume Alexander refers to exchanges like Grayscale's trusts (e.g. tickers GBTC, ETHE). If somebody buys or sells shares in the trust, there is a counterparty selling or buying shares. The cryptocurrency per se, Bitcoin or Ethereum, is not traded and therefore the transaction doesn't need mined. Only the beneficial owner of the shares changes. The trust holds legal title to the Bitcoin the same way before and after. 

P.S. I didn't post for about two weeks due to selling our previous house, moving into our new house, and a vacation for several days to Zion National Park, Bryce Canyon, the Grand Canyon, and Phoenix. 

Thursday, April 29, 2021

Profligate Joe Biden

Big spender Joe Biden is proposing another big spending spree, this time the $1.8 trillion American Families Plan. 

1. >$200 billion in spending on childcare,

2. ~$200 billion to make pre-kindergarten universally available for free,

3. >$200 billion towards government-subsidized paid family and medical leave,

4. ~$300 billion towards making community college free for all Americans, and

5. ~$200 billion on health insurance subsidies available through the Affordable Care Act healthcare exchanges.  Source: Wikipedia

That's $1.1 trillion. MarketWatch says there is $80 billion for enhanced IRS enforcement.  It's not clear what the other $0.6 trillion is. NPR says the amount for IRS enforcement is $700 billion. However, most of that seems to be higher tax revenues rather than spending.

Forbes has an article about the American Families Plan, too. It refers to the Washington Compost's touting  the bill's proposal "to give all workers up to 12 weeks of paid leave" for medical reasons or child care. All? Since when do the self-employed have an employer -- company or another person -- the government can subsidize in order to pay for such paid leave?

Biden proposes tax increases on "the rich" to pay for a little of it. You can bet that many "non-rich" will pay for it indirectly via inflation and smaller wage increases.

Adding the spending numbers for Profligate Joe, the result is $5.7 trillion. 

American Rescue Plan           $1.9 trillion 

American Jobs Plan               $2.0 trillion

American Families Plan         $1.8 trillion 

Saturday, April 24, 2021

Truth versus image-making

Holman W. Jenkins, Jr. has a very good article titled How to Have More Police Shootings in the April 24 Wall Street Journal. Double negatives make the subtitle confusing. The main pairings to choose from seem to be:

1. More people resisting arrest with more police misconduct.

2. Fewer people resisting arrest with less police misconduct.

Only 20-25% of the article concerns police conduct and resisting arrest. Most of the rest is about choosing between the truth and promoting one's self image. Promoting one's self-image has much more priority nowadays, especially for newspapers, journalists, politicians and some business people. "Virtue signaling" is another, newer term for promoting one's self-image.

Seeing the whole article online requires a paid subscription (which could be somebody else's), so the following are excerpts from the article.

"[T]he cavalcade of CEOs who denounced Georgia’s election law didn’t know in the slightest what they were talking about. ... Instead a bunch of business leaders simply adopted Democratic talking points not knowing what the law contained. And, more importantly, not caring." 

"If you think The New York Times and Washington Post mind in the least that their coverage is off-putting to a large number of Americans, you misunderstand the business they’re in. Once upon a time, broad reach really was our industry’s goal, to meet the desire of our advertisers for as many customers as possible. In turn, this drove our need to cover the news in a way that we could defend to all comers as “objective” and straight down the middle."

That's no longer the case. The New York Times, Washington Post, and many other media outlets now prioritize promoting and protecting their self-images over truth.

Joe Biden and Maxine Waters make prejudicial comments about a pending jury verdict to promote their self-image. Finally, of course, many people express opinions about politics and much more that prioritize "virtue signaling" over truth.

Monday, April 19, 2021

China's government's view of cryptocurrency

China's government did more or less what Turkey's did. It regards Bitcoin and other cryptocurrencies as "investment alternatives" but not "currencies per se." In other words, one can be a "store of value" but not a "medium of exchange." The usual meaning of money is something that has both properties.

Wikipedia: "The main functions of money are distinguished as: a medium of exchange, a unit of account, a store of value and sometimes, a standard of deferred payment. Any item or verifiable record that fulfils these functions can be considered as money."

China's government wants its yuan to have a monopoly on money.

Friday, April 16, 2021

Turkey bans crypto payments

Turkey Bans Crypto Payments

Note that Turkey's government did not ban cryptocurrencies entirely. Turks can still own and buy a cryptocurrency as an investment or inflation hedge. But Turkey's government wants to keep a monopoly for its lira as the means of payment (or means of exchange). "Readers should note that Turkey’s latest ban does not stop Turkish citizens from trading cryptocurrencies. They can still buy bitcoin as a hedge against inflation."

"Citizens of countries facing high inflation and fiat currency crises, such as Turkey, have turned to bitcoin in the past few years, raising hopes of widespread adoption across the globe. Turkey’s inflation topped 16% last week, and its currency, the lira, has depreciated by 10% this year, having dropped by 24% in 2020.

Wednesday, April 14, 2021

Crypto Fearmongers Get Pushback From Former CIA Director

 Janet Yellen, Bitcoin And Crypto Fearmongers Get Pushback From Former CIA Director

I have heard of drug dealers with suitcases full of greenbacks. I haven't heard of drug dealers transacting on the streets with a cryptocurrency. 😊

Earlier on this blog: Janet Yellen on cryptocurrency

Saturday, April 10, 2021

John Dewey on rights and government

Jonah Goldberg's article The Newest Deal in The Dispatch includes the following about John Dewey, a leader in the "progressive" Progressive movement during its formative years:

Philosophically, the New Deal drew on—or at least reflected—Dewey’s and Woodrow Wilson’s contempt for the outdated vision of the Founders. The Founders “lacked,” Dewey wrote in Liberalism and Social Action, “historic sense and interest.” The Burkean and Madisonian vision of government simply serving to protect liberties and enforce fair, neutral rules was inadequate next to what could be accomplished with a sufficient application of will by experts given the power to provide meaning to every individual.

This is what the lid-less, unconstrained universe had to offer planners. Indeed, even the idea of individual rights was a bygone relic. “Natural rights and natural liberties exist only in the kingdom of mythological social zoology,” Dewey explained. Rights can only be properly secured through “social control of economic forces in the interest of the great mass of individuals.” For Dewey, humans were “nothing in themselves”; the General Will was everything.

I have read very little by John Dewey. I don’t have a copy of Liberalism and Social Action, so I looked on Amazon to see if I could find these quotes in Liberalism and Social Action. Unfortunately Amazon does not have a "look inside" feature for the book.

Anyway, if Goldberg’s claims are legitimate enough, these quotes are enough for me to strongly disagree with Dewey’s political philosophy. The bedrock views of today's Progressives surely agree with Dewey's. The so-called General Will, even if it expresses the wants of a majority of the people subject to the government’s rules, can realistically only be wielded by politicians backed by government force.

Thursday, April 8, 2021

NY Times spreads ITEP falsehoods and propaganda

David Leonhardt of The New York Times says: Corporate Taxes Are Wealth TaxesHe adds: "And their decline has led to a steep drop in tax rates for the affluent."

I will say little about these two claims. Since the "corporate tax" is based on income, not strictly wealth (or assets), Leonhardt's word usage is very sloppy. Wealth and high income are much correlated. Thus a tax on wealth and a tax on income tax the same people (or businesses), but that is no excuse for such sloppiness. Secondly, corporate income taxes paid in part have fallen due to the base rate being cut from 35% to 21% effective 2018. Also, there are all the new tax subsidies created by legislation passed in response to the pandemic.  

My focus instead will be on Leonhardt's saying: "[A]t least 55 big companies paid zero federal income taxes last year, according to the Institute on Taxation and Economic Policy. Among them: Archer-Daniels-Midland, Booz Allen Hamilton, FedEx, HP, Interpublic, Nike and Xcel Energy."

Leonhardt thus relied on the deeply flawed reporting of the Institute on Taxation and Economic Policy (ITEP). ITEP consistently (a) treats GAAP accounting numbers as if they are cash taxes paid, and (b) ignores the cash paid for income taxes explicitly stated in corporate 10-Ks. I have written about these several times in the past:

ITEP and income taxes for 3 banks                        In the wake of ITEP’s report

ITEP and three tax topics                                       ITEP makes a myth    

Amazon income taxes addenda                             Amazon 2019, ITEP and its wake    

Netflix income taxes 2018

I also looked at the 10-Ks of three of the companies named above in Leonhardt's article to show ITEP's falsehoods and propagandizing.   

Archer Daniels Midland

ITEP: "Food conglomerate Archer Daniels Midland enjoyed $438 million of U.S. pretax income last year and received a federal tax rebate of $164 million."

ITEP ignored ADM's 10-K (p. 61) that explicitly says cash payments for corporate income taxes were $195 million.  

Also, the $164 million is not a cash rebate. It is the (negative) GAAP expense provision based on GAAP pre-tax income for 2020. ITEP also ignored the $41 million deferred part of ADM's GAAP provision for income tax for 2020. It compensates for accelerated tax deductions taken in prior years to be reversed with paying higher taxes thereafter, part of it in 2020.  


ITEP: "The delivery giant FedEx zeroed out its federal income tax on $1.2 billion of U.S. pretax income in 2020 and received a rebate of $230 million."

ITEP ignored FedEx's 10-K (p. 144) that explicitly says cash payments for corporate income taxes were $389 million.

Also, the $230 million is not a cash rebate. It is the (negative) GAAP expense provision based on GAAP pre-tax income for 2020. ITEP also ignored the $475 million deferred part of GAAP provision for income tax for 2020. It compensates for accelerated tax deductions taken in prior years to be reversed with paying higher taxes thereafter, part of it in 2020.


ITEP: "The shoe manufacturer Nike didn’t pay a dime of federal income tax on almost $2.9 billion of U.S. pretax income last year, instead enjoying a $109 million tax rebate."

ITEP ignored Nike's 10-K (p. 59) that explicitly says cash payments for corporate income taxes were $1,028 million.

Also, the $109 million is not a cash rebate. It is the (negative) GAAP expense provision based on GAAP pre-tax income for 2020. ITEP also ignored the deferred part of GAAP provision for income tax for 2020. It compensates for accelerated tax deductions taken in prior years to be reversed with paying higher taxes thereafter, part of it in 2020.

Tuesday, April 6, 2021

Federal spending spree

In 2008 Rahm Emanuel, former Chief of Staff to President Barack Obama and mayor of Chicago, said: "You never want a serious crisis to go to waste. And what I mean by that [is] it's an opportunity to do things that you think you could not before."

It has become a common catchphrase. Emanuel repeated it last year amid the coronavirus pandemic (link). Spendthrifts Joe Biden and the "progressives" and leftist radicals of the Democratic party have strongly embraced it 

FEE: Federal ‘COVID’ Spending Just Hit $41,870 Per Taxpayer Signed by Biden last month, the 
American Rescue Plan Act of 2021 called for spending $1.9 trillion on the Covid19 crisis, with a large part of the $1.9 trillion not directly related to Covid19. It includes, among other things, spending on
  • agriculture and nutrition programs;
  • schools and institutions of higher education;
  • child care and programs for older Americans and their families;
  • mental health and substance-use disorder services;
  • emergency rental assistance, homeowner assistance, and other housing programs;
  • payments to state, local, tribal, and territorial governments for economic relief. (Link)
The $6 trillion stated in the FEE article includes the $4.1 in relief measures passed while Donald Trump was President (link).

Still far from satisfied, Biden and his cronies propose another spending spree called the American Jobs Plan. It proposes spending another $2 trillion on infrastructure and jobs (link). Of course, it includes lots of "pork", such as subsidies for buying all-electric vehicles and charging stations for them. In other words, it is a down-payment -- merely a down-payment -- on the so-called Green New Deal.

The $2 trillion would increase total spending to about 8/6*$41,780 = $55,707 per taxpayer.

As usual, the the promoters of such legislation hype how many jobs it will create while ignoring how many jobs it will destroy.

This proposed legislation also includes tax increases to pay for some of it. The corporate tax rate would rise from 21% to 28%, half way toward the 35% pre-2018 tax rate. It would mostly raise personal income tax rates for people with incomes exceeding $200,000 for single filers and $400,000 for married filing jointly. However, it will very likely hit a lot of people with incomes lower than those.

Of course, all this spending (over 10 years) will increase the federal debt and sow seeds of inflation. Much of the debt will likely be funded by the accommodating Federal Reserve.

Saturday, April 3, 2021

Medicare Advantage analysis

It's time for a balanced conversation about Medicare Advantage spending

When a person becomes eligible for Medicare, he or she has two main choices. 

1. Original or traditional Medicare with or without supplemental coverage via a prescription drug policy, Medicaid, purchasing a Medicare supplement policy (sometimes called Medigap), or from an employer. The model is fee-for-service.  Medicare pays providers for claims for medical services.

2. Medicare Advantage. The insured person chooses one insurer (not Medicare) among many and various plans the insurer offers.  One policy from a private insurer, which pays providers. The Centers for Medicare & Medicaid Services pays each private insurer on a per capita basis, the rates varying geographically. The model is managed care or HMO or PPO. 

In either case, he or she pays the Medicare Part B premium. 

The author of this article favors Medicare Advantage over original Medicare with or without supplemental coverage. She believes it is more cost effective. I don't have the expertise to opine on the thoroughness of her case, but it seems she presents a good and unbiased case for favoring Medicare Advantage.

P.S. Sellers of Medicare Advantage policies often advertise "$0 premium." While this is true regarding the amount of premium the insured person pays to the insurer, it is at least misleading since the insured person must pay the Medicare Part B premium. Rarely does "$0 premium" advertising include this caveat, or it is in fine print (which on tv can appear too briefly to read).

Thursday, April 1, 2021

Bitcoin and freedom

Today I indulge in a little self-congratulations. Today is the 5th anniversary of this blog.

My posting the following articles is not an April Fools joke.

Bitcoin unleashes the sovereign individual

How Bitcoin Provides Freedom

Tuesday, March 30, 2021

Bitcoin and Walmart

What happens when Walmart buys $1billion of bitcoin? 

On March 2 here I wrote about, or at least hinted, how a cryptocurrency such as bitcoin could make international transactions easier. Presently to buy goods from foreign sources, Walmart likely faces cross-currency transactions of many kinds -- Euro, Japanese yen, Chinese yuan, India's rupee, etc. Imagine how much simpler it could be for Walmart if all these transactions could be done with only bitcoin, with the foreign trading partner pricing what it sells to Walmart in bitcoin rather than its local currency. That would greatly simplify matters for Walmart and probably require far fewer man-hours. 

Making transactions easier and simpler is not limited to current ("spot") transactions. Futures and options contracts are available for bitcoin. Walmart could use them to "lock in" prices for things it steadily buys or sells for weeks ahead of time. In other words, such contracts facilitate planning and reduce uncertainty.

Of course, the Bitcoin magazine article is speculative, not about how things are now. But if the speculative situation were to become real, it could be quite revolutionary.  

Addenda 4/1/2021Bianco Research CEO Says Next Reserve Currency Will Be a Cryptocurrency Can crypto actually take on the $US’s reserve currency role around the world?

Federal Reserve and home prices

Federal Reserve under fire as home prices soar  The following quotes are from this CNBC article.

The Federal Reserve is one of the largest, if not the largest, source of money for getting a home mortgage. "It now owns more than a third of the MBS market."

"Home prices nationally in January rose 11.2% year over year, according to the latest S&P CoreLogic Case-Shiller Index. That is the largest annual gain in nearly 15 years."

"Mortgage rates loosely follow the yield on the 10-year Treasury note, which fell dramatically during the pandemic. ... Mortgage rates are [as far below] 10-year Treasury yields as they have been for the past decade."

So rather than raise mortgage interest rates in step with the 10-year Treasury yield, the Fed has kept rates low, which has fueled demand for house buyers and thus higher house prices. A lower interest rate implies a lower monthly payment, which permits borrowing more, which often means paying more for a house. 

My personal experience agrees with higher prices for houses during the past year or so. publishes z-estimates of home prices on its website. The z-estimate of our house has risen about 24% since Jan 2020. Luckily for us, we got a contract to sell it for more than the asking price. We are buying a brand new house for which the builder probably set the price months ago. So our timing seems good and/or lucky.

Thomas Reid's theory of ideas

Friend and philosophy professor David Potts (City College of San Francisco) published Thomas Reid and the Theory of Ideas. Potts credits Reid's attributing intentionality to our ideas and criticisms of the Empiricist or representational views of John Locke, David Human, and George Berkeley.

I would need to read Thomas Reid's and John Locke's works again more closely to opine more, but I believe I would portray Locke's theory somewhat more favorably than David Potts and Thomas Reid did.

Friday, March 26, 2021

Bad news bias

 Bad News Bias by David Leonhardt of The New York Times  

Bruce Sacerdote, an economics professor at Dartmouth College, and two other researchers built a database of Covid coverage from every major network, CNN, Fox News, Politico, The New York Times and hundreds of other sources, in the U.S. and overseas. The researchers then analyzed it, classifying the coverage as positive, neutral or negative. 

"The coverage by U.S. publications with a national audience has been much more negative than coverage by any other source that the researchers analyzed, including scientific journals, major international publications and regional U.S. media."

"When Covid cases were rising in the U.S., the news coverage emphasized the increase. When cases were falling, the coverage instead focused on those places where cases were rising. And when vaccine research began showing positive results, the coverage downplayed it."

"About 87 percent of Covid coverage in national U.S. media last year was negative. The share was 51 percent in international media, 53 percent in U.S. regional media and 64 percent in scientific journals."

"Sacerdote is careful to emphasize that he does not think journalists usually report falsehoods. The issue is which facts they emphasize."

I credit Leonhardt for reporting on the study. It's still a case of the pot calling the kettle black. Leonhardt himself did some very negative reporting about Covid, President Trump, and the U.S.A. compared to other countries. I wrote about some of his reporting on this blog. 

Coronavirus - sloppy, biased NY Times

Coronavirus -- NY Times biased statistic

Coronavirus -- NY Times biased statistic #2

Wednesday, March 24, 2021

George Orwell as a Public Choice Economist?

George Orwell as a Public Choice Economist? is an essay by Michael Makovi.

George Orwell's famous novels Animal Farm and Nineteen can give the impression that Orwell was an anti-socialist. However, he was not strongly anti-socialist. Makovi holds that:

- George Orwell was a (democratic) socialist, despite his famous novels being biting satires of socialism, and

- Orwell’s criticisms were directed not against socialism per se but against the Soviet Union and similarly totalitarian regimes.

The Wikipedia article about Orwell agrees. "His work is characterised by lucid prose, biting social criticism, opposition to totalitarianism, and outspoken support of democratic socialism."

What's unique about both articles is that Makovi portrays Orwell as a public choice economist. Orwell died in 1950 before public choice economics gained much recognition in the 1960s, but there were strands of public choice economics in the 1950s. 

The first article has a good description of public choice economics in layman terms. 

"This interpretation of market activity as being based largely on self-interest is probably familiar to most readers, even those not trained in economics. Yet somehow, when we shift to the study of politics, the general assumption is often that political officials are not  self-interested, that they serve only the public good for conscience’s sake."

"No doubt, there are many individuals who are in politics because they sincerely wish to advance the public weal. But Public Choice is skeptical of the assumption that just because someone is in government office, he is an altruist. Public Choice argues that we ought to assume that political officials are every bit as self-interested - or not - as market actors - no more, no less. In other words, Public Choice assumes moral, behavioral, and psychological equivalence between public and private actors. This does not necessarily mean people seek to maximize their financial wealth alone, for self-interest means only seeking to obtain whatever an individual person subjectively desires, which may or may not be money." 

I add that the politician's self-interest may also be power over the lives of other people. The politician is in a position of using coercion or threat of coercion -- typically with somebody else, the police or the court system, doing the enforcing -- to punish or induce said others to act in a manner desired by the politician.

This is not to say that I view all power negatively. High-level executives in a private business have lots of power. The decisions they make may strongly affect the business and its employees. However, the executives generally do not have the power to enforce their decisions in the manner that politicians do, backed by a coercive government. 

Thiinterpretation of market activitas beingbased largely on self-interest is probably familiar tomost readers, even those not trained in economics.Yet somehow, when we shift to the study of poli-ticsthe general assumption is often thapoliticalofficials are
 self-interested, that they serve onlythe public good for conscience’s sake.

Monday, March 22, 2021

Atlanta shootings were "hate crimes"?

FoxNews: Andrew Sullivan of the Weekly Dish blasts the Washington ComPost and The New York Times for describing the Atlanta shootings as "hate crimes" (link). 

Sullivan's article is here. The following are excerpts.

"[T]his story has also been deeply instructive about our national discourse and the state of the American mainstream and elite media. This story’s coverage is proof, it seems to me, that American journalists have officially abandoned the habit of attempting any kind of “objectivity” in reporting these stories."

"[T]he NYT ran nine — nine! — separate stories about the incident as part of the narrative that this was an anti-Asian hate crime, fueled by white supremacy and/or misogyny. Not to be outdone, the WaPo ran sixteen separate stories on the incident as an anti-Asian white supremacist hate crime. Sixteen! One story for the facts; sixteen stories on how critical race theory would interpret the event regardless of the facts."

The Washington ComPost, The New York Times, and some others media companies love to portray such events as political or cultural. That such acts are simply committed by deranged persons doesn't fit their narrative. 

Saturday, March 20, 2021


Stablecoins And How They Work The following text within quotes are from the article.

"A stablecoin is a cryptocurrency whose value is pegged to a real and stable asset like gold or fiat currencies, in order to combat the price volatility experienced by cryptocurrencies like Bitcoin or Ether."

"Many stablecoins are collateralized at a 1:1 ratio with certain fiat currencies, such as the U.S. Dollar or the Euro, which can be traded on exchanges. Other stablecoins can be pegged to other kinds of assets, such as precious metals like gold, or even to groups of cryptocurrencies.

This means that if you buy a stablecoin that is pegged to the U.S. dollar at 1:1, meaning 1 stablecoin is equivalent to $1, you can sell your stablecoin and redeem your $1 at any time."

"Stablecoins, as digital currency that can be used to make payments across the world, have the potential to serve th[e] huge unbanked and underbanked population." China - 225 million unbanked adults in 2017. India - 190 million. U.S -  25% of U.S. households (> 50 million adults?). "From migrant workers who want to send money home, to businesses who make payments to overseas suppliers or employees, stablecoins have the potential to replace traditional currency to facilitate faster, more secure, easier, and cheaper cross-border payments."

1. Fiat, the most common, pegged to the U.S. dollar or the Euro.
2. Crypto-collateralized pegged to other cryptocurrencies.
3. Commodity-collateralized backed by stable assets, like precious metals, gold, real estate, and oil.

Nigerians Turn to Stablecoins for Protection Against Inflation

The inflation rate of Nigeria's currency naira has been more than 10% since 2016 (link). So many Nigerians have turned to stablecoins for protection of savings. Informal small savings accounts, called esusu, are formed by around 12 or more friends, colleagues or neighbors. Allegedly, Nigeria’s informal “cash” economy accounts for around 64% of 
Nigeria's GDP.

Stablecoins are not as prominent in the U.S.A, presumably because the $US inflation rate has been low. On the other hand, the cryptocurrency that Facebook has talked about creating is the stablecoin type (link). I suspect Facebook's customers for its product would be largely foreign, or U.S. residents sending money outside the USA. 

Stablecoin Regulation in The United States

Tuesday, March 16, 2021

Cryptocurrency outlook #5

Bitcoin MagazineThe Insurance Industry And Bitcoin

The article pertains to and refers to life insurance companies. It doesn't mention other kinds of insurance products, such as auto, homeowners, commercial property, and health, and therefore doesn't apply to them or much less so. The magnitude of interest rates affects the pricing of life insurance and annuities more so than the other products because the former are longer-term and without the ability of the insurer to adjust premiums after the contract is issued.

The following numbers illustrate the effect of interest rates on (pure) premiums for whole life insurance.  Here "pure" means they don't include non-mortality expenses or the probability of policy termination. (The premium amount buyers pay include these things.) For an issue age 40 or less the annual premium with the interest rate = 0.05% is more than 2x the annual premium with the interest rate = 5.0%. The ratio declines above age 40, but at age 60 is still about 1.4x times that for 0.5% interest than for 5.0% interest. For annuities the effect of lower interest rates on premiums is even more.

While such pure premiums are not what buyers pay, they are used in calculating reserves -- as required by statutory insurance laws -- for a life insurance company's in-force policies. Such reserves appear on the liability side of an insurer's balance sheet and thus have a real effect.

Kiplinger: How much Bitcoin should you own?


Saturday, March 13, 2021

The pandemic and black-owned businesses

ProPublica: How the Pandemic Economy Could Wipe Out a Generation of Black-Owned Businesses

Several times on this blog I criticized ProPublica's smear campaign against TurboTax and other makers of software for filing income taxes. ProPublica accused TurboTax especially of  "bait and switch", luring customers to file for free and then getting them to pay for another version of TurboTax after the customers find out they don't qualify for filing with TurboTax's free version. (There were also two versions of TurboTax that used "free" which probably confused some people.) Searching for "TurboTax" on this blog yields several such posts, most in May 2019 and the first quarter of 2020. 

It's widely known that the pandemic has affected black and Hispanic employees more than others, because so many of them work in the kind of jobs hit hardest by the the pandemic, like in restaurants and hotels and jobs involving close personal contact such as nursing homes and home health care. This ProPublica article about the pandemic's effect on black-owned businesses by Lydia DePillis tells the story with the example of a woman, Danette Wilder, whose business makes O-rings used in aerospace, medical and other industries. I admire Wilder's apparent competence and grit in business. She has faced hard times and is still standing. 

However, hard times are not limited to black-owned businesses. The between-the-lines message of this ProPublica article seems to be that Wilder has faced harder times because she is black. DePillis cites a statistical disparity favoring her opinion. "According to the Census Bureau, in 2012, 6,269 out of 7,032 manufacturing firms in Kentucky were white-owned, while 122 were owned by Black people." 7,032 - 6,269 - 122 = 641. Firstly, that was nine years ago, so there may be less disparity in more current numbers. Anyway, the numbers suggest 641 were Asian, Hispanic or other. According to this page, Kentucky's population is 8% Black, 4% Hispanic, 2% Asian, and 2% Multiple Races. Thus in the population Blacks number about the same as Hispanic + Asian + Multiple Races. 122/641 = 0.19 or 122/(641+122) = 0.16.  Thus Blacks seem to be underrepresented among owners of manufacturing firms. Whether or not that is due to racial discrimination is an open question in my opinion. There are many possible reasons. Suppose Asians are under-represented among owners of quick oil change businesses, McDonald's franchises, or yard maintenance companies. Are those statistical disparities due to racial discrimination, too? 

It thus seems that DePillis used Ibram X. Kendi's ployWhenever and wherever there is a statistical disparity, it is due to racism. Regardless of the real traits of those accused of racism, such traits are not relevant. The accused are automatically and subconsciously guilty.

Thursday, March 11, 2021

U.S. federal government interest payments

The Committee for a Responsible Federal Budget asks: How High Are Federal Interest Payments?

It will be about $300 billion this year. The amount of U.S. federal debt is $28 trillion. So the average interest rate paid on that debt is $300 billion/$28 trillion = 1.07%. In the early 1980s the aggregate or average interest rate on Treasury securities was over 8%. Interest rates on new 30-year bonds exceeded 14%, and rates on short-term issues exceeded 17%. Reaching an aggregate 8% again seems very improbable, but reaching 3% or 4% is not. Of course, reaching 3% or 4% instead of the current 1% implies the federal government's interest payments would triple or quadruple, and this would put pressure on other federal government spending. That's except to those unconcerned about deficits and debt, which includes the majority of politicians and bureaucrats.

Page 24 here shows (as of 6 months ago) when Treasury securities mature (and will be replaced by new issues).  Most mature within 5 years, so the aggregate interest rate will lag a rise of interest rates on new issues, but not for a long time (unlike all securities being long-dated).  

The graph on this page shows how the yield on 10-year Treasury bonds have risen this year from about 0.9% to 1.6%

Tuesday, March 9, 2021

GameStop stock price soars again

Apparently the fat lady hasn't sung yet. 😊

"GameStop Corp. mania was reignited Monday after the video-game retailer tapped Chewy Inc. founder and activist investor Ryan Cohen to helm its e-commerce business shift."

Of course, there are contrary opinions about what that news portends for the stock price. 

After the two spikes in January, the price of GameStop stock stayed in a range of about $40-$60 during most of February. Since then the price has more than tripled ($194.50 at yesterday’s close) and today’s pre-market points even higher ($227 at 9:05 a.m.). See the graph here and click on YTD for Jan. 1 - Mar. 9.

Voting rights bill H.R. 1

The Democrats’ voting rights bill is an assault on election integrity

The Washington Compost's op-eds are mostly leftist, but there are a few to the contrary. The above by Henry Olsen is one of them.

"The bill’s primary danger lies in its virtual abolition of any safeguards to ensure that a vote represents the true desire of a single, eligible voter. States would be effectively barred from mandating the use of a photo-ID to establish that a person is the registered voter they claim to be, instead permitting a prospective voter to merely sign a sworn affidavit. States would also be required to adopt same-day voter registration in federal elections, even during early voting, so that a person could show up at a poll, sign a registration form and cast a vote without any checks to ensure the person was actually eligible to vote."

The effect is an an open invitation to (what should be) fraud -- one person can vote many times using multiple identities. It's one thing for P1 to persuade P2 how to vote. P1 voting using P2's identity -- especially if P2 is unwilling to even make the effort to vote -- is very different. It a violation of the principle of one person - one vote. Too many Democrats don't care about this principle. Winning is the primary goal; how it's done matters far less.  

Joe Biden is using his bully-pulpit to push this agenda (link).

See the section titled "The Election Bills: HR 1, the Save Democracy Act, and the Carter/Baker Commission" here for more details about the content of HR 1.

Dem Duo Deem to Destroy Democracy

Sunday, March 7, 2021

Killing The SAT Means Hurting Minorities

The Weekly Dish: Killing The SAT Means Hurting Minorities

"The evidence is clear. But the woke refuse to accept it."

"The rationale for the SAT abolition movement is — surprise! — critical theory, which insists that any measurement that results in different outcomes among ethnic or racial groups is a priori racist. (Except for all cases when non-whites and non-Asians do better than whites or Asians, in which case, never mind.)"

"[This] argument is pure Ibram X. Kendi: the results are solely and exclusively what determines if a test is racist." Me: If there is any statistical disparity, it is due to somebody's "racism," whether or not that somebody admits it or even recognizes it as racist.

"There is no countering this argument because it is not an argument. It is a threat."

Thursday, March 4, 2021

Cryptocurrency outlook #4

Joe Biden picks Gary Gensler as SEC Chair. Fox Business and comment on the possible effects on government regulation of Bitcoin and other cryptocurrencies. 

Fox: "If bitcoin and other cryptocurrencies were deemed to be securities, they would fall under the purview of the SEC. Exchanges that facilitate the trading of such cryptocurrencies would also need to have the appropriate investor protections in place," Gensler said (my bold).

"He pointed to improvements in the areas of payments systems, trade finance, and medical-records technology as areas where blockchain has proven useful. Gensler is currently a professor at the Massachusetts Institute of Technology and teaches about blockchain." Gensler clarified: “To the extent that somebody is offering an investment contract or security that’s under the SEC’s remit, and they have exchanges that operate there, then we have to make sure there’s investor protection” (my bold).

On the other hand, “If it’s not that, and it’s a commodity, as bitcoin has been deemed to be, then it’s either a question for Congress … or it’s possibly a question for the Commodity Futures Trading Commission,” he described (my bold).

Furthermore, the professor also said that the SEC must ensure that crypto markets “are free of fraud and manipulation.”

This is an example of whether or not x falls under the concept X in the context of government regulation. Whether it does or not can have significant consequences. Maybe x falls under both. For cryptocurrencies there is one concept - investment contract or security - for the SEC and another - commodity - for the Commodity Futures Trading Commission. 

Tuesday, March 2, 2021

Cryptocurrency outlook #3

Bitcoin is at a tipping point and could become 'currency of choice' for global trade, Citi says

“A focus on global reach and neutrality could see bitcoin become an international trade currency. This would take advantage of bitcoin’s decentralized and borderless design, its lack of foreign exchange exposure, its speed and cost advantage in moving money, the security of its payments, and its traceability.”

Sunday, February 28, 2021

Cryptocurrency outlook #2

Harvard Professor Kenneth Rogoff Warns Central Banks Will Never Allow Bitcoin to Go Mainstream

Professor Rogoff says:

"As it really starts to compete with ordinary, fiat currencies, government currencies, I think they’ll clamp down on it like a ton of bricks. They are not going to allow that to happen."

"But make no mistake, the governments need to retain control over taxation, controlling crime, etc. They need to maintain control over the unit of account — the currency. Yes, private innovation can come out for a while, but eventually over the long course of history, the government first regulates and then it appropriates, and I think we can see that happening here."

Thursday, February 25, 2021

Cryptocurrency outlooks

Following are four opinions about the outlook for Bitcoin and other cryptocurrencies. Three are pessimistic or negative at this time. That's not surprising given the recent sharp rise in Bitcoin's prices.

'Big Short' investor Michael Burry says he doesn't hate bitcoin but thinks its 'long-term future is tenuous'

I guess Burry says "tenuous" based on Bitcoin's (and others') phenomenal rise during the past 4 months. Yahoo Finance: BTC-USD. Click on '6M' above the chart to see the rise graphically.

Creepy Bill Gates Announces That He’s Not a Fan of Bitcoin – Warns People Who Aren’t as Rich as Elon Musk from Buying It

Really? That's a reasonable opinion if cryptocurrency would be a large portion of one's investable assets or a large amount needed in the near future. However, what if it's a small part? How is it any worse than buying a few lottery tickets with multi-million dollar payoffs? Risk assessment is not an all-or-nothing matter; assessing the magnitude of risk is what's important. Stop being a control freak of others' lives, Bill Gates! It's a big enough task to control your own. 

Should I buy bitcoin? Why the cryptocurrency is on the verge of a bear market

"To be sure, bitcoin’s wobbles aren’t unusual but the crypto’s reputation for volatility is one reason naysayers contend it isn’t suited to serve as a medium of exchange."

“To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering,” Janet Yellen said.

This is reasonable and to be expected from one who favors a government-controlled monopoly on the widely-accepted medium of exchange. Transaction costs for Bitcoin and other cryptocurrencies are too large to be a widely-accepted medium of exchange for small transactions. This argument gets weaker as transaction size gets larger. Transaction cost divided by the value of the whole transaction declines as the latter gets much larger. Thus Bitcoin and other cryptocurrencies are more feasible for large business transactions.

Come on, Charlie. Never? Even buy low and sell high? I know that's difficult to achieve, but I see nothing wrong taking on a little risk and watching it like a falco columbarius. 🙂 If you had not taken risks, you would not have had the tremendous success that you did!! Little or nothing ventured; little or nothing gained. Does this mean your intended audience should not invest in Berkshire-Hathaway stock either? You know it has risk. Click on '5Y' above the chart here and see what happened mid-February to mid-March last year. BRK-B's price fell about 26%. Somebody could have bought BRK-B high and sold it low in a panic.