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 4/1/2021: Bianco 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. Zillow.com 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.

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

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.

Makovi argues likewise in another essay, Two Opposing Literary Critiques of Socialism: George Orwell Versus Eugen Richter and Henry Hazlitt.

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. 

This interpretation of market activity as 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-tics, the general assumption is often that politicalofficials are

 not 

 self-interested, that they serve onlythe public good for conscience’s sake.

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. 

Stablecoins

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."

Types: 

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.

Stablecoin per Wikipedia

Harvard Business Review: Is Stablecoin the Next Big Thing in E-Commerce?

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