Monday, November 28, 2005


Continuing on the Econ topic I wanted to addresss the issue of Supply. That of course being one part of the Supply/Demand equation but also something else. The amount of a resource that is available.

When looking at the supply of a resource we often think in terms of "how much." As in, there are X barrels of oil left. Well, economically speaking, this is not a good line of thinking. When we say X what we really mean is that is what is economically feasible to harvest. We may be aware that there is a one ton deposit of platinum (worth approx 32 million today) deep in the crust but it may cost so much more to mine it that it wouldnt be counted in the supply. Same with any natural resource.
So X is really X+Y with Y being the stuff that isnt economically feasible to mine.

So is X+Y the sum total of all of the resource to be found in the earth? If one were to say that all the oil in the earth is X+Y one would still be incorrect from an economic standpoint (Tho perhaps not from a technical standpoint). Why? Because of new technologies and new applications. Take copper. It once had to be laid out by the truckload to handle our communications needs and looking at the forecasts of the day one would be led to believe that conservation is a must. But looking at the scene today one sees a very different picture. We now broadcast much of our communications thru fiber optics or even thru the air.

Oil is a common concern perhaps even a primary concern today but it too is not irreplacable. I found today this post on Aldogg's site. It talks of a company making plastics from corn sugars. By and large plastic has been made by the conversion of natural products or by syththesis from primary chemicals coming from oil, natural gas or coal. ( Because of the lower cost of oil this company was only able to get companies who wanted to be more "green" but with the cost of oil going up so steeply this past year this company's sales have gone up over 200%.

So in summary, the true value of X far exceeds that of the sum total of X+Y. If/when the cost of X goes up Z will inevitably come in and pick up the slack. There is always a plan B, we just won't see it until that plan becomes cost effective.

Thursday, November 17, 2005

Deflationary fears

I was flipping thru the Wall Street Journal from last Sunday and came across a rather annoying quote. I dont remember who said it but he stated he was worried about deflation occuring next year. Leaving aside the whole Federal Reserve (which has kept us above 3% inflation since before I was born) I want to tackle the issue of deflation.

For the purpose of this and probable future posts I am going to define some terms.
Deflation: Less money, each unit worth more
Recession: A drop in the GDP for two or more consecutive quarters
Inflation: More money, each unit worth less
Stagnation: High unemployment
Stagflation: High inflation coupled with high unemployment (stagnation)
Depression: A period where business activity drops signifigantly

Currently the Fed is pursuing a policy of constant "controlled" inflation. Inflation is where you add to the supply of money which, after a few transactions, devalues all of the money in the supply. Your parents will tell you that they could fill a whole paper bag full of candy for $1 but because of inflation that isnt possible now. Inflation is due entirely to banks. Individuals cannot cause inflation.

Now deflation is basically the opposite. As the money supply contracts each unit of money becomes worth more. Were deflation to take place you might one day tell your kids it used to cost $25 to fill a bag of candy whereas they might be able to fill it for $1. Where inflation cannot be caused by individuals, deflation can be. A reduction in spending and/or an increase in savings. Banks can also cause deflation by printing money at less than the replacement level. Deflation can lead to a temporary reduction in jobs as the market adjusts to the higher purchasing power of each dollor. (Look at it from the boss's perspective. The income could be less than last year even tho more units and real profit could have been made. After all, it is numbers not actual value they are looking at.)

Deflation is basically unheard of. There is no way the people who benefit most from inflation would stop it. Who is it that benefits most from inflation? The Federal Gov. The FedGov is the first "person" to get to spend that money, before it causes a devaluation of the whole supply. They also do it to the tune of billions weekly, but I digress.

Adopting a policy of controlled deflation would be a great thing for our economy, or even just keeping the money at a replacement level. With "I-believe-inflation-is-good" Bernanke taking the helm of the Fed soon all those with unfounded fears of deflation can breath a sigh of relief.

Monday, November 14, 2005

Depression In Men

found an interesting article from the LA Times on "male-based depression"

Some depressed men may be plagued by impotence and loss of sexual interest, but others may become wildly promiscuous. Many complain of depression’s physical symptoms — sleep troubles, fatigue, headaches or stomach distress — without ever discerning their psychological source. Compared with women suffering depression, depressed men are more likely to behave recklessly, drink heavily or take drugs, drive fast or seek out confrontation.

Depressed men may bully and bluster and accuse those around them of failing them. For many men, anger — a masculine emotion that one “manages” rather than succumbs to — is a mask for deep mental anguish. “That’s their way of weeping,” says psychologist William Pollack, director of the Centers for Men and Young Men at McLean Hospital in suburban Boston.
“It’s embarrassing to be sad,” he says. “And the difference between being sad and lazy is hard to distinguish.”

Neither tears nor indolence, it seems, are manly virtues.
“Depression equals vulnerability and shame and lack of functioning. That takes away the man’s masculinity — and for men, that takes away the sense of self,” says Pollack, author of “Real Boys: Rescuing Our Sons from the Myths of Boyhood.” In the American ethos, Pollack says, “a man who’s vulnerable is not even a man any more. . . . It’s the equivalent of being psychologically castrated.”

...behave recklessly, ... drive fast or seek out confrontation. check check and check. Its an issue that doesnt ever quite go away but it isnt really a problem for me anymore. Hope none of you knows anyone who is depressed, but this is good info to have.

Friday, November 11, 2005

Battle Hymn Of The Republic

it just seems appropriate today

Julia Ward Howe

Mine eyes have seen the glory of the coming of the Lord
He is trampling out the vintage where the grapes of wrath are stored,
He has loosed the fateful lightening of His terrible swift sword
His truth is marching on.

Glory! Glory! Hallelujah!
Glory! Glory! Hallelujah!
Glory! Glory! Hallelujah!
His truth is marching on.

I have seen Him in the watch-fires of a hundred circling camps
They have builded Him an altar in the evening dews and damps
I can read His righteous sentence by the dim and flaring lamps
His day is marching on.

Glory! Glory! Hallelujah!
Glory! Glory! Hallelujah!
Glory! Glory! Hallelujah!
His truth is marching on.

I have read a fiery gospel writ in burnish`d rows of steel,
"As ye deal with my contemners, So with you my grace shall deal;"
Let the Hero, born of woman, crush the serpent with his heel
Since God is marching on.

Glory! Glory! Hallelujah!
Glory! Glory! Hallelujah!
Glory! Glory! Hallelujah!
His truth is marching on.

He has sounded forth the trumpet that shall never call retreat
He is sifting out the hearts of men before His judgment-seat
Oh, be swift, my soul, to answer Him! be jubilant, my feet!
Our God is marching on.

Glory! Glory! Hallelujah!
Glory! Glory! Hallelujah!
Glory! Glory! Hallelujah!
His truth is marching on.

In the beauty of the lilies Christ was born across the sea,
With a glory in His bosom that transfigures you and me:
As He died to make men holy, let us die to make men free,
While God is marching on.

Glory! Glory! Hallelujah!
Glory! Glory! Hallelujah!
Glory! Glory! Hallelujah!
His truth is marching on.