Daily Archives: December 1, 2013


Steve Keen: The International Financial Architecture 2

Naked Capitalism web site has the video Steve Keen: The International Financial Architecture. Naked Capitalism describes the video, thusly:

In this video, Steve Keen reviews the history of Keynes’ proposed international currency, Bancor, and why it failed to come to fruition at Bretton Woods. Keen thinks its time has finally come and supports the Central Bank of China’s call for its introduction.

As posted on YouTube by Steve Keen, it has the description:

My speech to the Meeting of Finance Ministers of Latin America in Quito on November 29th 2013. I explain Keynes’s proposal for an international unit of account called the Bancor, and support Zhou Xiaochuan, the Governor of the Central Bank of China, in calling for its introduction. I also argue that Latin America should in the meantime develop its own unit of account for intra-CELAC trade.


The speech even mentions some open source software called Minsky. That way, you can do your own economic modeling and predictions. The video also shows a link to Steve Keen’s Debtwatch blog.

On a superficial level, this presentation is fairly understandable. However, there is a depth to what is being said that requires deeper thought to fully understand.

I am afraid that my understanding of all of this does not live up to MardyS’s tongue in cheek claim that I am the smartest person in the room. It’s going to take quite a while for all of this to sink in and to reconcile with what I have been reading elsewhere. However, I bet that there other readers of this blog that will get it much faster than I will.

JoãoG should be happy with what Keen has to say about the Efficient Market Hypothesis.


Target Fixation At The Fork In The Road

I just don’t understand the obsession that the media has with bipartisan compromise.  The Boston Globe article Bipartisan group finds bridges hard to build is but the latest example.

Why can’t people understand what happens at a fork in the road?

Picture of a fork in the road

Target fixation occurs when you are so focused on the target that you want to avoid, that you inevitably miss all the other options and exactly run into the one thing you did not want to run into.

Here we are at the fork in the road. One party wants to go right while the other party wants to go left. If we have a bipartisan compromise, we go straight ahead, and hit the sign post. There is no middle road option. You can dream about the middle road option, you can pray for it, you can keep writing about it, but it does not exist.

It looks like this country is doomed to either sitting still at the fork in the road or crashing into the sign unless the voters make a decision in enough time.  If we can’t make a decision, then mother nature may come barreling down the road and crash into us.

Perhaps if the media would stop pretending that there is a third option, it might help people to wake up to the truth.

Here is the picture of the current situation as I see it.

Picture of forks in the road


Why Does The World Exist? 4

In an online conversation with MardyS, he recommended a book,  Holt, Jim (2012-07-16). Why Does the World Exist?: An Existential Detective Story. Liveright. Kindle Edition.

I found the book to be a very interesting and erudite discussion that was focusing on the question “Why is there something instead of nothing?”  The author seemed to be quite knowledgeable in physics, discussing Einstein’s General Theory of Relativity, The Big Bang Theory, Quantum Gravity, and the like.

The following statement in the book broke the mood completely.

To begin with, nothing in the concept of causation says that a cause must always precede in time its effect. Think of a locomotive pulling a caboose: the motion of the former causes the motion of the latter, yet the two are concurrent in time

To say that “the two are concurrent in time” shows an abysmal lack of understanding of elementary physics.  It also shows a lack of knowledge about how to run a train.

I finally found a definition of Slack Action in WikiPedia:

In railroading, slack action is the amount of free movement of one car before it transmits its motion to an adjoining coupled car. This free movement results from the fact that in railroad practice cars are loosely coupled, and the coupling is often combined with a shock-absorbing device, a “draft gear,” which, under stress, substantially increases the free movement as the train is started or stopped. Loose coupling is necessary to enable the train to bend around curves and is an aid in starting heavy trains, since the application of the locomotive power to the train operates on each car in the train successively, and the power is thus utilized to start only one car at a time.

So, clearly, on a  macro scale, the motion of the engine and the caboose are not concurrent in time in starting and stopping.  This can be generalized to any change in speed.  If there is no slack when the train tries to accelerate, then you may have to look to the “draft gear” or look at the microscopic level of stretching of the physical components of the train.

I leave it up to you to think of what The Second Law of Thermodynamics has to say about whether a cause precedes its effect in time.

The quoted selection from the book Why Does The World Exist? is not the first one that casually dismisses an idea with reasons that are unwarranted.  So while the book is interesting to read, I stopped looking for a definitive, scientific or philosophical answer to the book’s main question.  Sadly, I just stopped reading.