Here is the TED talk that introduces what this is all about.

Rootstrikers is the organization being set up by Lawrence Lessig.

The Los Angeles Times has the article Federal Reserve adopts tougher rules on bank reserves.

The Federal Reserve adopted tougher requirements for bank balance sheets, sending a message to the financial industry that it will cost much more to remain an institution that’s considered too big to fail.

The rules, approved Tuesday as part of an international agreement designed to prevent another financial crisis, make it more expensive to be a very big bank while going easier than originally proposed on small and medium-size institutions.

It is worth noting that this comes from an international agreement, so the banks in one country won’t have the excuse that they cannot compete in the international market if they are subject to new restrictions.

The second thing to note is that though this agreement must have been in the works for some time,  no mention of such an effort hit the press that I commonly follow.  This lack of widespread notice gives demagogues the opportunity to try to win elections by claiming the government isn’t doing anything to solve the problem.  For instance, Gabriel Gomez was going to go to Washington in part to fix the problems of banks that are too big to fail.  Maybe he was such a good politician after all, that he didn’t even have to win the election to get the problem solved.

Zeenews has the article Processed carbohydrates tempt people to overeat.

Washington: A new study has found that eating highly- processed carbohydrates like cakes, cookies and chips could affect pleasure centers in the brain, leading to serious cravings that might cause people to overeat.
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High-glycemic carbohydrates get digested rapidly, and include white bread, pasta, rice and baked goods, WebMD notes. Low-glycemic carbs are digested much slower, and include fruits, vegetables, unprocessed whole grains and legumes.

This might help to explain what foods to avoid and what foods are OK if you want to keep your weight and your blood sugar under control.

The real News Network is featuring a video Paula Deen Caught Being Incredibly Racist.

When I first read about the Paula Deen issue, the article was about Paula Dean admitting in a deposition to using racist terms.  The article gave no clue as  to why she would be giving a deposition, especially one on this topic.  It gave no clue about when the deposition was given, nor when the acts that she admitted to had occurred.  I know nothing about Paula Dean, and don’t think I have ever watched her show.   I decided I could not judge her without more facts.  I thought it was possible that people were over-reacting.

I ran across the video below, which finally put their explanation of the facts before me.

How can a “white” person explain why the N-word is not offensive? Offensive to whom? It may not be offensive to the person using the term, but that is no basis for judging. The test is whether or not it is offensive to the people at which the term is aimed. If those people say it is offensive, then that is the only opinion that matters, and by definition the word is deemed offensive by any rational measure. You can argue, unsuccessfully, as to whether people should be offended, but you cannot argue about whether people have the feelings they say they do.

I don’t know if anyone is thinking they can skip tomorrow’s election because there is only one office being contested. Think if it this way, with only one office being contested you can be in and out of the polling place in just a few minutes. Are a few minutes worth spending to decide the fate of the nation? Giving even more power to the Republicans to use to filibuster everything will only delay the solving of this country’s and the world’s problems. Electing another Progressive fighter for the middle class to work with Elizabeth Warren could be the beginning of a turn-around for this country.  Ed Markey is that progressive fighter.

We only send a message of approval to Congress that giving all power and wealth to the wealthy is what the middle class needs if we elect or allow to be elected another Republican like Gabriel Gomez.

Ed Markey understands that the role of government in society is complementary to the role of private enterprise.  Gabriel Gomez thinks that with his business experience, he knows what government should do.  We do not need two powerful entities playing the same role, profit over all else, in this society.  If we are stuck having powerful entities in society, we at least ought to have them playing a role of checks and balances with each other.  That is the only way the individual player without huge backing of great wealth can expect to get a fair shot.

Seeking Alpha has the article The Stock Market Doesn’t Have A Clue About Monetary Policy by  Christopher Mahoney .

The lead steers are laboring under the misconception that growth and stock prices have been artificially stimulated by “massive monetary stimulus” since 2008. Where did they get such an idea? Can’t they google FRED? The last time that we had sustained double-digit money growth was exactly thirty years ago, in 1983, following the Volcker Shock.

I’m going to repeat this until it finally sinks in: money growth since the crash has been quite low. M2 has grown at about 5%, while the broader aggregates have grown by much less. There has been no monetary stimulus; Fed policy has not been “extraordinarily accommodative” no matter how many times Bernanke uses those words. The linkage between the Fed’s balance sheet and the money supply is simply nonexistent. QE has been pushing on a string, resulting in a massive buildup of sterile excess reserves that have no impact on the money supply.

I have also been under the mis-conception that the stock price growth have been artificially stimulated by the fed.  I am trying to reconcile the view of this author with the view of Investment Quality Trends that says that the market is overvalued on the basis of historical dividend yields.

Perhaps the Fed stimulus did not increase the money supply, but it did lower bond interest.  The low bond interest did artificially drive investors toward the stock market instead of the bond market.  So the Fed stimulus may be responsible for overvalued stock prices, but not quite for the reasons some people assumed.

To put a finer point on the IQT analysis, I tell myself that the stock market dividend yield may not mean that the stock market is overvalued for the current level of interest rates.  However, in terms of what the interest rates will be when they revert to historical norms, then it is overvalued.  Other things  may change by the time that interest rates return to normal, so it is hard to predict stock market price trends based on them being overvalued now, in some sense.  For instance, dividends might grow faster than the rise of interest rates, so that the market price of stocks does not have to fall to get them out of being overvalued.  Or the dividends might not rise fast enough and prices will decline.  I just try not to believe in crystal balls when it comes to predicting the stock market.

The Russian Duo appeared on NPR in Cleveland on the show Around Noon.

I just love to hear this music.

When I read The New York Times headline For Retirees, a Million-Dollar Illusion, I knew this article would have the usual amount of baloney in it.

But then stock market risk comes into play. Over the long term, stocks tend to outperform bonds, but typically fluctuate much more wildly. There’s a good chance that at some point, stock investments will produce major losses that many people simply can’t tolerate.

“We find that people tend to think of losses in their portfolios based on the peak value they’ve ever had,” Mr. Masters said. So Bernstein calculates the probability of what it calls a “peak-to-trough loss” of at least 20 percent in its sample portfolios.

For those with an 80/20 mix of stocks and bonds, it found a 60 percent probability of such a loss over the investors’ lifetime. And, of course, some market declines far exceed 20 percent.

“Large losses may not be something that people are willing to live with, even if they are associated with higher returns over the long term,” Mr. Masters said. “Which is why we’d recommend holding some stocks, but not as much as 80 percent, for most people.”

What is missing from a featured place in this article is the role of stock dividends in a portfolio.  If you have a reliable stream of dividends coming to you from quality stocks, then a peak to trough decline of 20% in market value of your stocks is something you can ignore.

At the current low interest rates, it would be foolish to be invested in any large proportion of bonds.  You know their value will decline and the stream of interest payments is insufficient already.

With Social Security and a tiny pension, I find that a nest egg of the size being discussed here is totally adequate.  With most of my nest egg in tax deferred accounts my annual income tax liability is a tiny fraction of what it was when I was working.  And I also do not have to save for retirement.

I can live quite well on substantially less income than I needed when I was working.

Maybe The New York Times needs to get some people who have retired successfully to be writing these articles instead of working “experts” who do not seem to understand what retired living is all about.

Thanks to RogerG for posting the NPR article Our Surveillance Society: What Orwell And Kafka Might Say on his Facebook page.

And, even in the tradition of prophetic literature that warns of the dangers of bureaucratic power run amok, there is an awareness that the protection of the state, while intrusive, is necessary.

This gives me an opportunity to comment on this latest brouhaha.

I just do not understand what the hoopla about PRISM is all about.  Suddenly the people have been awakened to the technology that is there for the big guys to use.  The fact that Google, Amazon, Facebook, Verizon, AT&T, Walmart, etc, have all this data and use it to their advantage every day is what we should be addressing.  They use it to concentrate market power in the hands of fewer and fewer organizations to the disadvantage of those that do not have the information.  Collection of this data is not something we can stop.  So we need to carefully consider how it ought to be regulated.

Do not let big media and big politics divert your attention from the real issue.  We have to wonder whose advantage is being served by bringing this issue to light in just this way at just this time.

This NPR article serves the public interest better by bringing up the all the real issues for calmer consideration.

In my previous post, Fixing The Problem We Have At This Time, I mentioned that government stimulus spending is the right thing to do at this phase of the economic cycle.  I hope I also made it clear that in a different phase of the cycle, where the economy is booming so much that it may be overheating,  we would need a little (or a lot) of restraint in government spending.

Investing in our infrastructure, which includes the education of our citizens, is something that we always ought to do.  In the last three or more decades, we have been under investing.  We need to boost that investing so that the long term trend line meets the needs of an economy and society that wants to remain relevant in a global context.

So how do we reconcile the need for a long term growth trend in infrastructure spending and the cyclical nature of the economy?

Some infrastructure investing, like the interstate highway system of the Eisenhower administration, is a long term project that lasts through many economic cycles.  The legislation that authorizes the investment ought to allow for a structure that sets the end goals and spending limits, but not the micro details of timing.  The general plan for the entire project will be written at the beginning, but each phase of the project can either be sped up or delayed based on what is right for the economy at any given time.

Even successful business people who eventually migrate to congress had flexible spending plans for their businesses.  There was a time to spend vigorously and a time to pull back.  Since business and government have very different roles in our economy and society, the time to spend and the times to pull back for business and government should be out of phase compared to each other.  The reasons should be so obvious, I won’t state them here.

The net effect of adding together two cycles that are out of phase with each other is to have economic cycles that are smoother than would otherwise be the case.

The concepts described here are so obvious, that I wonder why it took me so long to think of them all together.  Do you suppose the “business oriented” people in Congress will ever figure this out?

Should we ever elect a business person to Congress who has not figured this out yet?  I think electing such immature business people is a very real danger to our economy, especially when they think of themselves as economic experts.  They have no humility and no clue as to what it is that they do not know about economics.