21st Century Schizoid Boy

See also: What changed in the last 60 years.

People who are out of work but no longer looking for jobs aren’t counted as officially unemployed.

Read that again. People who are so discouraged that they can’t find a job and who have stopped looking for a job, are not counted as unemployed. They are officially referred to as discouraged or “marginally attached” workers by the government. It only follows that the government either considers these people as employed, or worse, as non-existent, both of which are a slap in the face for those people. Of course, these are real human beings. They still have to eat, and live somewhere, and consume from the economy. (Quote from above: Breitbart. Official government definition of U-6 (and the other U-s) here and here.)

The often cited unemployment rate in the media is U-3, which is currently at 10.2%. The real unemployment rate is U-6, which is currently 17.5%. Moreover, as somebody from the U-3 pool “gives up,” they move to the U-6 pool, rather than being reflected in both pools, so the U-3 pool actually goes down while the U-6 pool goes up. So not only is U-3 under counting unemployment, but its rate of increase or decrease is deceptive. Both statistics are tracked by the government, so it’s likely the real real unemployment rate is even higher (See ShadowStats.com which puts unemployment at 22%) (See also New York Times, Broader Measure of U.S. Unemployment Stands at 17.5%, http://www.nytimes.com/2009/11/07/business/economy/07econ.html).

United States Bureau of Labor Statistics, Table A-12. Alternative measures of labor underutilization, http://www.bls.gov/webapps/legacy/cpsatab12.htm.

The Kansas City Police Preventive Patrol Experiment in the early 1970s found that a highly visible police presence “has little value in preventing crime or making citizens feel safe.”

The Kansas City Preventive Patrol Experiment found that traditional routine patrol in marked police cars does not appear to affect the level of crime. Nor does it affect the public’s feeling of security. The experiment demonstrated that urban police departments can successfully test patrol deployment strategies, and that they can manipulate patrol resources without jeopardizing public safety.

Patrol is considered the backbone of police work. Billions of dollars are spent each year in the United States to maintain and operate uniformed and often superbly equipped patrol forces. The assumption underlying such deployment has been that the presence or potential presence of officers patrolling the streets in marked police cars deters people from committing crime.

But the validity of this assumption had never been scientifically tested. And so, in 1972, with funding and technical assistance from the Police Foundation, the Kansas City Police launched a comprehensive, scientifically rigorous experiment to test the effects of police patrol on crime.

The experiment began in October 1972 and continued through 1973; it was administered by the Kansas City Police Department and evaluated by the Police Foundation.

Patrols were varied within 15 police beats. Routine preventive patrol was eliminated in five beats, labeled “reactive” beats (meaning officers entered these areas only in response to calls from residents). Normal, routine patrol was maintained in five “control” beats. In five “proactive” beats, patrol was intensified by two to three times the norm…

Information was gathered from victimization surveys, reported crime rates, arrest data, a survey of local businesses, attitudinal surveys, and trained observers who monitored police-citizen interaction.

Interestingly, citizens did not notice the difference when the level of patrol was changed. What is more, increasing or decreasing the level of police patrol had no significant effect on resident and commercial burglaries, auto thefts, larcenies involving auto accessories, robberies, or vandalism–crimes traditionally considered to be prevented by random, highly visible police patrol.

The rate at which crimes were reported to the police did not differ in any important or consistent way across the experimental beats. Citizen fear of crime was not affected by different levels of patrol. Nor was citizen satisfaction with police.

“Ride-alongs” by observers during the experiment also revealed that 60 percent of the time spent by a Kansas City patrol officer typically was noncommitted…

The findings do not prove per se that a highly visible police presence has no impact on crime in selected circumstances. What they do suggest, however, is that routine preventive patrol in marked police cars has little value in preventing crime or making citizens feel safe.

The overall implication is that resources ordinarily allocated to preventive patrol could safely be devoted to other, perhaps more productive, crime control strategies. More specifically, the results indicate that police deployment strategies could be based on targeted crime prevention and service goals rather than on routine preventive patrol.

The Kansas City Preventive Patrol Experiment, The Police Foundation, 1974, http://www.policefoundation.org/docs/kansas.html (full report: http://www.policefoundation.org/pdf/kcppe.pdf).

Paul Tudor Jones II is a legendary trader who predicted the 1987 market crash on the television series “Trader.” He also predicted the current crash in a New York Times article in 2007, The Man Who Won as Others Lost, http://www.nytimes.com/2007/10/13/business/13speculate.html. His fund currently manages over $10 billion dollars. In the following Third Quarter 2009 Performance Review and Current Market Outlook, along with outlining where the market is and where Tudor Investment Corp is investing, he says the following:

I have never been a gold bug. It is just an asset that, like everything else in life, has its time and place. And now is that time. And, as such, gold is at the center of our thinking as a store of value during a period of potentially large and persistent global portfolio shifts. The temptation to directly, or indirectly, monetize rising and persistent fiscal deficits globally means gold could have a bid for the forseeable future…

The dynamics of the gold market differ greatly from other traditional commodity markets. Gold is accumulated, not consumed, and acts as the ultimate store of value. Gold is portable and universally accepted as a medium of exchange and has been for over 5,000 years. It has outlasted countless governments, barter systems, fiat money structures and the ascendance of other metals and minerals. The worth ascribed to gold involves the belief that it can be reliably saved and stored, while having predictable value over time. When a currency is viewed as stable, money can serve as a store of value. However, during times of overt monetization, hyperinflation, or when questions arise about the stability of the banking system, gold prevails as a more reliable store of value. Gold has an economic value even in the worst of times.

These somewhat esoteric descriptions of gold’s value do not help in evaluating if gold is cheap or expensive at any given moment. In order to determine if gold is a wise investment, we have looked at gold in relation to a number of variables… as compared to the long-run average, gold appears to be cheap… In our view, gold’s value should increase as its scarcity relative to printed currencies increases…

Aside from valuation, we feel it is important to view gold in terms of supply and demand… Despite a three-fold increase in worldwide metal exploration expenditures, new mine production has remained stagnant at 80 million troy ounces over the last decade… As a result, any incremental demand for gold must be met through sales from current owners. They just aren’t making that much of it anymore…

On the demand side, much of the recent move to record prices in gold reflects continued strong investment demand for physical gold in the face of heightened macro uncertainty and unprecedented, globally-coordinated monetary stimulus. The historical drivers of investment demand for gold seem to have simultaneously come together in 2009 and, in our opinion, will continue to stimulate high levels of demand on a sustained basis going forward…

Another fundamental change in demand for gold is the shift of the official sector from a net seller to a net buyer. During the second half of 2009, the official sector will become a net buyer of gold. This represents a remarkable change of direction… and reflects the fact that there is a lack of appetite to sell among major bullion holders within the [Central Bank Gold Agreement members]. More importantly, there is huge potential for more buy-side interest to emerge from central banks…

By our estimation, G7 central banks have upwards of 35% of total reserve assets in gold. However, the remaining countries that make up the G20 only have 3.5% of their reserve assets in gold… Gold demand from non-G7 central banks will keep the official sector a net buyer of gold over the coming years.

Tudor Investment Corporation, Third Quarter 2009 Performance Review and Current Market Outlook, October 15, 2009, http://www.scribd.com/doc/21753600/Tudor-Third-Quarter-Letter.

Jones’ prediction that non-G7 banks will push up the demand for gold has already come true:

The International Monetary Fund has sold 200 metric tonnes of gold to India’s central bank.

IMF sells 200 tonnes of gold to India central bank, The Financial Times of London, November 3, 2009, http://www.ft.com/cms/s/0/2b981324-c807-11de-8ba8-00144feab49a.html.

China has quietly almost doubled its gold reserves to become the world’s fifth-biggest holder of the precious metal, it emerged on Friday, in a move that signals the revival of bullion after years of fading importance…

The increase in China’s gold reserves has come primarily from domestic production and refining…

Ahead of the G20 summit in London this month, China suggested global reliance on the US dollar as a reserve currency should be reduced.

China reveals big rise in gold reserves, The Financial Times of London, April 24, 2009, http://www.ft.com/cms/s/0/1d23f80c-30aa-11de-bc38-00144feabdc0.html?nclick_check=1.

For those that think that gold is an anachronism, or that gold helped cause the Great Depression:

1. Why are G-7 reserve holdings of gold still at 35% if academics (of which central bankers and the IMF are surely constituted) shun gold?
2. Why are G-20 countries massively increasing reserve holdings of gold?
3. Why did we still have this massive recession even with a fiat currency? And of course, the assumption is that the fiat currency has allowed us to avoid further calamity… based on many non-mainstream economists, this still needs to play out, and may not be true in just a few years. If so, that certainly couldn’t be blamed on gold.

See also: Gold Price Suppression by Central Banks.

Although the role of gold in the world economy has declined over the last century, people are still intrigued by the power, mystery, and brilliance associated with the metal. Today, gold is no longer commonly used as money but continues to serve as an important store of value. When people are worried about political instability, war, or inflation, they often put their savings into gold.

The gold bullion in the Federal Reserve Bank of New York’s vault is part of the monetary reserves of foreign governments, central banks, and official international organizations around the world.

The Federal Reserve Bank of New York, http://www.newyorkfed.org/education/addpub/goldvaul.pdf.

The first thing we should point out is that it is almost impossible to economically or commercially obtain absolutely pure gold. 24 carat gold would be absolutely pure. Before electrolytic refining, highly refined gold was usually .9995 pure (99.95%). If we convert this to carats, it would be 23.988 carats.

http://www.taxfreegold.co.uk/24caratgoldbars.html

The only size bar normally used in major international markets is the London Good Delivery Bar, which… is 400 ounces or 12.5 kilograms. Most gold stored by central banks is in this form.

http://www.taxfreegold.co.uk/goldbarsinfo.html

As of January 19, 2010 at a gold price of $1140 per troy ounce, a single gold “bar” seen in the movies would be worth nearly half a million dollars, or $456,000.

See also: http://www.zerohedge.com/article/gata-present-new-evidence-feds-gold-price-supression-scheme-coming-through-oddly-unredacted-

http://mises.org/daily/3368/Defend-the-Gold-Standard, http://www.thefreemanonline.org/featured/the-depression-youve-never-heard-of-1920-1921/, http://mises.org/daily/3778/The-Gold-Standard-and-the-Great-Depression

http://ihasahotdog.com/

I think that when it comes down to the core question of what the role of government should be, it is really about asking whether you’re optimistic or pessimistic about the average individual human being…

If you are optimistic about the average human, then you believe that personal freedom, individual liberty, voluntary exchange, and de-centralized communities are not only the best aspects needed to maximize the overall success of all life on Earth, but such aspects also imply the co-operative helping and caring (often for free, e.g. church hospitals, nonprofits, etc.) of those who struggle to survive in such a freer yet riskier environment. From here, there is then a divergence on how to deal with the Harm Principle — Ayn Rand style Objectivist Epistemology which is dogmatically Libertarian and is against the use of any force (close to a capitalistic anarchism), versus a classical U.S.-style enumerated constitution which defines a limited and constrained government (e.g. law enforcement, anti-fraud, defensive military, etc.).

If you are pessimistic about the average human, then you reject that in such a free system that people will help each other, or worse, you believe that individuals or groups will actively manipulate each other. Thus, a government “safety net” is required. Further, government not only needs to step in because of fraternal deficiencies, but also needs to restrain certain self-interests (using involuntary cooperation such as income taxes, backed by force). This is based on the idea that only government can ensure the equal treatment of all life on Earth (as subjectively defined at any one time by the people or their elected representatives), and that concentric circles of government (local to central to international and everything in between) are the best way to construct, secure, and defend the rights of all life on Earth. Although government is imperfect, it can be continuously tweaked or fixed by technocrats and an elected meritocratic elite, when things go wrong.

Modern day, mainstream Democrats and Republicans pander to these two philosophies, but it’s just pandering. Today’s general disillusion and apathy in the population comes from:

1. The failure of either mainstream party to realize either of the stated philosophies,
2. The almost 50/50 division along these philosophical lines in the country due to a lack of leadership that can either convince the country of either philosophy, or find a way to bridge the two philosophies (e.g. Liberaltarianism). Some politicians even use so called Wedge Issues to explicitly target this division for their own benefit,
3. And the rampant corporatism engulfing the globe (e.g. manipulative and powerful health insurance providers).

In the October 30, 2008 edition of The New England Journal of Medicine, a Swedish team studied the incidence rates of Myocardial Infarction, i.e. heart attacks, from the 1980s to 2006. The research was supported by the Swedish Heart and Lung Foundation, the Swedish Council of Working Life and Social Research, the Ansgarius Foundation, and the King Gustaf V and Queen Victoria’s Foundation. They suggest that losing an hour of sleep in the Spring is correlated with increased heart attacks.

More than 1.5 billion men and women are exposed to the transitions involved in daylight saving time: turning clocks forward by an hour in the spring and backward by an hour in the autumn. These transitions can disrupt chronobiologic rhythms and influence the duration and quality of sleep, and the effect lasts for several days after the shifts.

We examined the influence of these transitions on the incidence of acute myocardial infarction…

The incidence of acute myocardial infarction was significantly increased for the first 3 weekdays after the transition to daylight saving time in the spring…

In contrast, after the transition out of daylight saving time in the autumn, only the first weekday was affected significantly…

The effect of the spring transition to daylight saving time on the incidence of acute myocardial infarction was somewhat more pronounced in women than in men, and the autumn effect was more pronounced in men than in women.

The effects of transitions were consistently more pronounced for people under 65 years of age than for those 65 years of age or older. The most plausible explanation for our findings is the adverse effect of sleep deprivation on cardiovascular health. According to experimental studies, this adverse effect includes the predominance of sympathetic activity and an increase in proinflammatory cytokine levels. Our data suggest that vulnerable people might benefit from avoiding sudden changes in their biologic rhythms. It has been postulated that people in Western societies are chronically sleep deprived, since the average sleep duration decreased from 9.0 to 7.5 hours during the 20th century…

The finding that the possibility of additional sleep seems to be protective on the first workday after the autumn shift is intriguing… Sleep-diary studies suggest that bedtimes and wake-up times are usually later on weekend days than on weekdays; the earlier wake-up times on the first workday of the week and the consequent minor sleep deprivation can be hypothesized to have an adverse cardiovascular effect in some people… Studies are warranted to examine the possibility that a more stable weekly pattern of waking up in the morning and going to sleep at night or a somewhat later wake-up time on Monday might prevent some acute myocardial infarctions.

Shifts to and from Daylight Saving Time and Incidence of Myocardial Infarction, Dr. Janszky PhD, Karolinska Institute of Sweden, and Dr. Ljung PhD, National Board of Health and Welfare of Sweden, October 30, 2008, http://content.nejm.org/cgi/reprint/359/18/1966.pdf.

And for what?

The history of Daylight Saving Time (DST) has been long and controversial. Throughout its implementation during World Wars I and II, the oil embargo of the 1970s, consistent practice today, and recent extensions, the primary rationale for DST has always been to promote energy conservation. Nevertheless, there is surprisingly little evidence that DST actually saves energy. This paper takes advantage of a natural experiment in the state of Indiana to provide the first empirical estimates of DST effects on electricity consumption in the United States since the mid-1970s…

Our main finding is that—contrary to the policy’s intent—DST increases residential electricity demand. Estimates of the overall increase are approximately 1 percent, but we find that the effect is not constant throughout the DST period. DST causes the greatest increase in electricity consumption in the fall, when estimates range between 2 and 4 percent. These findings are consistent with simulation results that point to a tradeoff between reducing demand for lighting and increasing demand for heating and cooling. We estimate a cost of increased electricity bills to Indiana households of $9 million per year. We also estimate social costs of increased pollution emissions that range from $1.7 to $5.5 million per year. Finally, we argue that the effect is likely to be even stronger in other regions of the United States.

Does Daylight Saving Time Save Energy? Evidence from a Natural Experiment in Indiana, Matthew J. Kotchen and Laura E. Grant, Department of Economics at the University of California, Santa Barbara, October 20, 2008, http://www2.bren.ucsb.edu/~kotchen/links/DSTpaper.pdf (National Bureau of Economic Research: http://www.nber.org/papers/w14429).

Zimbabwe is the first country in the 21st century to hyperinflate. In February 2007, Zimbabwe’s inflation rate topped 50% per month, the minimum rate required to qualify as a hyperinflation (50% per month is equal to a 12,875% per year). Since then, inflation has soared…

By the end of November [2008], however, there were virtually no non-cash Zimbabwe transactions taking place and the Zimbabwe Stock Exchange had stopped trading. The non-cash Zimbabwe dollar is, therefore, dead.

Ashes are all that is left of the Zimbabwe dollar — a remnant of paper money. During Zimbabwe’s hyperinflation, foreign currencies replaced the Zimbabwe dollar in a rapid and spontaneous manner. This “dollarization” process was legalized in late January 2009. Even though the Zimbabwe paper money remnant circulates alongside foreign currencies, its real value is tiny, its use is limited, and its value against the U.S. dollar is cut in half every two days.

Zimbabwe failed to break Hungary’s 1946 world record for hyperinflation. That said, Zimbabwe did race past Yugoslavia in October 2008. In consequence, Zimbabwe can now lay claim to second place in the world hyperinflation record books.

R.I.P. Zimbabwe Dollar, Steve H. Hanke, Professor of Applied Economics, The Johns Hopkins University, February 9, 2009, http://www.cato.org/zimbabwe.

Economics book chapter: http://www.princeton.edu/~pkrugman/KW32.pdf

This is obvious but worth stating: new home sales are far more important for employment and the economy than existing home sales. When an existing home is sold, the housing stock doesn’t change, and the only direct contribution to the economy are the transaction costs. When a new home is sold, the housing stock of the nation increases, and there is a significant amount of spending on material and labor…

I believe this gap was initially caused by distressed sales, but more recently the gap has also been widened as a result of the first-time home buyer tax credit.

Calculated Risk blog, October 28, 2009, http://www.calculatedriskblog.com/2009/10/new-and-existing-home-sales-distressing.html.

Lawrence Wilkerson is a retired United States Army soldier and former chief of staff to United States Secretary of State Colin Powell.

http://www.youtube.com/watch?v=9P8CzRbLnC4

In Scramble, consumer governments seek energy security through exclusive deals with producers, and by promoting domestic production. Coal consumption grows more than two and half times by 2050, when oil and gas consumption is little different from today.

When action to reduce energy demand and curb carbon emissions is eventually taken, it is more expensive and less effective than if undertaken earlier.

In Blueprints, action is driven by emerging coalitions of interests – driven by business opportunities, and supply and environmental concerns. These pave the way for effective, market-driven measures to tackle demand and emissions.

Blueprint for a shared future, Malcolm Brinded, Royal Dutch Shell, April 10, 2008, http://www-static.shell.com/static/media/downloads/speeches/brinded_paris_10042008.pdf.