Trade Imbalance (2½)

John Maynard Keynes on the balance of trade

Directly out of Wikipedia:

He was the principal author of a proposal — the so-called Keynes Plan —— for an International Clearing Union. The two governing principles of the plan were that the problem of settling outstanding balances should be solved by 'creating' additional 'international money', and that debtor and creditor should be treated almost alike as disturbers of equilibrium.

Disturbers of equilibrium.

Trade Imbalance (2)

Wikipedia, Bastiat, Trade

From Wikipedka: "Bastiat argued that the national trade deficit was an indicator of a successful economy..."

But Bastiat's logic fails immediately if we "suppose" it's an Englishman who's running that import/export business. Sure, it's still profit that makes up the difference. But in this case, the French trade deficit is an indication of England's successful economy.

Trade Imbalance

As an American, I say our trade imbalance is a bad thing. It looks like this:

SOURCE: U.S. CENSUS BUREAU

$44B in the hole. Wow... I could do a lot with $44 billion. But that's not really the right context.

Our trade imbalance subtracts $44 billion from the GDP.

The GDP is $14 trillion for the year.

The trade imbalance is $44 billion for the month. Rough it up, multiply by 12: The trade imbalance is $528 billion for the year.

14 trillion is 14,000 billion.

528 billion is 3.8% of 14,000 billion.

The U.S. trade imbalance is less than four percent of GDP. It's a bad thing. But it's not a big thing. We have bigger problems to deal with.

IOU (1) Blog-Post

No blog post today. Instead, here's a promise I'll give you a blog post. Print it out. Keep it in your wallet. You can exchange it for one of my posts at any time. Or put it into a blog-post-savings account. After a year you can get a post, plus an extra word or two.

p.s. This is a model of the monetary system. Not an offer. Don't try to take me up on it. I'll default.

Trickle Down

SHARE OF TOTAL INCOME GOING TO TOP 10%

Trickle down. So, how's that workin out for ya?

If you wake up with a thought, write it down

HERE'S SOMETHING I MUST HAVE WRITTEN IN THE MIDDLE OF THE NIGHT A FEW WEEKS BACK.
JUST FOUND IT THIS MORNING.

The problem is not bad debt, but excessive debt.

Or, more belabored:

It may seem to someone who was not watching, that the problem is bad debt. But to politicians and policymakers and hobbyists like me, and to anyone who looks, it should be clear that debt went bad because it was excessive.

The Department of Mindless Reiteration

In the "Help" that comes with Windows Movie Maker, under the heading Choosing a video and audio capture device, the help explains that you can "choose the video and audio devices you want to use for capturing video and audio."

In other words, you can choose the devices you want to use to capture video and audio. I hope that's clear enough now.

Then, perhaps because the Windows people figure the rest of us are not very smart, they explain that "If you only have one video capture device attached to your computer, that device is the only one listed."

Maybe I should change my blog to an easier topic.

On Models and Theories

At the Market Pipeline -- itself a potentially very useful site -- a link to a link to a 14-page PDF by Emanuel Derman of Columbia University.

Abstract:
Theories deal with the world on its own terms, absolutely. Models are metaphors, relative descriptions of the object of their attention that compare it to something similar already better understood via theories. Models are reductions in dimensionality that always simplify and sweep dirt under the rug. Theories tell you what something is. Models tell you merely what something is partially like.


I found the paper interesting. Two excerpts:

Models are analogies, and always describe something relative to something else. Theories, in contrast, are the real thing. They don’t compare; they describe the essence, without reference.

It takes intuition to discover theories. Intuition may sound casual but it results from intimate knowledge acquired by careful observation and painstaking effort.

Can a hobbyist have intuition? I think so.

Malinvestment

A "good" investment is one you make money on. A "bad" investment is one you don't. But, malinvestment? This is where judgment comes in, subjectivity, preference, and moral superiority: "Good" and "bad" in the usual sense of those words.