80 MPG Mini Cooper

I'd like one for Maddie.

The Housing Panic Begins!

Here's a chart of home prices that's rippling through the memesphere; the conclusions should be obvious, yes? (hint: no)

Semi-Fractional Banking

Well, the Fed's guys said they may have to raise interest rates again after all, and the equity markets are in the predictable tizzy(plus USDJPY is happier -- piffle). I've been thinking for a while about currencies, given that if I can accumulate a nest-egg large enough for the work to be worthwhile, I want to start trading again. I could pro'lly scare up about $5k and do so now, but even if I'm very successful at %30/yr (not unrealistic with proper risk management), the return on only $5k isn't worth all the work required. But anyway, like I said, I think about currencies a fair bit. If you think about currencies long enough, you have to think about economics, since states' economies are the determinators of currency rates. For example, I was recently thinking about whether the ill health of the Iraqi Dinar (which I'd be happy to sell, without reservation) makes it a viable "sideways market" trading target, which got me thinking about hyperinflation, and, if you're a Mises kinda guy, that old bugaboo, Fractional Reserve Banking.

For background (note that this's an innaccurate "simple-minded" explanation -- see Mises.org for gorey details), fractional-reserve banking is the "modern" system of banking -- with FRB, a bank that has $100 in its savings accounts is free to lend someone $110 dollars. In our system, the Federal Reserve offers banks a Faustian deal that states that if they hold a certain amount of reserves (say, ten cents on the dollar) against deposits, the Fed will insure the deposits in case too many people all try to collect their debts at once. In the "non-fractional" system, you could only loan $110 if you have $110 to lend, and then you can't lend out any more until some comes back -- this is colloquially called the "money warehouse" school of banking. There's more to it that, but that's enough in a nutshell to get the next point, which is that fractional-reserve banking is inherently inflationary. The reason why is that if I have $100, and can lend you $110 dollars, you now have $110 and can loan someone $121 dollars -- so where did the extra $21 dollars come from? That's inflation. You now have $121 dollars representing $100 dollars of actual economic value, and thus each dollar is worth less than it was before. This is the real definition of inflation, not the commonly used proxy, "price inflation". In the absence of financial gimmics (like the Fed Funds Rate), price inflation almost instantly mirrors monetary inflation (assuming a free market). The Feds adjust the interest rate at which banks may lend each other money, which thereby adjusts the supply of money that banks can "invent" through loans. Note that the Fed Funds Rate is never negative! Go figure, huh? It all sounds like hanky-panky, and relative to true economic value (goods, services & property) it is, but so long as all countries are playing the same game, currency rates remain largely indicative of a particular state's economic performance (modulo central-bank interest-rate differences).

The big problem comes in because there's always pressure to have more money available, aka "cookies for everyone!" Too much money inexorably leads to hyperinflation, which is really, really bad (just ask the Turks -- they issue 20,000,000-Lira bank notes!). In order to avoid hyperinflation, the banks end up having to rein in the economy by raising interest rates above the pure-market "time-value of money" rate, which tends to cause recessions -- this gives rise to the "boom/bust" business cycle. The Business Cycle is completely avoidable with total-reserve banking, however, as Alexander Hamilton knew oh so well, if you're restricted to lending only "idle, unused" money, it's awfully hard to raise funds when you need them for wars and roads. Total-reserve banking makes for incredibly inflexible fiscal policy, and it's really hard to run a nation that way.

So I have a modest proposal: semi-fractional banking. Instead of having a total-reserve currency, with all its attendent virtues and inflexibility, or a fractional-reserve currency, with it's attendent vices and flexibility, why not have both? We could issue two separate currencies under different rules; let's call them Values and Credits:

• Value banking is total-reserve, money-warehouse banking. The interest rate charged over time for a bank to lend Values either to retail customers or to other banks is determined solely by the free market. Values are legal tender for property, wages and interest.
  
• Credits are fractional-reserve currency; the Federal Reserve controls deposit-reserve requirements, repo & funds rates, &c., just like it does for USD today. Credits are legal tender for all goods and services which are neither property, wages nor interest.
• The exchange rate between Values and Credits is determined by the free market.
• Taxes must be levied in Values.
  

N.B. The definition of "legal tender", btw, doesn't mean that you have to use that currency; it means you must accept that currency if offered. If the electric company is willing to accept payment in oil-packed tuna, that's great, but if I offer them dollars, they must discharge my bill in dollars.

Following this system, we're free to inflate our economy as much as we like, but our indebtedness must be financed with real money, our wages must be paid with real money and real property (land) must be purchased with real money. On the other hand, our iPods, car washes and battleships can be paid in flexibly money that we're free to invent as necessary. Our true economic situation would be apparent to everyone, as would the real cost of the things we purchase, because we'd be unable to finance our purchases with financed money. If we over-inflate the money supply, we'll either see the pain right away, or, if it's really necessary, delay the pain but see it loom ever larger on the horizon.

Semi-fractional banking would not come for free; we'd pay the piper with service-charge friction converting between the two currencies (although I suppose that, much like ATMs, your own bank wouldn't charge you if you have an account), but the stability and openness we'd get in exchange would more than make up for the friction.

It would be the best of both worlds.

I've shrunk!

I had an appointment with the allergist, and as part of the checking-in procedure I was weighed & measured. I'm fat, which's not news to anyone, but I'm 5'11.25" ! Holy crap! I used to be 6'0" -- that's a lot of less height.

Yours lemurly is creeped out.

Why Christianity isn't Wrong, or, Atheists Suck Too

Truthy, adj: quality of a proposition held to be true because of coinciding with an individual's existing biases -- see "faith".

So, I've been beating up on fideists a lot lately (defined for my purposes as those who go by faith without regard to reason; for a better definition, consult your local U.D. graduate). I tend to mainly poke at Christian fideists, because they're the ones that drive me crazy personally -- if I lived in Gujarat, I'd be harping on the JDP and Hindu fundamentalists instead. But, as an American, it's the folks like the "fish"-oriented dental assistant who can't believe that I don't go to her megachurch, much less to any other church, and think's it's really weird that I don't keep my mind buzzing in a vacuum of "how can I praise Him enough" songs -- her ilk creep me out even worse than Furries (and, I have to say, if you ever have the chance to stumble across a Furry Convention, don't -- you'll sleep much better that way). Nonetheless, there's another group of fideists that I can't stand, either: atheists. Most prominantly you'll see the writings of Richard Dawkins, who's so close to being "spot on" that he just couldn't be more wrong if he tried. I've attended Southern Baptist churches when I was the guest of a True Believer, and, being a guest, wasn't about to insult my hosts by not attending with them, and I agree with Dawkins that the larger ones can definitely have a queasy sort of Nuremburg Rally kind of feel to them. It's that whole "hey, we don't need reason; we have faith" thing. Creepy.

Atheists like Dawkins suck too, though. They take the fact that there's no real evidence in support of religion (and by evidence, I mean empirical data, not "an old book says so", "I can't explain everything any other way" nor "I managed to quit drinking") and therefore conclude that since there's no evidence for God, that there must not be a God. Need one say that this is patently rediculous? Even from the perspective of simple logic, modus ponens (A implies B) says nothing about B when A is false. That sort of fallacy actually has a name: "denying the antecedant". Yet presumably educated people run around stating with conviction that there's no God (and that therefore Christianity, Zoroastrianism and the Flying Spaghetti Monster are all false).

As far as I'm concerned, these people are guilty of a sin: rationalism. Rationalism is the belief that reason is sufficient to explain life, the universe and cheesecake, without the need to apply the guesswork of religious faith. The sad thing is though, that the belief that sufficiently well-developed use of reason (multiplying scientific truths throughout the ages, yada yada yada) is sufficient to explain everything is itself a religion! By extension, so is Atheism.

The standard arguments of faith versus atheism all rely on faulty epistemology (the philosophy of knowledge). In order to know something, the following must hold:

1. It must be true
2. It must be believed to be true
3. The believer must have sound reason to believe it to be true

Religious people, including atheists, rely on Aristotelian logic, since it suits their agenda. Specifically, they rely on the notion that if something is not true then it must therefore be false. From an epistemological point of view, this is not only a dead end: it's intellectual masturbation. This was found out by the failure of Descartes's project to ground truth on some unchallengeable edifice, and to thereafter derive all the other things we need to know. He famously chose St. Augustine's cogito ergo sum (and falsely took credit for it, I might add, the bastard), and thereafter immediately ran out of progress, so he invented a cock & bull story to show that God exists, and therefore went on to prove black is white and got himself killed at the first zebra crossing. Or not. But he did end up having to invent a story to explain God's existence purely on the basis of his own, and his explanation is so full of holes that college sophomores can pull it apart. (He should have stuck with analytic geometry (genius!).) There's a solid reason why DesCartes had to cheat and invent an argument for God to save his project, and that reason wasn't just trying not to get in trouble with the Church (although I suspect that did weigh upon him heavily). Standard Aristotelian logic is what is called truth-preserving. This means two things: first of all, if you start out with the truth, the whole truth and nothing but the truth, this logic will only give you the truth as a result. If you start out with a falsehood, on the other hand, all bets are off. By pulling in a false argument for God, Descartes could then make other arguments that he couldn't make just by relying on his own existence. He needed to do so for another good reason: truth-preserving logics cannot create new information; they can only rearrange the expressions of truth you already know, rearranging them into a form that is so direct that you can't miss it. No truth that doesn't already exist within the axioms of such a logic system can ever be derived by one -- Aristotelian logic cannot create new truths. Therefore, this sort of logic can't perform any explanation that doesn't really beg the question, using circular arguments. In Aristotelian logic, truth may neither be created nor destroyed. Basing claims to something unclaimable on the basis of this kind of logic is therefore appealling to people whose primary motivation isn't to find new truths, but to support something they already hold to be true.

The way out of this problem is to use a different kind of logic, namely, intuitionistic logic. Intuitionistic logic isn't truth-preserving, but it is knowledge preserving. At any given time using such logic, you always know that whatever you've derived is sound. But in the process, you give up the notion that anything is true unless you can directly demonstrate the fact -- specifically, you have to give up the notion of the exluded middle. That Christianity cannot be proven to be true thus does not mean that it has been proven to be false; it just means that it can't be shown to be true. Thus, to actually know that there is no God, in addition to believing there to be no God and there in fact not being any God, one must have a direct intutionistic proof that God does not exist. A proof that religion is false, or, that some particular religion is false, does not suffice. So far, I'm not certain that anyone has been able to formalize just what might constitute evidence of God's nonexistence, but I feel pretty comfortable wagering that no-one has found any so far. By weight of the three tests above, if anyone tells you there is no God, you can rest assured that they're acting on faith (or bias), because they simply can't know such a thing.

Worse yet for the sin of rationalism -- we've actually proven rationalism to be wrong. The nutshell version goes like this: there was a guy named Godel, who proved that an arithmetic (any arithemetic, not just base-10 number-stuff) cannot be both consistent and complete. This pretty much blew everyone's mind but Einstein's (Einstein was more mystified that Godel voted for Eisenhower). This poked a hole in the balloon that everyone had been carrying around since the Enlightenment, that there was a big theory of it all that we could learn and then we'd understand it all. Everyone sighed and said that it was probably hubris that we thought that mere mortals could have learned it anyway, but this didn't stop people from trying to patch the balloon (anyone remember "Gott wurfelt nicht"?) Eventually Alan Turing (the "Turing test" guy) started studying this mess, which by now had been named Godel's incompleteness theorem. Leaning on this work, he defined what it meant to be a full-fledged programming language, then proved that no computer, no matter how powerful, can ever decide whether or not a given program will eventually halt except by actually running the program. Everyone who wasn't a computer-scientist yawned and went back to their knitting, but eventually a guy named Chaitan came along. Remember the balloon that Godel popped? Chaitan blasted it to smithereens with a shotgun. What he did was to think about programs, reasoning that some programs halt properly, and some programs don't. Therefore, there must be a percentage of programs that halt, which's the same thing as saying that there must be a probability that a randomly selected program will halt. We also know that this probability is greater than zero but less than one. He went on to show, based on Turing's work, that this probability, called Omega, cannot be computed. This isn't like saying "what's the last digit of Pi" (there is none), or saying that you can't compute one-hundred-million factorial factorial factorial (impractical, but not impossible). What he proved is that the number, which does exist, cannot ever be known. And I don't mean "can't be known by humans because we're not smart enough", I mean as in "if the number is known, it can only be known by God, because unless you already know it you can never arrive at it". Omega thus falsifies the rationalist hypothesis.

You can have faith that God exists (you can even have faith that a desert-dwelling bronze-age nomad named "Abraham" was chosen to beget a nation that God authorized to commit genocide, if you really like), or you can have faith that God doesn't exist. But you can't know either. In the words of Militant Agnostics everywhere, "I don't know, and neither do you."