JoNova

A science presenter, writer, speaker & former TV host; author of The Skeptic's Handbook (over 200,000 copies distributed & available in 15 languages).


Handbooks


Advertising


Australian Speakers Agency



GoldNerds

The nerds have the numbers on precious metals investments on the ASX



The Skeptics Handbook

Think it has been debunked? See here.

The Skeptics Handbook II

Climate Money Paper



Archives

Books

Carbon tax and Sydney Uni economics, both slugs on the economy

Michael Harris, Senior Fellow in the School of Economics at University of Sydney, has the impossible job of defending the monstrously ineffective carbon tax against the pointless-but-efficient “Direct Action” program. The carbon tax cost $15b, and cut emissions by 12 million tonnes. The Direct Action plan cost $660m, and is projected to save 47 million tonnes.

Having no numbers remotely on his side, Harris goes quantum semantic. Watch the leap. A tax is not a cost, only a transfer. That makes your tax bill so much easier to pay:

There is also a difference between costs to the economy, and transfers within it. The amount of revenue raised through any tax is not a cost; it is simply a transfer from one “pocket” to “another”. The money has not been destroyed, and it remains available to be spent on something.

Now it seems to me that if I buy a beer, it’s a transfer from one “pocket” to another pocket and if that money is destroyed in the process, that would be the end of the bottle shop. The world of economics rather depends on that money not being vaporised and being available for the shop owner [...]

Volatility from Vega – Why math models can’t predict the future

Guest post by Eric Worrall

How can we predict the climate, when we can’t even predict financial markets?

US Subprime House Price Crash

Financial markets are a high stakes battle between teams of skilled traders, armed with powerful computers. [In a perfect market] The factors that affect market prices are well known, and for mathematicians, surprisingly simple to describe. Yet with all this underlying simplicity, traders don’t attempt to predict the future, because they know from bitter experience that predicting the future is futile. Instead, they use their models to gain a deeper understanding of the present.

Say you are trading financial options. Options are a right to buy or sell an underlying commodity (gold, shares in a company, tons of beef, whatever) at a future point in time, for an agreed price. The exact rules vary in different places, but essentially – your option gives you the right to buy an ounce of gold in one month, say, for $1000.

If so, and the price of gold is $1,200 per ounce, then your option is worth $200, right?

Wrong. In one month, the price of gold might be $800, in which case your option is worthless – [...]

Quantitative easing bleeds the poor and feeds the rich

In the past, David and I have written about how money supply is rampantly expanding, and how this benefits the spenders and the speculators while punishing the producers and the savers (in a relative sense of course). We’ve been called conspiracy theorists for pointing out systematic problems with paper currencies.

Today in The Australian we find some more people who agree with us: Rupert Murdoch, Veteran Reserve Bank economist Peter Jonson, Warwick McKibbin (former Reserve Bank Board), and Bob Gregory (Professor of economics at ANU and another former Reserve Bank Board member). It’s good to see this issue make the front page. Shame it wasn’t there 15 years ago.

“Rupert Murdoch had warned G20 ­finance ministers that money printing by central banks had exacerbated inequality…”

“Mr Murdoch is saying what a lot of people including central bankers are saying in private and increasingly in public,” said Warwick McKibbin

Here’s the latest US money base* graph. The massive injections started in August 2008, the numbers ran right off the old graph scale. It was a temporary liquidity injection to tide us over difficult times. It took 90 years to grow the US base money to $800 billion. Now six years later [...]

Buy gold while it’s in the ground (Plus David and Jo will be in Sydney at the Gold Symposium – Monday)

UPDATED (Already) Money is grubby thing, but financial independence means freedom. Freedom to spend time writing what a heart believes instead of what an employer demands. (Freedom to follow the most inexplicable whim — like tossing the 9-5 day to debate details of dendroclimatology with people who detest you). I wouldn’t be able to indulge in the luxury of writing this blog if it weren’t for the gold shares that keep food on the table. Next Monday David is speaking at The Gold Symposium in Sydney. (I’ll be in the audience.) Who should go? — only people who don’t want to be poor. I want to see both these independent conferences succeed (The AEF too), I want to share the word about both money and science, and I want to help independent spirits meet up. That’s why I’m giving them both a shameless plug before the article. There is a big overlap between gold and skepticism: skeptical of government science often means skeptical of government money too (see We are all Austrians now). For the pure-science readers here, it may all seem thoroughly odd, but while some will paint gold as a fatuous symbol of pointless wealth – and sometimes [...]

Bonds set record on record, stocks down, gold leaps

The world is so poised on the edge. The jitters are sweeping through tonight.

Just suppose you have $100m in assets that you are nervous about. You cannot stick that amount in a bank, because government guarantees only cover the first $1m or whatever, and banks are all risky now. So you buy into the biggest, most liquid market in the world — US Treasury bonds, that is, the debt of the US Government. Sure, you risk losing a few percent as bond prices jostle up in the panic, but at least you preserve your wealth. So you sell your assets, convert the proceeds to US dollars, and buy US Treasuries.

So much money had run to US Treasury bonds that the yield — which was at a record low yesterday — just got a lot lower. People are happy to give their money to the US government for an historically low yield.

Yesterday things were more scary than any time since WWII:

On Thursday, benchmark 10-year Treasuries yields fell to a historic low of 1.5326 percent, according to Tradeweb. The previous low was in November 1945 when yields ended that month at 1.55 percent.

Tonight, things are [...]

Murdoch tweets about money printing and inflation, reality won’t be far behind

The game is up when everyone knows the only way out is printing money, because then everyone knows inflation is coming, and the bun-fight begins. Everyone wants the wage rise, the payment now, and to buy the commodities that they won’t be able to afford tomorrow. Price tags begin that rising spiral. I don’t think we are on the verge just yet, but it can’t be that far when someone like Murdoch is broadcasting it.

Rupert Murdoch tweets:

‏ @rupertmurdoch

Governments worldwide have borrowed 100 trillion last ten years. Defaults inevitable sometime soon. Means crash, hurting rich and poor.

‏ @rupertmurdoch Of course markets stay high with central banks printing huge sums, inflating everything except jobs.

The only question that matters then, is are they “printing”, and how long have we got?

US Money Base Figures

This is the US money base, starting in 1918.

You can see the moment Lehman Brothers went under. It’s that “bend”.

 

..

That graph again, logarithmically, so we can put the last 90 years in perspective. Remember the oil crisis, the Vietnam War, the 1987 crash, LTCM, and the dot com burst? They don’t [...]