Economics: A Strong Headwind Against Inflation

 (Drivebycuriosity) - Pundits claim that the inflation rate will continue climbing. According to the University of Michigan the US inflation expectations rose to 3.3% (stlouisfed ). I beg to differ.

 

                          Helicopter Money

There is a strong headwind: The slowing monetary growth (image above x.com ). In January the money supply M2 grew 3.9%. The relatively slow monetary growth works like a brake and will cool inflation in the coming months.  

The recent high inflation was caused by a deluge of money in the years 2020 & 2021. In 2020 & 2021 the Biden government flooded the economy with stimulus checks in the value of trillions of dollars to fight the Covid19 recession (American Rescue Plan). The government checks got financed with massive bond purchases by the Federal Reserve (Quantitative Easing known as QE1,QE2 & QE3).

The government money landed directly on the bank accounts of the Americans, blowing up the money volume M2 (bank notes & coins & deposits at banks). Milton Friedman described this as helicopter money (cato ). As a result in 2021 & 2022 the US money supply M2, the engine of the inflation, jumped 40%. Unfortunately the money deluge met a constrained supply of goods & services partly - partly because of Covid19. So the price level inevitably had to jump and the inflation rate (first derivation) went up.

Fortunately the money flood ended already in 2022 and the money supply shrank for a while. Since October 2023 the money volume is growing again, but only moderately. Since inflation follows the growth of money, the inflation rate (growth rate of prices) will follow the pull of the slowly growing money supply and the inflation rate will stay low. 

 

 (source )

                         Causal Relationship

The causal relationship between the money supply and inflation was already recognized by Nicolaus Copernicus! The astronomer explained in the year 1517 why "too much money" causes inflation. Copernicus` "quantity theory of money" is based on observations: Early in the 16th century Spain conquered today`s Latin America and looted the silver stocks. The Spaniards send the precious metal to Europe where it was printed into coins and used as money.

As a result the European money supply jumped, but the supply of goods & services did not change much. The flood of money raised suddenly the demand for scarce goods & services and caused a jump of the price level.

Copernicus`findings lead to quantity theory of money. The theory is represented by the basic formula M X V = Q X P, meaning M (money) multiplied with V (the velocity of money) = Q (available goods & services) multiplied with P (price level). The dynamical version today means M (growth rate of money supply) X V = Q (real GDP) X P (inflation rate). Since the real GDP (Q) does not change much, a sudden jump of the monetary growth rate (M) leads to a rise of the inflation rate (P). 

 

( source)

                       

Elaborated studies by Milton Friedman, Karl Brunner, Allan Meltzer and many other economists (known as Monetarists) confirmed Copernicus & their quantity theory of money. They described in the 1960s elaborately how and why the inflation rate follows the growth rate of money with a time lag (causal connection).

 ( source)

Those who ignore the strong head wind from the slow monetary growth are economic illiterate & ignorant of history as well.

 

Architecture: The Brutalist Is Everywhere

 

(Drivebycuriosity) - There is a lot furor about the movie "The Brutalist" ( imdb). But brutalist architecture is more common than Hollywood wants you to believe. Here I present some brutalist constructions I spotted on my travels.

On top of this post an image from Salt Lake City, followed by shots from Denver

 

Above follows Rome

 

Then follow Panama City & Vancouver

Above brutalist London 

Followed by Mexico City

 

and last but not least Bangkok

Enjoy!

World Peace & Sanity: Fuck Ukraine and European Union, Von der Leyen plus Kanzler wannabe Merz

 (Drivebycuriosity) - In order to get back peace & sanity: Fuck Ukraine and the war mongers European Union, Von der Leyen plus Kanzler wannabe Merz

Science Fiction: Ninefox Gambit By Yoon Ha Lee

(Drivebycuriosity) - Yoon Ha Lee belongs to the stars of contemporary science fiction. The Korean-American author, a trans man, majored in mathematics, and earned a master's degree in secondary mathematics education at Stanford University. He has worked as an analyst for an energy market intelligence company, done web design, and taught mathematics (wikipedia ). This background shows in his/her works.

Ha Lee`s debut novel, Ninefox Gambit, the first volume of the Machineries of Empire trilogy, received the 2017 Locus Award for Best First Novel (amazon ). It was also nominated for the 2016 Nebula and Hugo Awards for Best Novel and the 2017 Clarke award ( wikipedia).

I have mixed feeling with the book. Even though it shows Ha Lee`s love of mathematics, I missed logic. The plot, if there is any, reminds me of the surreal plays by Eugène Ionesco and similar authors, and I couldn´t detect any sense. 

Otherwise I enjoyed the the deluge of funny ideas & & aphorism: 

"Immorality was like sex: it made idiots of otherwise rational people". 

Many paragraphs read like futurist poetry: 

"The room was decorated with vases filled with the bones of small animals wired into the shapes of flowers"

"She kept expecting the world to change around her in response to the calendrical rot: for the walls to run like water, the light to shiver into turbulent colors, the sounds of human voices to shred into the cries of migrating birds".

"He became fascinated by the objects people kept in their homes. Musical instruments that could have doubled as Vidona torture implements, especially the ones with the hungry wires. Floating globes that imitated pleasing weather patterns on green or purple planets". 

"The gate was made of material condensed from a certain dying star" 

Anyway, I prefer Ha Lee´s short stories, especially "Counting Casualties" (published a Kindle book my review ) and "Beyond the Dragons Gate" (review ).
 

Economics: Why We Need Self-Driving Cars

 (Drivebycuriosity) - Car insurances are getting much more expensive these days. The average rate jumped 31% y-o-y ( bankrate). The rise is mainly caused by the climbing number of accidents. Car crashes are very often caused by human failure, like speeding, alcohol abuse, falling asleep, texting & driving, phone calls or other distractions ( source).

But there is a remedy - self-driving cars. Computers have a much shorter response time than humans. They don`t drink and drive, they don´t text while driving. Robots don`t drive aggressively, they don´t take drugs, they aren´t distracted, they don`t feel the need to impress by speedy driving. Self-driving cars do not engage in car races, they don´t do suicide by driving, they don´t fall asleep while driving and they adapt their speed to the traffic situation. They behave strictly rational.

Computers don´t make mistakes and they don´t behave unlawful. A computer needs just a nanosecond to respond to a surprising event (like a child on the street), much faster than a human brain. And with the assistance of sensors the computer can respond to the traffic situation (hydroplaning, ice, potholes) much better than a human driver. As a result self-driving cars have much fewer accident than vehicles driven by human.

Fewer accidents mean less lost lives and save a lot of costs for the economy. They will also translate into lower insurance costs, so driving will get cheaper which also will reduce the costs for Uber, Lyft and taxi rides. 

Self-driving cars are also more efficient, because computers can calculate the optimum speed, track and driving rhythm. Therefore they use less energy to move from place A to place B. Self-driving cars will burn less gasoline which reduces the consumption of fossilized energy and create less exhaust, dampening the greenhouse effect.

Welcome to self-driving cars.

 

Science Fiction: All You Zombies— Five Classic Stories By Robert A. Heinlein

 (Drivebycuriosity) - Robert Heinlein belonged to the ring of masters who developed the science fiction genre (Asimov, Clark, Frederic Pohl wikipedia). Like his colleagues he speculated about the future by appreciating scientific possibilities (hard science fiction).

 His short story "And he built a crooked house" shows what science fiction can do. The plot is based on mathematics and blends the weirdness of quantum physics with cosmology and ancient Hindu mythology about time & infinity. Apparently the basic idea inspired Ted Chiang ("Tower of Babylon") and other writers. 

The story is part of the small collection "All You Zombies— Five Classic Stories" (89 pages amazon). The name giving short story does not contain zombies, but narrates about the paradoxes of time travel and blends it with different topics like sex change, terrorism, paranoia and much more. The weird plot reminds me more of Philllip K Dick than of the Heinlein`s typical engineer tales ("The Moon is a Harsh Mistress")

The collection also contains a horror story, untypical for Heinlein as well.

"Crooked House" alone is worth to get the collection, that - in the moment of writing - is priced with $4.50.

Books: King Of Fools By Frederic Dard

 (Drivebycuriosity) - The french author Frederic Dard belongs to my favorite writers. His crime mysteries - set in Europa in the 1950s - are short, crispy and full of twists & surprises. I especially enjoyed "Bird in a Cage" & ""The Executioner Weeps" ( my reviews here    here). 

The novel "King of Fool" fits to this collection (amazon ). The novel is told in first person - as usual with Dard. The protagonist, a French man, has a surprising encounter with a beautiful English woman, while making holiday at the Cote Azure. The encounter starts a series of unexpected events (this is a spoiler free blog).

The story is heavily constructed, but entertaining. It is hard to believe how the leading characters behave, but I enjoyed following them anyway. Some parts are hilarious like scenes in a Buster Keaton movie, they are literary slapstick. And Dard´s descriptions of persons, events and cities, especially the peculiar presentation of Edinburgh and her population, are a pleasure to read.

 I plan to read more by Dard.