Jennifer and I have enjoyed this and thought we would share it with ya’ll.  Here is a link to a live performance of Nickel Creek on their farewell tour.  It is about two hours long  and you can download it if you want in mp3 format.  Enjoy, that is if you like this kind of music.

Click here for link.

This would be awesome.

“I’m thinking about Ron Paul” as a running mate, Kucinich told a crowd of about 70 supporters at a house party here, one of numerous stops throughout New Hampshire over the Thanksgiving weekend. A Kucinich-Paul administration could bring people together “to balance the energies in this country,” Kucinich said.”

For the past three weekends, Michael Tonarely and I have enjoyed spending time with my family: hunting. Deer hunting, to be exact. We would drive two hours north to the Lake of the Ozarks, drink beer and smoke in my dad’s taxidermy shop long after we should’ve gone to bed, and then get up a few hours later–before the sun–and get ready for the day.

Hunting is a serious tradition in my family. My dad took my brothers and me hunting as soon as we were of legal age. It was like a rite of passage. It was also an extremely bonding-type experience. In fact, masculinity, in the forms of learned skills and behavior, were passed on and picked up from my father to us. Everything from little tricks of how to stay warm to proper and safe ways to hold a gun.

The many hours spent in the woods as a child has made a large impact on me. It was there I learned a love for nature. Conservation was instilled in me by the very culture of hunting I was exposed to. High ethical standards were preached, ones I took serious enough to follow: never litter, leave no trace, never point a gun at another person, never leave an animal wounded, never kill one needlessly.  

And just as my dad taught us, his dad taught him; my grandpa learned from his dad, and, no doubt, he from his. All the way back to who-knows-when. And since I’ll be having a son soon, I expect to pass on the family heritage.

I want my son to love the outdoors, to see conservationism and environmetalism as comfortable bedfellows. Too often they are seen as opponents. I mean, how many hunters do you know consider themselves environmetalists? They’ll usually embrace the term conservation, but that “e” word is for fruits. But I learned from Wendell Berry that the best of the one is the best of the other.

So there are a plethora of ethical issues when hunting comes up. Is it right to kill animals for sport? Of course, in most cases we are killing animals we eat. Does that make it better? The only time I’ve advocated not eating animals is when it supports cruelty to those creatures, as in the case of buying meat raised on factory farms. Hunting seems far superior to that, of course when done ethically.

But for some folks that’s not good enough. For instance, some (http://www.all-creatures.org/ca/ark-192-hunting.html & http://en.wikipedia.org/wiki/Anti-Hunting) attempt to make the case that hunting is morally wrong across the board. And then throw in the subject that hits close to home (at least my parent’s home)–taxidermy. That’s pretty much just plain, old trophy hunting. Not to say one who hunts such animals doesn’t utilize their meat.

Anyway, what do you all think?

This is an interesting post:

http://patrickdeneen.blogspot.com/2007/11/eating-oil.html

I just had one amazing Thanksgiving dinner. Not that I don’t usually enjoy amazing Thanksgiving dinners every year. I was thinking though just now about food in general. What makes food appetizing? Last week I went hiking and ice climbing all day. So by lunch time I was of course starving and needing some energy. My lunch consisted of 2 bagels (carbs) and a can of mussels (protean). Not your normally appetizing meal. If I had it now I don’t think I would find it that tasteful. However at the time, it was the most amazing lunch I remember having. Even this Thanksgiving dinner wasn’t as amazing to me as that lunch was when I had it. I don’t really even remember what it tasted like.

I find it interesting that we go all the time to these expensive restaurants in search of amazing food, and there I found it in the backcountry in a not normally appetizing form. Maybe the search itself exceeds the actual product… or maybe we are looking in the wrong spot. To bad I don’t have the answer to everything. Sometimes I think that would be kinda of nice.

Here is an article that was interesting to me on the issue of embryonic cells.

http://news.bbc.co.uk/2/hi/science/nature/7099758.stm

… on the off chance that it might reach someone who needs it.

This is Chimay Triple, an authentic Trappist brewed Belgian Ale.

The larger size, on the left, has a cork rather than a bottle cap. When opening the cork top, treat it like a champagne bottle. Open it away from your body and any breakables.

This is part of a series on the business cycle

Money, Money, Money
Money, Loans, Assets
Assets, Land, Bubbles part 1 of 2
Assets, Land, Bubbles part 2 of 2

Assets, Land, Bubbles (cont.)

Land is the single largest source of collateral that has the propensity to increase in value. Collectables are also used as collateral but their use represents only a fraction of the total pool. Other goods are used as collateral such as buildings and cars but their values do not increase and therefore do not have the ability to increase the total pool of collateral above their reproduction costs. A new car, for instance, will never be worth more than its present value. Likewise for most other goods minus collectables and land. Since our money supply is backed by our collateral and assets it follows that the money supply can only grow sustainably if we are more productive as a society – expect when land increases in value through speculative bubbles in which case the supply of money will be artificially high until a correction occurs.

And here, finally, we find the cause of the business cycle. The business cycle is at its root a land value cycle. The speculative bubbles in land such as we’ve seen over the past five years leads to a larger pool of value available for use as collateral. This value attached to land does not represent real goods at all but instead represents a quantity of goods people are willing to forgo to gain access to a given location. This new found collateral then makes its way into the money supply through bank loans pushing the total money supply far beyond what would otherwise be supported by the society’s total assets.

This glut in the money supply leads to inflation and a corresponding higher price for goods and services. This is not necessarily so bad as the economy adjusts to the higher prices through higher wages. But eventually this bubble bursts, the value of land drops, equity vanishes, people default on their mortgages and the money supply drops. This leads to a recession as prices take time to adjust to the new supply of money. Meanwhile the deflation caused by a dropping supply of money causes people to hold on to their money. This decreases the velocity of trade and furthers the effect of the recession. Without artificial mechanisms to increase or decrease the money supply (read “The Fed”) the modern capitalistic world would suffer depression after depression.

All because of land.

What’s the solution? There are at least two. The first is to do what the Fed does now. Buy up monies during a boom to artificially slow the economy down and sell monies during a bust to artificially speed the economy up. There are, of course, lots of political and practical problems with this. Not to mention ethical problems. The other solution is much better imo. It is to simply take land out of the equation by taxing it. The reason land is susceptible to speculative bubbles is because the holding cost of land is low yet the demand for land is always increasing in the long run due to population increases and technological advances. For this reason it nearly always pays to invest in land. If, however, the holding cost of land were high, no one would own land for investment reasons, they would only own that which they planned to use productively immediately. Not only would this lead to fewer recessions, it would also produce a more equitable distribution of wealth since under this system the landowners would not be the sole beneficiary of equity bubbles.

1. You all should listen to my show, Almanac. It’s in the vein of This American Life, music stories and interviews. I run it every week and archive it on A Good Man is Hard to Find.

2. Paste Magazine is giving away a yearly subscription for “Whatever you want to pay for it”. I paid ten dollars, that’s about .91 cents an issue. This is a very good deal, go to pastemagazine.com and sign up soon. They’re a pretty good rag.

3. I am getting press credentialed for Sundance this week, Film.com is paying me, and giving me lodging and flying me out there. And I get to watch movies and be there for press weekend. It’s pretty sweet.

This is part of a series on the business cycle

Money, Money, Money
Money, Loans, Assets
Assets, Land, Bubbles part 1 of 2
Assets, Land, Bubbles part 2 of 2

Assets, Land, Bubbles part 1 of 2

In this final post I hope to shed light on one certain property good, land, and show how land differs in behavior from other goods generally used as assets or collateral. This differing behavior, as we shall see, lies at the root of monetary problems – both now and historically.

To be clear, when I use the word “asset” I am referring to everything banks use to determine loan qualification (wages, property income, capital funds, etc.) and when I use “collateral” I am referring to everything banks can count on taking when payments cease for whatever reason. The difference is minor but important. Banks may offer loans to a borrower with zero collateral if his wages are high enough but someone with zero assets has, by my definition, zero wage earning potential. Such a person, obviously, could never get a loan

To illustrate the role of collateral in money creation let’s say that John Smith owns a car value at $20,000. John might be able to go to his local bank and secure a short-term loan from his bank using the car as collateral. The car would still be his to use but the money would be new money created by the bank as shown previously. Now, it may be the case that John could have gotten the loan without any collateral at all, using only his wage earning potential as his asset, but it is doubtful that a loan under those terms would have fetched as low an interest rate given the increased risk exposure seen by the bank.

Using land as collateral works in the same way but in a bit more complicated fashion. When John Smith bought his house he put down 20% of the loan amount as his down payment (read “collateral”). If the property was valued at $200,000, the down payment would have been for $40,000. When bankers talk about home loans the use another term to help clarify. That term is “equity.” Equity is nothing more than the difference between the amount borrowed and the market price of the home. After John buys his home we can say that he has $40,000 in equity but in two years when his home is assessed at $300,000 his equity has increased to $140,000. This is new collateral that John can use to secure bigger and better loans.

There are at least 2 ways in which John’s new equity can be used to increase the money supply. The first is through a home equity loan. In this way John goes directly to the bank and negotiates a loan with them using his equity as collateral. The money given via the loan is new money. Another method is as simple as selling and rebuying. When John sells his home and pays off his debt he has $100,000 (140,000 – 40,000 downpayment) more funds available to use as a down payment on a new loan. If the new loan is for $500,000 than $200,000 of new money has been created.

In real estate it is a common misconception that houses increase in value. In truth this is rarely the case with exceptions being only for those homes with architectural/historical significance. What actually happens when a home appreciates is the land it sets on gets more expensive. Land appreciates, not houses. Location, Location, Location. We can see then that the value of land, not buildings, increases the money supply over and above the initial assessed value over time.

To be continued…

Becker and Posner are two well known modern economists who discuss popular issues publicly on their blog. Yesterday they wrote about Billionaires due to the recent article in Forbes on the same. Their posts are always good, these ones especially so.

Billionaires-Becker

The Proliferation of Billionaires–Posner’s Comment

Pat Robertson’s recent endorsement of Rudy Giuliani comes as a bit of a shock. Now, that’s not an original comment, I know. It’s been all over the news. But I bring it up to discuss the irony I find in it.

And that element is this: Robertson is the founder of the Moral Majority and has built his entire popularity and work on standing up for “traditional family values.” Now he supports a candidate who stands diametrically opposed to what he believes — at least in part.

Why?

Well, I’m afraid it’s what I’ve suspected all along: Too many so-called conservatives wave banners of life yet are really only interested in pro-business economic capitalism. And war, of course; but that’s part and parcel of conservative economics.

So when the very same guy who relentlessly attacked Bill Clinton’s lapses of sexual morality with Monica Lewinsky and made comments about how the 9/11 attacks were the result of America’s tolerance for homosexuals and abortion now hails the only Republican candidate who actually supports these items, one is allowed to be suspicious.

It may simply be as Richard Land put it: Rudy is the establishment candidate and Pat is an establishment guy.

Regardless, this unique political event is a turning point. Surprising to those that really care for life but not for those who see behind all that.   

This is part of a series on the business cycle

Money, Money, Money
Money, Loans, Assets
Assets, Land, Bubbles part 1 of 2
Assets, Land, Bubbles part 2 of 2

Money, Loans, Assets

In my last post I glossed over quite a few important things one of which I hope to shed more light on presently. Mary Jane, in my example, was able to receive a loan of $90 from the bank which started the whole money creation iteration process. But on what terms will a bank give out such a loan? Every outstanding loan represents risk to the bank if the borrower cannot pay up. There must be something to “back up” the loan if the borrower defaults. This “something” is the borrower’s assets and the type and value of his/her assets is critical to the loan process and, therefore, critical to the money creation phenomenon.

When Mary Jane came to receive her loan the bank took a look at her many assets. These might include but are not limited to such things as her wages, car, house, and other types of property. The size of loan the bank will approve Mary for is proportional to the value and liquidity of her assets.

Stepping back for a moment one can observe that the money creation phenomenon is not as magical as it seemed at first. Yes, banks create money out of thin air but that money is backed legally by physical assets which are used by borrowers as collateral. Some people wish to have money backed by gold or silver but, imo, our present system is far better. When assets back the money supply money is free to expand with the creation of assets and, if everything else is in order, we can be assured that this process will supply the needed monies to keep a modern economy in working order.

Why is this the case? Well, in an expanding economy there is a need for a higher total quantity of monies and, thankfully, this supply can be met thanks to the higher than usual asset creation that accompanies an expanding economy. Likewise, a contracting economy might suffer from inflation if the money supply is too great but a contracting economy means fewer total assets and a resulting decrease in the money supply to match. The process seems like it would work well. In theory.

So why does it not work this way in the real world? Why do we need a Fed to control the money supply to keep recessions at bay? The problem stems from the bank loan process. When banks evaluate assets they start with the market rate for the good in question. If it’s reasonable to assume that Mary Jane’s car could fetch $100 at an auction then the bank would have no problem writing her the $90 loan using the car as collateral…EXCEPT if the loan did not have to be repaid for, say, 5 years after which her car would without question fetch a sum less than $90. In this case the loan may not be given. Likewise for other goods. The collateral required would be judged against the discounted value of the collateral over the life of the loan. Obviously this might involve some fancy math and a great number of assumptions about the future. For most goods the process has been worked out well and there are safe practices banks use to minimize risk and value goods properly taking all these factors into account. But there is a 500lb gorilla in the room.

That 500lb gorilla is… you guessed it, land. And I’m out of time so I’ll discuss that in a following post.

Next Post

This is the first of a three part series on the business cycle.

Money, Money, Money
Money, Loans, Assets
Assets, Land, Bubbles part 1 of 2
Assets, Land, Bubbles part 2 of 2

Money, Money, Money

Banks create money from debt. That’s right, the popular myth of “The Fed” printing money to supply our needs is wrong. Money is created by privately owned banks ex nihilo. Just sign on the dotted line, please. The process is remarkably simple.

Step 1) John Doe goes to the bank to deposit $100.
Step 2) Mary Jane agrees to terms of a loan for $90 plus interest from the bank and is issued a checking account and a check book.

That’s it, $90 created from nothing. John still has a $100 in his account and Mary has $90. That’s $190 but only $100 sitting in the vault. But that’s not all. Let’s say Mary spends her $90 loan on a bike from Edward’s Bike Shop. Edward also banks at the same bank so he takes her $90 check and deposits it in the bank. With this new deposit, the bank can now make a loan of $81 more. This $81 will return to the bank in the same form and the process will be repeated. In the end, the $100 bank deposit from John creates 1/.1 or 10 times the initial deposit which adds up to about $1000. In economics this process is called the money multiplier. It’s not challenged by any economist, orthodox or marginal, they all agree that this is how money is created.

But why a $90 loan from a $100 deposit and an $81 loan from a $90 deposit? This is where the Fed steps in. The Fed has regulated how much reserves a bank must keep on hand at any one time. Ever since 1992 the number has been 10%. So for every $100 of outstanding accounts against any one bank, they must have $10 deposited at their local federal reserve bank.

But why should you care? Well, maybe you needn’t. But it does help to understand the business cycle and since it looks as if we’re fast on our way to a recession, you may want to know a little bit about it all. In a following post I will talk about how money creation is connected to assets and how asset misevaluation can lead to gluts and famines in the money supply.

And yes, land has something to do with it all.

Next post.