Airs – Ian Lance Taylor

There is a disagreement as to just what caused the Great Depression, but the general problem once it started was one of liquidity: there was not enough money available. This led to price deflation, which led to people saving their money rather than spending it, which led to people not buying things, which led to workers being laid off, which led to even more people buying even less, which led to a slow moving positive feedback loop driving down the economy. The New Deal broke the feedback loop by pumping money into the economy and by insuring bank deposits, but the economy did not really get going again until World War II greatly increased employment by opening armament factories and putting millions of people into the armed forces.

It could never happen again, because the government would never permit liquidity to get too low. Or, would it? As we all know, the years after 2001 saw a credit boom, visible primarily in the spread of mortgages but also in the gigantic market for credit default swaps. Viewed at a snapshot in time, extending credit can be seen as creating new money. When the total indebtedness of the economy rises, there is in practice more money floating around—although of course all of the new money is supposed to get resolved into cash at some point.

The bills on a lot of the credit are now coming due. Some homeowners are defaulting, which pushes the debt back to the holders of the mortgage. Likewise for banks going bankrupt. Large financial organizations are writing off debt, which means that they need more cash to keep their balance sheets stable.

Although on paper this does not affect liquidity, I would argue that the resulting drop of the supply of credit means that at the present moment liquidity is going down. With the price of housing and oil dropping, it is possible that we are heading for a period of price deflation. The government is working to counteract that by pumping money into the economy via the banks, but the banks are using the money to prop up their balance sheets rather than extending new loans. The amount of money the government has put in is a pittance compared to the size of the credit default swap market (though it is also possible that the credit default swap market will largely cancel out—we don’t really know).

So it seems to me that it is possible that we are heading for a positive feedback loop like the one which made the Depression so bad. Fortunately today’s government is much more reactive than Hoover’s, and if Obama wins it is likely that he will immediately reprise many of the ideas of the New Deal, notably by increasing spending on infrastructure. So it will most likely all just fizzle out. We’ll see.

I like the system beep on my laptop. I’m used to hearing it for file completion and in emacs. I seem to be the only person who does like the system beep, though, considering how difficult it was to turn it on on a brand new Fedora 9 installation. Previous Fedora installations have not had a system beep after upgrades, but it was easily fixed by forcing a modprobe of the pcspkr module. Unfortunately, that was not sufficient for Fedora 9. After spending about an hour on the issue, and looking at acceptably obscure places like System > Preferences > Hardware > Sound, I discovered the secret. I had to right click on the volume control in the upper right corner, and select “Open Volume Control” (this does not give the same result as Sounds & Video > PulseAudio Volume Control in the main menu, but I discovered later that it is the same as System > Preferences > Hardware > Volume Control). Then in that window I had to select the menu item Edit > Preferences, which gave me a list of “Select tracks to be visible”. There were already items visible, but it turned out that I had to explicitly select “Beep”. That gave me a volume control for “Beep” alongside the volume controls for “Master”, “PCM”, and “Microphone”. The volume was set to zero, and I set it to the maximum. I also had to explicitly click on the “Mute/unmute Beep” button. After doing all that, I finally had my system beep.

I now understand that when people talk about the “Linux desktop” they mean the process of making Linux as baffling as Windows. This may actually be the right thing to do. As a long-time user of computer systems, it is possible that my notion of what is easy to understand and to use is radically different from that of people with a different life experience.

California is very fond of the ballot initiative. Coming from a different state with a different political culture, this baffles me.

This biggest, most obvious problem with democracy is that the majority will vote themselves benefits at the expense of the minority. The authors of the U.S. constitution were aware of this, and they created elitist systems on top of direct democracy in an attempt to minimize the issues. Senators were elected by state legislators, not by the people, and the president was elected by the state electors, not by popular vote. Over time we’ve move toward more direct democracy, but we still remain a representative democracy: our laws are not made by the people, they are made by the representatives that we elect.

When it works, this is a good system. We are all busy people, and we can’t keep track of all the important issues. Neither can our representatives, but they can hire staff to help them, and they can focus full time on deciding these issues wisely. Obviously in practice there are many difficulties, mostly in the area of money, but it mostly works well enough.

Except in California, where many important issues are decided by a direct vote by the people. I think this merely encourages demagoguery, not on behalf of a person, but on behalf of a specific issue. I don’t want to have to research these issues and figure out where I stand. I want to elect a person who has the time to consider them in detail, and who is intelligent enough to make a good decision.

I wonder how feasible it would be to pass a ballot initiative which made it much harder to create new ballot initiatives.

George Friedman has a good short analysis of what happened in South Ossetia from the Russian perspective. He doesn’t have an explanation from the U.S. perspective, and I don’t either. It seems possible that Saakashvili ordered the invasion of South Ossetia without any support from the U.S., and that the U.S. felt obliged to support him after the fact. It would have been very irresponsible for the U.S. to encourage his attack, given that 1) it predictably led directly to a confrontation with Russia, and 2) the U.S. could not militarily support the move even if they wanted to.

Given that the U.S. supported an independence referendum for Kosovo, they should have supported one for South Ossetia as well. I see no principled difference there, just that Georgia is an ally and Serbia is not. With Russia now occupying South Ossetia (and Abkhazia) the chances of a real independence referendum seem low.

The only reason the small war is of any interest to the U.S. is, of course, oil. The Baku-Tbilisi-Ceyhan pipeline was designed to get oil from the Caspian Sea to the West while avoiding Russia and Iran. It runs through Georgia. This is the pipeline featured in the James Bond film “The World is Not Enough,” though the real one is presumably more prosaic.

My aunt, who lives just outside of Portland, Oregon, told me that one of her neighbors told her that Barack Obama was the anti-Christ. She thinks the comment was meant fairly seriously, and in any case felt too intimidated to reply.

I told her that she should have pointed out that the anti-Christ would be doing better in the polls (“And all that dwell upon the earth shall worship him, whose names are not written in the book of life” [Revelations 13:8]).

George W. Bush promised that he would be a uniter as a president, but he failed. I wonder if it is possible for anybody to be a uniter for the U.S. these days.