Archive for the ‘Economics’ Category

It helps to be a Nobel laureate when you spout out economic nonsense. But, if you’re not able to milk your 2008 Nobel prize, here are the top ways to become a successful bitcoin doomsdayer:

  • It helps if you have some sort of “authority” on the subject: Nobel prize in economics, MBA, degree in finance, Instagram pictures of you on a boat, etc.
  • Start by claiming bitcoin is a bubble and even claim that you’ve been saying that for years.
  • Claim that you’ve been “right” about bitcion and cryptocurrency for years. You don’t need to have any proof of such claims, just make the claims.
  • Make nebulous claims like “this won’t end well” and “this bubble is about to burst”
  • Use words like parabolic
  • Make as many unsubstantiated claims of bitcion’s “true value” as you can. Just make up a number: $1,000… $3,000… Doesn’t matter if you understand the technology or not. Just make something up that sounds scary to people.
  • Be as vague as possible as to when the bitcoin bubble will burst. Remember, being an internet oracle doesn’t require specifics or even a month. Oracles are made by claims of “soon” and “imminent”.
  • Be as vague as possible as to what value the bitcoin crash will dip to. In fact, don’t even say what the crash will be. This way, when there’s a correction of 40% you can still claim oracle status! Definitely don’t make a 100% accurate prediction to the exact thousand dollar amount that BTC will drop to.
  • Use the word bubble at least 3-4 times every hour; even in conversations unrelated to bitcion
  • Make reference to the mythical tulip bubble
  • Bask in the glory of being right 4-5x per year about the bitcoin bubble when there’s a major correction in the budding cryptocurrency market every few months!
  • Bitcoin shame as much as possible on social media!

P.S. In Krugman’s defense, he does make a valid point that he doesn’t understand technology. He also makes a reasonable point that bitcoin lacks viability as a transactional currency. That is valid given BTC’s current limitations for handling massive tx volume and BTC’s high tx cost. BTC will either need to change or (more likely) be used as a store of large amounts of wealth and for large transactions (e.g. buying a house).


Four years ago, I wrote about how the national parks can avoid the next government shutdown. It was a bit shortsighted in retrospect. Rather than utilizing bonds, national parks (any any organization for that matter) should leverage cryptocurrencies. There are over 1,000 cryptocurrencies in existence today (most should be avoided).  But a park like Yosemite Nation Park fits the mold of being a perfect fit for a cryptocurrency.

A Yosemitecoin has a specific use for a specific purpose. Want to visit and park at Yosemite? Pay in Yosemitecoin. Want to stay at a lodge in Yosemite? Pay in Yosemitecoin. It’s important to the ecological health of Yosemite to limit the number of visitors per season/year, so having a cryptocurrency that is limited in availability during a season would allow the price/cost of Yosemitecoin to limit the exposure of the park.

Mining of Yosemitecoin could prove to be a profitable venture for miners depending upon how the rules are setup for Yosemitecoin mining and exchanging. Exchanging could help boost the overall budget available for Yosemite National Park and allow for the park to afford more resources to ensure the park is well maintained and employees at the park are well compensated. A Yosemitecoin could even serve as a long-term retirement investment vehicle for park employees.

Getting into details for all of this would require much more than a simple blog post. However, every national park, non-profits, and global organizations (such as the red cross) could greatly benefit from having their own cryptocurrency that furthers their cause.

There’s been a whole lot of discussion about the looming Bitcoin bubble burst or how valuing Bitcoin isn’t possible because “it’s not a value-producing asset”. Bloomberg seems to have figured out that even if Bitcoin isn’t a bubble, it will still fail because of it’s “exorbitant energy costs“.

We can’t assume that current financial transactions take place over a magic network that doesn’t require any energy to run. It takes energy to print paper money and to run the massive servers that banks and financial institutions use all around the globe. It’s not just magic.

Sid Verma is on to something about Bitcoin’s energy requirements, but he came to the wrong conclusion. Bitcoin’s exorbitant energy cost is NOT going to be Bitcoin’s undoing. Rather, it’s precisely what gives Bitcoin it’s value. The massive amount of energy required to mine Bitcoin means that you can compute a value for Bitcoin (contrary to what the “Sage of Omaha” thinks). Bitcoin will require more and more energy and hardware to continue to mine, increasing it’s real-world/tangible value. Even if energy costs decrease, more energy is required to mine at a far greater pace than the reduction in the cost of energy. The value of Bitcoin has a real-world justification for increasing because we value energy to support our digital world.

If the energy required to mine Bitcion will eventually surpass that of the entirety of Japan, Citigroup is suggesting that governments will tax miners for their high energy consumption. That doesn’t take into consideration renewable energy (there’s a reason why so much mining is taking place in Iceland: geothermal energy) and autonomy of energy. Ironically, this decentralized currency is ideal for decentralized (and cleaner) energy production as well.

Anyone following the rise of electric car transportation has often heard gripes from anti-EV folks about a “dirty grid”, “subsidies”, or even how EVs allegedly produce more pollution during their manufacturing than what is produced for the entire life of an internal combustion engine. Wired magazine even go into the mix with their (bunk) article talking about how EVs aren’t as green as you think they are. I’m not going to link to any of these “articles” because they are, quite frankly, gibberish. They often make claims such as lithium being a rare earth material (it’s not) or that Tesla uses permanent magnets in their motors (they’re AC induction, so they don’t; and Tesla gets all of it’s cobalt in North America).

Instead, I’m going to link to articles that provide insight into an often overlooked topic of internal combustion engines (ICE): externality economic benefits afforded to ICE manufacturers. As is turns out, driving in rush hour traffic is potentially twice as hazardous to your health than currently believed. This externality benefit is afforded to car manufacturers who are making ICE. They incur relatively zero cost for developing a product that produces emissions that the manufacturer has zero responsibility for. This is a tremendous economic benefit afforded to ICE manufacturers. While they are responsible for containing the pollution produced during the manufacturing of their product, they have zero responsibility for the pollution created during the usage of their production AND there is no way to use their product without producing pollution (unless you put the car in a museum).

One might argue that the driver should be responsible for that pollution or that the driver is responsible for the pollution because of paying taxes on gas. Let’s not pretend that the taxes on gasoline are even used for their intended purpose of rebuilding roads let alone healthcare costs incurred from the pollution caused by refining and burning gasoline. Also, the manufacturers of ICE don’t provide (or even have) the ability to collect pollution, so we’re stuck with tailpipe emissions spread to someone else’s property and effecting their lives. These effects are very costly, and the burden (as detailed in the RAND report I’ve linked to) is on health insurance companies, or government, and individuals deprived of their health liberty due to no action of their own! Certainly, one’s own rush hour car pollution is enough to kill them dozens of times over, but I digress… Perhaps the health insurance companies could lobby to get their money back?

The solution is fairly simple. Place a health insurance tax on the manufacturer of ICE vehicles that cannot be passed along to the consumer unless that consumer is a government agency. This tax would be paid to companies and individuals paying for health insurance to help offset their increased medical costs due to the products developed and sold by ICE manufacturers. The tax would be based upon the pollution (we’re not just talking about CO2 but ALL air pollution) produced by a vehicle from driving it 10K miles per year with the average life being 10 years for the vehicle and adjusted annually for the increased pollution that an ICE produces as it ages (which is the opposite of what happens with EV since grids are becoming cleaner each year).

The results from this would be reduced out of pocket medical costs for individuals since they are no longer subsidizing ICE manufacturers, a likely bankrupt automobile industry as electric cars would suddenly become significantly less expensive than ICE, and we can finally get rid of those tax incentives for electric vehicles that anti-EV folks love to complain about! Joking aside, there are considerable health costs that ICE manufacturers are causing by continuing to manufacture products that have no method to avoid. Taxing the manufacturers for their externality benefit they receive at our expense is a potential way to provide those manufacturers with incentives to make better products that are less detrimental to our health and puts the financial burden on the industry directly responsible for substantial increase in healthcare costs over the last half century.

Here’s an idea for the government bailout program that the vast majority of Americans don’t support. Give us an opt out clause on our taxes for the next 10 years.

Now, I’m not talking about opting out of our taxes. Those of us who don’t support the bailout will still have to pay our taxes as usual. However, we can opt out of our tax dollars being used to fund this ridiculous scam.

If you limit the government’s availability of funds, they can’t be as spendthrift as they have been. If they want to come up with $700 billion to spend on some useless bailout, they will need to get it from some other source than the American taxpayer.

Years ago, this would not have been possible. However, with technology today, this is entirely possible. In fact, we could give taxpayers the ability to opt out of any irresponsible government spending. It would really make it simple for the government to determine how much they can waste on pointless bailouts like the automobile industry bailout. If 60% of Americans don’t support the automobile bailout then they will only have access to 40% of the taxpayer funds.

This would make budgeting for the government much easier! Taxpayers don’t support something, Congress can’t just go spend the money whenever and wherever they want. I suspect that we could balance the budget within 4-5 years and keep it balanced indefinitely with a bailout opt out clause. In fact, I suspect the government would end up with considerable surpluses as government waste would now have a true checks and balance system in place. The total tax dollars collected would be the same, but the ability for Congress to spend would drop considerably.

Now, some might argue that this would create serious problems with because the funding for the bailout is something that is “necessary” to avoid a greater economic downturn or because it is something the public doesn’t understand the importance of. I have two words December 2007.

I’ve been a fan of Steve Forbes since the ’96 Republican primary. While I don’t agree with his flat income tax, I can certainly agree with him that Henry Paulson is “the worst Treasury Secretary in modern times“. It seems like nobody has been willing to point some very harsh fingers at administration officials but not Forbes.

There is this ridiculous notion that we have avoided a much worse financial crisis than it could have been. Certainly if we had buried money in the money holes like Onion News joked about, we’d be in a much worse financial situation. However, we haven’t actually been burying money in real money holes, unless you count the $700 billion bailout we dug ourselves last month.

I have a new idea for a business that is going to make a killing, but I need some investors to get things started. First, we need to hire tens of thousands of people. I’m thinking at least 30,000 people. We’re only going to pay them minimum wage, so we’ll be able to keep costs down. We also need to spend millions of dollars on advertising and make sure we are purchasing materials and services from hundreds of vendors in America.

You might be asking yourself, “What are we going to make?”

That’s the great part! We aren’t going to even make anything! We’ll probably just have each employee purchase a lottery ticket in the states where they are employed. The employees will get to play pool, foosball, air hockey, and basketball while on the job. We’ll have a corporate jet to fly us around. Corporate cars. We’ll have all the amenities necessary to run a large corporation.

Now, you might be asking yourself, “How will I recover my investment?”

By employing so many people and working with so many vendors, us going out of business will cause such a massive “ripple effect” that the federal government will just have to bail us out. We’ll fly to Washington in our private jet and ask them for maybe… I don’t know… Maybe $25 billion. That’s a small price for people to pay for preventing a massive economic meldown, right?

Urban Entrepreneur isn’t some PC term I’m using because I don’t want to talk about the crap life that homeless people have. It’s a marketing term I’m using to talk about the genius folks I see each morning, picking the recyclables out of the trash cans in downtown Los Angeles every day.

I love these folks! I don’t have time to make it to a recycle bin after my juice in the morning, and it certainly isn’t realistic for me to carry my empty juice bottle around with me all day long. At the same time, I don’t want to *not* recycle. I have bags of recyclables at my house. They cover the cost of my monthly haircut, which is hardly enough to live off of, but the folks in downtown are pulling that in just about everyday. They are doing us a favor my collecting our trash and recycling it while helping themselves out with some cash. Proof the entrepreneurial spirit doesn’t die just because you have a cardboard box over your head.

I keep hearing about how the Bush Administration and Congress don’t want the auto industry to fail. They don’t want the banking industry to fail. Yet most entrepreneurs will tell you that they’ve learned more from when they failed than when they succeeded. I’m betting that banks would learn more from failing than from getting bailed out.

There is something humbling about failure. There are so many lessons that come with failure. Perhaps the biggest is that we can recover. We can rebuild. We have it within our capacity to go beyond what we have failed at. That is the biggest life lesson we can ever learn, and I think it would behoove our Congress and President to let some of these businesses learn these valuable lessons.

I can’t tell you how many times I’ve heard people complain about our “greedy” capitalist society. Quite often they are referring to Walmart, the oil industry, and companies who “ship jobs” overseas. There are others, but one of these poses a serious question for capitalism:

Walmart (and hundreds of other retailers) purchase the majority of their products from China. China is a communist country. Are selling and purchasing communist goods acts of capitalism?

Certainly, a cornerstone of capitalism is the free market, but what is it when that “free market” that a capitalist nation purchases from is a communist country? Some might argue that it qualifies as a mixed market economy, but that is a moot point for various reasons and is irrelevant to the question.

People who complain about the “greed” of capitalism will argue that profit driven capitalism is what drives corporations to purchase cheap products from communist countries like China. However, I argue that it is (1) our fear of inflation that drives companies to find cheaper markets like China and that (2) searching for these cheaper products in a communist country is not capitalism.

It’s not like we don’t know China is a communist country. It’s not like we don’t know that the Chinese government filters all money that we send to Chinese banks when our corporations buy products from their factories. We also know that we could, if we wanted to, manufacture these same products in America or another non-communist country. And we also know that our government has given China, a communist nation, favored nation status. With government intervention in support of a communist nation, how can anyone consider the actions of Walmart and other retailers who purchase from a communist country capitalist greed?