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The magical money magnifier
Dec. 10th, 2009 03:15 pm
Currently at Toronto Pearson: -4. First snow of the season on the ground a couple of nights ago. This is the first year in the recorded history of Toronto with no snow through October and November.
One of these days, I'm going to have to get someone to explain me some economics, and see if they can make it make any more sense than it seems to. God knows there's enough business students around Laurier.
There's an article in the Globe today about the fabulous, unexpected (again with the unexpected!) rebound in net personal wealth among Canadians this year (so fabulous that we're almost as wealthy as we were two years ago--again with the quicksilver goalposts, like when the cost of living went up, oh noes! last month, and like when unemployment went down from 8.6% to 8.5% last month hurray!, when, you know, not so many months ago, 7.5% was cause for wailing and gnashing of teeth). This article pins this rebound on rebounding real estate and stocks--particularly stocks. Now, look, as far as I can see, here's the thing: there is no direct relationship between wealth and the prices of stocks. Here is how you can tell this: if you turn the potential wealth of a stock into the real wealth of money, the price of the stock (all other things being equal) goes down. I have very little idea what the mechanisms are by which the prices of stocks go up and down, but I do think i know this: what a stock is worth depends on how much money is sunk into it, and nothing else. The 40% increase in the total value of stocks on the S&P/TSX index that the article refers to is not an increase that is actually realizable, because if everyone attempted to convert their 40% gains into real things of value, then the 40% gain would instantly evaporate. $50 shares are not actually worth $50 to everyone who owns them, because if everyone cashes them in, the last person in line gets $0.
I also think I know this: even if by some magic the total "wealth" in an economy (just in the sense of the number of units of currency it comprises) increases if people take money from their pockets and put it into stocks, or if they borrow money and put it in stocks, or whatever, nothing of value is thereby created (at least not directly--theoretically, it gives the company you're investing in funds with which to create things of value, but those things don't exist yet), and so all that you've done, directly, is created potential inflation. If extra money put into stocks increases the total "wealth" in an economy by 10%, then you've changed the ratio of "wealth" to buyable-things from x:y to 1.1x:y ... except that, since that increase in wealth is unrealizable, that potential inflation should also be unrealizable, since the extra wealth exists only as long as it's not trying to buy anything ... except that, since it makes people feel wealthier (and that's all that really matters, right?), it makes them feel freer to buy things with their liquid wealth, such that it would have an inflationary effect.
In other news, one of my triannual, or triennial depending on which part of the country you're from, sacrifices to the APA has been accepted by the gods. You know, it occurs to me, Cain gets mad, but it doesn't say anything about Abel being happy. And the story ends before a second sacrifice. What would Abel have done the second time? You serve up the fatted lamb, and what you win is life as usual. Maybe you might just as well serve up some roadkill next time, and see what happens. Or if you're Cain, and Abel lived--what would you do next time? Of course, the story doesn't say why they're sacrificing things in the first place; they just do it. In fact, as far as I can see, there is no further mention of sacrifices in Genesis until Abraham and Isaac (edit: by which of course I mean Noah, geez). (I see that I'm not the first person to ever consider the idea that Cain could have presented Abel to God as a sacrifice, but it's certainly not a popular idea. You can think of reasons why it it's not a possible sacrifice--Cain can't sacrifice Abel because Abel doesn't belong to Cain, Cain didn't produce Abel (and where, anyway, is Eve in this story, who produced Abel with the help of the Lord, whose product Abel is as much as the lambs are Abel's?)--but why wouldn't Cain at least try that, instead of trying to say he doesn't know what happened? After all, why not think that the only thing better than an animal sacrifice is a human sacrifice, seeing as no one has told you the rules of this game, only that if you play it well, you'll win?)
Yes, so, now that I've finally managed to get a paper on an APA main program, I feel like getting a paper on the APA-Pacific main program must be something that any idiot like me can do. But it is nicer than another rejection notice, that is for true. In any event, I will be out there in San Francisco again (minus L., who has been eaten by the gubbermint), end of March / beginning of April. The Giants aren't in town until the following weekend, which is a damn shame I must say. Even the Sharks are on the road all week, so I will probably never know the way to San Jose.
One of these days, I'm going to have to get someone to explain me some economics, and see if they can make it make any more sense than it seems to. God knows there's enough business students around Laurier.
There's an article in the Globe today about the fabulous, unexpected (again with the unexpected!) rebound in net personal wealth among Canadians this year (so fabulous that we're almost as wealthy as we were two years ago--again with the quicksilver goalposts, like when the cost of living went up, oh noes! last month, and like when unemployment went down from 8.6% to 8.5% last month hurray!, when, you know, not so many months ago, 7.5% was cause for wailing and gnashing of teeth). This article pins this rebound on rebounding real estate and stocks--particularly stocks. Now, look, as far as I can see, here's the thing: there is no direct relationship between wealth and the prices of stocks. Here is how you can tell this: if you turn the potential wealth of a stock into the real wealth of money, the price of the stock (all other things being equal) goes down. I have very little idea what the mechanisms are by which the prices of stocks go up and down, but I do think i know this: what a stock is worth depends on how much money is sunk into it, and nothing else. The 40% increase in the total value of stocks on the S&P/TSX index that the article refers to is not an increase that is actually realizable, because if everyone attempted to convert their 40% gains into real things of value, then the 40% gain would instantly evaporate. $50 shares are not actually worth $50 to everyone who owns them, because if everyone cashes them in, the last person in line gets $0.
I also think I know this: even if by some magic the total "wealth" in an economy (just in the sense of the number of units of currency it comprises) increases if people take money from their pockets and put it into stocks, or if they borrow money and put it in stocks, or whatever, nothing of value is thereby created (at least not directly--theoretically, it gives the company you're investing in funds with which to create things of value, but those things don't exist yet), and so all that you've done, directly, is created potential inflation. If extra money put into stocks increases the total "wealth" in an economy by 10%, then you've changed the ratio of "wealth" to buyable-things from x:y to 1.1x:y ... except that, since that increase in wealth is unrealizable, that potential inflation should also be unrealizable, since the extra wealth exists only as long as it's not trying to buy anything ... except that, since it makes people feel wealthier (and that's all that really matters, right?), it makes them feel freer to buy things with their liquid wealth, such that it would have an inflationary effect.
In other news, one of my triannual, or triennial depending on which part of the country you're from, sacrifices to the APA has been accepted by the gods. You know, it occurs to me, Cain gets mad, but it doesn't say anything about Abel being happy. And the story ends before a second sacrifice. What would Abel have done the second time? You serve up the fatted lamb, and what you win is life as usual. Maybe you might just as well serve up some roadkill next time, and see what happens. Or if you're Cain, and Abel lived--what would you do next time? Of course, the story doesn't say why they're sacrificing things in the first place; they just do it. In fact, as far as I can see, there is no further mention of sacrifices in Genesis until Abraham and Isaac (edit: by which of course I mean Noah, geez). (I see that I'm not the first person to ever consider the idea that Cain could have presented Abel to God as a sacrifice, but it's certainly not a popular idea. You can think of reasons why it it's not a possible sacrifice--Cain can't sacrifice Abel because Abel doesn't belong to Cain, Cain didn't produce Abel (and where, anyway, is Eve in this story, who produced Abel with the help of the Lord, whose product Abel is as much as the lambs are Abel's?)--but why wouldn't Cain at least try that, instead of trying to say he doesn't know what happened? After all, why not think that the only thing better than an animal sacrifice is a human sacrifice, seeing as no one has told you the rules of this game, only that if you play it well, you'll win?)
Yes, so, now that I've finally managed to get a paper on an APA main program, I feel like getting a paper on the APA-Pacific main program must be something that any idiot like me can do. But it is nicer than another rejection notice, that is for true. In any event, I will be out there in San Francisco again (minus L., who has been eaten by the gubbermint), end of March / beginning of April. The Giants aren't in town until the following weekend, which is a damn shame I must say. Even the Sharks are on the road all week, so I will probably never know the way to San Jose.
