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HUMANITY DOOMSDAY CLOCK - Moves forward to 2125 due to election of US President trump.

Estimate of the time that Humanity will go extinct or civilization will collapse. The HUMANITY DOOMSDAY CLOCK moves forward to 2125 due to US President trump's abandonment of climate change goals. Apologies to Bulletin of the Atomic Scientists for using the name.

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Friday, May 18, 2012

Recovery : Great Fortunes, Great Incomes

Barry, My Liege :

The accumulation of great fortunes and large incomes in the United States has a deleterious effect on economic growth and job creation.

Economic growth and job creation comes from people who invest in businesses. It is well known that business investing is risky.

'Of all the new business startups, 1/3 eventually turn a profit, 1/3 break even, and 1/3 never leave a negative earnings scenario. According to a study by the U.S. Small Business Association, only 2/3 of all small business startups survive the first two years and less than half make it to four years', [http://www.gaebler.com]

And, since most jobs are created in small businesses, then it follows that economic growth and job creation requires risky investments.

People who create large fortunes are mostly interested in preserving their capital. They become risk averse as their fortunes become larger. They do not want to invest in risky businesses.

This was first recognized by Keynes in his description of the Marginal Efficiency of Capital. In Keynes' graph, the Marginal Efficiency of Capital is a negatively sloped cuve where higher returns are associated with lower capital amounts and lower returns are associated with higher capital amounts. In the graph the vertical axis represents percentage returns, the horizontal axis represents the dollar amount of capital and the MEC line represents the downward to the right sloping, negatively sloped curve of actual investments made.



We can see this demonstrated through classifying some investments as low risk and some as high risk in the United States today.

HIGH RISK INVESTMENTS ARE COMPARATIVELY SMALL - The total amount invested annually in venture capital business start ups and expansions, which are high risk, high profit investments is about $250 billion per year.

SAFE INVESTMENTS HAVE HIGHER DOLLAR TOTALS - At the other extreme, the value of United States Treasury bills is now about $15 trillion with some one or two trillion added each year. T-Bills are widely regarded as the safest investment in the world and are now paying about 2%.

All the gold mined in the world by 2009 was about 165,000 tons with a value of about 10 trillion dollars at $1,900 per ounce. Of that, some 19% is held by central banks as currency reserves.

The total valuation of homes in the United States is about $ 9 trillion after the price meltdown of the last few years. Residential real estate is usually considered a safe investment.

Commercial real estate is also considered a safe investment although somewhat more risky than houses. It is also worth about $ 9 trillion.

Although somewhat more risky than T-Bills, the NYSE is considered a safer investment than new business start ups for a number of reasons. The total valuation of all the companies on the NYSE is about $ 15 trillion.

In conclusion, My Liege, it is clear both theoretically and practically that people with large incomes and fortunes do not wish to invest in busines start-ups. Any activity that increases already large fortunes will take money away from people wishing to start new businesses, thus reducing economic growth and the Economic National Security of the United States.

Your faithful servant,

Monday, May 14, 2012

UPDATE - TRAPWIRE , NSA Records, Keeps All US Calls, Emails

Barry, My Liege:

The NSA collects and saves every telephone call and email made by every United States citizen and does so without a warrant and in direct violation of the US Constitution.

The operation is called TRAPWIRE, and you can read about it here :

http://rt.com/usa/news/trapwire-abraxas-cubic-surveillance-251/


And here : http://www.nytimes.com/2012/08/23/opinion/the-national-security-agencys-domestic-spying-program.html

The people who reported this have been deemed 'enemies of the state'. These American heroes are William Binney, Kirk Wiebe and Thomas Drake.

See a video of their discussion here: http://current.com/shows/viewpoint/videos/nsa-whistleblowers-warn-of-secret-spying-programs-that-can-target-anyone/

The 'data' remains available for any law enforcement official to request at any time in the future. That is the purpose of the Colorado data center - to warehouse our calls and emails so they will be available in case we become an 'enemy of the state' someday.

England is proposing the same thing: http://www.huffingtonpost.com/2012/05/18/uk-surveillance-law_n_1527145.html

Your faithful servant,

Sunday, May 13, 2012

Recovery : Free Trade

Barry, My Liege :

The structure of these few remarks is to provide some of the evidence supporting each of my specific suggestions for improving the Economic National Security of the United States that were listed in the posting of April 27, 2012 titled : 'Presidential Elections and Economic National Security'.

Each such remark is fronted in the title by the word 'Recovery'.

This posting is 'Recovery : Free Trade'

Free Trade Doesn't Work ; it's a fact and it's also the title of a book by Ian Fletcher [http://www.freetradedoesntwork.com/].

Trade policy in the United States of America has been wedded to the idea of Free Trade since the 1950's.

One of the justifications for Free Trade and low tariffs for the USA was that we could promote industry in other countries by opening our consumer and industrial markets to the world.

Since the USA emerged from World War 2 as the world's major industrial power, we could afford to, we had an obligation to and our security was made stronger by raising living standards in other countries.

Since then many countries have developed strong economies by protecting their domestic companies and exporting products to the USA : China, Korea, Japan, etc., etc.

Due to their success, our relative economic strength has declined significantly to the point where our economy is now the first among equals instead of the acknowledged leader ; further, we are tied together with the other industrialized countries in an electronic embrace that we cannot break.

The time has come to abandon that policy and conduct our trade policy with attention to the real world and not to the theoretical world constructed in the 1700's.

Make no mistake, trade with other countries can promote our Economic National Security if it is managed carefully. Equally it can damage our security if it is left to market forces.

I will be more than happy to debate any economist or politician on the theory of the subject, but this is not the forum for that technical debate. You can read my short discussion of trade theory and the theory of Comparative Advantage here : http://www.mkeever.com/compad.doc

It is sufficient here to offer an estimate of the harm done to our economy by our recent and overwhelmingly negative trade balances.

By the term 'negative trade balances' I refer to the monthly and annual difference in current dollars between the exports of goods and services from the USA to other countries and the imports of goods and services to the USA from other countries as published by the US Census Bureau, Foreign Trade Division. This number is known as the Balance of Payments or BOP.

The BOP for the United States was either a small positive number - meaning the total dollar value of our exports exceeded the dollar value of our imports - or a small negative number until the mid 1980's.

In 1984, the BOP of the United States exceeded a NEGATIVE $100 BILLION for the first time. That means that in 1984 we bought $109.1 BILLION more of stuff from other countries than we sold to them.

In monetary policy terms that means that our money supply was REDUCED by $109.1 BILLION in that year.

BUT, with the deposit money multiplier, it means that our GDP was reduced by about ONE TRILLION DOLLARS in 1984 alone. In that year, the GDP in current dollars was about Four Trillion Dollars.

SO, our GDP could have been reduced by about 20% in 1984 alone.

While there is some debate as to whether all that money was taken permanently from our domestic money supply and GDP or whether some of it was returned to the USA and used to buy T-bills, there is no doubt that the GDP reduction is significant.

Barry, My Liege, that is just 1984.

We have consistently run a negative BOP ever since then.

Between 1984 and 2009, our cumulative NEGATIVE BOP was 7.3 TRILLION DOLLARS.

Using a conservative money multiplier of 10, that means our GDP was REDUCED by about SEVENTY TRILLION DOLLARS during the period.

In simple terms, My Liege : We are not so rich we can afford to lose such substantial GDP every year to foreign trade.

Unless this problem is corrected, it will bankrupt the United States of America.

Your faithful servant,