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September 19, 2014 / 24 Elul, 5774
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Posts Tagged ‘economics’

Three Americans Win Nobel Awards in Economics

Monday, October 14th, 2013

Non-Jews finally have taken home some Nobel awards, although not officially Nobel Prizes.

After an almost embarrassingly large number of Jews  who won a vast majority of the prizes awarded this month, the Royal Swedish Academy of Sciences on Monday honored Eugene Fama, Lars Peter Hansen and Robert Shiller  for their “for their empirical analysis of asset prices.”

The award in economics is not a Nobel Prize as such, a category reserved for the fields of medicine, chemistry, physics, literature and peace, as designated by Swedish industrialist Alfred Nobel in 1895.

The Central Bank of Sweden added the economics prize in 1968.

Three Jews from US and France to Be Awarded Dan David Prize

Wednesday, May 8th, 2013

The international Dan David Prize will be awarded  June 9 at Tel Aviv University to an American Jewish philosopher, a research doctor at Johns Hopkins and a French economist.

The Dan David Prize awards three $1 million to individuals with proven exceptional excellence in the sciences, arts, humanities, public service and entrepreneurship that have made an outstanding contribution to humanity.

Leon Wieseltier, American intellectual and philosopher and Literary Editor of The New Republic, will be given the award in the in the present time dimension category of Ideas, Public Intellectuals and Contemporary Philosophers.

Dr. Alfred Sommer of Johns Hopkins University’s School of Public Health, who is known for his striking discovery in demonstrating that vitamin A has the power to save children’s lives, won the prize in the future time dimension field of Preventive Medicine.

Also in the future time dimension, and the only woman to win the prize this year, is French Economist Esther Duflo, whose research focuses on microeconomic issues in developing countries, including household behavior, education, access to finance, health and policy evaluation.

She was recently appointed by President Obama to the President’s Global Development Council.

What if Israel Were on the Gold Standard?

Wednesday, April 17th, 2013

Imagine for a moment that I want to buy a car for 100,000 shekels. I’d rather not work and save, so instead I decide to simply print 100,000 shekels in cash so I can buy the car. I print it, I hand the pile over to the car dealer and the car is now mine.

What just happened here? I counterfeited 100,000 shekels and increased the money supply by 100,000 when I handed those shekels over to the car dealer. The average person, the kind that has to work for his money would say that I stole 100,000 shekels. But today’s economic experts like Stanley Fischer and Ben Bernanke and Paul Krugman would say that I gave “economic stimulus to the automobile industry.” So what really happened?

When an average person works in the private economy and saves money to buy a car, he produces more than he consumes, hence savings. In other words, he puts more into the economy than he takes out, the difference represented by the money he saves. There is now more value in the economy, more stuff because he worked harder, and he takes that real value represented by the money saved and buys a car for 100,000 shekels.

The car dealer now has 100,000 shekels of real value to invest in expanding his business, and thanks to the value that the saver added to the economy through saving, there is now more value in the economy with the same money supply. The value of the shekel goes up and prices drop just a little bit, and everyone owning shekels gets a bit richer thanks to the saver. The car dealer can now expand his business and safely assume the demand is there to match his increase in supply. The economy grows.

Now, if I simply print up 100,000 shekels and give it to the car dealer, I added zero value to the economy. There is no more useful stuff. Just paper. I did not save a thing. All I am doing is taking from the economy without adding anything to it. Worse, the 100,000 shekels I added to the money supply makes the value of the shekel go down a little bit, since more shekels are now chasing the same amount of goods. Prices go up. Everyone gets poorer, except for me of course, because I got to buy the car before the money supply went up. The act of me buying the car was itself the action that made the money supply go up in the first place. I, the money printer and the first new money user, am up one car. Yay for me. But everyone else besides the first person to use newly printed money loses.

Now, let’s say I stop printing money and the car dealer expands his business with the new shekels. Since everyone is now poorer, there is no new demand to match his new supply. The signal he got of new demand for his cars was wrong, because the 100,000 shekels I printed did not represent added value to the economy through saving. Demand is not there, his business overexpands and he has to cut back and contract by selling cars for cheaper and taking a loss. His business shrinks or “goes into recession,” but cars get less expensive for everyone else.

But let’s say I keep printing 100,000 shekels every day and buy another car with it day after day after day. The car dealer will keep misinterpreting the sales as new demand that doesn’t actually exist. He will keep expanding. It will look like the economy is growing and growing, the statistics the government puts out on car sales will skyrocket. But really, only I and the car dealer are benefiting. Everyone else is suffering inflation and getting poorer and poorer every time I print. At some point I will have to print more than 100,000 to buy each car since the money supply is expanding so rapidly, but that’s no big deal for me. It takes the same effort to print 150,000 as it does to print 100,000. I keep getting richer. Inflation doesn’t bother me. The car dealer keeps expanding and cars become so expensive that no one can buy them. Then let’s say suddenly I stop printing shekels and stop buying cars. The car dealer’s business totally crashes, and he goes out of business in a bankruptcy sale. All the cars get sold to the public for ultra cheap. His business “goes into depression,” but cars are suddenly cheap for everyone else.

Canada, Keystone and the Palestinians

Sunday, March 31st, 2013

As Obama wrapped up his Middle East tour, applauded by AIPAC for reaffirming “unbreakable bonds” and “deep affection” between two key allies; and by Al Jazeera for “normalizing” Israel-Turkey ties, Obama’s neighbors to the north are left scratching their heads about what he meant by his off-the-cuff statement that compared Israeli-Palestinian relations to Canada-U.S. relations.

After acknowledging in his speech the horror of an Israeli sleeping in his bed and having a rocket come through the roof, Obama went on to say: “Even though both sides have areas of strong disagreement, maybe engaging in activities that the other side considers to be a breach of good faith, we have to push through those things…. There will be a sovereign Palestinian state, a sovereign Jewish State of Israel and those two states will be able to deal with each other the same way all states do. The United States and Canada have arguments once in a while.”

The outlandish comparison – as Canadians do not lob rockets and missiles into Rochester or Detroit or claim the U.S. as “Occupied Canada” — could have been an Obama gaffe to add to an open-mic one he made during his welcome ceremony after he landed in Israel and declared that this trip allowed him to “get away from Congress.” Obama has become quite noted for minor and major gaffes, such as when he insulted Netanyahu and conspired with outgoing Russian President Dmitry Medvedev. Both incidents raised questions about his character, his policies and potentially hidden agendas.

Although one could not decipher any meaning behind Obama’s odd comparison of American-Canadian relations with Israeli-Palestinian relations, one can note some important “arguments” the U.S. now faces with Canada: primarily the Keystone XL pipeline project, designed to carry oil from Canada to Texas oil refineries.

To address further these “once in a while arguments,” a Forbes article illustrated how — with policies similar to what are being promoted by Republicans — Canada is outperforming the U.S. economically on every level. Entitled “What President Obama Doesn’t Want You To Know About Canada”, it cited senior sources in the Canadian government who met with Obama administration officials and said their impression was that the White House is jealous of the Canadian government’s power to have its way. Even the notoriously liberal Canadian Broadcaster CBC featured in its community blog: “Republicans threaten move to Canada after Obama win”.

The Obama administration’s energy policy is starkly divergent from the Harper government’s. Canada obtains oil from places such as the Athabasca oil sands region in northeastern Alberta, while the Obama administration has reduced drilling permits on public lands and has stalled the go-ahead of the Keystone XL pipeline from Canada. The Keystone pipeline not only provides an ethical alternative to importing oil from regimes such as Saudi Arabia and Venezuela; it is also an “essential part of the North American energy marketplace” and of U.S.-Canada relations, according to former Conservative cabinet minister Jim Prentice , who is now a senior executive with the Canadian Imperial Bank of Commerce.

When Obama rejected Keystone in early 2012, he pinned the blame for the decision on Republicans, accusing them for trying to push the administration to an earlier deadline. But Obama’s dilemma about the Keystone project reveals underlying issues that could have long-term implications for Obama’s credibility in his ongoing commitment to promote an agenda affecting “climate change,” as well as to his liberal economic policies.

For example, during a speech on China and India as emerging economies, Obama’s assistant on economic policy, Lawrence Summers, raised the idea that India’s political-economic model, which he referred to as the “Mumbai Consensus,” may in the end win the day. According to Summers the Mumbai Consensus is “not based on ideas of laissez-faire capitalism that have proven obsolete or ideas of authoritarian capitalism that ultimately will prove not to be enduringly successful….” Recall that George Bush was the whipping boy for laissez-faire capitalism in certain camps after the Freddy Mac and Fanny Mae fiasco that led to the 2008 economic meltdown, even though it is no secret that the Democrats bore guilt.

With respect to Obama’s credibility, right after taking office, in having vowed to promote policies that would supposedly moderate climate change, Obama committed the U.S. to the foreground of global climate change initiatives — the centerpiece of which would entail revamping the flawed Kyoto protocol to bring include equitable commitments from countries such as China and India, which, despite being the most objectionable polluters, had been given free passes under the Kyoto accords. Now, years later and into his second term, Obama faces stumbling blocks in making good on his promises, not the least of which involves the Keystone pipeline.

The Economist Who Helped Warren Buffet Get Rich

Monday, February 18th, 2013

Meet Joe Carlen, who has written an intriguing biography of Benjamin Graham, the economist who influenced Warren Buffet, Irving Kahn, and other famous financial figures. Carlen, author of The Einstein of Money, and a business consultant himself, speaks to Doug on this week’s episode of the Goldstein on Geltshow about Benjamin Graham and his philosophy. How do Graham’’s theories affect investors and the financial world today? Find out by listening to this fascinating interview.

How to Play the Numbers Game (Podcast)

Monday, February 4th, 2013

In the internet and cellphone age, it’s hard to remember that not too long ago, people made all of their calculations in their heads. Has mental arithmetic become a thing of the past? On this week’s Goldstein on Gelt show, Dr. Arthur Benjamin, a professor of mathematics proves that this really isn’’t the case, and that making calculations in your head is not beyond the reach of the ordinary person. On this week’s podcast, you will find out how to play the numbers game and  apply mathematics to everyday life.

Enough with the Praise for Stanley Fischer and Israel’s Central Bank

Sunday, February 3rd, 2013

Stanley Fischer is the head of the Bank of Israel. As such, he is the government appointed goon in charge of money printing. In his infinite wisdom, he is supposed to know exactly what the supply of money should be, because he’s purportedly a chacham she-ein kamohu – a crazy genius who has a pulsating brain and somehow knows these things. Or maybe God comes to him in his sleep and tells him how many shekels should exist and how much he should print and when.

Or maybe he’s just some guy who has no idea what he’s doing, given a power the equivalent of an economic nuclear weapon, something that no one man should ever, ever have.

Stan the Super Shekel Man recently came out with an announcement that he would be quitting his post early. Aside from the speculation as to why (I think it’s because he knows there will be an unstoppable economic tsunami in the next 3-5 years and he wants to duck out early and quit while he’s ahead), I have seen nothing but wall to wall praise for this central planning money printing soviet-style currency czar. Sure he’s kindly, has a sweet voice, an endearing Zambian accent, cutely mixes up male and female in his Hebrew grammar all the time, and the Israeli economy didn’t totally collapse in 2008 so everyone assumes the money master is responsible for saving us all from destitution. But this is all a big, sad, sorry myth.

Let’s break it down.

Let’s step aside for a moment from the persona of Stan the Man himself. He as a person is not the main problem. As I said, he’s a nice guy. The main problem is the very system of central banking that give men like him inordinate power over all of our economic lives, a power which, once you realize the scope and consequences of it, can make you dizzy.

Imagine for a moment two national economies. One where the supply of shoes and their price is controlled by one man and anybody else who manufactures or uses shoes besides him goes to jail, and another where the supply of shoes and their price is controlled by the free market, meaning a myriad of entrepreneurs freely importing and exporting shoes based on the demand for them by customers. In a free market where anyone can manufacture and buy as many or as few shoes as he wants, the supply, demand, and price of shoes will tend to reach an equilibrium point where profits will remain constant and steady. Shoe firms like wholesalers, manufactures, and retailers, will all compete with each other to sell the most shoes to the public. In order to do this, they will have to make shoes of the highest possible quality at the lowest possible prices in order to attract buyers.

If the supply of shoes gets too high, shoe prices will tend to fall, lowering profit margins, thereby restricting the amount of shoes manufactured, choking off supply, and bringing shoe prices back up to equilibrium. If demand gets too high, shoe prices will tend to rise, increasing profit margins, encouraging shoemakers to produce more in order to earn those increased profits. This brings supply back up to match demand, bringing prices back down to equilibrium again.

Now, in an economy where the supply of shoes and their price is controlled by one man, let’s call him the chairman of the Shoe Bank of Israel, we are entrusting a single person to:

  1. Manufacture every single shoe in the country, because anyone else who does that is considered a shoe counterfeiter and goes to prison
  2. Know automatically what the supply of shoes in the country should be at any given moment
  3. Set the price of shoes at whatever he thinks it should be
  4. Not abuse this power

The shoe market in such a country would be a complete mess and everyone who needs shoes would be miserable. Since only one firm would be allowed to make and sell shoes, there would be no competition and the quality of the shoes would deteriorate. If the Chairman of the Shoe Bank of Israel set the price of shoes too low, meaning he underestimates demand, people would start hoarding the shoes and buying more than they need, and there would be shoe shortages. If he sets the price of shoes too high, meaning overestimates demand, people who needed new shoes would not buy them, instead waiting for a lower price. Perhaps they would attempt to repair their old shoes, or cut open the ends if they didn’t fit. Huge surpluses of shoes would result.

Printed from: http://www.jewishpress.com/blogs/settlers-of-samaria/enough-with-the-praise-for-stanley-fischer-and-israels-central-bank/2013/02/03/

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