A Frank appraisal of my blog

Tyler Cowen directed me to the blogger Daniel Frank, who has a post discussing my non-monetary blogging. I always find it gratifying when someone indicates that they find something of value in these non-monetary posts. I worry they are merely a self-indulgence, taking advantage of the fact that I have a captive audience from my market monetarist posts. And my Russia trolls keep telling me how stupid they are.

Frank appears to be a rather young blogger, and has some particularly interesting posts on the art of travel. Despite our vast age difference, we seem to share at least a few musical tastes (Radiohead, Sigur Ros, The Tallest Man on Earth, Daniel Romano, etc.)

In a postscript, Frank asks for help in identifying a few of my better posts. Please help him (me?) out.

I really need to get better organized . . .

. . . one of these days . . .

Donald and Hunter

It’s amazing how similar these two cases are. Both involve prosecutors going after people who committed minor technical violations, with the full force of the law. It’s likely that neither case would have been brought if the individuals had not been famous.

There is one big difference however. One guy is the top Republican, and the other guy is the top Democrat’s son. Therefore, among our totally irrational public there is almost zero overlap between those who sympathize with Donald and those who sympathize with Hunter.

It’s a stupid world, and we’re all forced to live in it.

PS. Reason says that roughly 20 million Americans are committing Hunter’s crime right now—right at this moment. Should they all be in prison? How much would it cost to build all those prisons? What would it do to the economy if you suddenly withdrew this many people from the workforce?

This is madness, but people don’t care because it doesn’t involve them.

PPS. Of course Donald should be in prison for other crimes, and perhaps the same is true of Hunter. (I haven’t followed his life as closely because . . . who cares?)

Read it and weep

1. Bad monetary policy produces inflation and/or recessions. But the greatest cost of bad monetary policy is that it leads to bad policies in other areas, including wasteful fiscal stimulus, protectionism, bank bailouts and price controls. In China, an overly restrictive monetary policy has led the government into a project involving the purchase of large quantities of homes. Here’s Bloomberg:

China is considering a proposal to have local governments across the country buy millions of unsold homes, people familiar with the matter said, in what would be one of its most ambitious attempts yet to salvage the beleaguered property market.

2. Freedom to travel is under threat:

Conservative legal groups are already drafting model legislation to prevent pregnant women from traveling for abortions by legally penalizing anyone who helps them, a strategy used by the state of Texas in one of its abortion bans, which allows anyone in the U.S. to sue those who assist women with abortions—and be rewarded with a bounty paid by the state.

3. Dani Rodrik has an interesting article on China’s program of subsidies for green technology:

China’s green industrial policies have been responsible for some of the most important wins to date against climate change. As Chinese producers expanded capacity and reaped the benefits of scale, the costs of renewable energy plummeted. In the space of a decade, prices fell by 80% for solar, 73% for offshore wind, 57% for onshore wind, and 80% for electric batteries. These gains underpin the creeping optimism in climate circles that we might just be able to keep global warming within reasonable bounds. Government incentives, private investment, and learning curves proved to be a very powerful combination indeed.

With the IRA, America already has its own version of China’s green industrial policies. The law provides hundreds of billions of dollars in subsidies to facilitate the transition to renewables and green industries. 

Who could possibly object to a highly successful program that is now being copied by the US government? You guessed it–the Biden administration:

On a recent trip to China, US Secretary of the Treasury Janet Yellen warned China directly that the US would not stand by in the face of China’s “large-scale government support” for industries such as solar, electric vehicles, and batteries.

4. Taiwan understands China far better than does the US government. It also has more to fear from the Chinese government. And yet, even Taiwan understands the futility of banning TikTok.

About 80 miles from China’s coast, Taiwan is particularly exposed to the possibility of TikTok’s being used as a source of geopolitical propaganda. Taiwan has been bombarded with digital disinformation for decades, much of it traced back to China.

But unlike Congress, the government in Taiwan is not contemplating legislation that could end in a ban of TikTok.

AFAIK, Russia does not own any major social media used in the US. And yet I see pro-Russian propaganda all over the internet. Tiktok is not the issue.

5. The Libertarian Party seems to have pulled back from the brink by choosing a respectable candidate over the sort of hard right figure preferred by the Mises Caucus. Here’s Reason:

Oliver, a 38-year-old gay man from Atlanta with socially tolerant and pro-immigration views, delivered a passionate response after Trump’s speech to the convention on Saturday. Now, he will get to spend the next six months competing directly against Trump and President Joe Biden, two men more than twice his age. After winning on Sunday, Oliver promised to keep pressing a message that neither major-party candidate is likely to offer.

“I will continue to bring a hopeful and positive message of liberty to both those who consider themselves libertarian and those who don’t know they are libertarian yet,” Oliver promised in his victory speech. . . .

Oliver’s victory on Sunday night was a blow to the Mises Caucus, the right-leaning faction that took control of the Libertarian Party at the 2022 convention and that had orchestrated Trump’s appearance at the convention. That faction’s preferred candidate was Rectenwald.

6. I’ve focused on arguments against Trump, but Matt Yglesias points out that it’s possible to construct some pretty creative pro-Trump arguments:

7. Martin Wolf has an excellent piece on the rising threat of nationalism. He concludes as follows:

In 1939, the poet WH Auden wrote of what he judged “a low dishonest decade”. How will ours look in 2029?

8. There’s no such thing as public opinion, example #329:

9. Back in the summer of 2021, I predicted that the public’s mood would sour even as the economy improved:

There’s always a price to pay for unsustainable good times, and thus I expect the public’s mood to turn sour in the fall and winter, even as employment recovers—indeed because employment recovers.  Someone has to do all those crappy jobs.

Now it’s becoming conventional wisdom:

Never forget that you heard it here first.

10. I am currently reading an old novel by Melville, entitled Omoo. This comment at the end of chapter 6 caught my eye:

But it is a curious fact, that the more ignorant and degraded men are, the more contemptuously they look upon those who they deem their inferiors.

Suppose you brought Melville to the year 2024, showed him each candidate’s speeches, and asked him who he thought would win the votes of “white trash”. What would he predict?

11. The funniest thing about this Youtube clip is that Trump forgot to lie. Normally he’d just lie, like when they asked him if he would release his taxes. In this case he was so freaked out by the name “Epstein” that he forgot to lie.

12. When Biden makes a patriotic speech on D-day extolling the virtues of democracy, Trumpistas whine that he’s being “political”. I guess that’s because in their view “everyone knows” that Trump hates democracy, so any discussion of its virtues is, ipso facto, a slap at Trump.

I’m going to have so much fun blogging during Trump’s second term!!


During my recent trip to the Bay Area, I met lots of people who are involved in the field of AI. My general impression is that this region has more smart people than anywhere else, at least per capita. And not just fairly smart, I’m talking about extremely high IQ individuals. I don’t claim to have met a representative cross section of AI people, however, so take the following with a grain of salt.

If you spend a fair bit of time surrounded by people in this sector, you begin to think that San Francisco is the only city that matters; everywhere else is just a backwater. There’s a sense that the world we live in today will soon come to an end, replaced by either a better world or human extinction. It’s the Bay Area’s world, we just live in it.

In other words, I don’t know if the world is going to end, but it seems as though this world is coming to an end.

Some people I spoke with worried that AIs would soon take all of the jobs—and wondered about the impact on the economy. As far as existential risk, it often seemed as if the optimists were the pessimists, and vice versa. As if humanity’s best hope is that the AI enthusiasts are overestimating the potential for AGI.

One guy asked me if I were interested in cryonics. Not whether I was interested in it as a concept; was I interested in the sense of ready to sign a contract if he drew one up? He pointed out (half joking) that due to the rapid advance of AI, I wouldn’t have to spend much time being dead before I was revived.

I’m probably giving you the idea that the Bay Area tech people are a bunch of weirdos. Nothing could be further from the truth. In general, I found them to be smarter, more rational, and even nicer than the average human being. If everyone in the world were like these people, even communism might have worked.

There’s a weird disconnect between the AI world and the normal world. If the AI people are correct, then I don’t think the public has any idea what’s about to hit them. Consider a recent survey that discussed public attitudes toward AI. The public thought it might produce benefits in some areas, and then listed a few downsides:

There’s broad concern about the loss of the human element due to emerging AI technologies, especially in settings like the workplace and health care. Many Americans who would not want to apply for a job that uses AI in the hiring process cite a lack of the “human factor” in hiring as the reason why. In health and medicine, a majority of Americans think relying more on AI would hurt patients’ relationships with their providers.

The potential for negative impacts on jobs is another common concern with AI. Among those who say they’re more concerned than excited about AI, the risk of people losing their job is cited most often as the reason why. We also see this concern with some specific examples of AI. For example, 83% of Americans think driverless cars would lead to job loss for ride-share and delivery drivers.

Surveillance and data privacy are also concerns when discussing AI. Large majorities of Americans who are aware of AI think that as companies use AI, personal information will be used in unintended ways and ways people are not comfortable with.  

Note that there is no question about existential risk, despite the fact that some of the smartest people on the planet think the “P(doom)” risk is uncomfortably high. I’m not saying they are right, but does the public even know about these concerns?

Leopold Aschenbrenner recently pointed out that even the federal government seems completely oblivious to the fact that AI research might have national security implications. Again, I don’t know how seriously we should take those concerns, but it shows the disconnect between the AI world and the normal world.

Overall, I felt there was both excitement about the progress in AI and a sort of melancholy about the fact that we might not know how to control the technology. I was often reminded of Lars von Trier’s underrated 2011 film entitled Melancholia, where a few experts understood that the end of the world was near (due to an asteroid strike), but the broader public was partying like there was a tomorrow. BTW, that film nicely captured the feeling of dread when you can see the end and cannot do anything about it.

Again, I’m not saying AI will be the end of the world. But spend enough time in the Bay Area and you begin to see the public’s fears as the optimistic case. All jobs are replaced by machines and we’re living on UBI? That’s great news! It means the world hasn’t been destroyed.

Of course this is easy for me to say, as I’m retired and will soon be dead. One younger guy told me that he was having trouble deciding what field to study, as he could not think of a single white collar job that wasn’t going to be replaced by AIs. Ironically, it’s the manual jobs that will be the last to be replaced, as computers are good at what we are bad at, and vice versa.

How seriously should we take the views of all these geniuses? I’m reminded of the observation that when playing the game of poker, if you cannot spot the “mark” at your poker table then you are the mark. I spent a few days among geniuses at the LessOnline meetup, and wasn’t able to spot the guy that was clueless about AI.


All kidding aside, do you think the average person living near Oak Ridge or Alamogordo back in 1945 had any idea what the nearby eggheads were about to cook up?

Toward the end of his long essay, Aschenbrenner has this to say about the need to take AI more seriously:

But the scariest realization is that there is no crack team coming to handle this. As a kid you have this glorified view of the world, that when things get real there are the heroic scientists, the uber-competent military men, the calm leaders who are on it, who will save the day. It is not so. The world is incredibly small; when the facade comes off, it’s usually just a few folks behind the scenes who are the live players, who are desperately trying to keep things from falling apart.

Right now, there’s perhaps a few hundred people in the world who realize what’s about to hit us, who understand just how crazy things are about to get, who have situational awareness. I probably either personally know or am one degree of separation from everyone who could plausibly run The Project. The few folks behind the scenes who are desperately trying to keep things from falling apart are you and your buddies and their buddies. That’s it. That’s all there is.

He’s still pretty young, but getting disillusioned at a fast rate. It’s worth noting that this isn’t just about him becoming less naive. The quality of our political establishment really is declining at an alarming rate. In the 1950s, we had people like Dwight Eisenhower. Now we have leaders like Trump.

For me, the wake-up call occurred much later in life, back in 2008. I suddenly realized that monetary policy at our major central banks was not being run by “Princeton School” economists, even though a Princeton economist chaired the Fed. The stock market had a similar wake-up call, and promptly crashed in the fall of 2008.

PS. If you have 4 1/2 hours to spare, this is the most interesting podcast I’ve ever listened to. Aschenbrenner graduated from Columbia at the top of his class, at age 19.

PPS. Is Durer’s Melencholia I the greatest print ever made?

A glimmer of hope?

I’ve had very low expectations for the Fed’s upcoming review of its operating regime. I had thought that the previous review (back in 2020) had hit the nail on the head, until I learned that “average inflation targeting” had nothing to do with stabilizing the average inflation rate. A new paper by Federal Reserve economist Michael T. Kiley suggests they may be about to fix the “asymmetry” problem with FAIT. Here’s the abstract:

I assess monetary policy strategies to foster price stability and labor market strength. The assessment incorporates a range of challenges, including uncertainty regarding the equilibrium real interest rate, mismeasurement of economic potential, and balancing the costs and benefits associated with employment shortfalls and labor market strength. I find that the ELB remains a significant constraint, hindering achievement of the inflation objective and worsening employment shortfalls. Symmetric policy reaction functions mitigate the most adverse effects of employment shortfalls by contributing to economic stability. Make-up strategies address ELB risks. These strategies call for policy to accommodate some period of inflation above its long-run objective following an ELB episode. I also consider an asymmetric shortfalls approach to policy. This approach provides accommodation in response to weak activity while foregoing tightening in response to strong activity. While the approach can, in principle, address ELB risks by raising inflation, it performs poorly. The shortfalls approach exacerbates economic volatility, worsens employment shortfalls, and creates excess inflationary pressures. Mismeasurement is not sufficient to limit the importance of strong responses to measured slack. Overall, monetary policy can promote price stability and labor market strength by focusing on economic stability, with a strategy targeted to address ELB risks.

The Fed’s big mistake in 2020 was adopting an asymmetric policy approach, which involved make-up policies for undershoots but not overheating. Policy must be symmetric.