from the world's big
A Little Inflation Would Do Us Good
Dr. Vernon L. Smith was awarded the Nobel Prize in Economic Sciences in 2002 for his groundbreaking work in experimental economics. Dr. Smith has joint appointments with the Argyros School of Business & Economics and the School of Law, and he is part of a team that will create and run the new Economic Science Institute at Chapman.
Question: What are the constraints on the Fed that prevent it from moving beyond its typical role as inflation fighter to address employment, another key part of its mission? (Ryan Avent, The Economist)
Vernon Smith: Well the Fed has already I think taken actions in roughly the last year. The excess reserves have risen by about a trillion dollars and that has huge inflationary potential depending upon what kind of endgame strategy the Fed follows in getting us out of this huge potential expansion in credit in the private economy. Of course it’s not been a problem because those excess reserves have not led to any kind of undesirable credit expansion in the private economy because there is just no demand for loans right now. The reason my coauthor Steve Gjerstad and I said that some inflation might be a good thing at the present time is that it is one way to get the relative price of homes up. If you inflate basically the rest of the economy by 6 percent then you correct that imbalance between the price of homes, which have gone way up during the boom went way up out of proportion to other prices in the economy, so it’s important for the relative price of homes now to come back to more standard historical levels if you’re going to get a natural resumption in the demand for housing. And of course the problem in setting about and creating a 6 percent inflation rate to give you that relative price change is simply that you might not be able to control those forces once they’re unleashed, so in a way our recommendation is somewhat tongue and cheek. I think that a little inflation now would be a good thing. Yes, it would, but the question is how do you achieve just a little bit of inflation and not get too much.
Question: One of the problems with TARP was an inability of the treasury to come up with an auction design that would correctly reveal the value of the toxic assets and fear of overpaying led them to be cautious to the point of never actually implementing the program to any significant degree. Is there any way to design an alternative market mechanism that will value these assets next time? (Mark Thoma, Economist’s View)
Vernon Smith: I really can’t answer that. It would require a pretty extensive experimental examination of the issues here to really come up with the question of whether you could design an auction for the treasury to dispose of these toxic assets. You know the problem people have described it as just a reverse auction where instead of the treasury being a seller of treasury securities as they have had a lot of experience with. See, the treasury sales securities to multiple buyers in treasury auctions and here you have the treasury buying from multiple sellers of these toxic assets, but the problem is that these assets are not homogeneous. When the treasury is issuing securities to multiple buyers there isn’t any difference. Every one of these securities is exactly like every other one, so that the buyers do not have the problem of valuing a mix of heterogeneous items. It’s a homogeneous set of items that are being offered up for sale. Private auctions don’t have any difficulty valuing heterogeneous assets. What they do is put them up to for sale one at a time. If you got to Christie’s or Sotheby’s, the auction houses, they auction items, heterogeneous items either singly or in very maybe very small groupings that are relatively homogeneous and if you’re going to do a multiple unit auction of dissimilar items that’s a challenging problem and the whole… You know the original proposal didn’t make any sense to me and of course they quickly found out what I think is obvious, which is that the treasury is simply not practiced at all in running that kind of auction and they backed off to as well they should have.
Recorded on December 15, 2009
Nobel Prize winning economist Vernon Smith says the question is, how do you achieve just a bit without getting too much?
Sallie Krawcheck and Bob Kulhan will be talking money, jobs, and how the pandemic will disproportionally affect women's finances.
Health officials in China reported that a man was infected with bubonic plague, the infectious disease that caused the Black Death.
- The case was reported in the city of Bayannur, which has issued a level-three plague prevention warning.
- Modern antibiotics can effectively treat bubonic plague, which spreads mainly by fleas.
- Chinese health officials are also monitoring a newly discovered type of swine flu that has the potential to develop into a pandemic virus.
Bacteria under microscope
needpix.com<p>Today, bubonic plague can be treated effectively with antibiotics.</p><p style="margin-left: 20px;">"Unlike in the 14th century, we now have an understanding of how this disease is transmitted," Dr. Shanthi Kappagoda, an infectious disease physician at Stanford Health Care, told <a href="https://www.healthline.com/health-news/seriously-dont-worry-about-the-plague#Heres-how-the-plague-spreads" target="_blank">Healthline</a>. "We know how to prevent it — avoid handling sick or dead animals in areas where there is transmission. We are also able to treat patients who are infected with effective antibiotics, and can give antibiotics to people who may have been exposed to the bacteria [and] prevent them [from] getting sick."</p>
This plague patient is displaying a swollen, ruptured inguinal lymph node, or buboe.
Centers for Disease Control and Prevention<p>Still, hundreds of people develop bubonic plague every year. In the U.S., a handful of cases occur annually, particularly in New Mexico, Arizona and Colorado, <a href="https://www.cdc.gov/plague/faq/index.html" target="_blank">where habitats allow the bacteria to spread more easily among wild rodent populations</a>. But these cases are very rare, mainly because you need to be in close contact with rodents in order to get infected. And though plague can spread from human to human, this <a href="https://www.healthline.com/health-news/seriously-dont-worry-about-the-plague#Heres-how-the-plague-spreads" target="_blank">only occurs with pneumonic plague</a>, and transmission is also rare.</p>
A new swine flu in China<p>Last week, researchers in China also reported another public health concern: a new virus that has "all the essential hallmarks" of a pandemic virus.<br></p><p>In a paper published in the <a href="https://www.pnas.org/content/early/2020/06/23/1921186117" target="_blank">Proceedings of the National Academy of Sciences</a>, researchers say the virus was discovered in pigs in China, and it descended from the H1N1 virus, commonly called "swine flu." That virus was able to transmit from human to human, and it killed an estimated 151,700 to 575,400 people worldwide from 2009 to 2010, according to the Centers for Disease Control and Prevention.</p>There's no evidence showing that the new virus can spread from person to person. But the researchers did find that 10 percent of swine workers had been infected by the virus, called G4 reassortant EA H1N1. This level of infectivity raises concerns, because it "greatly enhances the opportunity for virus adaptation in humans and raises concerns for the possible generation of pandemic viruses," the researchers wrote.
The word "learning" opens up space for more people, places, and ideas.
- The terms 'education' and 'learning' are often used interchangeably, but there is a cultural connotation to the former that can be limiting. Education naturally links to schooling, which is only one form of learning.
- Gregg Behr, founder and co-chair of Remake Learning, believes that this small word shift opens up the possibilities in terms of how and where learning can happen. It also becomes a more inclusive practice, welcoming in a larger, more diverse group of thinkers.
- Post-COVID, the way we think about what learning looks like will inevitably change, so it's crucial to adjust and begin building the necessary support systems today.
Scientists uncovered the secrets of what drove some of the world's last remaining woolly mammoths to extinction.
Every summer, children on the Alaskan island of St Paul cool down in Lake Hill, a crater lake in an extinct volcano – unaware of the mysteries that lie beneath.
The coronavirus pandemic has brought out the perception of selfishness among many.
- Selfish behavior has been analyzed by philosophers and psychologists for centuries.
- New research shows people may be wired for altruistic behavior and get more benefits from it.
- Times of crisis tend to increase self-centered acts.