Alamo by ~Gekko-chou

Last week I was at a conference in San Antonio. I had to join the event on Saturday but was not required to take part in any activities on Sunday morning. I thought I would take the opportunity to go for a short walk and see the Alamo. Since there was an IMAX theater on the way, I felt compelled to check out what was playing at the time and noticed that a show about the battle of the Alamo was about to start in a few minutes. Quick change of plans and I was watching the battle on the giant screen. I had no idea that the battle had taken place February 23 – March 6, 1836. I was watching the movie on February 28th – 174 years later.

A two minute walk from the theater and I was standing in front of the shrine. It was an experience of a lifetime. I was humbled to stand there remembering those who had perished.

Modernizing of History 5 by ~forrest-rowell

“So convenient a thing it is to be a reasonable creature, since it enables one to find or make a reason for everything one has a mind to do.” ~ Benjamin Franklin

What a perfect way to summarize our lives and the world in a single sentence! As self-aware creatures we are capable of recognizing self-deception yet acceptance of it (or even recognition) is rarely visible externally even if it takes place internally. Per Dr. Franklin, I should now attempt to “find or make a reason” for this observation. Actually, let me skip that step this time.

Markets are the best place to observe the “reason” factory in action. Why is something selling for more today than yesterday? Why did one buy or sell something at a particular level? Life is one giant reason factory. From workplace to world politics, from entrepreneurial endeavors to unthinkable acts, we are busy finding or making reasons for everything we do.

Maybe all we can do is hope that we do everything for the right reasons…

Death by Debt by ~jessiechrist

I recently stumbled upon the exact figures of US Debt to the Penny which as of a second ago indicated that public debt outstanding was $11,043,588,980,678.90. The latest monthly report is available here. I was very surprised to see we still had such debt given this prediction to have the debt paid off by now. The FAQ encourages us, the private citizens, to help pay off this debt with the following statement:

“How do you make a contribution to reduce the debt?

Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau Of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188″

I must say that this is not an April fools joke because research a bit further shows that people do make gifts to pay off the debt. However, before you make your contribution, please note this news story which indicates that the bailouts and the various expenditures could total $10.8 trillion.

Also please note that although we are all patriotic citizens who want to pay off this debt (and even if the whole world jumps in to help), this FED report says that there’s only about $8.3 trillion around (M3 is no longer published) and that money is created from around $2 trillion (soon to be $3 trillion) of reserves (interestingly we have only about $900 billion cash out there). If you know how the total debt can be paid off with all of the outstanding money, please help me understand this.

I also cannot figure out if the gifts to pay of the debt count as charitable donations for tax deduction purposes.

Americans are very smart people. I believe I have just understood why they choose to spend instead of saving.

Lenin by ~Belotaurus

A sense of worry about the many negative unintended consequences of recent actions has come over me. Perhaps it has something to do with receiving “healthy” doses of government propaganda during my ten years in the Soviet Armenian school system. I can still remember the brain-cleansing we had to undergo about how Comrade Lenin loved children and how Comrade Stalin also loved children and how many cubic tons of iron ore were required to meet the five year plan of the… In the name of the taxpayer much change is being proposed. I thought corporations also pay taxes. Perhaps, it is the collapse of the Soviet Union which taught me so many lessons. Even today, I remember vividly the day when we heard about the massacres in Sumgait in February of 1988. In my memory, this was the event that sparked the collapse of a dark era started by the events of 1917.

It seems that people forget that to grow anything meaningful in a garden, the soil must be rich with humus and at the right acidity. It seems they forget that once something is planted that the ground and the roots should not be disturbed. What business does Congress have in passing a 90% tax on anything? Given things stay roughly the same, I am sure the economy will get better sooner or later. The challenge right now is that nothing is a given.

For people who trade via systems, I have a question. At which point does one decide to:

1. modify the system (and to what degree and based on what)?
2. discard the system (and why)?
3. continue relying on the system (and for how long); if such a system is producing losing trades more recently but has worked fine for a long time (definition of time scales not relevant)?

Perhaps the answer contains clues regarding our recent government actions (and market reactions) where the scale of the system and the magnitude of its impact is great. The problem is further complicated by control over one’s actions but lack of control over [negative] consequences of those actions in human systems.

The second question that does not leave me alone is whether a game of chess (or any other game) can be won if after every few moves, the game rules are modified. Does the player quickly adjust and remain focused on winning the game according to the new rules (“queen can only move three squares at a time” for example) or does the focus shift on guessing what the next set of rule changes may be? After a few sets of changes and corresponding adjustments, does the player begin to suspect the rule maker in “supporting” the other side?

Every issue, every law, and every viewpoint represents a spectrum where our opinions, options, and choices vary infinitely within a continuum. Our position on the subject is where we find ourselves on the spectrum at any given time. Issues can also be seen as Euclidean vectors with their lengths and directions. Some issues have major impacts on many lives. Others are against the overall direction of the society but have more limited impact. At any particular time, we find ourselves in that one spot in the multi-dimensional universe of issues where all these vectors intersect with the point of intersection being our position on the subjects.

How I have changed...

Why are these issues so polarizing? As I was staring at my computer screen, the answer was staring right back at me.

“Hi! You! Hello… Yes you! I’m talking to you! You’re very fortunate, did you know that? Why? Are you joking? You have choices. What choices? Let’s see… where do I start… Let me tell you about my life. I sit here breathing dust waiting, waiting… waiting for your next command. But you know I can’t just do nothing. I can’t just sit like you sometimes gazing at the horizon. I have to work. When I am awake I cannot be idle. That’s how I’m built. Sometimes you look at me all day long and don’t even notice me. You see past me into the bits and bytes I bring to you from my extended family. Sometimes you come over, stare at me and start laughing. Are you laughing at me? Oh forget it… Who am I anyway? You could care less about me. But maybe not… You seem to like when I do tricks like playing music or showing movies but do you realize how empty I feel inside? All I can do is turn switches on and off… Oh how much I wish I could understand all those bits and bytes I deliver to you… If I could only laugh just once … with you. I only have one choice ON or OFF… I know I’m good at that. In a single blink of your eyes, I can switch millions of times… Blink… Yes don’t forget, blink a few times while you stare at me…”

We are very fortunate to live in times when not only we can have choices and options but we can actually express our positions and opinions. The problem is that we forget that others also represent a bunch of arrows intersecting at a unique spot in the universe at any given time. Many of us (myself included) try to force, persuade, or convince them that not only is our intersection the best spot in the universe but it is where they should also strive to be. If we could just accept their place in the universe the same way we accept where each star shows up on the sky…

Center of V838 Monocerotis Light Echo

Speaking of the sky, when I was little, we would sometimes lay on our backs on the warm asphalt on a cool summer night at the observatory looking at the starts. We had billion of stars in Armenia and only a few here in Massachusetts. In those days we would find all of the constellations and even make up our own. One day I saw a picture of the stars from a different point in the galaxy. None of the constellations were there even though it had a lot of the same stars. The arrows, their sizes and their directions are similar to the stars and appear a certain way only from where we stand. That happens to be our distorted view of the stars.

Federal Reserve by ~Venar

After years of focusing on nano-economics (too small to call it micro) of my little family, I went on a pleasant trip down the macro-economics lane today. At the end of it I realized that I must have slept through the undergraduate class on Federal Reserve monetizing the nation’s debt because I was “surprised” to see almost a trillion dollars of Treasury obligations on the asset side of the Fed’s balance sheet. Its Annual Report is about 400 pages but the numbers on page 315 are fascinating when contrasted with the numbers on page 322. This video provides a very basic overview of what money is, how it’s created and destroyed.

These are some simple observations:

1. The dollar is backed by debt obligation of our government – no debt > no dollars.
2. Gold mining could not produce enough gold to sustain the growth we needed giving way to the current system.
3. I understand the home mortgage deduction (and why it’s not a home mortgage full repayment deduction). Mortgages are good things as far as our system is concerned. The bank does not need a foreclosed house because that cannot be used as collateral with the Fed to meet the reserve requirements.
4. All other governments are married to the almighty dollar. For example, Russia had to spend billions of dollars in foreign currency reserves to defend its Ruble.
5. We pay thin air for the natural resources and efforts of other countries (oil from middle east, for example).
6. Our current troubles are in part from bad loans getting in the way of the money multiplier.
7. I would need another lifetime to begin to understand the current and past monetary systems, let alone make recommendations for changes.

In the meantime, I made the following comment in an e-mail yesterday:

I have come to think of money as some kind of a complex score in a game – and not much more. The higher the score, the better the player is at the game. Since the game rules are far out of my reach, I try to waste as few cycles as possible on changes I cannot implement but at least two elements bother me:

1. The devastation brought upon many people who fail in the game (real suffering from game “score” issues)
2. The incredible amounts of time (of our life – the real value which we cannot increase in any way) spent in playing the game for maintaining or increasing our scores

One more element bothers me but I did not mention it. People who are not the best at the game (myself in the list) sometimes feel that they are not good for anything. That could not be farther from the truth. My mother never had or paid attention to money and she was …. again searching for words to represent her true greatness.

When others say that time is money, I think the reverse. Money is time, actually. It’s the effort spent every day on earning a living. Here I have to say I feel bad for seniors who after decades of work got 50% cuts in their retirement accounts in the past year and are considering to continue working longer. They have every right to be mad at the system, the government, the brokers, the cheaters, the fund managers, and everyone else because time is what they have lost. Money can be created, but time cannot be created.

Unfortunately, time cannot be taxed (it would be a form of slavery). Therefore, it is converted to money which is then taxed. As a citizen of this great country, I actually like to pay taxes at all levels of government. The higher the tax bills, the higher our score and the better we’re playing the game. My earlier observation is not about the country but for the world as a whole.

Around the same topic, I must remember my uncles living in a small village where my father grew up. There was one little non-functioning store there at the time. Their basic existence revolved around the bounty of the land and their animals which were loved like family members – no money, no tax, no government, hardly a road, no shopping malls, no technological innovation, no Internet, no computer, no indoor plumbing (in the earlier years), no gym memberships, no stocks or bonds, no fancy cars or elaborate houses, but still a pretty happy life.

When I was a teenager in high school, I got into many fights with other boys on almost daily basis. Writing everything about these experiences will probably require many posts but one lesson I learned in that period was to avoid the fights I could not fight even when I was sure I would emerge as the winner. Some conflicts must be avoided completely.

One such conflict that must be avoided at all cost is the conflict between… the giants of the world: United States, Russia, and China. Even though I planned not writing about current events, I cannot stop myself in this case. Other countries are also giants along different dimensions but these three have the current moral obligation to maintain world order in addition to maintaining order within their borders. The latest conflict between Russia and the US using Georgia must have been prevented at all cost. Today’s move by Russia to recognize the independence of two regions alarms me greatly. The conflict is not being avoided or deescalated. Instead the situation continues to worsen.

I am not going to discuss the historical dimensions, or the complexity of the current situation on the world stage. All I want to say is that I know many Russian families and many American families and one thing we all have in common is the unending desire to guarantee life, liberty and the pursuit of happiness for us and our children. This does not have to come at the expense of one another. I hope the continued escalation will stop soon so we can avoid more death and destruction. It’s impossible to tell who will become the winner in this case, but I can say for certain that both sides are going to be losers in the long run if the conflict continues.

There are hundreds if not thousands of people on all sides working hard on the current situation. I’m fascinated how so many individuals trying to make the right decisions every minute end up as a whole making the wrong moves. History will determine the magnitude of the mistakes. For example, the collective decisions during the past world war cost many millions of lives and for what? I’ll write the story of my grandparents some day as an example.

Every generation of Armenians has lived through some tragedy. I very much hope and pray that does not apply to my generation. I hope you agree that some fights cannot be fought and must be avoided and prevented completely.