Relevant and even prescient commentary on news, politics and the economy.

Krugman, Mundell, Fleming, Summers, DeLong, and Rogoff

Here I go again, commenting on Krugman. But this time on a 5 year old talk on the risk that investors will lose confidence in the solvency of the US Treasury “CURRENCY REGIMES, CAPITAL FLOWS, ANDCRISES”. I think the talk about the risks of excessive budget deficits and unsustainable debt accumulation is much more relevant today than it was in 2013, since Republicans currently in power (not just Trump) will eliminate confidence that the US Treasury will pay its debts, if that is possible.

Krugman, however, thinks that a country which borrows in its own currency and allows the exchange rate to float can never be insolvent — the government can always monetized deficits and inflate away the value of its debt. He also argues that if investors lost faith in the US Treasury and decided Treasury notes and bonds would be worth little (either because of default or inflation) then the result would be a depreciation of the dollar.

He presents models in which this would stimulate demand for an economy in the liquidity trap (as the USA was in 2013). The counter argument is that this depreciation would cause a financial crisis in the USA. The key point of disagreement is explained by Krugman here:

Several commentators – for example, Rogoff (2013) — have suggested that a sudden stop of capital inflows provoked by concerns over sovereign debt would inevitably lead to a banking crisis, and that thiscrisis would dominate any positive effects from currency depreciation. If correct, this would certainly undermine the optimism I have expressed about how such a scenario would play out.

The question we need to ask here is why, exactly, we should believe that a sudden stop leads to a banking crisis. The argument seems to be that banks would take large losses on their holdings of government bonds. But why, exactly? A country that borrows in its own currency can’t be forced into default, and we’ve just seen that it can’t even be forced to raise interest rates. So there is no reason the domestic-currency value of the country’s bonds should plunge. The foreign-currency value of those bonds may indeed fall sharply thanks to currency depreciation, but this is only a problem for the banks if they have large liabilities denominated in foreign currency, a topic I address below

Here Krugman assumes investors are rational. Loss of confidence in the US Treasury doesn’t logically imply loss of confidence in banks. Larry Summers and Brad DeLong argue that investors are irrational and loss of one kind of confidence spills over to fear itself, which we have to fear. Knowing that economic agents are irrational but modeling rational ones implies that we know more than what is in our models.

I guess that the argument is that irrational fear due to sharp depreciation of the dollar could cause a banking crisis in the USA, even though it shouldn’t because US banks have dollar denominated liabilities. I further guess that it is true that general panic could cause a banking crisis in the USA — this doesn’t even have to be irrational — if there are multiple Nash equilibria assuming even Magic Nash rationality isn’t enough to rule out the possibility — a self fulfilling prophecy is a sunspot equilibrium not irrationality.

However, it does seem possible to rule out bad possibilities with rules. Economies used to have bank runs. Now they don’t because there is deposit insurance and/or a lender of last resort. The crisis of 2008 involved non-depository institutions which were acting as shadow banks transforming maturity so they had long term assets and short term liabilities. They weren’t covered by deposit insurance nor were they regulated much.

The Dodd-Frank act may have vastly reduced this risk. It is clear that the risk of financial crises can be very low — there wasn’t one n the USA during the long period of tight regulation from the 1930s through the 1970s. Nixon’s shift from fixed to floating exchange rates was a dramatic event in which the US government said it couldn’t keep a (non legally binding) promise. There was no banking crisis.

This means that the reasonable response to the concerns of Rogoff, DeLong, and Summers is to make sure regulations are sufficiently tight. Unfortunately, this too is highly relevant now. In addition to slashing taxes and raising spending, Congress also decided to relax regulations on medium sized banks with assets up to $249,999,999,999.99 . The argument is that this time the consequences of deregulation will be different.

It is too bad that a 5 year old discussion of possible problems is so topical. The change is that the possible risks have become probable now when Trump replaced Obama.

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Pseudo-Equity: Further Remarks on the Politics of Mandatory Diversity Training at Evergreen

Pseudo-Equity: Further Remarks on the Politics of Mandatory Diversity Training at Evergreen

This post follows the previous one and explains why I get so exercised about the politics of equity at a place like Evergreen State College.  The single issue at the heart of activism at Evergreen for the past two years is mandatory diversity training for faculty.  This was first proposed by the Equity Council (which was set up by the college administration and whose name changed a bit from year to year) and brought before the faculty, where it failed on a secret ballot.  Equity people were furious and concluded that (a) the faculty had just demonstrated its deep-seated racism, and (b) they would have to go directly to top administrators to impose these trainings anyway.  This perspective was picked up by activist students, who felt that only confrontation could rid the campus of its plague of professors who refused to deal with their own racism.  This is a bit of a cartoon version, I admit, but it is broadly accurate and provides essential context for understanding why someone like Bret Weinstein got the treatment he received.

So what about mandatory training?

I agree completely that it takes a tremendous amount of skill to negotiate issues involving race, gender and sexual preference in the classroom.  I’ve learned a lot over the years, and I definitely don’t think I’ve arrived at perfect wisdom.  I’m always trying to improve.  For me this is about both better serving the students in front of me and addressing the larger inequalities we’re all enmeshed in because we live when and where we do.  I’m absolutely in favor of providing lots of resources for all faculty to work on this front.

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Very Interesting

WASHINGTON — President Donald Trump blasted the FBI and special counsel Robert Mueller on Monday following news that investigators had raided the office of his personal attorney, calling the search “an attack on our country.”

Earlier in the day before the president met with senior military leaders at the White House, the FBI raided the New York office and residence of Michael Cohen, seeking information about a $130,000 payment the attorney made to porn star Stormy Daniels shortly before the 2016 election, sources told NBC News.

Federal prosecutors for the Office for the Southern District of New York executed search warrants at Cohen’s law office located at 30 Rockefeller Plaza and seized documents related to a referral from Mueller’s team.

Trump called Mueller’s investigation a “witch hunt.”

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March jobs report: surprisingly weak

March jobs report: surprisingly weak

  • +103,000 jobs added
  • U3 unemployment rate unchanged at 4.1%
  • U6 underemployment rate fell -0.2% from 8.2% to 8.0%
Here are the headlines on wages and the chronic heightened underemployment:
Wages and participation rates
  • Not in Labor Force, but Want a Job Now: fell -35,000 from 5.131 million to 5.096 million
  • Part time for economic reasons: fell -141,000 from 5.160 million to 5.019 million
  • Employment/population ratio ages 25-54: fell -0.1% from 79.3% to 79.2%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: rose $.04 from  $22.38 to $22.42, up +2.4% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
Holding Trump accountable on manufacturing and mining jobs

 Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?  
  • Manufacturing jobs rose 22,000 for an average of +19,000/month in the past year vs. the last seven years of Obama’s presidency in which an average of 10,300 manufacturing jobs were added each month.
  • Coal mining jobs were unchanged for an average of +75/month vs. the last seven years of Obama’s presidency in which an average of -300 jobs were lost each month

January was revised downward by -63,000. February was revised upward by +13,000, for a net change of -50,000.

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Kudlow’s Trade Coalition of the Willing

Kudlow’s Trade Coalition of the Willing

Who knew when I posted this:

We could go back to 2002 and how the Authorization for Use of Military Force Against Iraq Resolution of 2002 was sold to people like Senator John Kerry and Senator Hillary Clinton. The Bush-Cheney White House sold this as a means to encourage Iraq to comply with certain UN resolutions and not necessarily a prelude to war. Of course the White House was lying as we knew by March 2003. Of course Bush-Cheney lied about a lot of things with respect to Iraq back then including its forecast that an invasion would be quick, low cost, and very effective in establishing a Western democracy in Iraq. How did that work out exactly? Kudlow helped the White House cheerlead for this invasion arguing it would lead to so much Iraqi oil production that oil prices would fall to $12 a day. How did that work out again?

I was reacting to Kudlow claiming we are not in a trade war. Just as I thought Kudlow had reached all heights of stupidity, he exceeds expectations:

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Krugman, Heckscher, Ohlin, Samuelson, Autor, Dorn, and Hanson

Paul Krugman has been wondering why stock market indices fell so sharply soon after Trump began trade-war-mongering. (also less wonkily here) He starts by noting that it’s a mugs game to try to explain stock market fluctuations, but then tries all the same.

The puzzle is that according to the very standard Heckscher Ohlin Samuelson model, the effect even of a severe trade war on GDP is fairly small. On the other hand the decline in the Dow (which he pegs at 6%) is large. Also Autor, Dorn and Hanson famously estimated a large effect of “The China Syndrome” on local labor markets (pdf warning).

His argument is basically

there is a reason why stock prices might overshoot the overall economic costs of a trade war. For a trade war that “deglobalized” the U.S. economy would require a big reallocation of resources, including capital. Yet you go to trade war with the capital you have, not the capital you’re eventually going to want – and stocks are claims on the capital we have now, not the capital we’ll need if America goes all in on Trumponomics.

Or to put it another way, a trade war would produce a lot of stranded assets.

For this post, it is even more necessary to click the link and read Krugman. I can’t summarize competently.

This post turned out to be really bad, so I am putting the rest after the jump.

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Fake News, Flawed Analysis, and Bogus Tweets

From time to time, Angry Bear has featured Steve Hutkins, (Save The Post Office Blog) and Mark Jamison’s (retired NC Postmaster) commentary on the efforts of various political and commercial interests to close down the United States Postal Service and give it over to the likes of UPS, FedX, and other commercial enterprises. Most recently, President Trump’s inane Twitter comments have again gained undeserving national coverage about Amazon having a hypothetical cost advantage over the USPS by using the USPS to deliver Amazon orders 7 days a week. Steve takes issue with the President Twitter comments and a CitiGroup analysis of the Amazon – USPS relationship. Read on . . .

“Steve Hutkins; Talk about Fake News. How a flawed Citigroup analysis led to Trump’s bogus tweets about Amazon and the Postal Service.” President Trump is continuing his Twitter attack on Amazon over its deal with the Postal Service. Yesterday Trump tweeted,

“Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country… not a level playing field!”

A couple of days ago, his tweets were more specific:

“While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars…. If the P.O. ‘increased its parcel rates, Amazon’s shipping costs would rise by $2.6 Billion.’ This Post Office scam must stop.”

The attacks were in the same vein as his earlier tweets back in December. They are apparently based on an op-ed in the Wall Street Journal by Josh Sandbulte and published last July. Sandbulte claimed each Amazon parcel was getting a $1.46 subsidy;

“It’s like a gift card from Uncle Sam.”

As Jen Kirby at Vox noted, Sandbulte is a money manager who works for a firm owning FedEx stock, but it may or not be relevant, as anyone invested in mutual funds probably owns some FedEx. In any case, he didn’t invent the subsidy idea. It came from an analysis done by Citigroup in April 2017.

The thesis of the Citigroup report is that taxpayers are essentially paying for the free shipping offered by Amazon. As the Citi analysts write, “In this note, we examine the true profitability of the Post Office and show that by charging below market rates on parcel volume (mainly eCommerce) the Post Office has essentially turned free shipping into a future tax payers’ burden.”

It should be noted, the Citigroup report is intended to give advice to investors in the stock market. It claims, “a day of reckoning” is coming when the Postal Service will have to implement a significant increase in shipping rates, and this will provide a large “revenue opportunity” for the Postal Service’s competitors, FedEx and UPS — something on the order of $15 to $19 billion a year in additional revenue. This, they say, “supports upside for both stocks.”

The Citigroup report is somewhat less bullish on Amazon because it will have to bear the brunt of rate increases by the Postal Service and also FedEx and UPS, who will be in a better position to raise rates themselves. According to the analysts’ “worst case scenario,” Amazon will have to pay $2.6 billion a year in additional shipping costs.

As a closer look at the Citigroup report reveals, the case for a huge Postal Service rate hike on parcels is seriously flawed, and the report provides no evidence for Trump’s tweets that the Post Office is losing a fortune on the Amazon deal.

Before we get to the Citigroup report, it will be helpful to lay out a few basic facts about the types of U.S. mail, the way postal accounting works, and the particular service Amazon is using. If you’re familiar with all this, you can cut to the chase and go to the section (Part 2) on the Citigroup analysis.

A Postal Primer

In 2006, the Postal Accountability and Enhancement Act (PAEA) divided postal products and services into two categories, Market Dominant and Competitive.

Market Dominant products and services are those in which the Postal Service “dominates the marketplace” as a result of its two monopolies — the letter monopoly, which gives the Postal Service a monopoly on non-urgent First Class mail, and the mailbox monopoly, which gives the Postal Service exclusive right to put mail in mailboxes. Market Dominant includes First Class, Standard (mostly ad mail), and Periodicals, as well as certain types of international mail. According to the USPS 2017 10-K report, Market Dominant accounts for about 70 percent ($50 billion) of total revenues ($70 billion) and about 95 percent of total volumes (150 billion pieces)

Competitive mail includes shipping services like Priority Mail, parcels, and some other types of international mail. Its name derives from the fact that there are competitors in the private sector for these types of products. Competitive products account for 29 percent ($20 billion) of total USPS revenues and about 5 percent of volumes.

The rates for Market Dominant mail are constrained by “price cap” regulation, which limits rate increases in a class of mail to the Consumer Price Index. The rates on Competitive products are essentially constrained by the marketplace, but the Postal Service is free to set prices as it sees fit, subject to approval by the Postal Regulatory Commission, so long as the products cover their costs, aren’t cross-subsidized by Market Dominant products, and make an appropriate contribution to institutional costs. In other words, the rates can’t be too low.

The phrases “covering their costs” and “contribution to institutional costs” refer to the way the Postal Service analyzes the costs of each product and service. As in every business, for every product there are two types of costs, variable and fixed.

The variable costs are those associated directly and indirectly with a specific product or service, and they change relative to volume. The Postal Service calls these attributable costs.

The fixed costs include wages, rent on leased post offices, and all the other overhead expenses that stay the same regardless of how much volume the Postal Service is handling. The Postal Service calls these institutional costs.

For each product and service, the Postal Service figures out the variable costs that can be attributed to that product; whatever revenue is brought in beyond that is considered contribution to the institutional costs.

The cost coverage for a product or service is determined by dividing the unit’s revenue by the attributable cost. A cost coverage of 100 percent means that the product has covered of all its attributable costs but contributed nothing to institutional costs. Ideally, a product will therefore have a cost coverage greater than 100 percent, so it can contribute something to the Postal Service’s fixed overhead costs.

Finally, there are the Negotiated Service Agreements, i.e., contracts between the Postal Service and individual mailers that provide customized pricing and other arrangements. For business reasons, the details of these deals are withheld from the public, but each NSA must be approved by the PRC before it goes into effect, and then again annually as part of a review to ensure that the deal is still in compliance with the law.

There are several hundred NSAs in effect right now, including 846 Competitive domestic agreements, ranging widely in size and scope. At least one, perhaps several of them, cover the deals between Amazon and the Postal Service.

The PRC’s Annual Compliance Review

The PRC conducts an Annual Compliance Determination Review (ACDR) to ensure sure all the products and services provided by the Postal Service are in compliance with the laws governing postal matters. Generally speaking, the review determines if the costs incurred by each product and service are covered by the revenue generated by that product or service.

The compliance review thus looks at how each type of mail — including each NSA — is doing with respect to cost coverage, i.e., the extent to which it is covering attributable costs and how much it is contributing (or failing to contribute) to institutional costs.

The Commission also examines how much Competitive mail as a whole is contributing to institutional costs to ensure that the Postal Service isn’t using the products which it has a monopoly to unfairly subsidize products for which there’s competition from the private sector.

As it happens, last week the PRC issued the 2017 Annual Compliance Determination Report. The law requires “each Competitive domestic NSA product to cover its attributable cost. The Commission noted “all but four Competitive domestic NSAs covered their attributable costs and complied with this statutory requirement” (p. 84). Three of these NSAs expired or were terminated, and the fourth (a Priority Mail Contract that is almost definitely not the Amazon NSA) is being monitored pending reevaluation.

The PRC’s compliance report means that the PRC has reviewed the Amazon contract or contracts and determined that they are indeed covering their attributable costs. They are not losing money for the Postal Service.

The Amazon NSAs and Parcel Select

While we know very little about the details of Amazon’s contract or contracts with the Postal Service, we do know that most of the parcels delivered by the Postal Service for Amazon fall under the category called Parcel Select.

Back in 2013, when the Postal Service announced that it was doing Sunday delivery for Amazon Prime, we were able to locate the NSA in PRC docket CP2014-1 and confirm that it was a Parcel Select product. You can see the agreement here, but it’s almost entirely redacted.

According to the USPS description, “Parcel Select ser¬vice provides very competitive pricing. It is often used by other private parcel companies to complete delivery of the ‘last mile’ for their shipments — particularly for deliveries in non-metropolitan or rural areas because the Postal Service is the only carrier that offers delivery to every door 6 days a week.”

The biggest users of Parcel Select are Amazon, FedEx, and UPS. They’ve determined that using the Postal Service for the “last mile” (from the post office to the home or business) is much more cost-effective than trying to deliver to millions of addresses themselves.

In fiscal year 2016, according to an article in DC Velocity, about 2.5 billion packages moved under Parcel Select. Amazon was responsible for about 1 billion packages; FedEx (through its “SmartPost” product) used USPS for 600 million pieces, and UPS (through “SurePost”) had USPS deliver about 275 million pieces of Parcel Select. The balance came from several parcel consolidators that aggregate packages from multiple smaller shippers.

Parcel Select generally takes two to nine days, but the big mailers, consolidators, and private shippers prepare and presort the parcels and deliver them to the Destination Delivery Unit (DDU) — usually your local post office — or a regional processing facility, thus saving a lot of time and expense.

If the shippers get the parcels to the DDU by a certain time — Early Bird DDU — the Postal Service can often provide same-day delivery. Regular DDU — dropping off the parcels after the carriers have left the facility — usually means next working day delivery.

The Postal Service’s ability to deliver packages in two days or less has been an important factor in growing its parcel business, and it points to the synergy between the Postal Service and its larger customers who help shuffle packages to the right place in the network, labeled and sorted in the right way.

Because the users of Parcel Select do some of the work themselves, they’re entitled to “workshare” discounts based on the costs the Postal Service is avoiding. These discounts are arranged through the nonpublic NSAs, so we don’t know how much Amazon is paying, but the public pricing for Parcel Select is shown here. As you can see, the prices start at $2.85 for a parcel weighing a pound or less, dropped off at a DDU. Prices go up from there, depending on the weight and how close to the destination it’s dropped off.

Due to its volume discount, Amazon is paying much less than that, however. According to a Bloomberg article, David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimates that Amazon is probably paying, on average, about $2 per parcel. That estimate can also be derived from this USPS financial report. It shows that in 2017 Parcel Select brought in $5.66 billion on 2.8 billion pieces, an average of $2 per piece. Amazon’s deal is probably comparable to the agreement the Postal Service has with UPS and FedEx to deliver the last mile for them.

As the chart for Parcel Select prices shows, there’s a big range in pricing, and the pricing on Amazon packages probably varies significantly, depending on geography, time of year (holidays), and who’s doing the delivery (e.g., union workers or lesser-paid non-union workers like City Carrier Assistants).

If Amazon is now sending about a billion parcels through the Postal Service, and if the average is about $2 per piece, the relationship is bringing the Postal Service about $2 billion a year. That strictly a ballpark guess — the Citigroup report puts the estimate at $3 billion a year — but it shows that Amazon has become a big part of the Postal Service’s business.

By the way, to put the numbers in context, Amazon reportedly shipped about 5 billion parcels via Prime worldwide in 2017, and it spends about $20 billion a year on shipping.

Talk about Fake News: How a flawed Citigroup analysis led to Trump’s bogus tweets about Amazon and the Postal Service, Save The Post Offic blog, Steve Hutkins, April 7, 2018

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Total Blockchain Blocker Man

This essay is excellent. Just click the link.

Kai Stinchcombe argues

“blockchain is a … technology, not a metaphor”

here’s what blockchain-the-technology is: “Let’s create a very long sequence of small files — each one containing a hash of the previous file, some new data, and the answer to a difficult math problem — and divide up some money every hour among anyone willing to certify and store those files for us on their computers.”

Now, here’s what blockchain-the-metaphor is: “What if everyone keeps their records in a tamper-proof repository not owned by anyone?

He argues that blockchain technology does not eliminate the need for trusted intermediaries. He also argues that trust is good and that societies which rely on trust are better then ones which do without it.

I think he shouldn’t assume everyone knows what a hash is. It’s just a function (hash function) which maps from huge numbers to medium sized numbers (so not a one to one function). Also he shouldn’t assume I know what a smart contract is. It appears to be a program that actually transfers funds as soon as it is digitally signed rather than just telling people to pay other people.

There is an implicit challenge in the essay

There is no single person in existence who had a problem they wanted to solve, discovered that an available blockchain solution was the best way to solve it, and therefore became a blockchain enthusiast.

I am not a blockchain enthusiast & I want to try to meet this challenged here in this post. There is a strong hint here (sadly criminal but it doesn’t have to be).

Same with Silk Road, a cryptocurrency-driven online drug bazaar. The key to Silk Road wasn’t the bitcoins (that was just to evade government detection), it was the reputation scores that allowed people to trust criminals. And the reputation scores weren’t tracked on a tamper-proof blockchain, they were tracked by a trusted middleman!

So the challenge is how to have (relatively) trustworthy reputation scores without a trusted middleman ?

A problem with reputation scores (such as yelp reviews) is that they can be hacked with low ratings given by hostile people who haven’t really bought the good or service being reviewed.

There is (probably in use) a technology related to cryptocurrency blockchains which can eliminate this problem. One key part of say the bitcoin blockchain is the key or digital signifier each user has (meaning everyone who has ever owned bitcoin not just miners). This is just an application of the standard public code/private key system used for safe internet browsing (I just checked and I am at https://angrybear… using such a system). Each person A comes up with a function F_A which is very hard to invert and the inverse F_A_inverse. This serves as a digital signature. A tells the world F_A, then sends signed messages F_A_inverse(something comprehensible in say English o italiano). Only if it is really sent by A does F_A(the coded message) make any sense. Importantly it is very very hard to invert F_A knowing only F_A and hard but not so very hard to come up with new pairs of functions (F_A, F_A_inverse). This is standard technology absolutely key to e-commerce.

But it can be usefully combined with cryptocurrency as follows.

A writes (and encodes with F_inverse) an offer to pay B for some good or service, with payment when the good or service is delivered within some interval of time and is satisfactory, but really payment if the buyer doesn’t file a complaint within a slightly longer interval of time. To do this A must describe bitcoin belonging to A equal to the amount paid, possibly plus a penalty forfeited if A posts a complaint. B then sends a message (coded with F_B_inverse) accepting the offer. The pair of messages is is a draft transaction made of the offer and the acceptance. Then miners check that A really has the cryptocurrency (as they do with bitcoin etc), that the longer interval of time has passed and that A has not complained then put the transaction in a block. Now the cryptocurrency belongs to B. Or A can report that B failed to deliver on time or the good was no good. Then B doesn’t own the cryptocurrency. Also A doesn’t own the cryptocurrency. It belongs to the miner who creates who verifies that A made the offer, that A made the complaint, and that enough time had passed. adds the offer and complaint to a block and solves the proof of work math problem so that it is a valid block.

If B is cautious or paranoid, B can only accept the offer if it consists of A transfers so much to B and so much back to A only if A makes no complaint and the rest back to A even if A complains. So A reserves the right to make a complaint at a cost of giving some cryptocurrency to the miner when the complaint is recorded. Also (and finally I think) The buyer may demand (so written in the orignal offer) that the seller must post some cryptocurrency when accepting the offer, which cryptocurrency is forfeited if the buyer complains

Importantly, the offer and the complaint have the same signature (are mapped into apparent gibberish with the same F_A_inverse). The complaint is only recorded if the complainer pays, in this case to the miner not to B.

The remaining problem is that A and the miner might be the same person so the penalty is a transfer from A to A. But this requires A the malicious miner to solve the proof of work problem before anyone else.

I think this works.

A dishonest merchant might only fill orders from people who promise to pay such a large penalty to complain that they won’t complain even if the good never arrives. Fools will buy from such merchants. Technology can’t eliminate idiocy.

But the option to transfer the wealth to a third party miner means both shoddy goods and services and malicious negative reviews can be punished. The miner doesn’t have to be trusted by anyone as the mining oerations are verified by all other miners just so they can keep their blockchains up to date. The merchant B doesn’t have to worry about his or her reputation — the complaint is costly even if A is the only potential customer B will every have. A doesn’t have to worry about A’s reputation or to have a reputation for honesty. If no one trusts me, I promise to pay them or pay more to complain.

I think it works.

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Are We in a Trade War?

Are We in a Trade War?

President Trump sent two of his minions out yesterday to lie about this question. Kudlow:

We are not in a trade war. What this is is an attempt to right some of the wrongs with respect to China.

Our Treasury Secretary said essentially the same thing:

Our objective is still not to be in a trade war with [China] … I’m cautiously optimistic that we will be able to work this out.”.

We could go back to 2002 and how the Authorization for Use of Military Force Against Iraq Resolution of 2002 was sold to people like Senator John Kerry and Senator Hillary Clinton. The Bush-Cheney White House sold this as a means to encourage Iraq to comply with certain UN resolutions and not necessarily a prelude to war. Of course the White House was lying as we knew by March 2003. Of course Bush-Cheney lied about a lot of things with respect to Iraq back then including its forecast that an invasion would be quick, low cost, and very effective in establishing a Western democracy in Iraq. How did that work out exactly? Kudlow helped the White House cheerlead for this invasion arguing it would lead to so much Iraqi oil production that oil prices would fall to $12 a day. How did that work out again? We should have listened to Anthony Zinni:

Former Centcom Chief General Anthony Zinni Calls Iraq War a Blunder

He was saying invading Iraq would be a blunder even back in 2002. Of course Trump says we will win the trade with China. On Trump’s absurd claim, perhaps we should listen to Luke Skywalker :

This Is Not Going To Go! The Way You Think

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