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Home 2017-07-28T13:07:05+00:00

Trading Bears and Kitties

By | December 8th, 2017|

Remember “Beanie Babies”? Photo: Jonny Connormah. Source: Wikipedia My kids went gaga over Beanie Babies in the ‘90s. The cute plush toys are filled with plastic pellets rather than conventional stuffing, which game them a more flexible feel. People began collecting them, then trading them like financial assets – the way some people treat baseball cards. At one point, Beanie Babies accounted for 10% of [...]

Flying by Instruments

By | December 7th, 2017|

How much should we trust our gut? Photo: Adrian Pingstone; Source: Wikipedia Every pilot receives some instrument training. This makes sense. There’s always a chance you can get caught by unexpected weather. Getting tossed around by turbulence when there’s no visibility outside is disorienting. You feel like you’re moving when you’re stable, you think up is down, and vice-versa. The first rule that’s drilled into [...]

Flat and Flatter

By | December 6th, 2017|

What does a flat yield curve mean? Photo: Billy Hathorn; Source: Wikipedia 130 years ago the English schoolmaster Edwin Abbot wrote the novella “Flatland” about a two-dimensional world inhabited by geometric shapes. There’s no depth in Flatland, only height and width. It seems like investors today are entering a “flatland” of their own. Normally, long-term bonds yield significantly more than short-term bonds. We call this [...]

The Roots of Innovation

By | December 5th, 2017|

The apple doesn’t fall far from the tree. Photo Source: Pixabay That’s the lesson from a new study about innovation, inventions, and incentives. The children of inventors are far more likely to become inventors themselves. Income, education, and geography also matter. But it’s the home environment that has the biggest impact. Some researchers studied 1.7 million patent office applications and 1.2 million tax returns, asking [...]

Winners and Losers

By | December 4th, 2017|

Who wins and loses from tax reform? Photo: Derek Lilly. Source: Morguefile Most of the comments on tax reform center on what happens to individuals – the personal exemption, the mortgage interest or medical expense deduction, and so on. That’s understandable: people want to know how different versions will directly affect them. And the bill’s depends on each taxpayer’s personal situation But the point of [...]

Gifts Around the Tree

By | December 1st, 2017|

Why do we give gifts? Photo: Kevin Kay. Source: Wikipedia The Native Americans had “potlatch.” Pacific Islanders had “Aropa.” Techies today have open-source software. And most people exchange gifts around the holidays. But is gift-giving rational? A lot of economists say no. They look at the all the fruit cakes sent-but-never-eaten or the ugly ties or sweaters politely acknowledged and then discarded. Theses economists see [...]

Doing the Right Thing

By | November 30th, 2017|

Why should business people care about morals? “Avarice” by Jesus Solana. Source: Wikipedia In Hollywood, the amoral business person is a standard trope – the greedy capitalist who only cares about increasing the bottom line, no matter what the cost to workers, communities, or the environment. But markets need to have standards – like trust, honesty, and fairness – in order to work. It’s bad [...]

A Parliament of Fed Officials

By | November 29th, 2017|

Who makes up the Fed? Burrowing Owls. Photo: Tania Thompson. Source: Shutterstock For most people, the Federal Reserve is a mysterious place that makes mysterious hooting sounds every few months, and they tell banks where to set interest rates. Academics and politicians rail at the Fed for various reasons, but their debates often sound like medieval scholastics debating how many angels can dance on the [...]

Lipstick on What?

By | November 28th, 2017|

Remember the PIIGS? Photo: Doug Tengdin Six years ago, the problems with Europe’s common currency were in full flower. Greece had defaulted on its Euro-denominated sovereign debt, and the economic challenges facing Portugal, Ireland, Italy, Greece, and Spain (the PIIGS) were headline news. The Greek economy was facing hard times. Their textile exports to the rest of the EU had been displaced by China, and [...]