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Shuttleworth Says Ubuntu Can't Just Be Windows

NereusRen Re:Freedom. (710 comments)

The GPL restricts activities that are legal unless specifically restricted in the license.

I think you do not understand either the GPL or copyright law, or both. Could you give an example of something that you think is legal to do with unlicensed copyrighted work in your possession, but would be illegal if that work were provided to you with a license to make copies under the terms of the GPL?

more than 5 years ago

Let Big Brother Hawk Anti-Virus Software

NereusRen Economics in One Lesson (405 comments)

The submitter needs a better understanding of economics. He considers only the first-order effects, a classic blunder which is thoroughly discussed in Henry Hazlitt's classic book Economics in One Lesson, a rigorous treatment in layman's language which I recommend to everyone. (Google turns up a free ebook version that seems to be complete.) I'll give two reasons why this reasoning is bad:

But now suppose the government offers a $5 rebate (funded by a tax on all 100 million Internet users) to anyone who buys anti-virus software. Everybody who would have bought the software before, will obviously still buy it now that the government rebate has effectively lowered the price to $35, and now, all the people who value the software between $35 and $40 will buy it as well. For each person who purchases the software at the new price of $35, the following is true:

        * The person who bought the anti-virus software is better off -- they valued the software at at least $35, and they got it for $35. (Otherwise, they wouldn't have bought it.)
        * The taxpayers who subsidized the purchase are better off. Each rebate cost the taxpayer one-hundred-millionth of $5. But when that user installed the anti-virus software, they conferred $10 worth of total benefit on all other Internet users in the US, so that benefits each Internet-using taxpayer one-hundred-millionth of $10. So they're ahead.

1) The $5 coupons that are given to people who would have purchased the software anyway doesn't benefit the taxpayers at all. Say the subsidy spurs 50% higher antivirus sales over the next year, which I think would be a pretty incredible success. In that case, taxpayers are paying $15 for each "new" antivirus user. For every three subsidies granted, two of them would have purchased the software anyway. Thus for every 3 subsidies ($15), taxpayers have a net benefit of only $10. It's a losing deal unless you make VERY generous assumptions about the increased adoption rate due to the subsidy (I think mine was pretty darn generous), or the value of the positive externality (for which $10 seems reasonable to me, but is still pretty subjective and unproven), or both.

Note that, if $35 antivirus sold 50% more than $40 antivirus, someone probably would have already done it and made a bunch of money... which leads me to my next point:

2) You assume that prices would stay at $40. That would almost certainly be inefficient, irrational behavior by the antivirus company/ies. This is Hazlitt's One Lesson: you can't just look at one facet of your policy and assume everything else stays the same. Basic economic theory suggests that antivirus software would rise in price by somewhere between $0 and $5, and probably closer to $5 if the amount of the subsidy is a small fraction of the original purchase price and if prices are not being driven down by efficient competition (which seems unlikely, since there is free antivirus software available but companies can still sell theirs for $40).

Let's use an example: 50 million people would pay $40 for the software, and 5 million would pay $35 but not $40. (Also, of the 50 million who would pay $40, only 40 million would pay $45.)

Anti-virus companies have determined that the optimal balance of revenue per sale and number of sales occurs when they have a price of $40. The extra 5 million people are not worth lowering the price, because they'd make less on each of the 50 million that would have bought it anyway. $35 * 55m $45 * 40m, so neither raising nor lowering the price will raise revenue.

Now consider the $5 coupon. The companies will make the same pricing calculation, whether explicitly or implicitly. They will determine that the new optimal price is now higher than $40, because consumers will still make their purchasing decisions based on how much they actually have to pay out of pocket. Now they can charge $45 and still get 50 million sales, not 40 million, because everyone who is willing to pay $40 will now simply pay $40 + a $5 coupon. They will definitely not keep the price at $40, because they know only 55 million will pay $35+$5coupon, and $40 * 55 million $45 * 50 million.

As far as I'm concerned, this undermines the entire argument without even having to get into thorny moral issues of whether a government is justified in taking people's money if it thinks it can spend it on things which will benefit those people.

more than 5 years ago

Shuttleworth Says Ubuntu Can't Just Be Windows

NereusRen Re:Freedom. (710 comments)

DRM is a series of restrictions that are there to prevent people from stealing (media) intellectual property.
The GPL is a series of restrictions that are there to prevent people from stealing (source code) intellectual property.

This is only a superficial similarity emphasized by your borderline-incorrect choice of wording. Any closer examination reveals that DRM and GPL are serving opposite ends using opposite means.

DRM is a technical framework that prevents you from doing things that are legal, and often does so in an unfriendly way. If it weren't for the DRM applied to a certain piece of media content you receive, you could do more with it.

GPL is a legal framework that allows you to do things that are otherwise illegal. If it weren't for GPL applied to a certain piece of software you receive, you could do less with it (due to copyright law). There are certainly copyright licenses which give you greater permissions than the GPL does, but using the GPL is still an act of freedom compared to the default of no license.

more than 5 years ago

Why Is Connectivity So Cheap In Stockholm?

NereusRen Re:This is one place local governments have failed (443 comments)

Yet people would rebel if suddenly half of the country wouldn't be able to receive mail or have electricity.

It's not that they wouldn't be able to receive it. It would simply be more expensive to them, because they have chosen to live in a place that is harder to supply with such services.

So my question for you is: If someone chooses to live in an area where it is easy and cheap to deliver mail, why should they also pay part of the bill to deliver mail out to my remote residence? My decision to live inefficiently is easier when I don't have to pay all the costs. Is that really something you want to encourage?

more than 5 years ago

South Korean Financial Blogger Faces 18 Months of Prison

NereusRen Re:Yes, you can make the economy plunge ... (177 comments)

The wrong reporting about UA was corrected immediately, yet it sent the markets into a nose dive from which they haven't recovered yet.

This is the same ridiculous, absurd reasoning that makes the summary sound so crazy. (In the case of the summary, it seems the real story is a bit more complicated. A misleading summary on Slashdot? I'm shocked, SHOCKED etc.)

UAL's stock (symbol:UAUA) recovered most of its value later that day, and the rest shortly after that. You can't even tell when the false story broke if you look at the last year of the stock's price.

The US market nosedive is a symptom of the bust portion of the latest boom/bust cycle driven by low interest rates in the 90's/00's. (If you thought a nation-wide personal savings rate closing in on zero was unsustainable, you were right!) While it's true that specific news events can pop a bubble in a sudden and dramatic way, that doesn't mean those events were the cause of the subsequent problems! The problems have been slowly building up as more houses were being built than people wanted to buy, and as artificially low interest rates caused stocks to be priced higher than (as it turns out) they were worth. There's nothing to be done now but watch the pendulum swing back the other way, as it would in any market where there's more supply than demand.

more than 5 years ago

Sci Fi Channel Becoming Less Geek-Centric "SyFy"

NereusRen Re:The beginning of the end (798 comments)

"Anyone who thinks that Mythbusters has science content is kidding themselves."

Zombie Feynman disagrees with you. (And so do I -- it's best to stay on the good side of the genius undead.)

more than 5 years ago

Stimulus Could Kickstart US Battery Industry

NereusRen Re:How is it racism? (369 comments)

I'm sorry you feel my post was non-nonsensical, if you point out which part didn't make sense to you, I could explain what I meant.


They try to make profit as high as possibly raising the price of goods. This forces cost of living to go up, ultimately forcing the wage to go up following suit, and companies with set unrealistic profits raises the price of goods to maintain their profit. It's a vicious circle where the wage workers are always barely making ends meet at the bottom of the barrel.

This is not how inflation happens. With a fixed money supply, it can't. If a company sets unrealistic profit targets, and isn't going to meet them, it has a couple choices. (a) not meet them. This is what most companies do. (b) Raise prices and wages. Their competitors will eat them for lunch. (c) Raise prices without raising wages. Then they will just see workers leave to companies that have raised wages. (d) Collude with other companies, directly or indirectly, so they all raise prices without raising workers' pay and benefits. Then nobody will be able to afford the goods.

Companies raising prices doesn't magically make people able to pay those prices. There needs to be enough money out there in circulation for its value to go down (aka prices to go up). The only way for dramatic inflation to happen is for the money supply to increase in a similarly dramatic fashion. This is generally only possible with a fiat currency, when the government is able to print money as they please. You are absolutely correct that Zimbabwe and the U.S. have the same system in this regard... the US could trigger hyperinflation by simply printing $10,000 bills and using those to fund the stimulus package, for example. They wouldn't need to tax anyone, just to print their own money... but this would be an effective tax by destroying the value of everyone's money. Then they could do it again with $1M bills, and so forth until eating lunch would cost $1M like it does over there.

However, I find it pretty unlikely due to the checks and balances in our constitutional system, as ragged as it is after these past 8 years. The fiat money system is the same, but the people currently controlling are different.

Forces cost of goods down. Forces wage down. Forces their currency's worth down.

This was the main nonsensical part. If the costs of goods have gone down, then the worth of the currency has gone up. That's the very definition of the worth of a currency. Did you mean to say "forces cost of goods up" rather than down?

You want an easy example of economies collapsing due to artificially created currency, look at MMORPG. In Everquest, items are bought and sold by the millions. It's not the same force driving inflation but it's the same result of inflation.

The source of inflation in virtual worlds is the same: an increase in the money supply. Think about it: Everquest gold is created from nothing, simply by killing monsters. This gold goes into the economy, and since there isn't a good sink that takes it out of the economy as quickly, the total gold circulating between players tends to increase in an unbounded way. If it increases, then the supply is higher, so it won't be worth as much. ("Gold" responds to supply and demand like anything else.) Gold being worth not as much means the prices (as expressed in gold) are all higher. That's inflation.

(Interestingly, WoW gold maintained its value much better by constantly providing significant sinks to take the money back out. I don't actually play the game, so I'm not sure just how much inflation has happened recently, but I know they kept it under relative control for a while by charging so much for mounts and other things that people would really want.)

Ultimately, I'm not really sure what point your post was trying to make, since it wandered into so many different areas and it was hard for me to understand (with your many sentence fragments) which ideas you were advocating and which ideas you were criticizing. I saw some good ideas in there, but mixed in with some very strange ideas about how money works. That's why I said it was nonsensical. I also wanted to make the point that I was starting from the same place as WaZiX, to draw emphasis to the places where I felt his explanation was wrong. I'm glad you didn't take it as too much of an insult, and I'm glad that you could find the common ground in our posts: The government devaluing our currency is a bad thing, for many reasons.

more than 5 years ago

Stimulus Could Kickstart US Battery Industry

NereusRen Overconsumption, booms, and inflation (369 comments)

This oversight is unfortunately necessary because the financial sector tends to be overoptimistic in good times (booms/bubbles) and overpessimistic in bad ones (busts/recessions/credit crunches/ depressions).

"Future money" and "current money" are subject to the same laws of supply and demand as any other good, where the price of current money (as measured in future money) is expressed in the interest rate. Central banks targeting an interest rate is exactly the same as putting a price ceiling on current money: it will cause overconsumption of current money (excessive borrowing/consumption -- look at our negative savings rate in recent years!), with the government there to make up for the shortages in supply that would normally result from a price ceiling. I expect that, as an economist, you understand the price ceiling phenomenon pretty well... and I would hope that you don't usually advocate that governments set price ceilings at below-market prices!

This overconsumption manifests itself as "overoptimism," but it is just a rational response to the prevailing interest rate. If that interest rate were the true market rate, it would be the correct response... just "optimism." Unfortunately, the rate is often pushed lower by the central bank, which means the optimism turns out to be unjustified... leading (most recently) to the internet bubble and the housing bubble.

Have you ever priced a project or investment for a company, to determine whether to undertake it or not? I have, and a crucial part of the decision is calculating the present value of the future cash flows in different scenarios. The lower the interest rate, the better a project will look when it involves a cost now for a payoff in the future. There will be fewer scenarios where it loses money. Seen from a different standpoint, the borrowed money to fund the project's upfront costs is cheaper to acquire. That's how low interest rates are linked to "optimism." When the interest rate gets lower, people's rational response is to undertake more of these projects. (These "projects" are not just by large businesses... they can also be individual investments such as buying/building a house. People definitely look at the mortgage rates when deciding whether they can buy a house or not, although they won't generally make the same type of formal calculations that a large business would.)

When the interest rate is artificially low due to a central bank price ceiling, people's rational response to that market signal is to undertake projects that would have been too risky and/or costly otherwise. Those projects eventually reveal themselves to be bad investments, often when the interest rates come back up. The project owners find themselves unable or unwilling to continue funding what is now a money-loser, and they have to do all the things that are typical of a bust: default on their loans because the project didn't pay off, lay off the people who were working on the project, and so on. Nothing about this scenario necessarily involved irrational behavior on the part of the investors... they simply used the market signals that were available. The distortion of those signals is what causes some of the effects of the boom and bust cycles.

I'm not claiming that all business cycles are caused by central banks or fiat currency, but I am definitely suggesting that they make things worse with their active "management" of interest rates, and that you can predict and explain the effects using supply and demand.

Of course there will be inflation when demand picks up, this is why there always will be inflation in a growing economy.

In general, a growing economy with a fixed money supply should see deflation, as the same nominal amount of money will be chasing a greater number of goods... at least, that's how supply and demand would work out. Can I ask why you think otherwise?

The reason why we usually see inflation over the long run is because the money supply is NOT fixed. (That's the problem with a fiat currency.) The money supply is more than keeping up with the growth of real wealth.

For example, if the real economy is growing at 3% and the money supply at 5%, the reported CPI would show 2% inflation (over the long run, ignoring any temporary shocks to supply or demand of money or goods as a whole). I would actually consider that to be 5% inflation: However many dollars I was holding at that time, they lost 5% of their value due to the increase in money supply, since that increase was a completely independent event from the real economy growth.

(As an aside, this money supply increase could happen either if the central bank increased the quantity of the fiat currency arbitrarily, or if we had a gold standard and someone discovered a cheap way to synthesize gold or located a huge untapped deposit. However, at least in the case of a hard currency it would not be subject to complete and arbitrary control! The better solution than either of those is a broader commodity-basket-backed currency, so that the money supply is unlikely to go up or down significantly.)

more than 5 years ago

Stimulus Could Kickstart US Battery Industry

NereusRen Re:An outside viewpoint (369 comments)

I'm guessing you don't remember seeing opposition because you agreed with that opposition, so it didn't stick out as much in your mind. Either way, some people have complained very consistently about both: libertarians and other people who value fiscal responsibility.

Then you have the two camps that don't actually care about deficit spending, but suddenly (pretend to) care about the national debt when it isn't being spent on the things they consider important. We call those people Republicans and Democrats.

more than 5 years ago

Stimulus Could Kickstart US Battery Industry

NereusRen Re:Check one for science (369 comments)

They increased the $100,000 or so you already owe. And if you have a problem with that, you should have brought it up before, as the paltry $800 billion is nothing compared to the increase in debt over the past 8 years.

We did bring it up before. Yes, there are some hypocritical fuckers in the Republican party that loved to borrow money against our future to pay for Bush's wars and only now are turning on the waterworks about the national debt... but please don't lump us in with them, or pretend that their existence means nobody can complain about Obama borrowing from my future to pay other people now.

I've bitched about borrowing to fund Bush's insanity and I'll bitch about this, in part because I'm young enough that I'll probably see it come back to bite me.

more than 5 years ago

Stimulus Could Kickstart US Battery Industry

NereusRen Re:How is it racism? (369 comments)

GPs post was pretty nonsensical, and I would responded if you hadn't already done so. Still, there were a couple things about your post that struck me as odd.

The creation of money is governed by supply and demand of loans, there is nothing artificial about it.

Except that the Federal Reserve Bank either pushes money in or pulls money out by buying or selling those loans in their "open market operations"... there's nothing natural about those transactions.

I hope you will agree than the higher the money supply is, the less each individual dollar will be worth, also known as inflation. (That is, of course, assuming the total amount produced remains roughly constant.) Dollars react to supply and demand just like any other good, aside from the fact that the supply is controlled by government printing and fractional reserve requirements. Check out the increase in money supply in the past 8 months, and then tell me whether you think there will be inflation whenever consumer demand (which some call "velocity") picks back up.


(M1 may not be the best indicator... M3 is probably better, but the fed stopped reporting it in 2006, as it started showing higher growth rates than M1 and M2.)

The US had an annualized inflation rate of 0,09% in December 2008 and hasn't had an inflation rate above 4% since 1991. What exactly are you talking about?

Using CPI as a measure of inflation is... not optimal. They keep changing it, starting in the early 90s, which is (not coincidentally) when you cited as the last time the CPI was above 4%.


more than 5 years ago

How To, When You Have To Encrypt Absolutely Everything?

NereusRen Re:Not truecrypt, compusec (468 comments)

I've used both truecrypt and compusec, and for a corporate environment only compusec is acceptable. Truecrypt does not provide a master password you can use to quickly reset a password when the user forgets.

That's not true. Restoring access to a container or partition with a forgotten password is quite easy if you do one extra step when creating the container. From their FAQ:

Q: We use TrueCrypt in a corporate/enterprise environment. Is there a way for an administrator to reset a volume password or pre-boot authentication password when a user forgets it (or loses a keyfile)?

A: Yes. Note that there is no "back door" implemented in TrueCrypt. However, there is a way to "reset" volume passwords/keyfiles and pre-boot authentication passwords. After you create a volume, back up its header to a file (select Tools -> Backup Volume Header) before you allow a non-admin user to use the volume. Note that the volume header (which is encrypted with a header key derived from a password/keyfile) contains the master key with which the volume is encrypted. Then ask the user to choose a password, and set it for him/her (Volumes -> Change Volume Password); or generate a user keyfile for him/her. Then you can allow the user to use the volume and to change the password/keyfiles without your assistance/permission. In case he/she forgets his/her password or loses his/her keyfile, you can "reset" the volume password/keyfiles to your original admin password/keyfiles by restoring the volume header from the backup file (Tools -> Restore Volume Header).

Similarly, you can reset a pre-boot authentication password. To create a backup of the master key data (that will be stored on a TrueCrypt Rescue Disk and encrypted with your administrator password), select 'System' > 'Create Rescue Disk'. To set a user pre-boot authentication password, select 'System' > 'Change Password'. To restore your administrator password, boot the TrueCrypt Rescue Disk, select 'Repair Options' > 'Restore key data' and enter your administrator password.
Note: It is not required to burn each TrueCrypt Rescue Disk ISO image to a CD/DVD. You can maintain a central repository of ISO images for all workstations (rather than a repository of CDs/DVDs). For more information see the section Command Line Usage (option /noisocheck).

The actual FAQ has many of those terms linked to other help files for more info: http://www.truecrypt.org/faq.php

They don't mention it explicitly, but this process does not require any computation/decryption on the actual data. It will be very fast to execute no matter how large the container is.

more than 5 years ago

$2 Billion For Broadband Cut From Stimulus Bill

NereusRen Re:Do you know who is paying for this? (658 comments)

I'm glad someone took the GP to task for that horrible bit of innumeracy. I think it's fair to go a little farther and estimate that a 109k household will pay on the order of 2/3 the tax of a 154k household, so we're talking around $8K rather than $13K. That's still quite a bit, and people are justified in their concern that the money be spent in a way which will have a net effect rather than just shifting things around to less efficient uses e.g. from Greyhound to Amtrak.

Let's ignore for the moment that this is deficit spending, so no one's taxes will be raised.

Let's not. Where, exactly, do you think it comes from?

A) Borrowed from people by issuing treasury bonds or other debt instruments
      That just means they'll have to tax people later to pay for the original spending. (Plus, given that the Fed is BUYING treasury bonds like crazy to force the interest rate down, this seems unlikely.)
B) Spent without taking or getting it from anyone
      This is inflation, which is actually a hidden tax (on savings, rather than income). Allow me to illustrate:

According to http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt, the current M2 money supply is around 8 trillion. Let's pretend that's the best measure and run through a couple different hypothetical scenarios:

1) The government says "we are going to take 10% of your dollars and spend it on things." This is a regular tax of $800B, albeit based on accumulated money (how many dollars you own) rather than income (how many dollars you gained this year). Price levels don't really change, although money is redistributed a bit depending what the government does with it. (Assuming it's for "stimulus," price levels of consumer goods might actually increase, since the spending will be targeted to people who are more likely to spend it again on consumption.)
2) The government says "we are changing the US currency from the 'Dollar' to the 'Tollar.' We are going to create 10% more Tollars than Dollars, and everyone will be given 1.1 Tollars for each Dollar they previously had." Just before the day of the switch, you could buy a loaf of bread for $3.00. After the switch, it will cost exactly T3.30, because $1.00 = T1.10 by definition. Since you have 10% more Tollars, this doesn't mean anything to your consumption or earnings possibilities.
3) The government says "we aren't going to change the name, but we are going to create 10% more Dollars, and everyone will be given an additional 10c for each Dollar they previously had." This is exactly the same case as (2). The name of a currency is irrelevant. After this distribution of 10% extra dollars to everyone who owned dollars, the loaf of bread will rise from $3.00 to $3.30, and nobody will be able to buy any more or less than they previously could, just like with the switch to Tollars. Dollars devalue by 10%.
4) The government does (3), and then (1). (3) has no actual impact of quality of living (unless you were trading on the currency exchange), and (1) has the normal impact of a 10% tax on all savings, so the net impact of (4) is basically the same as (1).
5) The government says "we are going to create 10% more Dollars, and spend them instead of giving them to you." This is like (4), but just cutting out the administrative step of giving people money and then taking it back. The net impact will be the same as (4), which is the same as (1).

So you can see that an inflation-funded spending program of $800B will have the same effect (once the money is spent) of taxing everyone 10% on their accumulated savings! It would be beyond the scope of this post to discuss whether or not that's a good idea. I simply wanted to demonstrate that deficit spending is not some magic way to avoid taxing people. It just changes where and when the tax is applied. It will either come now or later, as an income tax, inflation tax, or something else... but that $800B will be paid. That's why people are concerned about what we'll get for it.

(P.S. I guess I'll make a couple remarks about inflation's effects as a tax, for the curious. Savings taxes like inflation don't hurt your future income, because your current wage tracks along with the price level if it changes... but it sure sucks to be you if you've retired already and have no income, and those savings are your only source of money. Retirees who aren't invested in inflation-indexed assets or in the particular stocks that benefit from the government spending are in for some bad times soon. It's zero sum, though, so on the flip side it's great for anyone who currently owes money: now they get to pay it back with dollars that are worth 10% less. So what do you think happens when you have a government that has a gigantic debt and also controls the money supply? Hmm...)

more than 5 years ago

One In 100 Carry Mutation For Heart Disease

NereusRen Misleading headline, as usual. (203 comments)

Oooh, 1 in 100! Sounds scary! I'm at risk! Wait... lets apply some critical thinking to that number, shall we?

globally, 1% of the population carry a gene mutation that is almost guaranteed to lead to some form of heart problems.

World population is about 6.7B. Total number of people with this mutation in the world:
1% * 6.7B = 67M.

On the Indian subcontinent, the prevalence is 4%.

According to Wikipedia, the subcontinent "accounts for about 40 percent of Asia's population," which is 4B. Total number of people there with this mutation:
4% * 40% * 4B = 64M

So, the percentage of people NOT on the Indian subcontinent that carry this mutation is:
(67M - 64M) / (6.7B - 40%*4B) = 0.06%.

With such a great geographical disparity in incidence, using the global 1% figure to generate the headline of "1 in 100 carry mutation" is incredibly misleading.

The linked article is quite a bit better. It's titled "The heart disease mutation carried by 60 million," and focuses on this as being primarily an Indian problem. Somehow I'm not surprised to see kdawson as the editor on this one.

about 6 years ago

Switching To Solar Power — Six Months Later

NereusRen Re:It Will Pay Off in 9 Years (591 comments)

Total return is $133,600 on $37,000 investment, so 3600% Return on Investment over 30 years.

I assume this was a typo for 360%. Of course, calculating total return like that is a pretty horrible way to measure whether a long-term investment is worth it. A better way is this method:

If you invested that money in a compound interest account (either savings or some investment with an average annual return reinvested), you'd have to get 15.43% annual compound interest to turn $37K into $136K in 30 years.

But you messed it up somehow... by a LOT. The actual number is slightly under 4.4%. You can verify it like so: since you gain 4.4% compounded each year, calculate $37k * (1.044) * (1.044) ..., 30 times, for a total of $37k * (1.044^30), which is about $134k.

Still, 4.4% isn't bad. Good luck earning that on rolling CDs, even if you go with 5-year. It's also inflation-protected, since any decrease in dollar-value means nominal utility costs go up, which means you save "more" and your percentage nominal return goes up. I don't think it's quite good enough of a return to make it worth it, but it depends what your alternatives are for your money. If you have an outstanding loan/mortgage of more than that, and you don't think lots of inflation is coming, then you probably want to pay off the loan before investing in this. Paying off a loan is like making a risk-free compound-interest investment at whatever your loan rate is, whereas these solar panels have an uncertain return that depends on electricity rates, lifetime estimates, hell even climate change! Of course, inflation probably IS coming, in a big way, but that's a completely different story...

This all assumes a purely financial perspective. If you derive personal value from "living green," then you'd have to add that in. 4.4% is a bare minimum return.

Btw, other parts of your post are dead on. Taking out a mortgage to do improvements to your house like this is pretty much the ideal way to do it... you don't see much change in day-to-day cash flows, and even if you have to sell the house early, the presence of a solar panel setup will increase the value by (more than) enough to cover paying back the extra loan principal. And if you expect inflation, taking out a loan is ideal. You get to pay it back with future-dollars-that-are-worth-less.

about 6 years ago

The Illuminati Project Pushes For Dark Skies In 2009

NereusRen Re:A mugger speaks... (315 comments)

Someone walking a couple blocks from a restaurant back to their car is not going to have their night vision. They won't see anyone moving around in the dark. Nor will they have much night vision for a while after they get in their car and start driving, which has an impact on the safety of pedestrians, and cyclists that don't have lights.

about 6 years ago

OpenID Fan Club Is Shrinking

NereusRen Re:I Wonder Why... (333 comments)

Dead on.

I've looked into OpenID multiple times before, and each time wandered around in a maze of terminology and things that didn't make any sense to me until I gave up.

I'm sure it's better overall than the current system of username/password pairs, but it's just not better enough. Pretty much any complaint about the current system can be solved in a way that doesn't depend on anyone else implementing or supporting it, and which is less complex than OpenID. If there were compelling enough advantages to using OpenID, I might have gone ahead and tried even though I didn't understand which parties were responsible for which parts of the authentication, or even how many parties were involved... but I just don't see the point, and it's not for lack of trying.

about 6 years ago

RIAA Case May Be Televised On Internet

NereusRen Re:What sort of a bloody name is Zavvi anyway?! (221 comments)

I guess that's the theory (though I'm not clear if is this accepted practice or your own reasoning; if you're an economics genius, please accept my apologies- it doesn't matter which ;)).

I'm no genius, and I not sure what group I would be speaking for if I said it was "accepted," but I have studied economics and I work with these issues as part of my job at a large insurance company. I do a lot of basic financial modeling, and work with the people in the investment and hedging areas that do the more advanced stuff. Regardless, you shouldn't take arguments like this at face value from anyone (especially on the internets), and I'd be glad to explain the reasoning behind my conclusion.

There's a couple different ways to define inflation, which does make this a bit (as you say) complicated. As a financial professional, I tend to think of the exchange rates as representing the relative prices of two currencies, and inflation of one currency as a decrease in that price, because that's the most consistent and tractable way to model uncertain future inflation and exchange rates. You're absolutely right that the presence of a free global market with minimal trade barriers (artificial or otherwise) is required for this to match the "cost-of-living" interpretation of inflation. If you measure inflation as the cost of goods for which there is such a market, such as widely-traded commodities like gold, then what I said should hold. If you define inflation as a CPI on an arbitrary basket of goods, some of which don't have such a market, well... that's what I meant about "not actually measuring inflation." Not in a consistent and useful way.

If I'd done the conversion a few months ago, when the Pound Sterling was hovering around the US $2 mark, you'd have got a higher figure than if I'd done the same thing today.

Not if you measure inflation based only on internationally traded commodities. If the Pound has lost value relative to the Dollar since then, then either it cannot buy as many commodities (inflation), or the Dollar can buy more (deflation), or both. Either way, it shouldn't matter what date you choose for the currency conversion, because the proper inflation adjustment will get you to the same place.

This is a bit confusing for people who are used to thinking of inflation only in terms of an arbitrary consumer price index. You might think that if you are making the same number of Pounds, and it buys the same number of CDs, what inflation has occurred? If your CPI basket consisted entirely of CDs, then indeed it would show 0% inflation. However, that's misleading, because you presumably spend money on many things which are ultimately driven by commodity prices and international free trade. Even if you don't, the suppliers of the CDs probably do, which means that even though you're still paying them the same for the CDs, they are feeling the true difference in price.

In other words, despite the stable salary and CD prices, I would say that the Pound really was worth more (relative to the Dollar) a few months ago, so your £X,000 salary and £X cost of CD were both "more" than they are now, even if the only thing you actually bought with your salary was CDs. You were still paying the opportunity cost by choosing CDs over whatever alternatives you had for that salary. Since then, you've received a pay cut (by being paid the same number of a less valuable currency), and certain goods (CDs) but not others (commodities) have also been discounted in the same way. If you still buy only CDs, you'll get the same number of them, but you won't be paying as large of an opportunity cost to do so, since your salary couldn't have bought you as many other goods. (Alternatively, or perhaps additionally, I've received a raise, but many goods like CDs have correspondingly gone up in price.)

This implicit price change can only happen if there are significant barriers to free international trade of the good in question, because otherwise someone could buy up CDs in one country, sell them in another, and convert the currency back to the original at a profit. In fact, this mechanism is exactly what makes the commodity prices a consistent measure. If the exchanges rates of the currencies didn't match up with their inflation (the amount of commodities they could buy), then people would do this trade until the values lined up again. That's how I can be so confident in the practical application of theory, as long as "inflation" is defined that way.

If you try to have a definition of inflation that relates your salary to your consumer prices of specific goods, then if any goods have higher barriers than others, you can simultaneously have "inflation" relative to some goods but not others. I find that to be a pretty useless way to think of value and inflation.

about 6 years ago

RIAA Case May Be Televised On Internet

NereusRen Re:What sort of a bloody name is Zavvi anyway?! (221 comments)

(*) Side note: What's the accepted method for showing a historical price in another currency in today's terms? Do I convert pounds to dollars at (e.g.) 1995 rates first *then* factor in dollar inflation. Or do I factor in pound inflation first then convert from pounds to dollars at modern-day rates?

I've never heard of one or the other being preferred (most journalists probably don't even understand the difference), but you should get approximately the same result either way. Inflation of one currency more than another changes the exchange rate correspondingly. If you don't get the same result, then one of the measures you used for inflation is not actually measuring inflation in the way you want. (For example, the CPI as published by the BLS probably understates the true amount of currency inflation, for political reasons.)

about 6 years ago


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