Monday, November 27, 2017

Bitcoin, Blockchains, and Bubbles: Why We Might be Headed for a Crash.

Right now the US economy is doing pretty well. Unemployment is around 4%, and our economy has been growing at around 2% per year. These relatively good numbers are why Trump's approval ratings aren't even lower than they are. But the good times may not last much longer.

Predicting what the economy is going to do is notoriously difficult. But without getting too tricky, we can see that the US goes through some sort of economic crisis/recession thing every 10 years or so.

Here were the last six big ones:

  • 1960 - unemployment at 6.1%, 10 months of recession
  • 1973 - unemployment at 7.8%, 1+ year of recession
  • 1981 - unemployment at 10.8%, 1 year or recession
  • 1990 - unemployment at 7.8%, 8 months of recession
  • 2001 - unemployment at 6.3%, 8 months of recession
  • 2007 - unemployment at 10%, 1+ year of recession

Now it's 2017, about 10 years since the 2007 recession. So we should be at least a little concerned that another recession might be around the corner.

Another reason we should be worried is that the last two of these recessions coincided with the bursting of a “speculative asset bubble,” In the mid to late 1990s this was the dot com bubble, and in the mid to late 2000s it was the housing bubble. When these “bubbles” burst, it didn't just hurt people who bought tech stocks or mortgage bonds, it triggered a recession in the entire economy.

And we're in another one of these bubbles right now.

Monday, November 13, 2017

President Trump's Popularity Depends on the Economy - But it Probably Shouldn't

As of November 13th, somewhere around 38% of American have a favorable opinion of Donald Trump, and around 56% have an unfavorable opinion of him. Right now, Trump is less popular than any past president at this point in their term. The possible exception is Gerald Ford, who had just pardoned Nixon. In fact, it's good to keep in mind that, on the day he resigned in disgrace, Nixon's approval rating was still 24%. Partisanship - as they say  - is a helluva drug.

But given that Trump's presidency has been a long sequence of scandals, FBI  investigations, offensive tweets, bone-headed gaffs, staff turnover, and legislative failures, we might still wonder why he's not even less popular. After all Trump has done (and failed to do!) how can 40% of Americans still approve of what he's doing?

Well, aside from partisanship, a big part of Trump's continued "popularity" is the fact that - as of early November, 2017 - the US economy is doing pretty well. Now, the economy may not feel all that great to all of us, but the US unemployment rate is only 4%, and the stock market is breaking records:

So even though Trump has done a lot of dumb or evil things, many Americans who supported him are still willing to give him the benefit of the doubt as long as the economy keeps doing well.

In other words, if the economy were to take a sudden dive - and it very well mightwe'd expect Trump to become even more unpopular than he is.

In US politics we have tended to support the current President when the economy is doing well, and attack him when the economy goes south. This is a really important thing to understand  But it's also important to understand that it's kind of dumb.

Wednesday, November 1, 2017

Science vs Conspiracy Theories

Pizzagate. Seth Rich and Wikileaks. The evil (reptilian?) “deep state” plotting a coup against Donald Trump.

Never before have baseless conspiracy theories played such a big role in American politics. At the same time, we're seeing more and more evidence that there really was some sort of “conspiracy” by Russia to influence the 2016 election.

How do we tell the difference between an honest-to-goodness conspiracy and a bogus conspiracy theory? It’s easy to say “just look at the evidence,” but if you’ve tried to argue with a conspiracy theorist before, you know that doesn’t usually work.

People who believe in these crazy theories will come at you with an endless parade of “facts” and “data” that they say prove they are correct:

If you try to point out that these “facts” are made up or wrong, they’ll just say the same thing about the “facts” you get from the “mainstream media”

The crazy thing is that they’re not (totally) wrong about this! The “mainstream media” does get things wrong, and sometimes it does have a liberal bias. How can we be sure that we’re not falling victim to the same “brainwashing” as the people we’re arguing with?

The best way to separate the bogus conspiracy theories from the real ones isn’t by trying to get better data, but by using the scientific method.

That may sound lame, but when they taught you about the scientific method in school, they left out the weirdest and most important part - in science you have to start by assuming that you are wrong.