The Coming Debt Repudiation

In-Cog-Nito sent me a pair of links, to an article entitled Why Default on U.S. Treasuries is Likely, and a shorter summary of the article. Troubling reading indeed, but still, RTWT.

It is not literally impossible that the Federal Reserve could unleash the Zimbabwe option and repudiate the national debt indirectly through hyperinflation, rather than have the Treasury repudiate it directly. But my guess is that, faced with the alternatives of seeing both the dollar and the debt become worthless or defaulting on the debt while saving the dollar, the U.S. government will choose the latter. Treasury securities are second-order claims to central-bank-issued dollars. Although both may be ultimately backed by the power of taxation, that in no way prevents government from discriminating between the priority of the claims. After the American Revolution, the United States repudiated its paper money and yet successfully honored its debt (in gold). It is true that fiat money, as opposed to a gold standard, makes it harder to separate the fate of a government’s money from that of its debt. But Russia in 1998 is just one recent example of a government choosing partial debt repudiation over a complete collapse of its fiat currency.

Zimbabwe option, anyone? Or the alternative of tax rates exceeding the peak from World War II — forever.

Have a nice day.

Danny Davis My Representative

When you see the tall buildings of Chicago and hear the history as a dynamic, leading center of industry and innovation, you’d expect that our local representative in the US House of Representatives would embrace measures to keep this sort of talent and engine of growth humming at high efficiency. But instead we get… Danny Davis, our 7th Congressional District representative (D).

Our Illinois districts have been completely gerrymandered so that the south side of Chicago and a slice of the suburbs going west, along with the loop and River North itself, fall into a single district. Here is a map link if you want to see a veritable “case study” in gerrymandering. Thus the representative, Danny Davis, treats the loop with its engines of economic growth as an afterthought and concentrates on the other constituents, mostly the poor, who reside in the rest of the district.

From the latest newsletter, discussing issues raised to Danny Davis:

They have been concerned about jobs, about the economy, about foreclosure, about education, about health care, about the wars in Iraq and Afghanistan, about torture and Guantanamo, about our policies in Latin America, about immigration, about youth violence, about criminal justice reform, about taxes, about family assistance

While certainly these are valid issues to be raised by constituents, no where is mentioned the types of policies that would keep the Loop, THE DISTRICT HE REPRESENTS, a leading beacon of business. These items would likely include:

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The Myth of “Security Through Rarity”

If malware was water falling from the sky, the experience of people running the big three desktop operating systems would go something like this:

Mac OS X: “Is it sprinkling? I thought I felt a drop there. Did anyone else feel a drop? No? Maybe I just imagined it.”

Linux: “Oh, yeah… I definitely felt a sprinkle or two there.”

Windows: [Can’t say anything because they’re pinned to the foot of Niagara Falls by tons of down rushing water.]

For the last ten years, there has been a raging debate among computer geeks as to why Mac OS X and Linux have virtually no problems with malware while Windows is often almost crippled by it. The most commonly accepted explanation is called “Security Through Rarity.” This concept holds that on a technological level Mac OS X and Linux are just as insecure as Windows but that the relatively small market share of the first two operating systems makes it unprofitable for malware programmers to spend the time trying to infect them.

I have longed believed that the basic premise of “Security Through Rarity” largely explained why I can run my Mac OS X machines without any additional anti-malware software but don’t dare do the same for my Windows machines. For the last decade, I and everyone else who believed in the concept have expected that “any day now” the Mac’s immunity from malware would end in a shocking gotterdammerung of a Mac malware pandemic but it hasn’t happened yet. Just as the failure of other types of apocalyptic prophesies undermine people’s faith in those prophesies, the fact that the long-prophesied Mac malware apocalypse has never manifested in more than a trivial manner has caused me to reexamine my belief in the “Security Through Rarity” concept.

There are several good reasons to doubt that “Security Through Rarity” explains the lack of malware that exploits Mac OS X in particular.

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Advice for Charlie Rangel

You.. can be a millionaire.. and never pay taxes! You can be a millionaire.. and never pay taxes! You say.. “Steve.. how can I be a millionaire.. and never pay taxes?” First.. get a million dollars. Now.. you say, “Steve.. what do I say to the tax man when he comes to my door and says, ‘You.. have never paid taxes’?” Two simple words. Two simple words in the English language: “I forgot!” How many times do we let ourselves get into terrible situations because we don’t say “I forgot”? Let’s say you’re on trial for armed robbery. You say to the judge, “I forgot armed robbery was illegal.” Let’s suppose he says back to you, “You have committed a foul crime. you have stolen hundreds and thousands of dollars from people at random, and you say, ‘I forgot’?” Two simple words: Excuuuuuse me!!”

Steve Martin