Financial Reckoning Day PDF Summary

Financial Reckoning Day PDFSurviving the Soft Depression of the 21st Century

What if someone told you that there are serious indicators attesting that we are experiencing the beginning of the end of American capitalism?

And what if that same guy added that, in fact, American capitalism wasn’t that great to begin with – but just another case of plain old dumb luck?

You may have second thoughts whether you should listen to that guy even a second more – probably just another time-forsaken communist, right? – but William Bonner and Addison Wiggin are anything but.

And, at least at first glance, they offer a strong case in “Financial Reckoning Day.”

Who Should Read “Financial Reckoning Day”? And Why?

“Financial Reckoning Day” references almost everyone from Adam Smith to Robert Merton, and from Freud to Einstein. In other words, it’s not exactly an easy read, but, strangely enough, it’s not a difficult one either.

Those who are interested in economics will certainly find here many things to think about. Those who are not – may find a reason to be.

About William Bonner and Addison Wiggin

William BonnerWilliam “Bill” Bonner is an American author of articles and books on economic and financial topics.

He is also the founder and president of Agora Inc. and the driving force behind its email newsletter The Daily Reckoning.

Bonner has co-authored two bestsellers with Addison Wiggin, the other one being “The New Empire of Debt” (in two editions). In addition, he has co-authored “Mobs, Messiahs, and Markets” with Lila Rajiva and “Family Fortunes” with his son, Will Bonner.

Independently, he is the author of “Hormeggedon” and, most recently, “Dice Have No Memory.”

Addison WigginAddison Wiggin is an American financial author and filmmaker.

Executive publisher of Agora Financial, he is a long-time friend and collaborator of Bill Bonner, with whom he has co-authored two books.

In addition, he has co-authored “I.O.U.S.A.” (with Kate Incontrera) and written “Demise of the Dollar” and “The Little Book of the Shrinking Dollar.”

“Financial Reckoning Day PDF Summary”

Back in 1989, Francis Fukuyama published a widely discussed essay titled “The End of History?” on the pages of the renowned international affairs journal, “The National Interest.”

Inspired by the events happening in Eastern Europe and Germany at the time, Fukuyama had an interesting case to make:

What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.

One dot-com bubble and another financial crisis later, and not even Fukuyama himself currently believes his barely three decades old own prediction! In fact, in retrospect, it couldn’t have been further from the truth!

The truth – in the opinion of Bill Bonner and Addison Wiggin – has much more to do with luck than it has to do with smart organization.

Let’s look at the twentieth century, they say, but this time, without prejudice or partiality.

The United States currently accounts for about one-fifth of the world’s economy, but back in 1870 it accounted for no more than a tenth – a little less than what the United Kingdom did at the time; China accounted for more than twice as much.

The US economy grew during the next half a century, and most of the other economies stagnated, which resulted in the country being one of the richest in the world before the start of the First World War.

However, neither that war, nor the next one, were as gentle to USA’s competitors as they had been to the United States themselves.

As you probably already know, the US lost about half a million people in both wars combined and emerged from them without a single decimated city. For comparison, France lost six million people in World War I and the Soviet Union and Germany at least thrice as much in the Second World War only.

Needless to add, whole cities were ravaged throughout Eurasia, and industrial complexes had been irretrievably devasted.

In a nutshell, even though the United States did become the largest national economy in the 20th century, don’t you think that another European country would have achieved something similar if it hadn’t been bombarded and

What followed next was the Cold War during which – and don’t forget that – the Soviet Union was surely an enemy to fear from: its often ridiculed economy accounted for 20% of the world’s GDP in 1966!

At that time, the Soviets – and even the North Koreans! – believed that communism has brought not only the end of capitalism but the end of history as well. But we all know how that ended two decades later, don’t we?

Cue for rereading the Fukuyama quote above.

Notice the cycle?

Things are going great, everybody believes in progress and ultimate victory, and then everything goes down in blood and mud and flames!

Well, brace yourself for a somewhat similar future!

How do Bonner and Wiggin know this?

Well, because the US economy seems to freakishly closely mirror the Japanese economic miracle, offset by a decade.

The Japanese bull market began in 1971; the US in 1981. Stock market value increased by 500% by 1985 in Japan and by 1995 in the United States. Within the next five years, it increased three-fold in both countries, peaking in 1990 in Japan and at the turn of the millennium in the United States.

Who would have guessed back then – when everybody was investing in everything with .com at the end – that merely a year and a half later, the U.S. stock market would drop about 30%! The Japanese, interestingly, lost almost the same amount of value by the third quartal of 1991.

Supposedly, the Americans fared better during the next decade because of their consumerism: tight-fisted spending should have been the thing that hurt Japan.

But it isn’t: it’s simply the way the current economic system works. Too much optimism is never a good thing, especially if history has been kind to you; because it will certainly come back and hit you on the head.

Don’t forget: this book was written before the financial crisis of 2008 which it all but predicts: “…when those bubbles burst, it’s going to be worse than the stock market bubble, because there are many more people who are involved in consumption and housing.”

Key Lessons from “Financial Reckoning Day”

1.      The Cold War Was a Battle Between Myths
2.      The Trouble of the Market
3.      The Damning Relation Between Economics and Demography

The Cold War Was a Battle Between Myths

You’ve already heard a lot about how the idea of a communist society was always a myth. However, barely half a century ago, a large part of the world firmly believed in this myth.

Well, capitalism is another myth based on the very same premise: the one of constant progress.

Constant progress is impossible and the fact that the US has experienced it for a century is merely evidence that things will soon deteriorate.

In a nutshell: don’t believe all those George Gilders out there!

The Trouble of the Market

The case of LTCM should be a lesson for everybody: the market is irrational, and there’s no way to predict it. In the words of Keynes, it can stay irrational much longer than an investor can remain solvent:

The trouble is that the market may look mechanistic, but it is not. The market is an unbounded, organic system; mastering it is a human science, not a hard science.

The Damning Relation Between Economics and Demography

Historian Jack Andrew Goldstone, in his book “Revolution and Rebellion in the Early Modern World,” argues that the fall of three empires (the Ottoman, the Chinese, and the Japanese) occurred because of population growth.

Currently, we have one even more serious problem: in the developed world, old people live far too long for the current social institutions to work.

Will we learn how to be flexible before it’s too late?

Like this summary? We’d like to invite you to download our free 12 min app for more amazing summaries and audiobooks.

“Financial Reckoning Day Quotes”

History shows that people who save and invest grow and prosper, and the others deteriorate and collapse. Click To Tweet

Policies being pursued at the Fed are making the bubble worse. They are changing it from a stock market bubble to a consumption and housing bubble. Click To Tweet

The consumer was the last man standing in the U.S. economy. Greenspan was compelled to do all he could to hold him upright, even if he was already dead. Click To Tweet

The average boomer came of prime ’stock-buying’ age in the years when all good things seemed not just possible, but inevitable. Click To Tweet

Most economists will tell you that the economic system is controlled by mood changes at the Fed. Click To Tweet

Our Critical Review

“Financial Reckoning Day” was first published a decade and a half ago and, in few years’ time, one of its predictions came true: the United States (and the world) was hit by a serious financial crisis.

Now, if Bonner and Wiggin are right, that’s bound to happen again; and again; and again.

So, excuse us for reserving our judgment for now.

Because if it does, then this one will definitely go down in history as one of the most prophetic and visionary economics books ever written.

If, however, it doesn’t, then “Financial Reckoning Day” is hardly anything more than those apocalyptic religious prophecies (not that dissimilar from the Mayan 2012 phenomenon) which tend to scare a few people from time to time before turning into ingenious memes and the laughing-stock of multitudes.

www.pdf24.org    Take this summary with you and read anywhere! Download PDF:   

Guns, Germs, and Steel PDF Summary

Guns, Germs, and Steel PDFA Short History of Everybody for the Last 13,000 Years

You’ve read that right:

Guns, Germs, and Steel” tells everything about everybody.

In 500 pages.

Here summarized in about 1,500 words!

Who Should Read “Guns, Germs, and Steel”? And Why?

The main reason why Jared Diamond wrote “Guns, Germs, and Steel” was a conversation he had with a New Guinean politician called Yali.

Yali asked Diamond: “Why is it that you white people developed so much cargo and brought it to New Guinea, but we black people had little cargo of our own?”

If you want to find out the answer to this question – then read “Guns, Germs, and Steel.”

Because this book does give the most widely accepted one.

Jared DiamondAbout Jared Diamond

Jared Mason Diamond is an American polymath (geographer, physiologist, biologist, anthropologist) and the author of many popular science books, such as “The Third Chimpanzee” and “Why Is Sex Fun?”

A professor of geography at UCLA, he is one of the most influential public intellectuals in the world.

Read more at http://www.jareddiamond.org

“Guns, Germs, and Steel PDF Summary”

“It seems logical to suppose that history’s pattern reflects innate differences among people themselves,” writes Jared Diamond in “Guns, Germs, and Steel” in a sentence which sounds controversial despite the italicized verb.

But, nevertheless, it’s difficult to dismiss it simply because it is not politically correct.

After all, there are some questions which seem unanswerable without a “convincing, detailed, agreed-upon explanation for the broad pattern of history.”

For example, why almost all of the hunter-gatherer societies disappeared even though the ones we could study until recently seemed non-violent, lawful in the absence of laws, egalitarian, and, for all intents and purposes, more content than us?

Why did practically every technological innovation you can think of was made either by a European or a Chinese for millennia?

Even more controversially: why did the white people enslave the African-Americans and not the other way around?

In “Guns, Germs, and Steel,” Diamond attempts to answer these – and numerous similar – questions by taking a wide interdisciplinary look of history, biology, and – possibly most importantly – geography.

In fact, the main thesis of the book, in the words of the author, is the following one:

History followed different courses for different peoples because of differences among peoples’ environments, not because of biological differences among peoples themselves.

In other words, it does matter where you are born; not because of the who; but because of the where.

The main environmental difference between the conquerors (Europe and Asia) and the conquered (Africa, the Americas) is the primary geographic axis.

Namely, as opposed to the Eurasian east-west latitudinal axis, the African and the American axis is longitudinal, i.e., north-south.

And, unfortunately, that is the direction in which climate changes.

Consequently, European and Asian countries were able not only to communicate easily between them even before the proper sailing and marine technology was developed, but they were also able to almost inadvertently share each other’s progress in agriculture as well.

For example, domesticated crops could easily spread from Europe to Asia and vice versa via one domestication, few bugs and a little bit of wind; contrary to this, cotton or squash had to be domesticated over and over again in Mesoamerica in multiple individual areas, because the crops couldn’t spread by themselves in north-south direction.

As Diamond notes, “all human societies contain inventive people. It’s just that some environments provide more starting materials and more favorable conditions for utilizing inventions than other environments.”

And this, logically, meant many different things in the long run, best summed up in this cycle: more food → more people → more intellectual power → better technology → more food…

Less intuitively, it also meant better immunity, due to the domestication of numerous animals and the subsequent exposure to deadly germs.

Which is why far more Native Americans, Australians, and South Africans died from infectious diseases than from knives and guns.

Speaking of which, Jared Diamond points out four primary reasons why the Europeans conquered the Americans and the Africans and not the other way around:

#1. Opportunities for domestication of plants and animals.

Europe and Asia had by far the best prospects in this area, as opposed to, say, Australia, whose chances to become a superpower were always going to be slim to none. We can place Africa and America somewhere in the middle.

However, the fact that Europeans and Asians could eat far better food and in far larger quantities (these continents were inhabited with a far larger number of domesticable animal and plant species) meant that they were able to reproduce in larger numbers when compared to the inhabitants of Africa or the Americas.

#2. Agricultural and technological expansion.

In addition to having more domestication-worthy/viable animals and plants, the Eurasians also had the luxury of domesticating them at a faster rate, due to the primary direction of the continent’s geographic axis (east-west) and the absence of any significant geographic barriers (deserts and mountains).

#3. Intercontinental diffusion.

Since Eurasia is one large (easily traversable) landmass, it was always easy for ideas and technologies to spread from China to Portugal – even in the absence of direct contact. The northern parts of the African continent profited from this communication as well.

However, such communication was all but impossible in the Americas which are connected by an almost inhabitable area notorious for its susceptibility to floods, landslides, and earthquakes.

#4. Population size.

This is self-explanatory: you can’t have a large army if you don’t have a large population. And you can’t profit from competition if you don’t have someone to compete against:

In short, Europe’s colonization of Africa [and America] had nothing to do with differences between European and African peoples themselves, as white racists assume. Rather, it was due to accidents of geography and biogeography — in particular, to the continents’ different areas, axes, and suites of wild plant and animal species.

Key Lessons from “Guns, Germs, and Steel”

1.      Geography and Progress
2.      The Anna Karenina Principle
3.      Centralized Power vs. Fragmentation

Geography and Progress

The main thesis of Jared Diamond’s transdisciplinary classic “Guns, Germs, and Steel” is that “history followed different courses for different peoples because of differences among peoples’ environments, not because of biological differences among peoples themselves.”

Throughout the book, he attempts to show that Eurasians had the opportunity to develop more and better than the Americans or the Africans simply because they lived on the better continents.

In a nutshell, the fact that Eurasia is one large landmass and that its primary geographic axis is east-west meant better diffusion of technology and culture and more efficient communication between the people living on these continents as opposed to the ones living in the Americas and Africa whose geographic axis is north-south.

The Anna Karenina Principle

According to the Anna Karenina principle – inspired by the memorable first sentence of the Leo Tolstoy classic – in order for an endeavor to be successful, all factors must be met; in other words, if any one of these factors remains unmet than the endeavor is doomed to fail.

Jared Diamond uses this principle to explain why there are only 14 (out of 148 possible candidates) domesticated species.

In his opinion, the factors which must be met for an animal to be domestication-worthy are at least six: diet (it must be easy to feed), growth rate (it must grow fast enough), captive breeding (it must be able to breed in captivity), disposition (it must not be ill-tempered), tendency to panic (it mustn’t take flight), and social structure (lonely animals are not good candidates).

Very few animals – in Diamond’s opinion only the 14 we have already domesticated – meet all six criteria.

Centralized Power vs. Fragmentation

Interestingly enough, the only reason why Europe crossed the Atlantic first – and not China the Pacific – to colonize the Americas was the social structure of the continents.

China, in other words, had the technology, but about half a century before Columbus set sail, a local political dispute resulted in a national ban on transoceanic expeditions. This was possible because one man had the power to do that.

In Europe, Columbus was turned down by four different kingdoms before Spain decided to fund his trip. A Chinese sailor with an idea to cross the Pacific didn’t have another country to look funds from but China.

In other words, a little fragmentation is good; too much centralized power is not.

Like this summary? We’d like to invite you to download our free 12 min app, for more amazing summaries and audiobooks.

“Guns, Germs, and Steel Quotes”

Much of human history has consisted of unequal conflicts between the haves and the have-nots. Click To Tweet

With the rise of chiefdoms around 7,500 years ago, people had to learn, for the first time in history, how to encounter strangers regularly without attempting to kill them. Click To Tweet

It's striking that Native Americans evolved no devastating epidemic diseases to give to Europeans in return for the many devastating epidemic diseases that Indians received from the Old World. Click To Tweet

Rhino-mounted Bantu shock troops could have overthrown the Roman Empire. It never happened. Click To Tweet

One way to explain the complexity and unpredictability of historical systems, despite their ultimate determinacy, is to note that long chains of causation may separate final effects from ultimate causes lying outside the domain of that… Click To Tweet

Our Critical Review

“Guns, Germs, and Steel” won the Pulitzer Prize for general nonfiction in 1998 and was turned into a National Geographic documentary seven years later.

About a decade after this, we didn’t think twice before including it in our list of top history books ever written.

Not because numerous giants of modern scholarship – from Yuval Noah Harari to Gregory Clark – have been directly inspired by “Guns, Germs, and Steel.”

But, simply put, because we have been as well.

One of our favorite books.

www.pdf24.org    Take this summary with you and read anywhere! Download PDF:   

Is the American Dream Alive or Dead? It Depends on Where You Look PDF Summary

Is the American Dream Alive or Dead? It Depends on Where You Look PDFIn “Guns, Germs, and Steel,” Jared Diamond first championed the notion that geography has had a profound influence on the distribution of human wealth.

Now, in the appropriately titled report “Is the American Dream Alive or Dead,” the Economic Innovation Group demonstrates that the American reality of today can be described along the same lines.

Which is a scary notion.

But, unfortunately, is backed by data.

Who Should Read “Is the American Dream Alive or Dead? It Depends on Where You Look”? And Why?

Whether you believe in the American dream or not, this article is certainly a wakeup call – for the latter to see their fears validated by the available data, and for the former to realize that, even if still alive, it’s all but a nightmare for millions.

Economic Innovation GroupAbout the Economic Innovation Group

The Economic Innovation Group (EIG) is a bipartisan public policy organization founded half a decade ago with the mission “to advance solutions that empower entrepreneurs and investors to forge a more dynamic economy throughout America.”

To do that, EIG combines research and data-driven approaches to thoroughly examine some of the most pressing economic challenges facing the United States.

The organization considers itself “a leading voice in bringing geographic inequality into the national conversation.”

“Is the American Dream Alive or Dead? It Depends on Where You Look PDF Summary”

Ever since being both invented and overused ad nauseam by Horatio Alger Jr. in the second half of the 19th century, the nature and the reality of the American Dream have been explored by a host of great American writers in some of USA’s essential works of literature.

However, whether it’s F. Scott Fitzgerald’s “Great Gatsby” or Steinbeck’s “Of Mice and Men,” Arthur Miller’s “Death of a Salesman” or Hunter S. Thompson’s “Fear and Loathing in Las Vegas” – these books all seem to have in common a profound distrust in Alger’s vision, neatly summed up in George Carlin’s famous quip: “it’s called the American dream because you have to be asleep to believe it.”

Well, many still do, George: if you work hard enough – they think – you can reach the top of the ladder, no matter how many steps you need to climb on the way to there.

In EIG’s report “Is the American Dream Alive or Dead?”, we learn that things are not as pink.

On the contrary, in fact: the American Dream is unequivocally at risk, since “more than half of all U.S. counties [exert] a negative impact on children’s future earnings.”

You heard that right:

Basically half of America can only sleep through the American Dream!

Why?

Because they live in the wrong counties.

Really:

Place matters. While many like to think of the United States as a country where anyone willing to work hard can succeed, the reality for many is more complicated. The American Dream lies far out of reach for young people across much of the country not due to any individual shortcomings, but due to the unique mix of social, cultural, and economic forces at work in their communities—forces that condition and affect, if not always determine, lifetime outcomes.

Based on data coming from 2,869 US counties, EIG has discovered that “economic prosperity and economic mobility are positively and meaningfully correlated.”

Meaning: upward mobility is possible in prosperous counties, but unlikely in the poor ones which suffer from high rates of inequality as well!

The ratio is staggering:

Three out of five children under the age of 18 (so, 60% of underage Americans) live in counties where the American Dream is all but a nightmare.

If the American Dream is a “twofold promise of prosperity and mobility,” then “neither is in good health,” since both promises are alive and well in only 420 (i.e., one-seventh) of the examined counties. These are mostly located on the East Coast and the metropolitan areas on the West Coast, as well as the upper and the industrial Midwest and Texas.

The Southeast, on the other hand, and the remote desert Southwest (populated by Native Americans), abounds in counties in which the American Dream is merely a distant prospect.

Most of the counties have less than 100,000 people, “but altogether 14.5 million Americans live in these corners effectively vacated by the American Dream.”

In between these extremes, EIG analyzes two more groups of counties: such where mobility is possible, but the upward move doesn’t mean prosperity as well (the American dream is within reach) and such which are prosperous, but immobile (the American dream is fenced off).

The American Dream is fenced off in 28% of USA’s prosperous counties where 47.5 million Americans live in wild inequality.

On the other hand, the American dream is within reach against the odds for about 1.4 million Americans living in the few counties “that are still able to reconcile distress with mobility.”

The conclusion?

If the American Dream is to become more accessible, the country needs a more geographically inclusive pattern of growth, and it needs to tackle the determinants of mobility at their roots, neighborhood by neighborhood, at the same time.

Key Lessons from “Is the American Dream Alive or Dead? It Depends on Where You Look”

1.      The American Dream Is a Twofold Promise of Prosperity and Mobility
2.      The Four States of the American Dream
3.      The Stats Behind the American Dream

The American Dream Is a Twofold Promise of Prosperity and Mobility

By definition, the American Dream promises two things: that if you work hard, you’ll be able to move up the social ladder and become rich.

EIG’s report studies the data of almost 3,000 counties to see in which condition is the American Dream in relation to these two promises.

The Four States of the American Dream

After studying the data, EIG then categorizes each county in one of the four possible categories: prosperous and mobile counties (the American Dream is alive and well), prosperous and immobile (the American Dream is fenced off), distressed and mobile (the American Dream is within reach) and distressed and immobile (the American Dream is a distant prospect).

The Stats Behind the American Dream

Overall, over 60 percent of Americans under the age of 18 are growing up in counties which are geographically and environmentally incapable of fostering economic mobility.

The American dream is alive and well in 72% of USA’s prosperous countries examined by EIG (about 71 million people), mostly located in the Upper Midwest and Northern Plains.

The rest 28% (which encompass 47.5 million people) lack policies capable of translating prosperity into mobility and are, thus, fencing off the American Dream from many dreamers.

Against the odds, about 10% of America’s distressed counties (only 1.4 million people) still manage to foster upward mobility, rendering the American Dream within reach.

However, for the rest of the Americans living in USA’s poor counties (14.5 million), the American Dream is merely a distant prospect.

Like this summary? We’d like to invite you to download our free 12 min app, for more amazing summaries and audiobooks.

“Is the American Dream Alive or Dead? It Depends on Where You Look Quotes”

The American Dream can be summed up as a two-fold promise of prosperity and mobility. Neither is in good health. Click To Tweet

Overall, the majority (51 percent) of counties in the United States exert a negative impact on the economic mobility of low-income children. Click To Tweet

Fewer than 10 percent of the country’s distressed counties manage to provide disadvantaged children with a ladder to higher incomes in adulthood. Click To Tweet

Altogether 14.5 million Americans live in… corners effectively vacated by the American Dream. Click To Tweet

The American Dream does indeed exist; our task is to expand its reach. Click To Tweet

Our Critical Review

The concluding sentence of EIG’s report may be the most important you’ll read this year if you still believe in the American Dream or, at least, in some things such as compassion and humanity:

The American Dream does indeed exist; our task is to expand its reach.

We’ll just leave it at that.

www.pdf24.org    Take this summary with you and read anywhere! Download PDF:   

How Futures Trading Changed Bitcoin Prices PDF Summary

How Futures Trading Changed Bitcoin Prices PDFSome hail it as the future; others warn that it may be the newest economic bubble.

Either way, few people haven’t heard of bitcoin by now.

In this May 2008 FRBSF Economic Report, authors Galina Hale, Arvind Krishnamurthy, Marianna Kudlyak and Patrick Shultz take a careful look at “How Futures Trading Changed Bitcoin Prices.”

Who Should Read “How Futures Trading Changed Bitcoin Prices”? And Why?

“How Futures Trading Changed Bitcoin Prices” is not exactly an article for people who have been, are, or are planning to trade with bitcoins or bitcoin futures.

Simply put, there isn’t any investment advice here – especially not in relation to Bitcoin.

However, there is an interesting conclusion concerning the relation of price dynamics and futures trading in general.

Which should make this article interesting for any future investor or trader.

About Galina Hale, Arvind Krishnamurthy, Marianna Kudlyak and Patrick Shultz

Galina B. Hale Galina B. Hale is a research advisor in the Economic Research Department of the Federal Reserve Bank of San Francisco.

Arvind KrishnamurthyArvind Krishnamurthy is a Professor of Finance at the Stanford Graduate School of Business, with a Ph.D. in Financial Economics from MIT.

Marianna Kudlyak and Patrick Shultz are both research advisors in the Economic Research Department of the Federal Reserve Bank of San Francisco.  

“How Futures Trading Changed Bitcoin Prices PDF Summary”

Nobody knows who Satoshi Nakamoto is, or even if it is one person for that matter.

But many people know that, almost a decade ago, he/she/they developed the bitcoin and devised the first blockchain database.

The first decentralized digital currency, bitcoin was hailed by the leaders of the bitcoin movement as “inherently anti-establishment, anti-system, and anti-state,” not to mention “fundamentally humanitarian.”

Now, between January 2009 and February 22, 2017, bitcoin’s price never exceeded $1,150.

And, then it suddenly started skyrocketing, reaching $19,511 on December 17, 2017.

Coincidentally, the day bitcoin reached its peak was the very same day the Chicago Mercantile Exchange (CME) opened up a futures market for the cryptocurrency.

In barely a month, bitcoin’s price fell to half of its peak price and is currently at half of that, selling at about $6,000 per bitcoin.

So, you can’t blame the authors of “How Futures Trading Changed Bitcoin Prices” for seeing much more than just a coincidence between bitcoin’s fall and the opening of the futures market for bitcoins.

Even less so if you take into consideration that the same happened in the home financing market in the 2000s, when “financial innovations in securitization and groupings of bonds” attracted optimistic investors, before instruments were created which “allowed pessimistic investors to bet against the housing market.”

Similarly, the advent of blockchain introduced a new financial instrument, bitcoin, which optimistic investors bid up, until the launch of bitcoin futures allowed pessimists to enter the market, which contributed to the reversal of the bitcoin price dynamics.

Simply put, before December 17, 2017, there was no way for pessimists to bet on the decline in bitcoin prices.

The only ones who traded were optimists who, by buying bitcoins, were betting on the rise of bitcoin.

It’s always easier to bet on the rise because all you need to do is just buy a bitcoin.

However, once CME futures trading for bitcoin was launched, pessimists entered the equation.

Now, they could finally bet on the bitcoin prices going down, by short selling the digital currency.

The prophecy was, once again, self-fulfilling: as many people took short positions on the digital currency, its price started falling, and this triggered even more pessimism.

According to the authors, this pricing dynamic happens over and over again:

Once derivatives markets become sufficiently deep, short-selling pressure from pessimists leads to a sharp decline in value.

Now, the only question left is: do we know the real price of bitcoin?

Of course, this is not an easy question to answer.

However, in time, by analyzing some fundamentals such as mining costs, transactional demand, regulatory governance and the use and benefits of rival cryptocurrencies, investors will reach a clearer picture of bitcoin’s value.

By then – it’s all a speculation.

Key Lessons from “How Futures Trading Changed Bitcoin Prices”

1.      Bitcoin Was the First Decentralized Digital Currency
2.      Bitcoin’s Decline Coincided with the CME’s Opening of a Futures Market for the Cryptocurrency
3.      In the Future, Sell Before the Futures

Bitcoin Was the First Decentralized Digital Currency

Bitcoin is a cryptocurrency, i.e., a digital currency not backed by any asset of intrinsic value.

Launched in 2009, it was the first decentralized digital currency since its system was designed to work without administrators or a central bank.

Bitcoin’s Decline Coincided with the CME’s Opening of a Futures Market for the Cryptocurrency

Between 2009 and February 22, 2017, bitcoin’s price was relatively steady, never passing the $1,150 threshold.

However, during the next 11 months, it skyrocketed, and on December 17, 2017, one bitcoin was selling at a price of nearly $20,000.

That very same day, the Chicago Mercantile Exchange opened the futures market for bitcoin.

This provided pessimists with a mechanism to express their opinion about bitcoin by short selling. In merely a month, the price of bitcoin halved, and half a year after that, it revolves in the realm of $6,000 per bitcoin.

In the Future, Sell Before the Futures

“How Futures Trading Changed Bitcoin Prices” argues that Bitcoin’s price volatility is consistent with the rise and collapse of the home financing market of the 2000s, i.e., that, once again, the price dynamics was reversed once futures were launched.

If the logic of the authors is sound, be sure to sell before the futures start trading during the next investing craze.

Like this summary? We’d like to invite you to download our free 12 min app, for more amazing summaries and audiobooks.

“How Futures Trading Changed Bitcoin Prices Quotes”

The launch of bitcoin futures allowed pessimists to enter the market, which contributed to the reversal of the bitcoin price dynamics. Click To Tweet

The rapid run-up and subsequent fall in price after the introduction of futures does not appear to be a coincidence. Click To Tweet

As speculative dynamics disappear from the bitcoin market, the transactional benefits are likely to be the factor that will drive valuation. Click To Tweet

Optimists bid up the price before financial instruments are available to short the market. Click To Tweet

Once derivatives markets become sufficiently deep, short-selling pressure from pessimists leads to a sharp decline in value. Click To Tweet

Our Critical Review

“How Futures Trading Change Bitcoin” is a well-written, tightly-structured, thought-provoking analysis of a hotly debated topic. Highly recommended.

www.pdf24.org    Take this summary with you and read anywhere! Download PDF:   

The Accidental Investment Banker PDF Summary

The Accidental Investment Banker PDFInside the Decade that Transformed Wall Street

Want to learn more about investment banking?

Interested to find out more about its fabulous past and its speculative present?

Then delve inside the decade that transformed Wall Street – the 1990s.

With Jonathan A. Knee, the “The Accidental Investment Banker.”

Who Should Read “The Accidental Investment Banker”? And Why?

“The New York Times” has described “The Accidental Investment Banker” as “a rare, ringside seat inside the madcap and often egomaniacal world of Wall Street’s Masters of the Universe” adding that for would-be bankers, the book is an excellent primer on what it’s really like; for current bankers it will be a guilty pleasure.

And even if you are neither, we truly believe that you’ll find a lot of enjoyment in peeking behind the curtain and seeing what’s really happening on the fabulous stage of Wall Street.

General readers will marvel, noted “The Wall Street Journal.”

Jonathan A. KneeJonathan A. Knee

Jonathan A. Knee is the Michael T. Fries Professor of Professional Practice of Media and Technology at Columbia Business School and a Senior Advisor at Evercore Partners.

He has earned a BA from Boston University, MSc from Trinity in Dublin, MBA from Stanford and JD from Yale. Before joining Evercore Partners, Knee was a Publishing Sector Head in the Communications, Media and Entertainment Group at Goldman Sachs and, then, a Managing Director and Co-head of Morgan Stanley’s Media Group.

In addition to “The Accidental Investment Banker,” he has authored one more book, “Class Clowns,” and co-authored another, “The Curse of the Mogul.”

“The Accidental Investment Banker PDF Summary”

Before we delve briefly into the quiet beginnings and the wild decades of investment banking, it’s only appropriate to explain what an investment bank actually is.

By strict definition, an investment bank is usually a private company which provides various financial (and finance-related) services to individuals, corporations, and even governments.

Mostly these all boil down to two primary functions: corporate finance and sales and trading.

Corporate finance is what investment banks traditionally do (and have done for centuries).

In a nutshell, it means helping customers raise funds (via mutual funds, pension funds, etc.) so that they can develop new capabilities or purchase new assets.

In the latter case – i.e., mergers and acquisitions (M&A) – investment banks can also give advisory services to companies on how to best consolidate the new assets under one entity.

In its sales and trading function, an investment bank basically serves as the middleman, buying and selling securities on behalf of itself and its clients, earning some percent of the funds it raises.

On IPOs, for example, an investment bank’s “spread” can be up to 7% of the raised finances!

Now, even though investment banking began with the activities of the Dutch East India Company a few centuries ago, it actually became something big in the United States in the early 20th century.

More or less just as today, the leading investment banking houses at the time were Morgan Stanley and Goldman Sachs, closely followed by Merrill Lynch.

Behind them, four investment banks which, for one reason or another, don’t exist anymore: First Boston, Lehman Brothers, Donaldson, Lufkin & Jenrette (DLJ), and Salomon Brothers.

After the Great Depression of 1929, investment banks entered a golden era.

How could they not?

In a world practically bereaved of financial euphoria, the investment banks of the time were all but the only model financial institutions, so everybody respected them as such.

Loyal to their customers and as conservative as possible, the investment banks of this period prized integrity above all and didn’t want to blow their own horns that much:

With roots going back over a century, the major investment banking houses largely eschewed publicity and had developed their own idiosyncratic cultures built on notions of exclusivity, integrity and conservatism.

And if there is one man who embodies golden-era investment banking, then that man is certainly Goldman Sachs’ long-time leader, Sidney Weinberg, Mr. Wall Street himself.

Widely respected, Weinberg was both a shrewd and an honest man, with a keen eye for business, but also with the integrity to stay away from speculative businesses; for example, he refused to underwrite gambling-related businesses.

However, soon after Weinberg’s death in 1969, views such as these became not only outdated but also a competitive disadvantage.

And the relatively humble white-shoe conservative investment banker of the war years morphed into the unorthodox M&A rock star with a lavish lifestyle and a six-figure paycheck.

J.P. Morgan Jr. may have advised doing “first-class business in a first-class way,” but the Wall Street motto of the 1990s spelled anything but: “IBG-YBG” (i.e., “I’ll be gone, you’ll be gone.”) meant that “short-term thinking,” was now the only valid way to run an investment bank.

And, as usual, short-term thinking resulted in a disaster in the long run.

Investment banks did rebound a few years after the crash of 2000 rattled the industry, but, expectedly, they never regained their reputation of the golden-era Weinberg years.

Key Lessons from “The Accidental Investment Banker”

1.      The Two Primary Functions of Investment Banks
2.      The Golden Era of Investment Banking
3.      The Boom and the Bust of the 1990s

The Two Primary Functions of Investment Banks

Investment banks have two primary functions: corporate finance and sales and trading.

The corporate finance function includes raising funds for their clients, be they individuals, corporations, or governments. It also incorporates giving valuable advice concerning mergers and acquisitions (M&A).

The sales and trading function means underwriting the clients’ assets, i.e., buying and selling securities, and earning a percentage of it.

The Golden Era of Investment Banking

After the Great Depression, investment banks were conservative institutions, mostly interested in long-term plans and staying away from speculations.

Sidney Weinberg – Goldman Sachs’ CEO from 1930 to his death in 1969 – typified the era: an honest and reliable man, he stayed away from hostile takeover bids and refused to underwrite gambling businesses.

Most investment banks followed suit, making them the most reliable financial institutions of the war (Second World War, Cold War) years.

The Boom and the Bust of the 1990s

However, the 1980s infamously turned Wall Street into a den of thieves, and during the 1990s things really spiraled out of control.

First – for the better; and then – for the worse:

Just as the investment banks were ill-prepared to deal with the boom of the 1990s, they had no road map to manage the bust of the new millennium.

Unsurprisingly, investment banks haven’t recovered their golden-era reputation of trusted, loyal advisers.

In fact, nowadays, there’s “an unprecedented level of cynicism, suspicion, and distrust of investment banks” among CEOs.

Probably for a very good reason.

Like this summary? We’d like to invite you to download our free 12 min app, for more amazing summaries and audiobooks.

“The Accidental Investment Banker Quotes”

What sends an investment banking firm into decline is typically a major scandal, a capital crisis, a mass exodus of productive partners, or usually some combination of the three. Click To Tweet

Investment banks and investment bankers had always thought of themselves as providing a highly differentiated value-added service – strategic advice selected based on quality. Click To Tweet

Investment banking, at bottom, is a sales job. Click To Tweet

The ‘spin’ involved in any sales job has a comic aspect that takes on an even more absurd quality when the financial stakes are as high as in investment banking. Click To Tweet

Our Critical Review

“The Accidental Investment Banker” is, by all accounts, a rare book: an insider’s look into the world of investment banking.

Written by someone who has worked at both Goldman Sachs and Morgan Stanley, the book chronicles the madness of the boom and the bust of the 1990s with appropriate flair and panache and abounds with engaging intrigues and memorable anecdotes.

To quote “Fortune” magazine, “For anyone who remembers the crazy boom times, and the even crazier bust, Jonathan A. Knee’s ‘The Accidental Investment Banker’ is a must.”

www.pdf24.org    Take this summary with you and read anywhere! Download PDF:   

A Short History of Financial Euphoria PDF Summary

A Short History of Financial Euphoria PDFReady for a new speculative bubble?

Because as John Kenneth Galbraith’s “A Short History of Financial Euphoria” demonstrates, if there’s one thing history has taught us it’s that there will surely be one very soon.

Read ahead to find out why.

Who Should Read “A Short History of Financial Euphoria”? And Why?

In “A Short History of Financial Euphoria,” John Kenneth Galbraith offers “dourly irreverent analyses of financial debacle from the tulip craze of the seventeenth century to the recent plague of junk bonds.”

Chances are you’ll forget the origin and the effects of all of them in the blink of an eye, which will expose you to the manipulative schemes of charlatans and cons in no time.

Which is why it’s all but necessary to not merely read, but also constantly reread Galbraith’s 100-page classic.

John Kenneth GalbraithAbout John Kenneth Galbraith

John Kenneth Galbraith was a Canadian-born economist and diplomat, one of the leading proponents of American liberalism of the 20th century.

A long-time Harvard faculty member and professor, Galbraith served in the administrations of four American presidents (Roosevelt, Truman, Kennedy, Johnson).

One of the few people to receive both the Medal of Freedom and the Presidential Medal of Freedom, Galbraith was USA’s Ambassador to India under Kennedy and a widely respected public intellectual for the duration of the Cold War.

A prolific author, he wrote numerous books, including a few successful novels. His trilogy on economics – “American Capitalism,” “The Affluent Society” and “The New Industrial State” – is still hotly debated and thoroughly analyzed.

“A Short History of Financial Euphoria PDF Summary”

There is nothing in economic life,” writes John Kenneth Galbraith near the end of his “Short History of Financial Euphoria,” so willfully misunderstood as the great speculative episode.

And this, even though on the face of it, everything should be quite plain and simple.

It all starts with a bidding war over some asset a few people believe is so rare and important that its value should only increase in the future.

That’s, after all, the basic economic rule: when supply is low, and demand is great, prices rise.

Add to this the yearning desire of many people to become rich overnight, and you get a recipe for disaster!

Because soon enough, investors join in.

Why should they not?

It’s their job to get the most out of anything, and bubbles are the perfect way for them to earn some money.

And since they are usually the earliest players, they actually do – and they do it big time!

Of course, these investors are not exactly humble people, so they start tooting their own horns, and soon even more people start investing in the asset the price of which, in the meantime, has blown ridiculously out of proportions.

The scary thing is that in this second group of people there are usually even quite a few intelligent analysts who are aware that at some point in the future this bubble must burst, but who, nevertheless, expect to be able to take their money back before that happens.

Some do. Most don’t.

And when the inevitable happens – the market crash – many lose substantial amounts of money; many more lose absolutely everything.

The strange thing: in a decade or so, financial euphoria strikes again.

Why?

In the opinion of Galbraith, it is because of several unchanging factors.

Since these are probably the most important insights of his book but are mostly scattered through brilliant historical analyses of many speculative bubbles, we tried to systematize them so that you can follow them better.

#1. Short-term fiscal memory

When it comes to money, Galbraith says, people never seem to learn anything. “There can be few fields of human endeavor,” he says, “in which history counts for so little as in the world of finance.”

In other words, when it comes to get-rich-fast schemes, you can burn yourself numerous times, because wanting more is part of your very human nature.

Rationality is just a note on the margin.

#2. The fallacious link between wealth and intellect

Most people believe that wealthy investors are, by definition, smart.

Which is why they have devised all those fancy epithets about the likes of Warren Buffet, Peter Lynch, and George Soros!

However, since almost everything that happens in life and in the markets is governed by chance, it’s all but crazy to believe that some people have found a surefire way to earn money.

In fact, most of the time, they have just been lucky.

The majority doesn’t think so.

So, it is inclined to be the victim of Ponzi schemes and speculative bubbles.

#3. Nobody believes the pessimists

Almost every bubble comes with a Cassandra or two.

Before the market crash of 1929, Paul M. Warburg foresaw the collapse and the depression, but his warnings fell on deaf ears, with the public claiming that he (a Jew) was “sandbagging American prosperity.”

Most wanted to believe Irving Fisher who famously proclaimed that the “stock prices have reached what looks like a permanently high plateau.”

Just a few days before the market crashed.

#4. Everyone chooses to ignore the real reasons

Charles Mackay, in his remarkable 1841 classic “Extraordinary Popular Delusions and the Madness of Crowds” (a defining influence on Galbraith’s book which thoroughly recounts its three chapters), commenting on the South Sea Company bubble, writes thus:

[In the autumn of 1720,] public meetings were held in every considerable town of the empire, at which petitions were adopted, praying the vengeance of the legislature upon the South Sea directors, who, by their fraudulent practices, had brought the nation to the brink of ruin. Nobody seemed to imagine that the nation itself was as culpable as the South-Sea company. Nobody blamed the credulity and avarice of the people-the degrading lust of gain…or the infatuation which had made the multitude run their heads with such frantic eagerness into the net held out for them by scheming projectors. These things were never mentioned.

The truth is – these things never are.

Even though:

#5. Bubbles are an inherent part of the market

Speculation is part of the market, and it will always be that way.

Contrary to what many will say, the market is not infallible, since humans are not infallible as well.

Regulations can help, but even they can’t contain mass euphoria and gullibility.

So, as long as there are people and markets, there will be bubbles as well.

Key Lessons from “A Short History of Financial Euphoria”

1.      People Suffer from a Short-Term Fiscal Memory
2.      Believe the Pessimists – for Your Own Sake
3.      Bubbles Are Inherent Part of the Free-Enterprise System

People Suffer from a Short-Term Fiscal Memory

When it comes to money, people tend to forget everything, including the most disastrous financial crashes in but a few decades.

That’s why it’s too optimistic to hope that people will ever learn their lesson when it comes to speculative bubbles.

Believe the Pessimists – for Your Own Sake

Every speculative bubble comes with a Cassandra or two: a prophet of disaster whose prophecies nobody believes until it’s too late.

Unfortunately, more often than not – or, rather, for most of the people involved – they are the only ones who are actually right.

Could it be that the pessimists are also right in the case of, say, Bitcoin?

Bubbles Are Inherent Part of the Free-Enterprise System

Markets are not perfect.

Bubbles are a part of them, and, as long as there are markets, it is inevitable that many people will lose huge amounts of money due to ruinous speculation.

The earlier you realize this, the better for you.

Like this summary? We’d like to invite you to download our free 12 min app, for more amazing summaries and audiobooks.

“A Short History of Financial Euphoria Quotes”

The circumstances that induce the recurrent lapses into financial dementia have not changed in any truly operative fashion since the Tulipomania of 1636-1637. Click To Tweet

The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version. Click To Tweet

There is nothing in economic life so willfully misunderstood as the great speculative episode. Click To Tweet

Speculation buys up, in a very practical way, the intelligence of those involved. Click To Tweet

In a world where for many the acquisition of money is difficult and the resulting sums palpably insufficient, the possession of it in large amounts seems a miracle. Click To Tweet

Our Critical Review

“Financial Euphoria” – to quote a great review – is a keeper, the sort of book you’ll recommend to other investors. It is brief, readable, with a statesman-like style, yet not above the heads of small investors.

Originally, Galbraith wrote it as a warning. Unfortunately, as he explains in the Foreword to the book’s second edition, a warning he grew to believe that has no value whatsoever:

In the first foreword to this volume, I told of my hope that business executives, the inhabitants of the financial world and the citizens of speculative mood, tendency or temptation might be reminded of the way that not only fools but quite a lot of other people are recurrently separated from their money in the moment of speculative euphoria.

I am less certain than when I then wrote of the social and personal value of such a warning. Recurrent speculative insanity and the associated financial deprivation and larger devastation are, I am persuaded, inherent in the system. Perhaps it is better that this be recognized and accepted.

Unsurprisingly, Galbraith ends his book with a depressing question: “When will come the next great speculative episode and in what venue will it recur?”

That was 1994.

Unfortunately, we know now the answer.

And, yet – frighteningly – the question is still valid.

www.pdf24.org    Take this summary with you and read anywhere! Download PDF:   

Applied Economics PDF Summary

Applied Economics PDFThinking Beyond Stage One

Should politicians meddle with the economy?

And is economics truly “the dismal science”?

Thomas Sowell tries to answer these questions by thinking beyond stage one in his exceptionally well received “Applied Economics.”

Who Should Read “Applied Economics”? And Why?

Whether you like it or not, economics and politics affect you personally.

And, regardless of whether you’ll agree with its conclusions or think they are a bit stretched, books such as “Applied Economics” are a breath of fresh air, both for their simplicity and for their uncompromising attitude.

In other words, “Applied Economics” is not about experts, but about the general public, and especially for disinterested voters who’ should profit a lot from learning more about the relationship between politics and economics.

Thomas SowellAbout Thomas Sowell

Thomas Sowell is an American economist and the Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution at Stanford University.

After dropping out of high school to serve in the United States Marine Corps during the Korean War, Sowell went on to graduate magna cum laude from Harvard University, a decade before obtaining a doctorate in economics from the University of Chicago.

He has taught at several universities and has written numerous articles and more than thirty books. His “Basic Economics” is considered a classic.

“Applied Economics PDF Summary”

According to 19th-century Scottish writer and philosopher Thomas Carlyle, as opposed to the gay science of verse-writing, economics was a “dismal science.”

Thomas Sowell, an economist, agrees with Carlyle.

And, believe it or not, for the exact same reason!

Namely, because – as Carlyle writes in “Occasional Discourse on the Negro Question” – economics “finds the secret of this Universe in ‘supply and demand,’ and reduces the duty of human governors to that of letting men alone.”

But, here’s the kicker:

Sowell thinks that this is great and that, in fact, the very abject nature of economics is its most wonderful attribute!

Why?

Well, we’ve already told you how “the universe is under no obligation to make sense to you;” but, if you remember well enough, you already know that, even so, Neil deGrasse Tyson sees beauty and power in its laws because “they apply everywhere, whether or not you choose to believe in them.”

In the opinion of Thomas Sowell, the same is true in economics as well.

It is the science of the cold, hard facts of life: when supply is low and demand is great, prices rise; when supply exceeds demand, prices fall; in the absence of an economic incentive, people tend to; in its presence – they.

It may be dismal – or even anticlimactic – to say that this is one of the secrets of the Universe, but it is – whether you like it or not, the same way 2+2=4.

In a nutshell, economics thinks of the world logically, in terms of the way it actually works. It believes that there are predictable consequences of people’s actions and that, in the long run, there’s no running away from some outcomes.

As opposed to economics, politics thinks about the world emotionally, in terms of the way it fantasizes the world should look like. It’s a short-term anything-can-happen mode of thinking which multiplies problems while trying to solve them:

Political thinking tends to conceive of policies, institutions or programs in terms of their hoped-for results – ’drug prevention’ programs, ’profit-making’ enterprise, ’public-interest’ law firms, ’gun control’ laws, and so forth.

Sowell speaks from his own experience.

While an undergraduate studying economics under Professor Arthur Smithies of Harvard, he was in class one day what policy he favored “on a particular issue of the times.”

Sowell proceeded to answer him with enthusiasm, explaining the beneficial consequences of the policy he advocated.

“And then what will happen?”, his professor asked.

This question caught Sowell off guard, but he managed to find a satisfying answer. But when his professor persisted with the same question and Sowell got further and further in the future analyzing the economic consequences of his policy, he realized “that the economic reverberations of the policy [he] advocated were likely to be pretty disastrous — and, in fact, much worse than the initial situation that it was designed to improve.”

The point?

Simple as this little exercise might seem, it went further than most economic discussions about policies on a wide range of issues. Most thinking stops at stage one.

Sowell’s book is rife with examples how seemingly beneficial policies are in fact beneficial only superficially – that is, at stage one.

In the long run – stages 2, 3, 4, etc. – the very fact that the government has chosen to interfere with the free markets inevitably results in economic consequences which undermine the very cause the government policies have initially attempted to advance.

We’ll look at one more specific example from the book in the “Key Lessons” section, but here’s, for now, one simplified general analysis so that you can understand how politics messes up economics 99 out of 100 times.

Problem: There’s not enough money for education.

Solution: Take it from private businesses.

Stage 1: Raise taxes. Year one: there is more money for education, and more and more students are capable of going to college.

Stage 2: Year two: corporations on the edge of profitability go bust. Other corporations start relocating to escape the same destiny.

Stage 3: There are no new businesses during the following two or three years since everybody wants to pay as little taxes as possible.

Stage 4: The happy students who profited from the policy at Stage 1 have graduated from college by now; in vain: no one is hiring, and they are unable to find any kind of job, let alone a suitable one.

Stage 5: There’s a new government now and, in addition to the unemployment, they are also faced with a budgetary problem (fewer companies, less money in the budget).

Stage 6: The new government proposes – wait for it… – a tax increase.

There’s an adjective which describes this circuitous logic.

And it’s “vicious” for a sound reason.

Key Lessons from “Applied Economics”

1.      Economics vs. Politics = Logic vs. Fantasy
2.      The Short-Sightedness of Politicians and California’s Electricity Problem
3.      Governments, Leave the Free Markets Alone!

Economics vs. Politics = Logic vs. Fantasy

Economics and politics are not exactly Butch Cassidy and the Sundance Kid; in the opinion of Thomas Sowell – the analogy is, of course, ours – they are much more akin to the pairing of Sancho Panza and Don Quixote, without the funny bits or the relatively happy ending.

In other words, economics is down-to-earth, logical, and factual; the head of politics is always in the clouds: it is idealistic, fantastical, unscientific.

Basic supply-side economics may be a dismal science, but it’s the way the world works, so economics is able to people’s behavior in the long run. Politics is much more hopeful mainly because it has nothing to do with reality.

Which is why it always messes things up.

The Short-Sightedness of Politicians and California’s Electricity Problem

When thinking about real-world problems, politicians are always stuck at Stage 1 – they never ask “what then?” when they propose a solution.

A good real-world example is the California electricity crisis of 2000 and 2001.

When California’s politicians decided that the electric prices were too high, they lobbied for votes to regulate them; and, obviously, they got enough of them to cap the price at a maximum of seven cents a kilowatt-hour.

However, as it turned out, the prices went up for a reason: due to reduced rainfall and higher hydrocarbon prices, utilities actually needed 15 cents to generate one kilowatt-hour for electricity.

So, they started shutting down their facilities, and California started experiencing blackouts and power shortages.

In the end, the government had to buy electricity and, of course, it paid with the money of the people.

So, in the end, the people actually paid more than they would have if the state didn’t try to regulate the prices in the first place!

Governments, Leave the Free Markets Alone!

Even though some respected economists such as Paul Krugman believe that conservative libertarian supply-side economics is “a crank doctrine,” Thomas Sowell thinks – with, say, Hayek and Friedman – that it is a fact of life.

In other words, that there’s no other way to organize an economy but by regulating it as little as possible and letting the free market decide what people need and how much of it they should be supplied with.

A simple, but a powerful equation.

Like this summary? We’d like to invite you to download our free 12 min app, for more amazing summaries and audiobooks.

“Applied Economics Quotes”

Families, gangs, feudal warlords, insurance companies, partnerships, commodity speculators, and issuers of stocks and bonds are all in the business of reducing and transferring risk. Click To Tweet

For purposes of economic analysis, what matters is not what goals are being sought but what incentives and constraints are being created in pursuit of those goals. Click To Tweet

As markets replaced politically managed economic decision-making, China experienced one of the highest economic growth rates in the world. Click To Tweet

The advantages of a free labor market benefit not only the worker but also the economy. Click To Tweet

Given the low educational levels of many who become career criminals, crime may well be their best-paying option. Click To Tweet

Our Critical Review

“Applied Economics” is a bit one-sided, and, at times – and as a consequence – too simplified analysis of how economic processes work in the real world.

However, it’s also an easy-to-understand read with many good points.

Conservatives will adore it.

Others should read it since it’s too thought-provoking to be ignored.

www.pdf24.org    Take this summary with you and read anywhere! Download PDF:   

Trade War Brewing? PDF Summary

Trade War Brewing? PDFWorld Trade in 2018

Evidently, the battlefield is now remodeled to serve the purposes of the New Era.

Two Major Superpowers are on the brink of full-scale Trade War that can shape the course of the economic future.

Let’s find out what makes this warfare so unique.

Who Should Read “Trade War Brewing?”? And Why?

Almost the entire planet has grown tired of endless conflicts and battles. As it turns out, the bloodshed is now converted into an intellectual war, which calls into question our integrity and principles.

In the “Trade War Brewing?“ Report you’ll be introduced to the eventual aftermath of this clash and more.

Dive right in!  

About The Economist Intelligence Unit

The Economist Intelligence Unit wants to be labeled as entirely independent research and analysis organization.

“Trade War Brewing? PDF Summary”

American Administration led by the 45th US President Donald J. Trump released a report on the reasons for increasing tariffs on steel and aluminum imports from Eastern and Central Asia.

For the apparent logic to safeguard America’s interest, the Chinese manufacturers and importers are pushed back by additional fees imposed on them.

Although no one believes that China would act indifferent to the provocations, people at least hope that this little issue will not grow into a full-scale Trade Conflict. American Trade Organization is deliberately testing the Chinese readiness to play alongside the restrictions.

Indeed, this is a double-edged sword because China in response can enforce trade restrictions on agricultural products. So, according to experts, this war for the moment is not anywhere near its end.

Due to the political and economic sake of the world, a full-scale trade war has to be prevented. Global supplies and needs being met rely on the cooperation of these two Giants on the World Arena.

Logically, increased barriers and tariffs on imports and exports could reduce the power of the wide-ranging supply chains.

So basically, both countries will suffer economically due to the higher fees. From what we see right now, the world trade growth ratio is at serious risk in terms of slowing down the global progress.

As a result, many Republicans in Congress may wind up in a middle of nowhere, by losing their seats. In other words, if the global community continues to behave immaturely, world trade will suffer in years to come.

The idea of integrating the supply chains may inflict an insignificant recession on the US Economy in 2020. Moreover, dragging down US-China relations is not something the World Trade Organization (WTO) strives for.

Such an unfortunate escalation may endanger their credibility. Losing its influence means having lesser authority in managing the global supply network.

China may file a complaint to its American counterparts about the steel and aluminum fees. As a matter of fact, Central and Eastern Asia depend on American metals.

Following a negotiation can eventually mean that one of the parties may receive the go-ahead from the WTO. Favoring one or the other country may leave the other one exposed to external influences.

An American Victory could spark a whole different behavior in protecting the country’s supplies and asserting dominance. In case of Chinese Victory, WTO could encourage the Americans to stick to the tariffs and cast doubt upon global agreements.

Each decision will inflame instability in the global arena, and further destabilize the fragility of world-trade liberalization.

Japan is growing increasingly closer with its European allies and is inclined to nurture the Trans-Pacific Partnership. On the other end, US isolation may represent a turning point in the worldwide dominance as far as trade is concerned.

Like this summary? We’d Like to invite you to download our free 12 min app, for more amazing summaries and audiobooks.

“Trade War Brewing? Quotes”

After setting the global trade agenda for the past 70 years, the current position of the Trump administration has left the US isolated. Click To Tweet With the US turning away from multilateral trade liberalization… China now has the opportunity to help to set the rules of engagement. Click To Tweet

Our Critical Review

In all honesty, we don’t believe that we possess the means and expertise to gauge such an in-depth overview of the situation.

One thing is for certain; neither country wants to be on the receiving end of sanctions and outcomes which depict a fruitless economy.  

www.pdf24.org    Take this summary with you and read anywhere! Download PDF:   

A Farewell to Alms PDF Summary

A Farewell to Alms PDFA Brief Economic History of the World

Have you ever wondered why some nations are rich and others poor?

Or, say, why some of the latter can’t get out of poverty regardless of their systems or the number of benevolent outside interventions?

Well, Gregory Clark has – and for most of his life.

And in “A Farewell to Alms” he offers a rather controversial answer.

Who Should Read “A Farewell to Alms”? And Why?

“A Farewell to Arms” purports to be a brief economic history of the world.

However, you’re in for a big surprise as early as the table of contents where you’ll certainly notice the suspicious absence of any title suggesting a discussion of the ideas of Adam Smith or John Maynard Keynes or of the economic theories of capitalism or socialism.

What kind of an economic history is this? – you start to wonder.

Probably the best answer to this question is “Malthusian,” but we’ll go for the more general one: “a very unique one.”

Because, as far as we know, it’s the only one of its kind.

Bear with us to find out which kind.

Or read it yourself if you are interested in economics, racial and political history and the nature of social mobility.

The best part: even though it features hundreds of graphs and discusses serious problems in economics, no formal economics training is necessary to understand any part of the book.

Gregory ClarkAbout Gregory Clark

Gregory Clark is an economic historian and a professor of economics at the University of California, Davis.

Born in Scotland, Clark attended King’s College, Cambridge before obtaining a Ph.D. degree at Harvard in 1985.

Ever since then, he has been researching topics such as social mobility, the wealth of nations, long-term economic growth, and, particularly, the economic history of England and India.

He has written one more book, the title of which is, once again, a pun on Ernest Hemingway’s novel, “The Son Also Rises.”

Find out more at http://faculty.econ.ucdavis.edu/faculty/gclark/index.html

“A Farewell to Alms PDF Summary”

The basic outline of world economic history,” writes Gregory Clark at the beginning of “A Farewell to Alms,” “is surprisingly simple.

So simple, in fact, that he needs no more than one graph and about 17 pages to recount everything that has ever happened to humans in terms of wealth and incomes – and other related things – from Mesopotamia until today.

You can see the graph in the Introduction to his course at UC Davis, which, if you have the time, we advise you to hear out in its entirety – all 26 lectures of it:

Anyway, back to Clark’s simple outline of world economic history:

Before 1800 income per person – the food, clothing, heat, light, and housing available per head – varied across society and epochs. But there was no upward trend. A simple but powerful mechanism explained in this book, the Malthusian Trap, ensured that short-term gains in income through technological advances were inevitably lost through population growth.

Thus, the average person in the world of 1800 was no better off than the average person of 100,000 BC.

To translate this in no uncertain terms: if you were living in the 18th century, chances are you would have probably lived the way the Nukak people – or, to use an example you can relate to even better, the Bushmen – live today (or, at least, lived up until recently).

To you, a fervent reader of Jane Austen novels, this may sound a little bit exaggerated, but statistics demonstratively prove that it is not.

Put differently, a typical Englishman had a much worse diet than a hunter-gatherer of the Stone Age, and, since, unlike his distant ancestor, he lived in a society of inequality, he was also far less happy than the latter; both could expect to live no more than, say, 35 years.

Jane Austen may have written about refined conversations over tea served in china cups,” wittily remarks Clark. “But for the majority of the English as late as 1813 conditions were no better than for their naked ancestors of the African savannah. The Darcys were few, the poor plentiful.

The mechanism which explains why this was so: the Malthusian Trap.

Here’s what it is all about.

It is based on three simple and axiomatic assumptions:

#1. Each society has a birth rate which, naturally, increases as living standards (higher income, better education, more advanced medicine) increase;
#2. Each society has a death rate which, once again as expected, declines with the increase of living standards (fewer people tend to die today than ever for this reason);
#3. Material living standards decline – as the population increases.

In a nutshell – the Malthusian Trap is the vicious circle of (anti-)progress!

Namely, as Thomas Robert Malthus (after whom the trap is named) demonstrated back in 1798, even if technology manages to increase the material living standards, they, in turn, will diminish the death rate and increase the birth rate, resulting in a society where even though we have more resources to distribute, we need to distribute them among more people as well!

The end result?

The resource supply per capita remains the same!

That certainly explains why nothing changed for tens thousands of years, but here’s the real kicker:

In the Malthusian economy before 1800 economic policy was turned on its head: vice now was virtue then, and virtue vice. Those scourges of failed modern states—war, violence, disorder, harvest failures, collapsed public infrastructures, bad sanitation—were the friends of mankind before 1800. They reduced population pressures and increased material living standards. In contrast policies beloved of the World Bank and the United Nations today—peace, stability, order, public health, transfers to the poor—were the enemies of prosperity. They generated the population growth that impoverished societies.

And then came the Industrial Revolution and put an end to the Malthusian era of humanity!

However, not in the way you think it did – which, in fact, makes the next part the most controversial of the book.

Namely, in Clark’s opinion, the Industrial Revolution facilitated the dying out of the poor, functioning as some sort of an advanced natural selection tool.

Look at today’s Malawi or Tanzania for evidence: due to the Industrial Revolution, their people are way poorer than their Stone-Age ancestors.

However, in Britain, as the poor got poorer and started dying more, the rich got richer and took over the positions of the former.

And with it, they spread a fairly new type of values – hard work, education, rationality – among the strata of society previously governed by illiteracy and instincts such as violence and impatience.

Thus, the British started using the resources more sensibly and finally broke out of the Malthusian Trap.

Many countries are, unfortunately, still in it.

And, if Clark’s analysis is correct, the policies we use to get them out of it, may be utterly wrong.

Key Lessons from “A Farewell to Alms”

1.      Hunter-Gatherers Were Richer Than Many People Living Today
2.      The Mechanism of the Malthusian Trap
3.      Money Doesn’t Bring Happiness

Hunter-Gatherers Were Richer Than Many People Living Today

It may sound strange to you, but the following sentence is a fact: “There walk the earth now both the richest people who ever lived and the poores.”

For example, the people living today in, say, Malawi and Tanzania – on average – have a lower living standard than their very distant ancestors.

Just as the Industrial Revolution reduced income inequalities within societies,” notes Clark, “it has increased them between societies, in a process recently labeled the Great Divergence. The gap in incomes between countries is of the order of 50:1.

The Mechanism of the Malthusian Trap

In “An Essay on the Principle of Population” published in 1798, Thomas Robert Malthus first touched upon the subject why, in spite of obvious progress, men, on average, remained as wealthy/poor for millennia.

And the explanation is quite simple:

When technological advances increase the supply – i.e., more resources – they also increase the birth rate and diminish the death rate – i.e., more people.

Which means, the amount of supplied resources per capita remains unaffected.

Money Doesn’t Bring Happiness

It’s strange, but it’s true:

“The people of the world of 1800, in which all societies were relatively poor, and communities were much more local in scope, were likely just as happy as the wealthiest nations of the world today, such as the United States.”

Why?

Simply put, because happiness is a relative category.

And because our societies are unequal.

Like this summary? We’d like to invite you to download our free 12 min app, for more amazing summaries and audiobooks.

“A Farewell to Alms Quotes”

As long as technology improved slowly, material conditions could not permanently improve. Click To Tweet

Since the Industrial Revolution...we have entered a strange new world in which economic theory is of little use in understanding differences in income across societies. Click To Tweet

High incomes profoundly shape lifestyles in the modern developed world. But wealth has not brought happiness. Another foundational assumption of economics is incorrect. Click To Tweet

Given the static nature of the economy and of the opportunities it afforded, the abundant children of the rich had to, on average, move down the social hierarchy. Click To Tweet

Poor countries used the same technology as rich ones. They achieved the same levels of output per unit of capital. But in doing so, they employed so much more labor per machine that they lost most of the labor cost advantages with which… Click To Tweet

Our Critical Review

As controversial as an economics book can get nowadays, “A Farewell to Alms” was deemed “the next blockbuster in economics” as soon as it was published.

The prediction came true, springing a lively debate of which the main thesis is still a subject.

So, the word “stimulating” doesn’t even begin to describe it.

www.pdf24.org    Take this summary with you and read anywhere! Download PDF:   

Driving the Sustainability of Production Systems with Fourth Industrial Revolution Innovation PDF

Driving the Sustainability of Production Systems with Fourth Industrial Revolution Innovation PDFOne can’t be blamed for feeling that the Third Industrial Revolution barely started yesterday, and the World Economic Forum says we are already in the midst of another one.

The goal of this one?

Driving the Sustainability of Production Systems with Innovation.”

Who Should Read “Driving the Sustainability of Production Systems with Fourth Industrial Revolution Innovation”? And Why?

When something has a boring and ridiculously long title as “Driving the Sustainability of Production Systems with Fourth Industrial Revolution Innovation” – you can be all but sure that it is a white paper.

And when that white paper is written by the World Economic Forum – it’s safe to assume that you are not reading about the present, but that you are, in fact, getting a glimpse into the future.

At merely 60 pages, the article convincingly argues that competition and profits mean little without proper sustainability practices because, in the absence of the latter, there may be nothing to compete for and nothing to profit from in the blink of an eye.

So, leaders and managers, governments and corporations, take note: the future depends on you implementing the advices from this white paper!

And we are not exaggerating!

World Economic ForumAbout the World Economic Forum

The World Economic Forum (WEF) is a Swiss non-profit foundation based in Geneva, “committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas.”

Every year, the Forum organizes a meeting in Davos, which brings together over 2,500 business and political leaders, Nobel Prize-winning economists, celebrities and journalists to discuss – in no less than three days – “the most pressing issues facing the world.”

This meeting has even generated a neologism, “Davos Man,” usually pejoratively used to mean a “supranational wealthy member of the global elite.”

“Driving the Sustainability of Production Systems with Fourth Industrial Revolution Innovation PDF”

As we all know, the First Industrial Revolution started in the second half of the 18th century and used steam and water power to mechanize production.

The Second took place in the last half a century before the First World War and this one used electric power to create mass production.

The Third Industrial Revolution is the one most of us have lived our lives through – it is commonly known as the Digital Revolution, during which we used information technology to automate processes.

Well, brace yourself: as Klaus Schwab, the founder and executive chairman of WEF announced a while ago, a new, Fourth Industrial Revolution, has begun.

This one is building on the third and is characterized by “a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.”

So, think AI, robotics, biotechnology, autonomous vehicles, 3D printing, i.e., technology embedded in society and biology.

Fortunately, one must say, since we’re on the brink of a sixth extinction and we must do something about it now, lest we want to wake up in a tomorrow when nothing can be done anymore.

Because our economy has been unsustainable for much too long.

We now know (or most of the world acknowledges)” – states WEF’s white paper – “a simple truth: the way the world manufactures cannot be sustained. The ‘take-make-dispose’ linear economy approach results in significant resource inefficiency.

And here are the facts:

Global manufacturing consumes about 54% of the world’s energy and a fifth of its greenhouse gas (GHG) emissions. Industrial waste makes up to half of the world’s total waste generated each year. Production activities are gobbling up primary resources; metal ore extraction, for example, rose by 133% over the last three decades. At the same time, resource extraction from non-renewable stocks grew, while extraction from renewable stocks declined.

In other words, we do not have enough resources to keep up the growth.

The problem is that, in fact, we’ve never had them, and that everybody has known this for quite some time: century-old predictions have estimated that, unless we develop better practices, at one point, we’ll use up all of our resources and be left with nothing more but deserted industrial capacities and worldwide poverty.

Let us guess: you know about the peak oil problem ever since you were a little child, right?

Now, why have we been purposefully turning a blind eye on a problem as enormous as this for so long?

One word: capitalism.

Simply put, it was too expensive for corporations to care about problems such as the world or unsustainable production because this would have stopped production altogether.

So, as businesses grew more and more efficient in extracting and using resources, they grew more and more ineffective in preserving them.

Governments usually didn’t help one bit, because even though the “profits from destroying the planet were privatized,” “the cost for addressing the damage was socialized.”

In other words, in the eyes of the business leaders, sustainability was a cost only taxpayers’ money can and should cover.

It’s time to put an end to this!

Due to the technological advances of the Third and the Fourth Industrial Revolution, sustainability has not been a cost for a while; in fact, it is already a major business opportunity. One can even argue that, with more and more people being conscious of what we are doing to the planet, sustainability has become an important competitive advantage.

And this is where the Accelerating Sustainable Production (ASP) project of the World Economic Forum System Initiative on Shaping the Future of Production comes into play.

Its final goal?

To “harness innovation to strengthen competitiveness while delivering increased efficiency, improved human well-being and less environmental damage.”

How?

Through financing innovation in five cross-industry areas which hold the most promise for accelerating sustainable production.

Let’s have a look at all of them!

Key Lessons from “Driving the Sustainability of Production Systems with Fourth Industrial Revolution Innovation”

1.      Advanced Remanufacturing
2.      New Materials
3.      Advanced Agriculture
4.      Factory Efficiency
5.      Traceability

Advanced Remanufacturing

Thanks to developments in IT, new manufacturing cost-effective methods are revolutionizing production processes in the automotive and the electronics industry, making them both more efficient and greener.

New Materials

Thanks to advances in nano- and biotechnology, new materials are quickly disposing of traditional materials, becoming not only better, but also cheaper. These include green electronics, new types of packaging, and various alternatives to meat, leather, and plastic.

Advanced Agriculture

We are now more precise than ever, and new technologies are capable of optimizing farming decisions “on everything from fertilizer and irrigation to harvesting time and seed spacing.” And better planning doesn’t only translate into better business opportunity, but it also means greater care for things such as food scarcity and ecosystem health.

Factory Efficiency

The Internet of Things has already introduced us to an age in which factories are basically producing by themselves, in an all but near-dark environment, while shortening the supply chains and reducing the consumption of non-renewable resources.

Traceability

The widely debated blockchain technology – coupled with data tags and sensors – is already allowing companies to safely trace and verify all relevant information about a product, whether it is the origin of its materials or the supply chain through which it has traveled. In the very near future, this should ensure fair earnings for small suppliers, while eliminating low-value-added processes.

Like this summary? We’d like to invite you to download our free 12 min app, for more amazing summaries and audiobooks.

“Driving the Sustainability of Production Systems with Fourth Industrial Revolution Innovation Quotes”

Our aim in the Accelerating Sustainable Production project is to leverage production as a tool for meeting the United Nations Sustainable Development Goals (SDGs) and as a source for business competitiveness. Click To Tweet

Sustainability has been viewed as a cost. That perception needs to change to ensure we collectively understand that it can also represent a major business opportunity. Click To Tweet

In the past, profits from destroying the planet were privatized while the cost for addressing the damage was socialized. Click To Tweet

The way the world manufactures cannot be sustained. The ‘take-make-dispose’ linear economy approach results in significant resource inefficiency. Click To Tweet

The production of the future will cater to rapidly evolving consumer needs by delivering products and services within a well-designed supply chain that fully embeds innovation and sustainability. Click To Tweet

https://blog.12min.com/subscribe/

Our Critical Review

Dense with data and statistics, outstandingly well-structured and well informed, “Driving the Sustainability of Production Systems with Fourth Industrial Revolution Innovation” is a well-researched, well-written and finely illustrated white paper of utmost importance.

Dear reader, if you are in a position to decide, know this: the earlier you implement it – the better for all of us.

www.pdf24.org    Take this summary with you and read anywhere! Download PDF: