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Fort Knox Gold vs Interest on the National Debt

Assuming that Fort Knox actually contains all of the gold that it is claimed to hold, and using the approximate spot price of gold as $420 per ounce, approximately how many years would the gold in Fort Knox last to pay the interest on the National Debt if it were to remain at the FY2004 level?

Best guess without looking it up.

Federal Budget Spending

Fort Knox Gold


Applied Econometrics

While Austrian economists probably generally believe that econometrics has a similar relationship to economics as astrology has to astronomy, it seems only fair to give econometricians a chance to prove otherwise. Accordingly, the problem described below has both an arithmetic part and a policy part.

Imagine that Walmart has a secret Chinese subsidiary on the mainland that has developed the ability to produce perfect, undetectable, counterfeit Federal Reserve Notes ( $1, $5, $10, $20, $50, and $100 ) without significant cost. Read more »


Expensing Stock Grants

You are the brand new CFO of Microsoft, taking over after the previous CFO, John Connors, has abruptly terminated his employment to join an investment firm that can make use of his uncanny ability to predict the future.

You take over on Monday, August 1st, and find on your desk a shoebox labelled July Employee Compensation. Inside you find several scraps of paper which are notes concerning all the employee compensation transactions which took place in the month of July, other than normally scheduled wages. These transactions have not yet been accounted for. Read more »


Crisis, Social Security and the Federal Debt

In a recent post, I tried to demonstrate that the Social Security Trust Fund was of no actual significance.

It has become clear that arguments are ongoing as to the timing and existence of something called a Social Security crisis. The following posts address this issue, with a mix of truths and untruths.

Brad Delong Read more »


Don Lloyd\'s Bio

Born in central NY State in 1947, I have a true generation gap separating me from the rest of the Catallarchy authors. When I took my first college programming course, MIT didn't even have a Computer Science department. Although programs were implemented with punch cards, it would be inaccurate to imply that the programs were executed on carpet looms. Read more »


The Social Security Trust Fund, a Logical Demonstration of Its Insignificance

If the Social Security Trust Fund were of actual significance, then it would seem likely that the day that it becomes exhausted in, say, 2042, would be of some note, more newsworthy than, for example, Tax Freedom Day, the day that taxpayers in general start working each year for themselves, rather than for the government.

You would expect, for example, that SSTF Exhaustion Day would be marked by an sudden increase in the sale of Treasury Debt to fund the difference between SS payment obligations and payroll tax revenues. Read more »


Owner-Specific, Non-Economic Assets

No matter whether someone is completely innocent of economic understanding, or if they have a doctorate or even a Nobel Prize in economics, there is still a high probability of failure to believe that certain economic assets can lose their entire economic value depending on who owns them. This phenomenon arises in a wide variety of situations, some of which are noted below. Read more »


Mis-Keystroke Help Requested

All too often when trying to enter a blog comment somewhere, my left hand accidently slips left off the a-s-d-f keys and strikes a key or keys unknown that blank out all of my previously entered text. This is highly annoying. I am soliciting suggestions to explain what keys may have been hit.

By accident in the last couple of days, I have found that if I immediately follow the loss of text by a ctrl-Z, the text is restored in a highlighted (selected) display.

For background, this is all using IE6.0 under Win98SE. The keys in the target area are as follows : Read more »


Is Comparative Advantage Essential to Economic Prosperity?

Imagine a space colony planted on Vega III, an isolated human-compatible planet with a uniform surface climate and topology. All of the colonists are asexual, non-aging humanoid clones made from a single genetic pattern in a robotic laboratory in the grounded starship. Casualties due to accidents, etc., can be replaced.

All of the clones have identical abilities and preferences, and thus no comparative advantages of any kind. Is trade and economic prosperity still possible? If so, how and why?


Textbook Prices

In Sticker shock, Henry at Crooked Timber re-initiates a popular blog discussion topic, dealing with the prices of college textbooks.

Other blogs responding include :

Alex at Marginal Revolution,

Mark at The Liberal Order , Read more »


Healthcare Inflation

It seems likely that we have managed to create a healthcare system so economically perverse that economics may not have yet invented a concise description for it.

If the suppliers of health and medical goods and services were to operate in a competitive marketplace, they would be restrained from price increases by the rapid loss of market share to competitors .

If they were to operate under a condition of monopoly supply, they would be able to raise prices, but only to the point beyond which falling unit demand would outweigh increasing unit prices. Read more »


A Followup to Opportunity Cost Puzzle

In Opportunity Cost Puzzle the following appeared --

John owns a retail consumer electronics business.

He sells ten 30 inch plasma TV sets per month. His wholesale price is $2000, his markup is $1000 and his selling price is $3000.

If he takes a set home for use in his den, which of these dollar amounts, if any, is his approximate sacrificed opportunity cost. Explain your reasoning. Read more »


Opportunity Cost Puzzle

John owns a retail consumer electronics business.

He sells ten 30 inch plasma TV sets per month. His wholesale price is $2000, his markup is $1000 and his selling price is $3000.

If he takes a set home for use in his den, which of these dollar amounts, if any, is his approximate sacrificed opportunity cost. Explain your reasoning.


Why High Rates of Return Won\'t Save Social Security

One of the most widely used arguments in favor of solving the coming Social Security demographic crisis by means of privatization of a part of payroll taxes is the relatively high historical rate of return of the stock market. It is assumed that high investment returns will fix anything. At a time when the prospective returns of payroll taxes is barely positive, if at all, even investments that don't include stocks look to be an improvement if they are likely to have positive returns. Read more »


Why Unfunded Mandates Cannot Be Effectively Funded in Advance

Imagine that the 2004 Congress mandates the building of a covered bridge between San Francisco and Honolulu. Construction will commence in 2051 and continue through 2055, a total of five years. Over that five year period, it is projected that the project will consume 50% of the construction materials available in the US at that time. To finance the project, Congress neither allocates funds, nor authorizes borrowing, nor raises taxes, but expects the US Treasury to print enough new dollars starting in 2051 to both buy materials and pay for labor. Read more »