70 years ago this wasn't the case. How did the US become the printer of the currency of choice? While (almost) every other country needs a foreign currency to trade, the US can just press a button and this beautiful green paper comes out. And then they can give us these pieces of paper and we all give them real goods. Quite a privilege. Luckily, they don't take as much advantage of this privilege as some of my fellow countrymen would.
How did this happen? Let me set the environment first. It all started at the end of the 2nd World War. A beautiful hotel in Bretton Woods (New Hampshire, USA). 44 countries got together to restore the economy. The gold standard was out, and every country was trying to protect its own industries (in other words, no trade). Currency values were flying around (well, not as much as some future post-Soviet or Latin American countries would experience, but a lot for the time). How can you trade when you don't know what the other currency will be worth tomorrow? Well, as any person with an "Argentinean survivor" degree knows, the answer is "you can't." So a tiny group of people were trying to put an end to this by deciding on the exclusive right to create money out of nothing. But lots of alcohol and cigars, a beautiful Peruvian singer and not much sleep may have interfered...
There were really just two sides: England vs US. Keynes vs a John Doe. (All the rest seem to have been just drinking and partying). But you can imagine by now who won: This John Doe, a number cruncher, timid, antisocial, actually named Harry White. But forgotten by history.
Both wanted an international currency for trade. Keynes wanted a new currency created by a worldwide global bank (named "bancor" from the French "banc d'or" to please the Frenchmen, but based in London of course to cheer the Royal pockets...Tricky John Maynard). White of course wanted another universal currency, the US dollar. How did he win? He started writing in all the documents "gold convertible currency." But who had all the gold? The US (80% of it). And finally, after all that drinking, the people got confused about what "gold convertible currency" meant. Keynes was at another meeting, and his British replacement - either not very bright or quite hangover - suggested that for "clarity" they could simply call it "US dollar." He thought this was just a technicality. Bollocks. Keynes was ill (he even collapsed and some journals even reported he was dead), so he was never able to check the document he finally signed (nor kill his second man). And, hence, after a seemingly irrelevant "clarification", every country now uses dollars to do business.
In 1999, Time magazine included Keynes in their list of the 100 most important and influential people of the 20th century. Well, I feel the role of the US dollar has been quite relevant, so shouldn't Harry be on that list? Maybe this absence has to do with what later happened to Harry White. Accused (and later convicted) by FBI Director Hoover for being a spy for the Soviet Union, he was also questioned for passing Treasury plates to print Allied money, sparking a black market and serious inflation throughout Germany. Quite a turnaround for the American hero (a real life Walter White?). If all this shouldn't be a movie, I don't know what should.
Based on another great episode from Planet Money.
Do people get paid more if they are better looking? Freakonomics did a podcast interviewing beauty economist Hamermesh who explained that:
If you are an economist you may think the statistics above could be problematic. For example, better looking people could be more charming or better communicators, which are more "standard" sources of income differences. However, even when looking at quarterbacks - where looks may not matter as much, except for merchandise/publicity revenue which is not included here - Berri finds that beauty (based on symmetrical faces) pays as well.
So, if surgeries cost less than $10k, and we can increase our lifetime income by over $150k, shouldn't we all get a surgery? It seems like a great investment. Well, data (from China and the surgery mecca of "North Korea") says this does not help...
Have you noticed that lately everyone is switching to Python? Well, if you are not surrounded by geeks who spend most of their days doing engineering problem solving work with computers you may have not heard about this. And then you may not be interested in this post either. But if somehow you are, you should keep reading!
All this talk (it's not only economists by the way) about Python made me think if the effort would be worth it. Luckily, Boragan Aruoba and Fernandez-Villaderde came to the rescue and showed that it may not be worth the effort. They ran a classic economic problem (basically grid search and value function iteration, so lots of loops and big matrices) in many languages and basically found that:
Python does improve with compilers as well, but it is not faster than Matlab in any case. Hence, if you are looking for speed (rather than flexibility or low price), Python seems to be the wrong way. Full report here. This table summarizes their findings (time in seconds):
Planet Money did an excellent episode on how much university majors pay. Some great data:
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News and posts for an active mind.