Category: Uncategorized

Oil price rise causing inflation

In 1974 we faced an OPEC oil embargo that raised the price of oil and immediately created domestic U.S. inflation.  That Inflation continued for 12 years and at one point in 1980 reached a 12% rise in the CPI measure of inflation.  

This was the first of its kind oil price- caused inflation.  One-of-a-kind events are seldom the basis for new economic thinking.

The same thing has happened again in 2021. It is time to think about the issue of oil prices and inflation.

I think that oil prices play a unique role in the economy. Oil and gas consumption is only 2% of the GDP so it should have a trivial impact.  However it is a component of nearly every other component of the GDP ranging from exports, to fertilizer, to chemicals, plastics, energy, construction and transportation.

Therefore the price of oil has a multiplier effect on the economy and a long- term residual effect.  The unexplained impact of a substantial price rise lasting for many years is novel.  My guess is that oil prices have a ratchet effect on the economy.  ‘Ratchet’ means that a price rise does not disappear or resolve to a lower level because of union restrictions on wage decreases and other rigidities in the market.  Furthermore an oil price increase, over a few years, brings into play large investments in the oil and gas industry which themselves have an inflationary consequence because of their magnitude.

We shall see.  In 2021 incoming President Biden declared an end to the fracking style of oil and gas drilling and immediately doubled the price of crude oil. This is 2022 with more than a year of inflation and the high inflation rate continues.  If it continues for several more years, we can conclude that the price of oil is a key long-term ratchet multiplier in inflation.

Global money pipes go to the Bay Area

There is an obvious pattern in global money flows that I don’t see discussed anywhere else.  I see it because of the rapidly increasing wealth in the San Francisco Bay area that is not restrained by any taxes or other repressive economic forces.  

The global internet is operating based on patented technology, software and many physical products that are owned by major corporations in the S.F. Bay Area. Companies such as Intel, Oracle, Adobe, Cisco, Salesforce, Google and Apple are a key part of the global internet and the computer/phone infrastructure. The money they earn flows directly to their headquarters before being distributed everywhere else that there are owners, suppliers and employees.

That means that when a 16- year old boy in Nur-Sultan, Kazakhstan uses his phone he is paying for the wireless connection, the phone, the internet, all the programs and apps on the phone. A part of his payment consistently goes to the San Francisco Bay area. The same is true for every phone everywhere on the planet from Iceland to Delhi to Cape Horn.  That money is pouring in. It has been pouring in for several decades and may continue for another decade.  

This is the new form of invisible colonialism where wealth from the entire planet flows to the power of U.S. tech corporations.  Most of whom happen to be headquartered in the S.F. Bay area.

Longest Economic Rise Without a Decline

Number 2 above is probably the reason for the 12-year long continuous rise in the U.S. economic growth is the longest continuous rise in the recorded history of the GDP. 

One of my close friends died a year ago and his entire 50 years of life in San Francisco is not in the brief obit in the Boston press.

I met Tom in 1976 when he came from Boston to San Francisco.  The first thing Tom did when he got here was become a partner in a bar in Noe Valley, Finnegans Wake.  His two partners were Don Neuwirth and Tom Frankel. Tom Hargadon had owned a bar near Harvard Square where he had gone to college and where he had graduated with a law degree.  Tom passed the California bar, but never practiced law to my knowledge.  Tom Frankel went on to own a bar on Potrero Hill where Tom H. rented the upstairs apartment.  I shared the apartment occasionally over several years in the 1980s.  Tom owned a home in Monte Rio near the Russian River.  It flooded twice (2 one-hundred year floods). The home was above a garage and only the floor of the house was flooded.  I helped Tom clear it out after the floods by dumping everything out the front window into a dumpster.

When Finnegan’s Wake was closed in 1986, Tom Frankel moved it to Cole Valley where he took over a former lesbian bar, Mauds. 

The original Noe Valley bar was the headquarters for San Francisco politics during the Dianne Feinstein years, largely due to Don Neuwirth’s contacts.  I never saw Tom H. drink, but I assume he had beer on occasion.

The entire time I knew Tom he was built like a long cube, very Irish.  He was able to run occasionally with my Portola Institute gang and with my friends at Crissy field.  But otherwise I never knew him to indulge in athletics. 

Soon after I met Tom I made him Publisher of the Briarpatch Review, which never entailed anything but showing up at parties and being a springboard for discussions. From the late 1970s he was a regular at our coffee group mornings in North Beach. First at Roma’s for a dozen years and for the next three decades at Malvina’s and then to the new Roma’s. The final story on that comes later.

Tom was among my very closest life friends.  He was the most intelligent man around. With an encyclopedic mind and a comprehensive knowledge of Irish literature. All my close friends were like Tom. Interested in the world, current events and deeply self educated.

Tom was also wise.  He talked when talked to, but he was quiet otherwise. Surprisingly, his bar talents meant he was gregarious among strangers. Calm, sweet, gentle, genetically honest and infinitely curious. Always reading when alone.  Tom had the unique ability to carry on three simultaneous conversations.

Tom grew up in Boston, probably Waltham.  His education was at private Catholic schools. Because Tom was so bright and probably slightly autistic, the nuns, bless their hearts, didn’t waste his time in class, they sent him to the library where he read every book in the collection over his dozen years in pre-college. 

From Tom’s own report, after law school he worked at Boston City Hall with mayor Kevin White. Tom understood politics. He had done some organizational work in Mayor White’s office which later led him to some similar work in Washington D.C.  It had to do with computers of that era. Tom always had friends in the computer world.

The only anecdotal story I have about Tom is that he lived, for a time, in a communal arts group in a warehouse in Emeryville. There, he met and married a woman, Ambika, who lived in the building and was a fine potter.  A few years later when Ambika went to Japan, I strongly advised Tom to join her there. I said that Japan would be heaven for a potter and unless he joined her she would meet up with a Japanese potter and stay there.  He didn’t understand what I was saying. I had been going to Kyoto, at that point, for many years.  I was right.  

A decade later Tom joined me and my girlfriend in Tokyo.  He had a marvelous time.  Japan was so new and interesting to him.  He spent his days just travelling around the city in total amazement, learning everything he could.

At one point Tom became a partner in the Blue Heron, a restaurant in Duncan Mills near the mouth of the Russian River.  He made it a lively musical center for the area, but since all the business was weekends, it never succeeded financially. During all my years as a close friend, I never knew where Tom’s money came from.  One year a friend of his in D.C. had government funds left over at the end of the fiscal year to build public housing near Santa Rosa. Tom helped him spend it.

Tom always dressed a little more formally than the hippie style of the era.  Usually a white shirt and suspenders.

Tom and I ended our friendship twenty-four hours after the Arab terrorists piloted airliners into the New York Twin Towers.  We had our usual coffee at Malvina’s in North Beach the next day. An Egyptian, an occasional visitor to coffee, had sent an email overnight saying the attack was justified because of America's role in oppressing nations around the world. Before he entered Malvina’s I told him he was not welcome at the coffee group. Tom tried to stop me from chasing him away; I told Tom to ‘fuck himself.’  He told the rest of the coffee group, who agreed that I didn’t have the authority to kick anyone out of the group.  That ended the group at Malvina’s and my friendship with Tom. Over the next 20 years we ran into each other twice, but we never talked.

Tom was a wonderful man and a great friend.  He died September 8th, 2020 at a hospice in Larkspur, California.

America will be saved by ending censorship.  For one reason. 

The anti-wokie arguments are powerful and convincing. Wokieness is ignorance and blindness at its core.  Censorship of knowledge and intelligence is the only reason wokieness survives in more than 10% of the population.

Xi Jinping gave a speech last year announcing his determination to return China to the values of Mao.  Our incompetent media did not cover it at the time. This year has seen his plan being implemented.

This will have several effects. 

• First, it will bring China’s economic growth to a near standstill, like Europe and every other country that tries to mix Marxism with modern commerce.
• Second, it will show, over five years, that the wokie ideas of equity and anti-corporate malice are neither feasible nor productive.
• Third, and most importantly it will enable America’s core commercial and Constitutional values to re-emerge.

During the forty years of the Cold War against the Marxist USSR, America rekindled the core values of the Constitution, open debate and support for modern commerce.  The dialectic of having a Marxist opponent generated American resistance to tyranny in the form of deeper Americanism.

The renewed Marxism of China will have the same effect.  During the Cold War, for example, the ACLU actually defended the 1st Amendment.  Americans defended and supported modern commerce (using the Marxist term ‘capitalism.’)  That was pure Hegelian dialectic.

The same will happen again.  Additionally because China is threatening free trade on the open seas, the core underlying value of ‘public accommodation’ will re-emerge as a global value. 

As I have argued many times, the core historic value of ‘public accommodation’  is the reason the digital media giants have no right to apply censorship on their websites.  Goodbye censorship over the coming five years. Public accommodation applies to all businesses that serve the public whether public or privately owned.

From my July 12, 2021 blog:

The whole debate on the mechanisms necessary to enforce the 1st Amendment to the Constitution and eliminate political censorship on public media seems to be based on a lack of understanding of the history of commerce.

The basic law that is being violated is the law of public accommodation, a law that is more than 2,300 years old.  The law was created by the Roman legislature two centuries before the CE common era to deal with the problem of ferries across rivers in Roman territory.  Ferry boat operators seem to have been applying their own discretion to what people and goods they would transport across rivers.  This stifled trade and created rewards and punishments that were entirely arbitrary, in the hands of a vital service.  

The Roman public accommodations law required ferry boat operators to carry everyone who wished to travel.

Now that law is obvious and our generation seems able to ignore an obvious reality.

Public Accommodation is the core legal idea that creates freedom of the seas laws that China doesn’t understand.  Wokies will find that Chinese antagonism on this issue will spread to many realms of legality, especially censorship.

I turned 21 in 1959. In truth, the computers at that time were not very impressive.  I used computers from that time forward.My first use of a computer was in my checking account at the Bank of America in San Francisco.  I was issued checks with electronic readable numbers on the bottom line that were processed by the first commercial computer called ERMA made by General Electric.  

I joined the bank in 1964 as one of the first two market research analysts in American banking. My first computer project was with a bank economist (I forget his name).  We jointly created a 50- line equation to model the U.S. economy.  Each line was put in the computer on punch cards and the data for 50 quarters was input the same way. We ran the cards on an IBM 360 machine for projections for 8 quarters into 1966.  We also tested the projections by going back to the early 1958-59 period.  The projections for the earlier periods were way off as were the future projections.  From that time until today, economic forecasting models have been nearly useless.  The same is even more true of global weather prediction models which are covered in many of my last few thousand blogs.

My next computer project at the bank was to input two eq
uations and data from several thousand Bankamericard (now called Visa) applications where we knew the outcome; either good payment history for one equation or bad payment history for the other.  Still punch card input into the IBM 360. The result was the discovery that credit card applications could reliably predict bad debt outcomes.  I used this to create a credit score for each new application, which was used by the Bankamericard departent from that time forward.  This was certainly one of the earliest credit scoring systems in business but I make no claim to inventing it.  We never publicized what Bankamericard was doing: wisely. I remember that not filling out the space for a phone number was one of the best predictors of credit outcome; bad.

One of my goals for marketing research was to find a way to synthesize a single account for each customer.  Some customers had multiple accounts including personal loans, home loans, checking, savings and more; often scattered among many branches.  I did the work manually for 40 Northern California branches. Then I tried the same thing on the computer.  While I could transform street descriptors (st., street, ln, lane, ave., avenue, etc) into a standard form, there were so many other irregularities that my best matches on the computer were only 90% compared to matching by hand-eye.  That was useless for 60 million bankwide accounts.  Until the standard use of Social Security numbers in banking, the computer was useless for matching accounts.

From the mid-1960s forward I did many survey research jobs outside of bank work and always used computers at public computer sharing companies to do the tabulating.  Questionnaires could be read by OCR machines.

By 1968 I had my own programmable 10- key calculator with 4 memory locations; it was in my office at the Bank of California.  I programmed it to take the day’s date and the user’s birth date and time of birth and generate a random number from 1 to 30. The number was then used to find a page in a horoscope book.  A steady stream of bank employees came to my office to get their daily horoscope.  Call me a cynic if you wish. 

By 1971 I wrote my first book, The Seven Laws of Money which I had typeset and laid out on a commercial computer.  The layout was on a magnetic disc.  When the book finally was published by Random House in early 1974, I had the book put on the SPIRES computer at Stanford. I hoped it would be read and commented on by computer users.  No one ever noticed or said anything.

By then, I was using a portable teletype keyboard with a one line monitor and a modem.  I connected to other modems with monitors (once to my office from Japan) as well as to the ARPAnet. Not much to connect to except for the bulletin board at the New Jersey Institute of Technology called EIES.  

I worked with the hippie techies at the Community Memory and Resource One.  It was a dream with little use.  On the other hand the Home Brew Computer Club in Menlo Park joined the Briarpatch Network (which I founded) and I consulted with them several times to help make the business work. I knew most of the people involved but not Jobs or Wozniak.  I did work a lot with John Draper (Cap’t Crunch) father of the black box and the blue box.

As soon as they came out I got a simple Radio Shack computer with tape cassette memory and then the first semi-portable Kaypro II in 1982.

I wrote my second book Honest Business on the Kaypro with Salli Rasberry.  One line at a time with only line editing. If I forgot to  ‘save’ regularly I often could lose a whole page and have to re-write it.

Many important developers of computer programs and internet protocols were members of the Briarpatch. Too many to remember.

When Stewart Brand created the Well in 1985, I joined and used it. My email as an early user was mp@well.com.  It still is.

Computers became ubiquitous by the 1990’s; I have used many different versions since then.

By the end of the 2000 teens, the computer based social media programs Google, Facebook, Twitter and Amazon had done more damage to the young United States of America, with censorship and utter stupidity, than any military attack in history. 

A tragic outcome to a lifetime of computers.  The destruction of the society that created them.

• Science is what we call the explanations for the many accurate measurements that technologists have discovered; especially physical constants.  I learned this from Niels Bohr in a class at the U. of Chicago.  Technology is a truly empirical field. Bridges fall down and engineers learn from it.
• Surgery is 2,500 years old.  It is truly a skill with knowledge and training that is passed on.  Medicine is recent, 100 years since sulfa-thiozole.  Still filled with witchcraft and voodoo.  Most medical published studies are statistically inadequate and poorly designed.
• Humans are primates and they only learn in childhood which ends at roughly age 23. Maybe 1 out of 300 people actually learn significantly new material after age 23.
• Modern commerce is 90% cooperation and 10% competition.
• Many cultural attributes are probably genetic.  Many cultures are old enough to inscribe some widespread behavior in the genes.
• Most management and personnel problems go away with time, but a few need immediate attention before they get worse.
• When measuring human or any real world phenomenon 95% is the equivalent of 100%, there is always noise in real world measurements.

The world has radically changed.  Suffering was a major part of human life for all of human history. Today it is a minor factor.

The amount of suffering individual humans experience has so dramatically changed that the magnitude can not be imagined nor the importance ignored. This has occurred in less than one century in much of the West.

In most of the world, two centuries ago, half of all children died before age 5 and one out of three women died in childbirth.  That meant death was common in almost every family. Children who survived commonly had two legs of different length and distorted feet. Everyone had painful teeth most of the time for most of their lives. 

Nearly everyone had smallpox, scarlet fever, diphtheria, chicken pox,mumps and measles all of which left facial scars and many children died.  Tuberculosis left many crippled and most who got it dead. The same with polio.

A wide range of injuries meant death; animal bites meant death from rabies, most serious cuts and gashes meant death from infection and sepsis.

Outside the agriculturally abundant United States, famine was the norm every five years along with war. 

Suffering from illness, disease and a variety of infirmities and pain was the norm of human life.

Most of this is gone.

What does this mean for humanity?  

• First we don’t notice the absence of suffering so we find trivial problems in our lives and magnify them. Many find their problems on soap opera TV.
• The role of religion, which was used to ameliorate suffering, has been drastically diminished.
• The Iron Curtain ended in 1991, the human-caused global apocalypse began with the Kyoto Protocols in 1992.  Armageddon replaced fear of nuclear bombs and physical suffering.

It is fairly obvious now that we have a new standard in restaurant service.

From now on most restaurants will use a QR reader for the menu. It will take longer for the very high end restaurants to use this tool.

Why?

The QR menu is a profitable innovative mechanism. 

I’ve consulted many restaurants beginning with one in 1960s San Francisco, Victoria Station, that was made up of railroad cars.  It became a successful global chain with 100 stores, following my guidance for the opening of the first one.  I told them to open with a wall-to-wall crowd of young people for the entire first month and to be very generous with drinks. 

That advice was the basis for great success. The three owners two decades later lost a bundle when trying to open and run a high- end eatery on the top floor of a Hollywood venue.  They didn’t understand that new market and never sought my advice.

I was also the father of Greens restaurant at Ft. Mason in San Francisco, which was the first high-end vegetarian restaurant in the U.S. Still full with over 180 seats nearly 40 years later.

A QR reader menu offers the following benefits:

• When the kitchen runs out of ingredients for a dish it can immediately be taken off the menu. Much less waste in meal planning for the kitchen which usually over orders.
• Many menus are expensive to produce; not true for a website which can be changed at will.
• The website can offer high quality and appetizing color photos of dishes, not possible or too expensive with printed menus. Videos are also possible.
• New and seasonal dishes can be added to the menu quickly and inexpensively.
• Price changes can be immediate.
• Vast background information can be available through the menu for select customers.
• In some cases ordering is possible without the use of as many wait staff. 
• The same or a similar menu can be used for pick-up ordering and delivery.

Those are just a few of the profitable reasons that QR menus are here to stay.

I’m reading Julian Baggini’s How the World Thinks. He compares our Western philosophy that is Greek based with Indian, Chinese and Japanese versions of similar thought. East and West seem incompatible.

The Indian, Chinese and Japanese thought is based on the existence of another realm that is ineffable.  The Western approach accepts only experience that is mutually agreeable to reasoning.  These seem irreconcilable.

I am a person, firmly grounded in Western thinking as a Jew.  I am also a practicing Zennie.

I have found a reconciliation that is satisfactory to me.  I have been sitting zazen daily for decades and sat without interruption for weeks in sesshins; I am comfortable with the non-mind, non-linguistic world of the ineffable. There is an immediacy to the world that I experience. I live in the present.

I owe it to the late Rabbi Alan Lew for the reconciliation he taught .  The basic Jewish prayer is the Barucha. Alan taught me to read this as Blessed are thou the sound that fills the universe. Transliterated from Hebrew as: Baruch Atah Adonai, Eloheinu Melech Haolam.

He didn’t need to explain the other great daily prayer, the Shema. Hear o Israel, the sound that fills the universe is One.

So we Jews have a way to treat God as an agreed upon reality.  The 3k cosmic background radiation, a remnant of the Big Bang that pervades the universe is God.   

It is interesting that one of the people who found the 3k background radiation was Arno Penzias (co-founded with Robert Wilson) whose grandfather was a rabbi and whose daughter is a rabbi. Arno escaped from Hitler’s Germany on the Kindertransport.

When my mind is blank in zazen I hear the sound of the universe, it pervades me and is ineffable.  East and West in one place, one person.

I am reading Niall Ferguson’s Doom.  I have learned three surprising things so far. Wars, revolutions and major social changes were shaped by plagues and pandemics.  I need to keep a list of pandemic dates handy to understand a force long ignored in teaching history.  Many murderous pogroms of Jews were a Christian response to plagues and pandemics.

Second, the end of the Cold War was in large part due to the incompetence and maleficent's of the USSR’s administrative apparatus. That gives me hope because most of the agencies of the government in the U.S. are totally incompetent.

Third and most important, the reason for the title of this blog, in 1957 I lived through a flu pandemic nearly identical to the current Covid 19, but there was no national hysteria about social distancing, empty schools, face masks and the whole tyrannical apparatus we globally experienced last year.

I, like most intelligent people, do not trust any news medium or agency of government.  What I do trust are data on murders and deaths because it is hard to hide a large number of dead bodies or create them ex nihilo. Therefore I looked at the 1957 flu pandemic in terms of excess deaths for the years 1957 and 1958 compared to the years before and after.  We had 20% more deaths in those years than the years before and after.

While we yielded to a totalitarian health regime in 2020, the excess deaths over the previous year was 18%.  One epidemic, 1957,  was virtually unnoticed; the latest one, with many reliable treatments, was a major social devastation.

In a recent blog I said that the field of psychology, which is built on data from experiments on 17-year old college students doing tests on supercilious questions, is not science.  The methodology is nonsense.

To build a science on data about human psychology, the approach would have to be very different.  I have done such research and will elucidate here the correct way to do it.

I created a model of such proper scientific research in the mid-1980s.  I invited 12 people I knew, but who didn’t know each other, to my house.  When they came in I had them put on a large number label and asked them not to say anything to anyone else.  When they were all seated around my living room I had them fill out a page that had all the combinations of numbers 1-2, 1-3 etc and rate them as more alike or less alike. Then I had them go to a table with refreshments and before leaving the living room I had them put on a new label A to L . When they returned I asked each to give a short description of themself and then had them all fill out a new page with A-B, A-C etc rated the same way, more alike or less alike.  

The data was tabulated and analyzed on an mdscal program. The results are multidimensional lines.

The same approach can be used in five cities using random subjects. Boston, New York, Atlanta, Fresno and San Francisco.

Participants can be shown instruments such as the Rorschach test and follow-up with questions to test the theoretical dimensions reflected in the prior tests.

This would be the beginning of a scientific basis for psychological data gathering.  No presumptions.  Most negligible preconception bias conceivable.