Aaron > Aaron's Quotes

“I cannot leave this subject as though its just treatment wholly depended either on our own pledges or economic facts. The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable, - abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe. Some preach it in the name of Justice. In the great events of man's history, in the unwinding of the complex fates of nations Justice is not so simple. And if it were, nations are not authorized, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents of rulers.”
― John Maynard Keynes, The Economic Consequences of the Peace

“The businessman is only tolerable so long as his gains can be held to bear some relation to what, roughly and in some sense, his activities have contributed to society.”
― John Maynard Keynes

“Too large a proportion of recent "mathematical" economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.”
― John Maynard Keynes

“When the final result is expected to be a compromise, it is often prudent to start from an extreme position.”
― John Maynard Keynes, The Economic Consequences of the Peace

“But my lord, when we addressed this issue a few years ago, didn't you argue the other side?" He said, "That's true, but when I get more evidence I sometimes change my mind. What do you do?”
― John Maynard Keynes

“Markets can remain irrational longer than you can remain solvent.”
― John Maynard Keynes

“The political problem of mankind is to combine three things: economic efficiency, social justice and individual liberty.”
― John Maynard Keynes

“Worldly wisdom teaches that is it is better for reputation to fail conventionally than to succeed unconventionally.”
― Richard H. Thaler, Misbehaving: The Making of Behavioural Economics

“That's the myth of it, the required lie that allows us to render our judgments. Parasites, criminals, dope fiends, dope peddlers, whores--when we can ride past them at Fayette and Monroe, car doors locked, our field of vision cautiously restricted to the road ahead, then the long journey into darkness is underway. Pale-skinned hillbillies and hard-faced yos, toothless white trash and gold-front gangsters--when we can glide on and feel only fear, we're well on the way. And if, after a time, we can glimpse the spectacle of the corner and manage nothing beyond loathing and contempt, then we've arrived at last at that naked place where a man finally sees the sense in stretching razor wire and building barracks and directing cattle cars into the compound.

It's a reckoning of another kind, perhaps, and one that becomes a possibility only through the arrogance and certainty that so easily accompanies a well-planned and well-tended life. We know ourselves, we believe in ourselves; from what we value most, we grant ourselves the illusion that it's not chance in circumstance, that opportunity itself isn't the defining issue. We want the high ground; we want our own worth to be acknowledged. Morality, intelligence, values--we want those things measured and counted. We want it to be about Us.

Yes, if we were down there, if we were the damned of the American cities, we would not fail. We would rise above the corner. And when we tell ourselves such things, we unthinkably assume that we would be consigned to places like Fayette Street fully equipped, with all the graces and disciplines, talents and training that we now posses. Our parents would still be our parents, our teachers still our teachers, our broker still our broker. Amid the stench of so much defeat and despair, we would kick fate in the teeth and claim our deserved victory. We would escape to live the life we were supposed to live, the life we are living now. We would be saved, and as it always is in matters of salvation, we know this as a matter of perfect, pristine faith.

Why? The truth is plain:

We were not born to be niggers.”
― David Simon, The Corner: A Year in the Life of an Inner-City Neighborhood

“Human beings, viewed as behaving systems, are quite simple. The apparent complexity of our behavior over time is largely a reflection of the complexity of the environment in which we find ourselves.”
― Herbert A. Simon, The Sciences of the Artificial

“The liberty of a democracy is not safe if the people tolerated the growth of private power to a point where it becomes stronger than the democratic state itself. That in its essence is fascism: ownership of government by an individual, by a group, or any controlling private power.”
― Franklin D. Roosevelt

“′Classic′ - a book which people praise and don't read.”
― Mark Twain

“Whenever you find yourself on the side of the majority, it is time to reform (or pause and reflect).”
― Mark Twain

“I have never let my schooling interfere with my education.”
― Mark Twain

“Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.”
― Mark Twain

“Reader, suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.”
― Mark Twain

“I did not attend his funeral, but I sent a nice letter saying I approved of it.”
― Mark Twain

“God created war so that Americans would learn geography.”
― Mark Twain

“When I was a boy of 14, my father was so ignorant I could hardly stand to have the old man around. But when I got to be 21, I was astonished at how much the old man had learned in seven years.”
― Mark Twain

“It is not the size of the dog in the fight that counts, but the fight in the dog that wins.”
― Arthur G. Lewis, Stub Ends of Thought and Verse

“You believe in a book that has talking animals, wizards, witches, demons, sticks turning into snakes, burning bushes, food falling from the sky, people walking on water, and all sorts of magical, absurd and primitive stories, and you say that we are the ones that need help?”
― Mark Twain

“History doesn't repeat itself, but it does rhyme.”
― Mark Twain

“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.”
― Mark Twain

“In general, the deployment of austerity as economic policy has been as effective in bringing us peace, prosperity, and crucially, a sustained reduction of debt, as the Mongol Golden Horde was in furthering the development of Olympic dressage.”
― Mark Blyth, Austerity: The History of a Dangerous Idea

“The “German problem” after 1970 became how to keep up with the Germans in terms of efficiency and productivity. One way, as above, was to serially devalue, but that was beginning to hurt. The other way was to tie your currency to the deutsche mark and thereby make your price and inflation rate the same as the Germans, which it turned out would also hurt, but in a different way.

The problem with keeping up with the Germans is that German industrial exports have the lowest price elasticities in the world. In plain English, Germany makes really great stuff that everyone wants and will pay more for in comparison to all the alternatives. So when you tie your currency to the deutsche mark, you are making a one-way bet that your industry can be as competitive as the Germans in terms of quality and price. That would be difficult enough if the deutsche mark hadn’t been undervalued for most of the postwar period and both German labor costs and inflation rates were lower than average, but unfortunately for everyone else, they were. That gave the German economy the advantage in producing less-than-great stuff too, thereby undercutting competitors in products lower down, as well as higher up the value-added chain. Add to this contemporary German wages, which have seen real declines over the 2000s, and you have an economy that is extremely hard to keep up with. On the other side of this one-way bet were the financial markets. They looked at less dynamic economies, such as the United Kingdom and Italy, that were tying themselves to the deutsche mark and saw a way to make money.

The only way to maintain a currency peg is to either defend it with foreign exchange reserves or deflate your wages and prices to accommodate it. To defend a peg you need lots of foreign currency so that when your currency loses value (as it will if you are trying to keep up with the Germans), you can sell your foreign currency reserves and buy back your own currency to maintain the desired rate. But if the markets can figure out how much foreign currency you have in reserve, they can bet against you, force a devaluation of your currency, and pocket the difference between the peg and the new market value in a short sale.

George Soros (and a lot of other hedge funds) famously did this to the European Exchange Rate Mechanism in 1992, blowing the United Kingdom and Italy out of the system. Soros could do this because he knew that there was no way the United Kingdom or Italy could be as competitive as Germany without serious price deflation to increase cost competitiveness, and that there would be only so much deflation and unemployment these countries could take before they either ran out of foreign exchange reserves or lost the next election. Indeed, the European Exchange Rate Mechanism was sometimes referred to as the European “Eternal Recession Mechanism,” such was its deflationary impact. In short, attempts to maintain an anti-inflationary currency peg fail because they are not credible on the following point: you cannot run a gold standard (where the only way to adjust is through internal deflation) in a democracy.”
― Mark Blyth, Austerity: The History of a Dangerous Idea