Tuesday, January 19, 2010

The Truth, the whole Truth, . . . ah, you get it!

I feel like Mark Thoma, and would not inflict This on my Readers except that the material is relatively important; think that the Test on the material will come in the future, and will likely cost the Reader real Money. The real lesson is Borrowing does increase the Price of Products, and Pricing rises with the degree of margin looseness which is allowed. The Point not discussed adequately is the fact that the effect of leverage is accumulative in nature, as it averages the level of optimism without constraint; meaning that pessimism is discounted but not effectively. The trouble results in the fact that the money market does not utilize the actual Average, but the more erratic Mean without recourse to pessimism; all this insisting the Cost of any form of Collateral will be less that the nominal Price. The following article within the Post states that loans are tied to one another, as leverage has foundation upon leveraged collateral. They suggest that regulating leverage can be accomplished by limiting liquidity. I cannot see the connection to this idea in actual fact; dismissing the concept that stability can be afforded by limiting the magnitude of the total loans which can be extended on the collateral; the instability being introduced by the degree of leverage, not by the quantity of loans made by the same leverage. Of course, there are Many who say I don’t understand these things!

We find this article about the effectiveness of propaganda. It is a relatively good Interview within, but the real effect of propaganda may escape. Propaganda is basically a methodology which introduces a logical alternative shaped to promote some objective belief. It may be True or False, or contain elements of each; all of which does not highlight the purpose behind the propaganda. The later is intended to offer an alternative explanation (I like to say alternate Universe) based upon the hidden motivation of hidden Participants; the later of which are all the population who are condemned–whether they be some minority, or simply a current leadership. The real grasp of the essential of propagandist argument comes in determination of the motivation sequence of the propagandists themselves; asking what led them to devise the alternative explanation. It is here that one can grasp some estimation of the truth of the propagandist statement.

It is like the discussion within the article of health costs. The later prices will always be determined by the interplay of Supply and Demand, while the discussion is introduced to shape both elements of the Supply and Demand curves. Care remains forefront to avoid discussion of expansion of health providers and finding Cost curtailments for the provision; all because Most of the discussion is generated by the health care providers. Such propaganda is directed at generation of health care Demand by Consumers, pushing the Curve outward; all the time insisting that the Supply curve should advance only upward. No one suggest that the Demand curve can be pushed downward, or that the Supply curve can be pressed lower and to the Left. The actual fact stands about 30% of health care Costs could be eliminated without any impact upon health care outcomes, through more accurate use of health care elements to eliminate unwarranted medical procedures. A second major area of resource should come in the arena of over-the-counter medication; resultant shock treatment from drug reactions being much cheaper than the current Proscription debacle–one of those areas where we should imitate Mexico; only about 1 in 160k purchases ever have any resultant adverse reaction. lgl

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