When Memory Commits an Injustice – By Jonah Lehrer

Eyewitness mistakes lead to tragic errors in court, but new methods could help

The biggest lie of human memory is that it feels true. Although our recollections seem like literal snapshots of the past, they're actually deeply flawed reconstructions, a set of stories constantly undergoing rewrites.

Consider our collective memories of 9/11. For the last 10 years, researchers led by William Hirst of the New School and Elizabeth Phelps of New York University have been tracking the steady decay of what people recall about that tragic event. They first quizzed people shortly after the attacks, then after one year, and found that 37% of the details had already changed. Although the most recent data have yet to be published, they're expected to reveal that the vast majority of remembered "facts" are now make-believe.

If memory flaws only affected our personal past, that would be bad enough. But the problems created by our mistaken recollections affect all of society. More than 75,000 prosecutions every year are based entirely on the recollections of others. While perjury is a felony, the overwhelming majority of eyewitness errors aren't conscious or intentional. Rather, they're the inevitable side effects of the remembering process.

Henry Hazlitt on the troubles of even a mild inflation

Via the WSJ:

Even a relatively mild inflation distorts the structure of production. It leads to the over-expansion of some industries at the expense of others. This involves a misapplication and waste of capital. When the inflation collapses, or is brought to a halt, the misdirected capital investment—whether in the form of machines, factories or office buildings—cannot yield an adequate return and loses the greater part of its value.

Nor is it possible to bring inflation to a smooth and gentle stop, and so avert a subsequent depression. It is not even possible to halt an inflation, once embarked upon, at some preconceived point, or when prices have achieved a previously-agreed-upon level; for both political and economic forces, will have got out of hand. . . .

For . . . the causation is never a merely mechanical one. You cannot, for example, say in advance that a 100 per cent increase in the quantity of money will mean a 50 per cent fall in the value of the monetary unit. The value of money, as we have seen, depends upon the subjective valuations of the people who hold it. And those valuations do not depend solely on the quantity of it that each person holds. They depend also on the quality of the money. In wartime the value of a nation's monetary unit, not on the gold standard, will rise on the foreign exchanges with victory and fall with defeat, regardless of changes in its quantity. The present valuation will often depend upon what people expect the future quantity of money to be. And, as with commodities on the speculative exchanges, each person's valuation of money is affected not only by what he thinks its value is but by what he thinks is going to be everybody else's valuation of money.

All this explains why, when super-inflation has once set in, the value of the monetary unit drops at a far faster rate than the quantity of money either is or can be increased.

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Related books:

Economics in One Lesson

What You Should Know About Inflation

Robert Shiller on 'Finance and the Good Society' (video)

April 16 (Bloomberg) -- Robert Shiller, an economics professor at Yale University, talks about the U.S. financial system and his book "Finance and the Good Society." He speaks with Tom Keene on Bloomberg Television's "Surveillance Midday."

Chapter 1 of World Right Side Up - By Chris Mayer

One thought always strikes me in my travels. I’ll be sitting in a comfortable bistro in Medellín with its doors open to the warm night air wafting in gently from a quiet street, in a restaurant on a man-made island gazing up at the tallest tower in the world twinkling on a starless night in Dubai, at a bar in Cape Town, in a noodle shop in Beijing, or countless other places around this ever-fascinating planet of ours. And the thought will hit me.

If I close my eyes, I could easily imagine myself in New York, Washington, D.C., or any number of American cities. Of course, each of these places is different from each other in many ways, and yet they are much the same.

People are people around the world. They like many of the same things. They want to have a better life. They want to have a safe home, wear clothes they like and have friends. They want to have leisure time and eat well. They all want something.

They share all the same traits that make us human. People everywhere are humble and vain, generous and greedy, wise and foolish, and many other qualities besides. They’ve made mistakes. They have hopes and dreams.

Yet great disparities and differences exist, too.

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Book: World Right Side Up

Michael Hudson: Debt: The Politics and Economics of Restructuring

Link

George Soros: Challenging the Foundation

Link

Steve Keen: Minskian Perspective on Instability in Financial Markets

Link

Nassim Taleb's Talk at Princeton

Found via Farnam Street. This took place on April 10th.

Link

Leucadia 2011 Letter to Shareholders

Usually we begin our Letter to Shareholders with a recap of last year’s earnings, but this year all business including Leucadia’s plays second fiddle to the sad state of our body politic or more simply put the mess in Washington. It is true that unemployment is down and the economy is showing signs of a pickup, but the recovery is fragile and we think quite prone to relapse back into recession. The recovery seems more beholden to money printing by the Federal Reserve than to a growing strength in the underlying economy. It is ironic that the financial shenanigans that begat the financial crisis in the first place are being treated and ostensibly cured by financial shenanigans of our own government. Our national debt has gone up two and a half times in twelve years and government expenditures are now consuming 25% of GDP, up from a more normal 20%. All of the above is not sustainable and when interest rates get back to normal we’ll be the headline, not Greece. Without fixing our fiscal infrastructure high inflation seems inevitable. One of us loves GLD the other farmland.

In the face of this compounding wall of debt further tax cuts seem as absurd as the dream of cutting in one year annual government spending by $500 billion. And any plan that doesn’t attack entitlements is not a plan. One of us leans to the right and the other to the left, but we are sure we could agree on an imperfect compromise solution to our fiscal mess. Like children on the playground, no one gets their way all the time.

Democrats and Republicans in Washington remind us of the days of the Cold War when Mutual Assured Destruction resulted in a stalemate between Russia and the U.S. In this new cold war between Democrats and Republicans we are the hostages to the stalemate. Last year we recommended the Simpson-Bowles Commission report as a start on a path to getting our economy back in balance. We do so again.

John Mauldin: The War for Spain

I fully intended to ignore Spain this week. Really, truly I did. I had my letter all planned, but then a few notes drew my attention, and the more I reflected on them, the more I realized that the inflection point that I thought the ECB had pushed down the road for at least a year with their recent €1 trillion LTRO is now rushing toward us much faster than ECB President Draghi had in mind when he launched his massive funding operation. So, we simply must pay attention to what Spain has done this week – which, to my surprise, seems to have escaped the attention of the major media. What we will find may be considered a tipping point when the crisis is analyzed by some future historian. And then we'll get back to some additional details on the US employment situation, starting with a few rather shocking data points. What we'll see is that for most people in the US the employment level has not risen, even as overall employment is up by 2 million jobs since the end of the recession in 2009. And there are a few other interesting items. Are we really going to see 2 billion jobs disappear in the next 30 years?