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My Favorite Chart on Earth

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Re: My Favorite Chart on Earth

#31

Post by doron »

I wonder how the graph will continue if we add one possible scenario.

That the war on terror will last for decades to come, escalating conflicts in other locations, say Pakistan or somewhere in the gulf (again)

World wide war without end.. The assertion that the war in Afghanistan is winding down, doesn't strike me as accurate.

In addition the period after the second world war, was marked by a US economic dominance, as Europe was in ruins and the soviet block stifled economic development in almost half the globe for several decades including the Vietnam period until glasnost started to get a footing (in that curious uptick around 1988 perhaps), right till the fall of the Berlin wall.

Things are different now. slightly.

Re: My Favorite Chart on Earth

#32

Post by harshpotatoes »

aristus wrote: post #2

This suggests that we are in for a long period of inflation.

True, but look at the bright side, following the long period of inflation there will be fantastic growth! But really, are any of us keynesians surprised?

I'm more apathetic to this surprise. Everything looks like linear growth when plotted on a long enough time line, in log log with a fat marker.

Re: My Favorite Chart on Earth

#33

Post by [deleted] »

edge17 wrote: post #15
charlesju wrote: post #14

I love how economists make all sorts or ridiculous claims by looking at the historical stock market. Two or three data points is not a trend, if you have 3 users and they all register, that doesn't mean your conversion rate is 100%. Sometimes we forget that 100 years of data is nothing compared to human history and does not signify anything about the future.

remember Moore's law? that was based on two or three data points :)

[deleted]

Re: My Favorite Chart on Earth

#34

Post by stoney »

ars wrote: post #18
stoney wrote: post #12

Earlier quoted context omitted.

Is there a simple explanation for non-economics types like me of why the linear graph is misleading and the log one is not?

Yes, here are a few explanations: Because of compound interest money grows exponentially - the more money you have, the faster it grows. Suppose I start with earning 10,000 a year, but my neighbor earns 20,000. Now suppose we both each 5% raises each year. After 10 years I earn 16288, and he earns 32577. Now graph my income over the years and look at the gap between our incomes. In a linear graph the separation keeps…

Great explanation, thanks! It's that miracle of compound interest turning up again.

Re: My Favorite Chart on Earth

#35

Post by edge17 »

Symmetry wrote: post #22
knowledgesale wrote: post #19

Earlier quoted context omitted.

a reference to back up this particular claim maybe?

Moore's diagram's in his origonal paper, presumably. However, while he only plotted a few data points he presumably used his experience with the semi-conductor industry in general and so actually had more. ftp://download.intel.com/museum/Moores_Law/Articles-Press_Releases/Gordon_Moore_1965_Article.pdf

most industry insiders will tell you that Moore's law is a marketing law that drives timelines more than anything else.

sure he used his experience, but CEO's have also been known to make wild and extravagant statements :)

Re: My Favorite Chart on Earth

#37

Post by brc »

All very interesting but the author fails to discuss the survivor bias inherent in the Dow Jones Index (or any other index, for that matter). This is the results of the companies that survived. A lot of companies have dissappeared over this time, both through poor performance or going bankrupt. In fact, GE is the only company that has remained on the index since it's inception.

So unless you're buying index funds that track the DJIA, the chart loses it use. Because when we look at this, we see that the stock market always goes up with time. But what we are looking at is the fact that the 30 largest/most successful companies in the USA keep pace with inflation. Which is hardly a shock.

Note that I'm not arguing some of the authors points, I'm just encouraging an open mind when viewing graphics like this - you've got to know what you're looking for.

Re: My Favorite Chart on Earth

#38

Post by randallsquared »

TomOfTTB wrote: post #30
randallsquared wrote: post #29

Earlier quoted context omitted.

Also saying "The war on terror" is kind of misleading since troop levels have varied greatly. Only if you believe the cause is troop levels. There are lots of things about a war that could be responsible for a correlation that are not directly correlated with number of troops deployed.

The author is contending that armed conflicts have an impact on the economy. I'm offering other conflicts with similar troop levels to disprove that theory. I'd be open to any other factors you think distinguishes the Afghan conflict from these other conflicts but just saying there could be other unnamed factors doesn't further the debate.

Thing is, I don't necessarily buy the original authors assertion. It's just that there are lots of other things that could easily have an effect, such as investor mood, government spending tie-ins like growing debt (or debt ratio) and inflation, diversion of investor money from things with higher growth potential into things that have immediate profits, like Xe...

None of those necessarily have a great deal to do with troop strength, but they do all seem to correlate with (some) wars.

Re: My Favorite Chart on Earth

#40

Post by ramchip »

charlesju wrote: post #14

I love how economists make all sorts or ridiculous claims by looking at the historical stock market. Two or three data points is not a trend, if you have 3 users and they all register, that doesn't mean your conversion rate is 100%. Sometimes we forget that 100 years of data is nothing compared to human history and does not signify anything about the future.

The author is not an economist.

Just like people writing about science in the newspapers are rarely actual scientists, people writing about economy in the news are rarely economists.

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