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What We Read Today 01 March 2015

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

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The 25 highest-paying jobs with the most openings right now (Julie Bort, Business Insider)  Number 25 is Sales Engineer with 5,508 openings at an average base salary more than $90,000.  Here is the summary description from job-hunting site Glassdoor:

A sales engineer is the technical resource for the sales force that helps them make sure bids and contracts meet the customers' technical specifications.

Number 1 is Physician with 7,984 openings at an average base salary of $212,270.

There are some surprises in between. 

  • Not suprising is that technology positions top the list with 9 positions; but what is surprising, perhaps, is that IT (information technlogy)  and software dominate the category.
  • Business and marketing is a strong second on the list with 7 job types.
  • Healthcare is third with 4 job types.
  • FIRE (finance, insurance and real estate) has 3 jobs (accounting is included here).
  • The last 2 job classifications we group in a category labeled "other".  Try guessing what they might be before checking the source at Business Insider.

Articles about events, conflicts and disease around the world

U.S.

UK

Denmark

Estonia

Algeria

Afghanistan

North Korea

Ukraine

Russia

Hong Kong


Stock Market Indicators:  Fundamental, Sentiment & Technical (Yardini Research)  Is there any chance that New York Stock Exchange volume may have bottomed?  Econintersect is suspicious of any conclusion from a data stream this volatile.

NYSE.volume.1999.2015


Benjamin Franklin and the Birth of a Paper Money Economy (Farley Grubb
Professor of Economics, University of Delaware, and National Bureau of Economic Research, 30 March 2006)  Hat tip to Roger Erickson. There are two eras of paper money in what is now the United States.  The first began approximately in 1690 and ended in 1789 with the adoption of the current Constitution of the United States.  The second is from 1789 to date.

In the first era the legislatures of the various colonies (and eventually the Continental Congress for the colonies becoming states collectively) issued paper currency as needed for the needs of commerce in the colonies and then states.  When the U.S. Constitution was written in 1787 (and adopted by 1789) the power of legislative issuance of money was ended leading to the system in place for the past 225 years where nearly all money is issued by privately owned banks which are government chartered and regulated.

The issuance of money by private banks has been in the form of credit backed by assets pledged as collateral by the parties funded by the banks or by commodities, commonly gold or silver, held as reserves by the banks.

Farley reviews the history of colonial paper money and the association of Benjamin Franklin with that monetary system.  Farley asserts that Franklin was the preeminent expert on money in the colonial period in America.  Farley also considers Franklin as one of paramount influence over the course money policy in Pennsylvania if not over all the colonies.  Franklin has left a record of his thinking and action via pamphlets he wrote at the time.

Franklin argued that a lack of money carried a heavy cost because it reduced the ocassion of commerce to the level of barter which is very inefficient.  He saw paper money as the solution to this problem.  He recogniized the need to have enough money to meet the needs of the economy but not so much that the value would be diminished.  And indeed lack of control of paper money did lead to significant depreciation events in New England and South Carolina.  Franklin said that proper control of the issuance of moeny was a crucial factor. 

Here is a section from Farley's essay:

First, Franklin points out that gold and silver are of no permanent value and so paper monies linked to or backed by gold and silver, as with bank paper money in Europe, are of no permanent value. Everyone knew that over the previous 100 years the labor value of gold and silver had fallen because new discoveries had expanded supplies faster than demand. The spot value of gold and silver could fluctuate just like that of any other commodity and could be acutely affected by unexpected trade disruptions. Franklin observes in 1729 that “we [Pennsylvanians] have already parted with our silver and gold” in trade with England, and the difference between the value of paper money and that of silver is due to “the scarcity of the latter.”

Second, Franklin notes that land is a more certain and steady asset with which to back paper money. For a given colony, its supply will not fluctuate with trade as much as gold and silver do, nor will its supply be subject to long-run expansion as New World gold and silver had been.

Finally, and most important, land cannot be exported from the province as gold and silver can. He then points out that Pennsylvania’s paper money will be backed by land; that is, it will be issued by the legislature through a loan office, and subjects will pledge their lands as collateral for loans of paper money. Finally, Franklin argues that “coined land” or a properly run land bank will automatically stabilize the quantity of paper money issued — never too much and never too little to carry on the province’s internal trade. If there is too little paper money, the barter cost of trade will be high, and people will borrow more money on their landed security to reap the gains of the lowered costs that result when money is used to make transactions. A properly run land bank will never loan more paper money than the landed security available to back it, and so the value of paper money, through this limit on its quantity, will never fall below that of land. If, by chance, too much paper money were issued relative to what was necessary to carry on internal trade such that the paper money started to lose its value, people would snap up this depreciated paper money to pay off their mortgaged lands in order to clear away the mortgage lender’s legal claims to the land. So people could potentially sell the land to capture its real value. This process of paying paper money back into the government would reduce the quantity of paper money in circulation and so return paper money’s value to its former level.

Automatic stabilization or a natural equilibrium of the amount of paper money within the province results from decentralized market competition within this monetary institutional setting. Fluctuations in the demand for money for internal trade are accommodated by a flexible internal money supply directly tuned to that demand. This in turn controls and stabilizes the value of money and the price level within the province.

Farley points out that colonies sometimes financed military expenditures with large amounts of paper money issuance and then had to "redeem" said excess through subsequent taxation.


EURUSD Bear Bias Intact; March Risk Through 1.1000 (Steve Miley, The Market Chartist)  Annotation added to this 17-year chart to emphasize the 7-year down trending trading channel.The bottom of the channel is very close to the author's 1.1000 target.

EUR.USD.Monthly.1998.2015.annotated


Net Neutrality Explained (Source unknown)  Hat tip to Roger Erickson.  This is in the member only section because we are not sure of attribution and copyright status.

net.neutrality.explained



Other Economics and Business Items of Note and Miscellanea

Will YCharts Eventually Overtake the Bloomberg Terminal? (Michael Grogan, First Class Analytics)  Michael Grogan contributes to GEI.

Wal-Mart, the Market Combine in Minimum-Wage Hike (The Wall Street Journal)  Author invokes the "rising tide raises all boats" bromide.  Econintersect:  More like an added drop raises the contents of a cup.

Buffett looks to succession, signals future growth problem (Reuters)  Warren says not to expect 50 more years like the last 50.

Fed’s Williams Sees Full U.S. Employment by Year End (The Wall Street Journal)  He says that 5% unemployment will be "full employment" and acheived in 2015.  But if the labor force for age 25-64 had the same participation rate as in 2000, there would be an additional 6.7 million people in the labor force and all would be unemployed.  On that basis the unemployment rate wold not be 5%, but more than 9%.

Structural Trends in Employment by Age Group (Advisor Perspectives dshort.com)  Doug Short is a regular contributor to GEI.  The labor force participation age 25-64 has declined by 4.0 percentage points (from 87.9% to 83.9%) since 2000.  That difference is about 6.7 million people in 2015.

Singletary: College-bound teen needs Economics 101 (The Dallas Morning News)

3 Lessons Monopoly Can Teach Us About Finance (Everything Finance)  Paraphtrasing the author:  Money not used is money wasted - and using it wisely helps as well.

Real World Economics: Using tax to capture increased value an ideal, but tricky, feat (Twin Cities Pioneer Press)

Impact of pandemic control over airport economics: Reconciling public health with airport business through a streamlined approach in pandemic control (Science Direct)



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