9/22/2021

It’s axiomatic that prudent investors should hold diversified portfolios; and while I don’t disagree with this principle, I feel that this objective is too frequently misapplied. Under the guise of seeking diversification, too many people include too much garbage in their holdings.

Modern portfolio theory postulates that investors should seek to compose a mix of investments that will optimize their expected return for a given level of risk. To that effect, practitioners often add uncorrelated asset classes to the mix of investments as a way to affect this desired diversification. This intention serves as the basis for the inclusion…


9/14/21

It’s possible that the world is waking up to the onerous energy demands involved in supporting Bitcoin and other cryptocurrencies, but perhaps not soon enough.

I’m sure I’m not alone in feeling like this energy aspect of cryptocurrencies developed out of nowhere. When Bitcoin just got started, the associated energy usage was trivial; but these days, the energy requirements are massive. One comparison suggests that Bitcoin uses more than a third of the energy used for residential cooling. …


9/6/21

I continue to react to the hype and promotion of cryptocurrencies with horror and disbelief as traditional, seemingly reputable companies enter into crypto-related activities. As an economist, part of me gets it, but the better part of me rues these developments.

The purported rationale for cryptocurrencies is to democratize commerce by eliminating the oversight and involvement of government and traditional banking institutions. I don’t buy it. To me, this rationale is little more than a smoke screen, serving as a way for crooks and charlatans to launder money or fleece the ill-informed.

Developers of these digital currencies clearly saw…


8/26/21

So the John Lewis Voting Rights Advancement Act passed in the House this week by a vote of 219 to 212. That’s 219 Democrats in favor; 212 Republicans against. Hard to understand how this bill could generate such a party-line divide, particularly since the 1965 Voting Act was unanimously reauthorized in the Senate in 2006. I’m trying to understand what could possibly be in this bill that would foster such a dramatic change of heart on the part of Republicans.

The objectives of the bill are clearly stated: to restore Federal oversight to states and localities that have a…


8/19/21

Headlines this week are about as discouraging as can be. The tragedies that have befallen Afghanistan and Haiti and the worldwide resurgence of Covid-19 stand out; but on the home front, we’re confronted by a series of misdirected state-wide initiatives seeking (a) to inhibit the institution of mask mandates, (b) to impose chilling restrictions on school curricula and how that curricula can be taught, and (c) to obstruct voter access or otherwise politicize election oversight, purportedly to protect the integrity of elections but more likely to disenfranchise eligible voters. …


8/10/21

As anyone paying any attention knows, an effort is underway to draft what will likely be a second, larger infrastructure bill, projected to come in with a price tag of as much as $3.5 trillion. That legislation, if it ever comes to fruition, is likely to contain billions of dollars allocated to mitigating the effects of climate change.

It remains to be seen what the Congress will pass, but it appears that in connection with the climate issues, the legislation will likely support initiatives spelled out in a White House fact sheet relating to expanding electric vehicle charging stations…


8/3/21

I’ve been trying to understand the rationale underlying people’s decision not to take a Covid-19 vaccination; and I can’t — except possibly for a tiny portion of the population of those eligible. I had been under the impression that anyone with a compromised immune system might legitimately be wary of the vaccine and elect to pass on it; but that caution may be overstated if I am to believe the CDC’s website.

Although I’m quite sure that some readers will dismiss the CDC guidance out of hand, I’m ready to ignore those partisans’ inclinations. Admittedly, the CDC’s messaging had…


7/13/21

I’ve been reading about the planned summit with 20 major countries scheduled for October. At that time, high on the US agenda will be the imposition of a 15 percent minimum tax rate, worldwide. Presumably, this measure is intended to address the problem of certain countries setting themselves up as tax havens, the consequences of which include (a) allowing multinational corporations to significantly reduce their tax liabilities and (b) fostering some incentives for businesses to offshore some portion of their economic activity. While such an adjustment might seem to address both concerns, in fact, it’s wrong-headed. …


7/7/21

Shortly before the July 4th holiday, the NY Times posted a video that chronicled the January 6th assault on the Capitol. If you haven’t viewed this video, I highly recommend it. It’s not easy viewing, and it requires 40 minutes of your time; but if you give a damn about the state of our nation, it’s worth watching.

I’ve heard many commentators express relief about how close we came to losing our democracy; but for me, in the aftermath of watching that video, the use of the past tense in this assessment seems premature. The mob mentality shown during…


6/29/21

Largely motivated to enhance US competitiveness with China, the Senate passed the Endless Frontier Act earlier this month. If signed into law, that bill would invest about $250 billion over the next five years in scientific research. The vote was 68–32 in support of the legislation. More recently, just this week the House passed its bill on science funding by a voice vote. This legislation provided funding for the Department of Energy to improve the competitiveness of the US by supporting research and development in a host of science and engineering disciplines. …

Ira Kawaller

Kawaller holds a Ph.D. in economics from Purdue University.

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