We Need to Leave Facebook

I just was locked out of Facebook for 24 hours over what they considered to be a 'hate speech' comment.  I will explain it here for fear that if I tried to explain it on Facebook I would be censored again and be put on a road to permanent banishment.

Many of my Facebook friends know that I spend much of the year in Albania.  One of them commented with a map that showed the mean IQ of the Balkan nations.  Albania was shown on the map as 89.  I confessed that, yes, if you go to Albania you will notice that, as a group, they are slow on the uptake.  It isn't a huge difference.  Americans have a mental age of about 15, on average, and Albanians average a mental age of 13.5.  That is what got me in trouble for stating that one group is inferior to others.  

The question is whether the 10 point difference is 1) an artifact of the test, i.e. cultural unfairness, 2) the result of environmental differences, or 3) the result of actual differences in allelic frequencies, i.e. genetic.

My response related to the Flynn Effect.  Essentially, during the 20th Century, IQs in Western countries increased at the rate of about 2 points per decade.  The reason for this is controversial.  I explain it as being essentially the same as if a population was subjected to increasing emphasis on exercise.  Over time the population would get stronger.  Modern technological society is cognitively more challenging than the preceding agricultural society.  Therefore, as a country emerges into the tecnological age, the increasing 'cognitive exercise' will result in higher IQs.

Until recently, Albania has been a technologically backward nation.  The 10 point lower IQ in Albania could be explained as a result of it being about 50 years behind in technological development.

That does not mean that cultural unfairness and genetics don't play a role.  For example, if 10 year olds in a technologically advanced country and 10 year olds in an undeveloped country are both given IQ tests, the first group, when asked to complete a number progression will be somewhat practiced with them while the second group may find the problem completely novel.  That puts them at a disadvantage.

There has been an enormous controversy over whether there is a genetic component to the IQ differences between 'races' and nationalities.  The controversy astonishes me.  Of course there is.  Or, more properly stated, it would be perplexing if there wasn't.

Until recently, populations were primarily isolated from each other.  We see clear and obvious differences in things like skin pigmentation, hair and eye color, etc.  However, there are many more subtle genetic differences.  Various populations have different immune systems, different enzyme profiles, etc.  When I took Population Genetics, one of our more advanced problems was to take a number of allelic frequencies for Europeans, West Africans and African Americans and from this information estimate what percent of African Americans' genetic heritage comes from Europe.  Put simply the question was, "How white is the average American black"?

With just a little reflection, since IQ differences are 70% genetically determined, one would assume that these groups, and others, have substantial differences in allelic frequencies at gene sites that affect IQ.  The notion that, somehow, they all cancel out and result in the same genetic IQ is implausible in the extreme.

Facebook censorship is based upon a progressive world view that, despite the claims of 'following the science', is not well supported by the evidence.  For example, while human industrial activity is increasing atmospheric CO2 and thereby contributing to higher mean global temperatures, the claim that this constitutes an existential threat to humanity is difficult to support.  I suspect that is only a matter of time before that claim will be censored on Facebook.

So, while personal updates are fine on Facebook, serious posts and the ensuing discussions are definitely not fine.  To clarify I don't subscribe to much of the conservative world view as well.  But at Polymaths.Locals.com I don't get censored for it.  And neither will you.

Locals.com is far from a perfect social media platform.  However, it is likely the best available right now.  So, please register.  Right now, it's mostly me, but the intention is to grow it to more contributing Polymaths in the future.

Without Bayes, You Are Easily Tricked

Suppose 1% of the population has COVID.  The COVID test is 99% accurate.  You are going to travel internationally and a negative PCR (99% accurate) test is required.  Your test is positive.  What is the probability that you have COVID?   Most people will answer 99%.  After all, the test is 99% accurate.  The correct answer is 50%.  

This is how it works.  Suppose 1,000,000 people selected at random are tested.  1% have COVID so, in this thought experiment, there are 10,000 with it.  Since the test is 99% accurate, 9,900 will test positive.  990,000 do not have COVID, but because the test is 99% accurate, 1% or 9,900 will test positive, anyway.  So, in total, 19,800 will test positive and half of those do not have the disease.

This is Bayesian probability and is properly used when there are prior relavent probabilities.  Withhout training, people are really very bad at properly assessing these situations.  Because of this it can and is used to trick people, without lies. You will be told that 10,000 people tested positive for COVID and that the test is 99% accurate.  They did not lie.  But you will likely walk away with the impression that the 10,000 estimate is very close to reality.  You now know that it may be very wrong.

This was highlighted when the 'Monte Hall Problem' was widely published.  It goes like this. A game show host shows you three doors and tells you that there is a donkey behind two doors and a brand new car behind the third one.  He tells you that you may have what is behind the door you select.  Nearly everyone understands that they have ⅓ chance of getting a car.

However, rather than showing you what you won, the gameshow host opens one of the doors that you didn't choose to expose a donkey.  He then tells you that you can stay with the door you selected or switch.  The question is, 'should you stay or switch"?

The vast majority of people say it doesn't matter. When I first heard this problem, I immediately said, "You switch, of course", which is the correct answer.  I knew the correct answer because I know Bayesian Probability.  What is interesting is thàt most people didn't believe the answer even when it was explained to them.

The best way to explain the answer is like this.  There was a ⅓ chance you selected a car and a ⅔ chance that you didn't.  When the game show host opened one of the doors, the ⅔ chance that you didn't choose a car resides in just the one door.  You should switch to it.

Returning to the issue of COVID, in order to assess the meaning of reported statistics, the person conversant in Bayesian Probability will understand that without two values, the positivity rate and the test accuracy, the reported number may or may not be reliable.

Let's take a look at a recent day for U.S. reported numbers.  The number of tests reported was 1,494,000 and the reported cases was 93,000.  This is a positivity rate of 6.28%.  So, if the accuracy of the tests is 93.6%, all reported cases would be false positives.

Several studies have been undertaken and various tests and testing protocols have found a wide variety of results, so the mix of tests used is very imoortant.  Not surprisingly, people who had symptoms and tested positive were much more likely to have the disease.  This tells us that the trend toward testing asymptomatic people with rapid tests (as happens with travel or entrance requirement testing) means that most of the reported cases may be false positives.

Another outgrowth of Bayes is how you react to a positive test result.  If the reported posivity rate in your locale is low you understand that, in spite of the 99% accuracy, your positive result is likely to be false.  So, you will know to take the test again.  The probability of a negative second result is high.  

The belief is that statistcs lie.  They don't.  However, your ignorance of statistics can lead you to misinterpret the stastistcs that are presented to you.  Politicians, 'the news' and other charlatans can take advantage of this to mislead you.  I argue that a mandatory course on 'Everyday Statistics' should be given in the K-12 curriculum.  That, of course, would require the very people who are using statistics to mislead to agree.  Of course, they won't.

Locals.com

 I am migrating from Facebook.com to Polymaths.Locals.com for several reasons

1) Facebook is ineffective.  I have learned that Facebook will only notify about 5% to 10% of Friends, Members or Followers of my posts.  Also, the more counter-woke they are, the fewer people will be made aware of it.  It is important to recognize that Facebook is not shadow banning just conservatives.  They are throttling all messages that are counter to the woke message. So, most of my Polymath posts are throttled.

When Facebook first emerged, the founder of a group was allowed to directly notify all members as long as the group had fewer than 5,000 members.  Then they eliminated direct notifications entirely.  Why?  Because, they knew that if people were notified of all posts, they would get swamped and they would start unfriending and quitting groups.  However, Facebook sells your group memberships and friends, so they don't want you doing that.

Locals.com doesn't sell such affiliations, so they have no problem with my ability to e-mail you notification of posts.  I will not swamp you.  I will send you a weekly e-mail that will provide you with Abstracts of important articles.

2) There are likely about 15,000,000 polymathic types on the Internet.  After huge effort with no compensation for my time, I was able to accumulate about 3,000 of them in Polymathica.  Of course, when I posted, at best, only about 300 of them would be notified.  Facebook provides no feasible path from 3,000 to a significant portion of 15,000,000.  They understand that any group that reached that level would no longer need Facebook.

Locals doesn't involve itself in such behavior.  However, just as importantly, Locals also blends in a Patreon type function.  Certainly, you understand that nothing is free.  Facebook sells your online behavior.  Locals doesn't, but rather requires you to support the group in order to participate.  I haven't determined it yet, but in essence you are selling your privacy for $12 to $18 per year.  

3) The other advantage is that Facebook keeps all the money that it gets for selling your information.  None of it benefits the group.  Say Membership in Polymaths.Locals.com costs $15 per year.  Some can be used to pay one or more administrators, but most of it will be used to build the group.  Your life options will explode when there is a Polymaths.Locals.com with 6 or 7 figure membership that will more than pay for the nominal support required to build it.

4) Polymaths.locals.com will create a platform that will facilitate some of its members to become professional polymaths.  Nearly all of us must engage, usually full time, in a job that in no way is polymathic.  In other words, we are required to be a Polymath on a part time basis.  That can change, but it will require a degree of commitment.  Polymathica, the Facebook group, has existed for over a decade, but in all that time, the plight of aspiring Polymaths has not improved.  We can change that.

Locals.com is hardly perfect, though it is improving.  It is blending in features of ezines and YouTube/Rumble.  I'm sure it will continue to improve.  As every journey begins with a first step, so does your journey to a more polymathically friendly environment.  That first step is signing up at Polymaths.Locals.com

How an Additional 4 Trillion USD Gets Financed.

In 2020 and 2021, the Federal deficit is projected at 5.5 trillion USD.  However, 1.5 trillion is consistent with the Federal Reserve's target.  The other 4.0 trillion needs to be dealt with outside of normal monetary activities.  The U.S. economy will be dramatically affected by the added debt, but how it will be affected will be determined by both fiscal and monetary policy decisions.

M2 is currently around 19.5 trillion.  If it was increased by the whole 4.0 trillion through monetization or 'quantitative easing'(commonly referred to as 'printing money'), it would result in an additional 4.0/19.5 ~ 20% inflation, over and above the Fed's 2% target. If it was incurred over two years, it would result in 12% inflation per year.  The U.S. would survive that, though it would undoubtedly shake confidence in the dollar.  To clarify, the Federal Reserve undertakes QE by buying Treasury debt with newly created money.

On the other hand, if the Treasury auctioned debt to domestic lenders only, yields would go way up but it would not create inflation.  It would push up interest rates, since the Treasury would need to incentivize the purchase.  In order to do so, investors would need to liquidate other positions and thus would reduce market valuations, primarily of stocks and bonds, but likely also gold and perhaps crypto.  As investors liquidated some of their positions to fund their treasury buy, those investments could be pushed into a bear market territory from which they may not easily recover.

Third, Treasuries could be purchased internationally.  Like private domestic purchasers, substantial international funding would require a substantially higher yield.  This, also, will push interest rates higher.  While counter intuitive to most people, large International treasury purchases will actually strengthen the dollar.  That is because the purchases will be in dollars and they will reduce the supply of USD in forex markets.  With increasing oil prices, demand could also increase.  In fact, rising oil prices is likely part of the explanation for the recent strength of the dollar.

An important factor is that increasing treasury yields could increase federal interest expense and therefore future deficits.  The scope will likely be insufficient to cause a fiscal death spiral.  To explain, increasing interest rates creates increased deficits (unless it is financed through QE) which increases the amount of Treasuries sold which increase interest rates, which increases deficits, etc.  Still, rising interest rates is certainly a downside to current policy decisions that created the additional 4.0 trillion USD of deficits..

Lastly, the 4.0 trillion could be reduced through tax increases.  However, the Laffer Curve probably limits this as a useful action.  To clarify, Arthur Laffer claimed that lower tax rates decrease government revenue simply from lower rates.  However, less intuitive, there is a point where higher tax rates by slower economic growth and increased tax avoidance behavior actually reduces total tax revenue.  The Biden Administration has already signaled its interest in a substantial tax increase, so we know that an attempt will be made to finance some of the 4.0 trillion USD in this way.

While fiscal policy will have an effect on how the budget shortfall is financed, it is primarily monetary policy that will determine the ultimate outcome.  The Federal reserve will need to decide, after estimating the degree to which increases in tax revenues can cover the shortfall, how much it will finance through QE and how much it will allow to be funded by the marketplace.  It can only affect how much is financed domestically and how much internationally by encouraging Congress to change laws to either incentivize or disincentivize either the international or domestic investors.

Financing through tax increases or Q.E. does not increase the Federal debt while Treasuries funded either by domestic or international investors does.  So, the claims made in the popular press that the whole of 5.5 trillion is added to the debt are incorrect.  We know that the Treasury debt.  It will be financed through tax increases and, while no statements have been made thus far, the Fed necessarily will purchase a substantial portion of it.  It is likely that the Fed will have resistance to adding more than an additional 2.0 trillion USD to its balance sheet, so it will have a hard ceiling on inflation at about 7%.

I'm not sure how they will do it, but I suspect that Treasury will look for ways to encourage foreign purchase of Treasury debt.  The reason is that the increases in interest rates and inflation will depress the value of the dollar, while international purchases will strengthen the dollar.  

So, in summary, interest rates and inflation almost certainly will increase.  Because of the massive deficit spending, economic growth will increase,  however, the increases in tax rates will tend to depress economic growth.  Also, the equity and debt markets will likely turn bearish as investments in Treasuries will increase.

Hyper-inflation is not really a risk and, even with China, Iran and Russia attempting to move away from USD as the reserve currency, a collapse in the dollar is not likely.  People misunderstand what causes hyper-inflation.  It is actually a 'velocity' death spiral.  In the U.S., today, velocity is usually around 1.3 to 1.7.  It is calculated by dividing GDP by money supply.  When velocity increases money supply needs to shrink or inflation will ensue.  Unfortunately, historically and to a degree, even today, many currencies do not have an effective way to decrease money supply rapidly.  Consequently, rapid increases in velocity will exacerbate inflation.

A velocity of 1.5 means that, on average, any given dollar is spent once every 243 days.  If velocity increases to once every 180 days, this will result in inflation of 243/180 = 35%.  However, that increase in velocity can happen very quickly, say in 3 months, which creates an annualized rate of inflation of 1.35^4 = 232%.  When that level of devaluation of the currency takes place, clearly people will not hold onto their currency for very long.  They will be inclined to convert their currency asset into a hard asset almost immediately upon receiving it.  So, if velocity increases to a turnover once every 3 days, inflation will be 243/3 = 8,000%.  This has happened many times throughout history.

It happens precisely because people lose confidence in the currency.  If the Fed states that they expect inflation to increase to 7% for two years and if the public believes them, the velocity induced devaluation death spiral will not be ignited.  While there is a substantial community, mostly gold bugs, that loudly proclaims the coming collapse of the dollar, in reality, the likelihood of such a collapse is slight.

Especially, on the Right, there are many pundits proclaiming an imminent collapse of the dollar, hyperinflation and a resultant depression level economic downturn.  While this substantial deficit spending, whether needful or not, is hardly a good turn of events, the apocalyptic prognostications can be safely disregarded.