The Canadian Penny is Little More than a Rounding Error Today Thanks to Inflation

Posted by PITHOCRATES - March 31st, 2012

Week in Review

Do you know when a country has inflated their currency too much?  When they start eliminating the smallest denomination of their money (see In Canada, the Lowly Penny’s Time to Shine Nears an End by IAN AUSTEN posted 3/29/2012 on The New York Times).

Jim Flaherty, the finance minister of Canada, pronounced a death sentence on the country’s penny during his budget speech on Thursday…

As pennies disappear, cash transactions will be rounded to the nearest nickel after federal and provincial sales taxes have been added. All other transactions, including payments by check, credit and debit cards, will still be calculated to the cent.

Britain, Australia and Norway are among the countries that preceded Canada in abandoning their smallest-denomination coins. A study by the Bank of Canada concluded that the move has no significant impact on inflation.

Won’t have a significant impact on inflation?  Of course not.  That damage is already done.

Pennies once had value.  Before our government inflated them away.  If you can find an old catalog from a department store look at the prices in it.  Something from the Fifties.  Or earlier.  You’ll see a strange unit used on some of their prices.  A thing that looks like this ‘¢’.  It’s the symbol for ‘cents’.  And we used it a lot back in those days.  When a lot of prices were less than a dollar.  When we often used the penny when shopping.  Especially for making change when you bought something with the much larger nickel.

Penny candy.  Shopping at the five and dime.  Penny for your thoughts.  Once upon a time, before the Keynesians embarked on a policy of permanent inflation, we bought most things with the coins in our pocket.  Because they were worth something.  And the only reason why they aren’t anymore is because of the inflationary policies of our government.  As they printed more and more money they depreciated the value of each unit of currency.  Until the penny became nothing more than a rounding error today.

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Britons respond to Possible Strike with Panic Gas Buying, some Topping their Tanks as much as Two-Thirds Full

Posted by PITHOCRATES - March 31st, 2012

Week in Review

Gasoline haulers just TALK about a strike and it causes a panic of gasoline buying (see Fuel Strike: Unleaded Petrol Sales Rise 172% posted 3/30/2012 on Sky News).

Ministers have held crisis talks with haulage bosses after panic-buying saw sales of unleaded petrol shoot up by 172%…

Meanwhile, the Government discussed contingency plans with company bosses to try to mitigate the effects of any walkout by tanker drivers.

Energy Secretary Ed Davey – who has advised drivers who usually only fill their tanks by one-third should consider upping this to two-thirds – lead the talks…

The Petrol Retailers Association, which represents around 5,500 garages, blamed advice from the Government on keeping tanks topped up, including the much-criticised call by cabinet office minister Francis Maude to fill up jerry cans.

This is what President Obama and his energy secretary Steven Chu want for the U.S.  High gasoline prices.  And less of it.  Which is what their policies will do.  They’ve stopped drilling in the Gulf.  They won’t open up new federal lands to oil exploration.  And they said ‘no’ to the Keystone XL pipeline from Canada.  All of these things would have helped bring the cost of gasoline down.  But they said ‘no’ to lower gasoline prices.  By saying ‘no’ to increasing oil supplies.  Instead they want to be able to tell Americans to only fill their tanks up to one-third full.  Banish the idiom “fill ‘er up” from the American lexicon.  And make you pay European prices for what little they would like you to have.

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France may be next to go in Crisis as the Weight of the Crushing Costs of her Social Democracy threatens the Euro

Posted by PITHOCRATES - March 31st, 2012

Week in Review

France is in big trouble.  Or is about to be.  For they have put the ‘social’ in social democracy.  And the French people are about to learn how all that government largess can kill an economy.  And take with it all the social benefits they’ve come to enjoy (see A country in denial posed 3/31/2012 on The Economist).

France has not balanced its books since 1974. Public debt stands at 90% of GDP and rising. Public spending, at 56% of GDP, gobbles up a bigger chunk of output than in any other euro-zone country—more even than in Sweden. The banks are undercapitalised. Unemployment is higher than at any time since the late 1990s and has not fallen below 7% in nearly 30 years, creating chronic joblessness in the crime-ridden banlieues that ring France’s big cities. Exports are stagnating while they roar ahead in Germany. France now has the euro zone’s largest current-account deficit in nominal terms. Perhaps France could live on credit before the financial crisis, when borrowing was easy. Not any more. Indeed, a sluggish and unreformed France might even find itself at the centre of the next euro crisis.

It is not unusual for politicians to avoid some ugly truths during elections; but it is unusual, in recent times in Europe, to ignore them as completely as French politicians are doing. In Britain, Ireland, Portugal and Spain voters have plumped for parties that promised painful realism. Part of the problem is that French voters are notorious for their belief in the state’s benevolence and the market’s heartless cruelty. Almost uniquely among developed countries, French voters tend to see globalisation as a blind threat rather than a source of prosperity.  With the far left and the far right preaching protectionism, any candidate will feel he must shore up his base.

In America they say no president can win a reelection with unemployment at 8%.  The French have been 1% below that rate for 30 years.  Their banking system is not that far away from cascading bank runs.  Their big cities are surrounded by tinderboxes of unemployed youth just waiting for something to set them off.  And a large current account deficit means they are uncompetitive in international trade.  Which means that their economy is not about to create a lot of new jobs to employ the unemployed.  And with the government already spending over half of their GDP they’re not going to be able to throw much at the unemployed youth to keep them from expressing their discontent at being unemployed.  And with France’s history of generous state benefits the unemployed will not take kindly to any austerity programs.  Nor will those who have jobs.

Could France be the country to break the Euro’s back?  Perhaps.  For they are definitely too big for Germany to save.  And if France goes the grand experiment of the common currency will come to an end.  For a common currency without a political unity is doomed to fail.  For there is no way to stop a member state from not meeting the requirements of the Maastricht Treaty (which created the Euro).  So their financial problems are everyone’s financial problems.  Because of the common currency.  And if you think the French are going to take austerity orders from Germany you don’t know the French.  Or Franco-German history.  For they will cooperate.  But one will never subordinate themselves to the other.

So don’t be surprised if the next round of austerity fills the streets of French cities and towns with discontent.  For it looks like it will soon be their turn in this unfolding saga of the decline and fall of the Euro.  Pity to see this befall such a great people.  For much of the Enlightenment came from French thinkers.  And to see her collapse under the weight of her social democracy is painful to watch indeed.

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BRICS are taking on the United States, the Eurozone and the World Bank

Posted by PITHOCRATES - March 31st, 2012

Week in Review

BRICS are on the ascendant.  Producing healthy economic growth while the old dogs who taught them everything they know are wallowing in economic despair.  Then again, the old dogs aren’t what they used to be.  For they are nothing like their former selves.  Or BRICS.  Who are embracing economic growth.  Instead of worrying about income redistribution and environmental policies that are killing the old dogs.  And these new dogs are looking to teach the old dogs a new trick (see Bank tops agenda at Brics summit of emerging nations posted 3/29/2012 on BBC India).

Brazil, Russia, China, India and South Africa (the Brics group) are proposing an alternative to the World Bank.

Leaders of the five nations, which now account for nearly 28% of the global economy, discussed closer trade links…

“The Brics countries have agreed to examine in greater detail a proposal to set up a South-South development bank, funded and managed by the Brics and other developing countries,” Mr Singh later said.

The Delhi Declaration expressed concern over the current global economic situation, especially in the euro zone…

The countries also resolved “to promote greater interaction among the business communities of Brics nations and easier visa facilities for businessmen”.

Mr Singh said the Brics group must speak with one voice on important issues such as reform of the UN Security Council.

President Hu said Brics nations should “enhance co-operation and intensify communication in international trade”…

The Brics nations have radically different economies and political systems and have often struggled to find common ground in the past.

But, they have been looking at ways to increase their trade links and decrease dependency on Europe and the United States.

Speak with one voice and improve international trade?  To compete against Europe and the United States?  Other than that part about Europe this sounds very familiar.  Oh, yes.  I remember.  This is what the Europeans said when they set up the Eurozone.  Which is struggling to survive.  Because they can’t speak with one voice.  For the individual nations may have surrendered their currency.  But they won’t surrender their sovereignty.  Which is why uber responsible Germany is continually frustrated by spendthrifts like Greece and Spain.  Not to blame Greece or Spain.  A common currency without a political unity was just a bad idea.

I suppose as long as BRICS don’t do anything foolish like try to set up a common currency to compete against the US dollar or the Euro they may do all right.  Being as they have such “radically different economies and political systems.”  But let’s just hope they don’t follow the “institutions of global political and economic governance created more than six decades ago” and ruin their emerging economies by turning them into social democracies.  Perhaps they can take a lesson from the Chileans.  Who have done a remarkable job embracing free market capitalism.  Thanks to their Chicago Boys.  And a little Milton Friedman.  Even privatized their social security system.  They’re doing pretty well now.  Unlike the nation that helped create them.  Spain.  Who is struggling with riots in their streets as they try to implement austerity to get their social spending under control.  So they can remain in the Eurozone.  And save the Euro.

Perhaps BRICS will be able to help bailout the Eurozone, too.  You know, as long as they don’t follow the Europeans down the Road to Serfdom.

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Faced with Unpleasant Austerity Spain follows Greece’s Lead and Riots in the Streets

Posted by PITHOCRATES - March 31st, 2012

Week in Review

The Eurozone is suffering the consequences of their social democracies.  Their cradle-to-the-grave welfare state.  And huge governments full of government jobs.  Paying nice salaries and benefits.  Greece is on the brink of bankruptcy because of their out of control spending.  And when they try to rein in that spending the people take to the streets in violent protest.  Making it very hard for the government to take back some of the free stuff they’ve been giving out to buy their votes.  And making it ever harder to avoid bankruptcy.  Now it’s Spain’s turn (see Spain Unions On Strike Over Austerity Plans by Robert Nisbet posted 3/30/2012 on Sky News).

Scores of Spanish workers have been arrested after protesting on a day of anger over a swingeing austerity drive and changes to labour laws…

In scenes reminiscent of anti-austerity demonstrations in Greece, tens of thousands held protest marches in Madrid and other cities…

There is widespread anger at moves by Prime Minister Mariano Rajoy’s conservative government – which is not yet 100 days old – to slash Spain’s debt and boost the economy.

Spain’s biggest unions called the 24-hour strike over labour reforms which make it cheaper and easier for companies to lay people off and cut wages without consultation.

The government claims they are needed to tackle the 22.85% jobless rate, which is predicted to rise to almost 24.3% this year…

The government is under pressure to reduce its budget deficit, which last year ballooned to 8.51% of all the goods and services produced by Spain.

The European Union says this must be reduced to 5.3% this year and 3% in 2013 but economists warn that growth in Spain is so sluggish and debt so high, it will be a tough deadline to meet.

There is good reason for nervousness in the Eurozone. Unlike Greece and Portugal, Spain is deemed too big to bail and British banks are also heavily exposed to Spanish debt.

With unemployment running at 50% among young Spaniards and, as a member of the Eurozone, no monetary levers to pull, the government in Madrid says it has little choice but to wield the axe once again.

Peak unemployment in the U.S. during the Great Depression was about 25%.  So Spain is enduring Great Depression unemployment.  That’s bad.  What’s worse is that those who can be the most violent in their discontent, the young, suffer from 50% unemployment.  Filling them with discontent.  And a lot of free time on their hands.  Never a good combination.

If Spain has a high budget deficit it can only mean one of two things.  Either their government is spending too much.  Or their economy cannot generate sufficient tax revenue from their tax structure.  Either taxes aren’t high enough.  Or taxes are too high and they dampen economic activity thus reducing tax revenue.  With those high unemployment numbers, though, the smart money is on ‘they’re spending too much’.  Both the government.  And the employers.  Where the unions are holding the cost of labor (wages and benefits) so high that it’s too costly to hire more employees.  Whereas if the market set wages and benefits these costs would come down to reflect that large surplus of labor out there.  And the people who want jobs could get jobs.

The problem with these social democracies is that they are anti-business.  They favor the public sector over the private sector.  But you can’t keep beating up on the private sector.  Because they pay the taxes that fund the public sector.  A lot of that unemployment no doubt are government workers they let go to meet their Eurozone requirements.  And there are probably a lot more to follow.  If they reduce the cost of labor in the private sector the private sector will be able to absorb these people.  And as the private sector grows and becomes more productive more people will be paying taxes.  And they will be able to bring down those massive budget deficits. 

But if they don’t bring down labor costs or cut government spending, hello Greece.  Which they are currently experiencing in the streets of Spain.  Which, incidentally, is the path the U.S. is currently on.

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President Obama is not Telling the Truth about our Economic Past

Posted by PITHOCRATES - March 31st, 2012

Week in Review

President Obama attacks rugged individualism.  Entrepreneurialism.  And the American spirit.  What he calls ‘you’re on your own economics’.  Lying about what hasn’t worked in the past.  For he is either lying or he is incredibly uninformed when it comes to American economic history (see Obama: “You’re On Your Own” Economics Doesn’t Work posted 3/30/2012 on Real Clear Politics).

“It’s been tried in our history and it hasn’t worked,” Obama said. “It didn’t work when we tried it in the decade before the Great Depression. It didn’t work when we tried it in the last decade. We just tried this. What they’re peddling has been tried — it did not work!”

When the government left people alone in the Twenties that decade roared.  The ‘leave the people alone’ policies of the Harding (and then the Coolidge) administration gave us the Roaring Twenties.  A remarkable decade of technological growth.  Both in the cities and on the farms.  We mechanized.  We electrified.  We talked to people all over the country on the new telephones.  We went mobile in our new automobiles.  We listened to the radio in our homes.  We used electric appliances in our homes.  We went to theaters to watch the new motion pictures.  People flew in airplanes.  The Roaring Twenties were a seminal time.  It marked the beginning of the modern world we know today.  And it was full of real, solid economic growth.  Until the progressive Herbert Hoover took over.  And after he got rid of ‘you’re on your own economics’ everything went to hell.

The Great Depression was a wholly made government disaster.  Massive interventions into the private sector economy.  Price supports.  A horrendous tariff bill (the Smoot-Hawley Tariff Act).  And the resulting trade war.  And then in the midst of all of this the Federal Reserve System destroyed the banking system.  By NOT being the lender of last resort.  Causing a cascade of bank failures.

The Seventies was Keynesian Economics at its pinnacle.  It was everything President Obama believes in and wants today.  Massive government spending.  Paid for by massive taxes, borrowing and printing.  The polar opposite of ‘you’re on your own economics’.  Which were an abject failure.  Even Keynesian Economists have to qualify the Seventies to explain away the stagflation (high unemployment AND high inflation) their policies gave us.  Ronald Reagan fixed the Keynesian train wreck with exactly ‘you’re on your own economics’.  It was so successful that Keynesians call it the decade of greed.  A moniker no one can place on the Seventies.

So why is the president saying things that aren’t true?  Because they want those failed Keynesian polices back.  They want to tax and spend like there’s no tomorrow.  For they like the power.  The control.  And the ability to buy votes.  Which is the only way they can win elections.  Because no one will willingly vote for their failed policies of the past.

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FT111: “Arrogance and intelligence are not the same thing.” -Old Pithy

Posted by PITHOCRATES - March 30th, 2012

Fundamental Truth

Liberal Control of Pop Culture, the Mainstream Media and the Colleges help push their Minority Views onto the Majority

What do you think the breakdown of people in the United States is?  Politically speaking.  What are the percentages of conservatives, liberals and moderates?  If you watch/listen/read a lot of pop culture you no doubt think conservatives are in the minority.  If you listen to the mainstream media you no doubt think that conservatives are in the minority.  If you’re young and/or are in college you no doubt think that conservatives are in the minority.  Would it surprise you to learn that conservatives are actually in the majority?  Well, then, surprise.

According to Gallup, in 2011 40% of the American people identified themselves as conservative.  While 35% identified themselves as moderate.  And only 21% identified themselves as liberal.  Surprising, huh?  Especially when the ‘appropriate’ behavior appears to be to snicker at and belittle conservatives these days.  Forcing them into the closet.  For one thing you never hear of is a closet-liberal.  No, they can be in your face.  Any time.  Any place.  And it’s okay.  But a conservative has to lower his or her voice and look around first to see if it’s ‘okay’ to express his or her political opinion.  Why is that?

Well, it helps to control the major channels of communication.  Pop culture.  The mainstream media.  And colleges.  It also helps that young adults want to escape the responsible parenting of their parents so they can party and have as much sex that is humanly possible.  Which makes them a very useful pawn for liberals to advance their minority views.  Because liberals aren’t their parents.  But they act and talk like their parents.  When they attack their parents.  With an air of all-knowing condescension.  Exasperation.  And arrogance.  The only difference between kids’ parents and these liberals is that kids’ parents are trying to do what is best for their kids.  While liberals are trying to do what is best to advance their minority views.

Liberals speak with such Arrogant Confidence that it makes Some People Feel that they Must be Right 

Women fall for bad boys.  Even though they are not particularly bright.  Or have great earning potential.  That’s why so many women can never find true happiness in a relationship.  At least based on the high divorce rates.  It’s just the way it is.  Because women aren’t attracted to short, fat, balding guys that have good but boring careers.  No matter how beautiful they are on the inside.  No.  These women are attracted to the men that will ultimately cheat on them.  These men who can’t stand the thought of being in a monogamous relationship.  Because they are bad boys.  Rebels.  Nonconformists.  Alpha males.  Confident and cocky.  Who don’t like having any limits placed on them.  And want to enjoy every moment of life.  Especially since feminists have empowered women.  Giving them all the birth control and access to abortion they need to please these alpha males.  Which lets these men enjoy as many women sexually as is humanly possible.  No, marriage is not for them.  Neither is a monogamous relationship.  For there is just too much passion in their hearts for one woman.

Everyone is attracted to the alpha male.  Women want to be with them.  And men want to be around them.  To be like them.  To enjoy a little of their world.  For arrogance is attractive.  People are attracted to strong people who are sure of themselves.  Who never doubt themselves.  And feel safer whenever they are around.  Like the cowboys in the Old West.  When life was scary.  And nothing made you feel safer than having a manly cowboy around to protect you.  And this is how liberals advance their minority view.  It’s their arrogance that makes people feel that they must be right.  For they speak with such confidence.  Without a shadow of doubt.  And anyone so sure and so full of themselves must know what they are talking about.  Besides, they make the stuff we want to do (like having a lot of sex) seem the right thing enlightened people do.

But arrogance and intelligence are not the same thing.  Pick your favorite celebrity who’s attacked a conservative.  Or conservative policies.  And ask yourself if you think they understand economics.  Do they understand that high inflation is a monetary problem?  That governments cause high prices by printing too much money?  Do they know that stimulus spending fails to stimulate the economy because sellers increase their prices to offset the coming inflation (rational expectations)?  Before anyone spends that stimulus money?  Resulting in no new economic activity.  Only higher prices.  Do they understand that everyone prices oil on the international market in U.S. dollars?  And that government inflation causes gasoline prices to rise (as the oil sellers raise their prices to offset that inflation)?  Do they understand that government regulations are another cost of business that businesses add to their selling prices? Do they understand that jobs in the private sector pay for all government spending including all government jobs?  Do they know that free markets have promoted equality and reduced discrimination (women have a better life in a country with free markets than they do in a country like Iran)?  Do they know that Karl Marx was wrong in his economic thinking (as technology increases in capitalistic countries workers see their wages rise over time, not fall into perpetual poverty)? 

Liberals can push their Minority Views onto the Majority because of the Perception that their Views are the Majority

Of course they don’t know.  They haven’t the foggiest clue about things economic.  And are only liberals so no one picks on them for their obscene wealth and their extravagant lifestyles.  No.  They don’t attack conservatives for economic reasons.  They attack them because they’ve just learned that it’s appropriate to attack conservatives.  To snicker at them.  To belittle them.  Which they learned from their pop culture.  From the mainstream media.  And from our colleges.  They don’t know how to articulate their beliefs.  Because they don’t understand what they criticize.  And mask their ignorance with an air of all-knowing condescension.  Exasperation at those who disagree with them.  And, of course, arrogance.  By attacking and ridiculing conservatives.  But never engaging them in an ideological debate.

And this is how the 21% pushes their minority views on the majority population.  It’s sort of like real estate.  It’s all about perception.  Because they have pop culture, the mainstream media, the colleges and young adults (who want an alternative to their parents so they can have fun) their views appear to be in the majority.  Not in the minority.  So their views appear to be the ‘right’ views.  Just like that story about a small realtor who has only two signs in town.  One on the road into town.  And one on the road out of town.  Making people driving on that road think, “Wow.  This must be the biggest realtor in town.  I see their signs everywhere.”

And so it is with liberalism.  When people hear their minority views everywhere they feel that these views are the ‘biggest’ views in town.  And don’t question the ideology supporting them.  Or the economics.  Or the history of their failure.

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British, French, Quebec City, John Adams, Benjamin Franklin, Pierre Beaumarchais, Silas Deane, King Louis XVI and Entangling Alliances

Posted by PITHOCRATES - March 29th, 2012

 Politics 101

When the American Colonists rebelled against their British Overlords it created a Complex Political Landscape

For about a hundred years the nations of Europe had been at war.  Over religion (Protestantism versus Catholicism).  Oversea colonies to build trade networks.  And the balance of power of the European nations.  Often tilted by the acquisitions of their overseas possessions.  These nations have been at war with each other off and on from the late 17th century to the late 18th century.  Alliances formed and shifted during this century of war.  But one thing was constant.  The Protestant British and the Catholic French were always on opposing sides.

The most recent war that ended in 1763 (the Seven Year’s War) was a particularly bitter pill for the French to swallow.  They lost pretty much all of New France in North America to Great Britain.  Including Quebec City.  Founded by Samuel de Champlain in 1608.  The British occupation defiled 155 years of French history.  This was the heart and soul of New France.   The French culture was so deep that they still speak French there today, having never accepted their British overlords.  And never have forgotten their French heritage.  For as Quebec’s official motto says today, “Je me souviens.”  Which translates to, “I remember.”  Remember what?  That they were French.  And remain French.

When the American colonists rebelled against their British overlords it created a complex political landscape.  In a drawn out war with Great Britain the Americans would more than likely need foreign assistance.  Meaning an alliance.  However, the reason why they declared their independence from Great Britain had a lot to do with all those European wars that Britain fought.  Which were expensive.  As was the following peace.  For they now had to defend their newly conquered lands.  Exhausted from all these wars the British taxpayers felt taxed out.  So Parliament turned to their British brethren in America.  And taxed them.  Which led, of course, to the Americans’ Declaration of Independence.  So the Americans were very wary of joining into any European alliances.  Fearful that the Europeans would pull them into a future European war.  And bankrupt them.  Before they even had a chance to become a country. 

The European Monarchs weren’t going to help the Americans Rebel against Monarchy out of the Goodness of their Hearts

So the Americans were wary of alliances.  But they were thinking about it.  Especially with the most likely candidate for an alliance.  In September of 1776 John Adams wrote, “our negotiations with France ought, however, to be conducted with great caution, and with all the foresight we could possibly attain; that we ought not to enter into any alliance with her which should entangle us in any future wars in Europe; that we ought to lay it down as a first principle and a maxim never to be forgotten, to maintain an entire neutrality in all future European wars; that it never could be in our interest to unite with France in the destruction of England, or in any measures to break her spirit or reduce her to a situation in which she could not support her independence.”  This from one of the most outspoken Founding Fathers for independence.  One of the few men Britain was not willing to forgive for the things he said and wrote.   A man the British condemned to death even if the Americans reconciled with the British.

At the time of the Revolution The Hague in the Netherlands had diplomats from all the courts of Europe.  One of these diplomats was a friend of Benjamin Franklin.  Charles William Dumas.  Franklin wrote to him to feel out the foreign powers.  In September of 1775 he wrote asking if there was any “state or power in Europe who would be willing to enter into an alliance with us for the benefit of our commerce, which amounted, before the war, to near seven millions sterling per annum…”  Like Adams, he wanted to avoid any alliance that could draw America into a future European war.  Feeling that American commerce would be reason enough to support the Americans.  As at that time all American trade went though Great Britain.  So treating directly with the Americans would cut out the middle man.  Making American goods less costly.  Surely a financial incentive for any nation.

Then again, these European powers they were feeling out were all monarchies.  Would these monarchies support a rebellion against royal authority?  France, their most likely alliance partner due to their history with Great Britain, was an absolute monarchy.  Would they support the Americans in their bid for independence with French taxes?  Would they take a chance that their oppressed masses wouldn’t rise up in defiance of those high taxes and/or royal authority (which they eventually did)?  Then there was a moral element as Robert Morrison noted in a letter to John Jay in September of 1776.  “Can this be morally right?”  Bringing war to the people of Europe in their bid for independence?  Their kings may not care about what they do to the innocents.  But a government of the people would.  Or should.  But if they got any support from these European monarchs the big question would be at what price?  For these monarchs weren’t going to help the Americans in their rebellion against monarchy out of the goodness of their hearts.  For, as monarchs, they kind of liked the institution of monarchy.  So any involvement on their part wasn’t going to be for any moral imperative.  It was for personal gain.  New territory.  Getting back lost territory.  Or changing the balance of power in Europe to their favor.

Despite all of their Misgivings the Americans entered into an Entangling Alliance with the French

Monarchies were getting a little nervous about the impoverished masses around this time.  For there were a lot more poor people than royals and nobles.  Revolution was in the air.  They made fun of the noble classes in some of the leading plays of the day.  In fact, one play was banned in Vienna.  For being less than respectful of the aristocracy.  But that didn’t stop a composer from using it to write a new opera from it.  That play?  The Marriage of Figaro.  The composer was, of course, Wolfgang Amadeus Mozart.  Who based his new opera on the play written by a Frenchman.  Pierre Beaumarchais.  Who plays a prominent role in America’s Revolutionary War.

Beaumarchais had written a play making fun of the aristocracy.  And the American rebellion against aristocracy piqued his interest.  So he decided to aid the Americans in their cause.  He strongly encouraged Louis XVI to support the Americans in their cause.  For if they did not they would not only lose in the balance power to Great Britain.  But likely the very valuable sugar trade coming from the French West Indies.  He also set up a private company to ship war material to America in exchange for tobacco.  Silas Deane arrived from America in Paris in July 1776.  He, too, worked on obtaining the materials of war as well as skilled officers.  America’s greatest diplomat and propagandist was also in Paris.  Benjamin Franklin.  Who the French adored.  For his scientific experiments.  And his plain American airs.  They really got a kick out of the coonskin hat he wore.  Which he wore only for them.  Never having worn one back in America.

So the Americans were really working their mojo behind the scenes to get French support for the cause.  As well as French money and arms.  Which they were getting.  And after the American win at the Battle of Saratoga, they got a whole lot more.  Formal recognition of the United States.  And despite all of their misgivings, an alliance.  On January 7, 1778 they entered into a treaty of amity and commerce.  Followed by (on February 6) the treaty of alliance.  And these treaties were rather entangling.  But so dictated the necessities of war.  And what did the Americans agree to?  In exchange for French military support against the British in North America the Americans would support the French militarily in the French West Indies.  In any future French war where the Americans were neutral the French and their warships would have access to American ports.  While the French adversary would not.  Also, the French could bring in any captured ships into American ports to refit and re-provision them.  And then leave freely.  Which came back to haunt the Washington administration during the next war between the French and the British.  Following the French Revolution.  A war in which America not only remained neutral.  But her neutrality ‘favored’ the British.  As the vast majority of her trade was with the British.  Causing a lot of animosity in America.  For we had a treaty with the French.  Who helped win them their independence from the nation they were now currently fighting.  Again.  A treaty some of the Americans noted, though, that they made with King Louis XVI.  Who the French recently executed.  Brought about, in part, by the incredible French debt incurred financing the American Revolution.  Providing the tinder for the French Revolution.

A complex political landscape indeed.  Of course the Americans didn’t know what was awaiting them in the future.  All they knew is that when General Washington left winter quarters at Valley Forge they were no longer alone in their struggle.  After their win at Saratoga and their new ally things were looking up.  Little did they know that there would still be 5 more years of war.

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Fire, Oil Lamp, Candle, Wicks, Gas Lights, Incandescence, Incandescent Light Bulb, Fluorescence and Compact Fluorescent Lamp

Posted by PITHOCRATES - March 28th, 2012

Technology 101

A Lit Match heats the Fuel Absorbed into a Wick, Vaporizes it, Mixes it with Oxygen and Ignites It 

Fire changed the world.  From when Homo erectus first captured it.  Around 600,000 BC.  In China.  They saw it.  Maybe following a lightning strike.  Seeing it around volcanic activity.  Perhaps a burning natural gas vent.  Whatever.  They saw fire.  Approached it.  And learned not to fear it.  How to add fuel to it.  To transfer it to another fuel source.  To carry it.  They couldn’t create fire.  But they could manage it.  And use it.  It was warm.  And bright.  So they brought it indoors.  To light up their caves.  Scare the predators out.  To use it to heat.  And to cook.  Taking a giant leap forward for mankind.

When man moved into man-made dwellings they brought fire with them.  At first a one-room structure with a fire in the center of it.  And a hole in the roof above it.  Where everyone gathered around to eat.  Stay warm.  Sleep.  Even to make babies.  As there wasn’t a lot of modesty back then.  Not that anyone complained much.  What was a little romance next to you when you were living in a room full of smoke, soot and ash?  Fireplaces and chimneys changed all that.  Back to back fireplaces could share a chimney.  Providing more heat and light.  Less smoke and ash.  And a little privacy.  Where the family could be in one room eating, staying warm, reading, playing games and sleeping.  While the grownups could make babies in the other room.

As we advanced so did our literacy.  After a hard day’s work we went inside.  After the sun set.  To read.  Write letters.  Do some paperwork for the business.  Write an opera.  Whatever.  Even during the summer time.  When it was warm.  And we didn’t have a large fire burning in the fireplace.  But we could still see to read and write.  Thanks to candles.  And oil lamps.  One using a liquid fuel.  One using a solid fuel.  But they both operate basically the same.  The wick draws liquid (or liquefied) fuel via capillary action.  Where a porous substance placed into contact with a liquid will absorb that liquid.  Like a paper towel or a sponge.  When you place a lit match into contact with the wick it heats the fuel absorbed into the wick and vaporizes it.  Mixing it with the oxygen in the air.  And ignites it.  Creating a flame.  The candle works the same way only starting with a solid fuel.  The match melts the top of this fuel and liquefies it.  Then it works the same way as an oil lamp.  With the heat of the flame melting the solid fuel to continue the process. 

Placing a Mantle over a Flame created Light through Incandescence (when a Heated Object emits Visible Light)

Two popular oils were olive oil and whale oil.  Beeswax and tallow were common solid fuels.  Candles set the standard for noting lighting intensity.  One candle flame produced one candlepower.  Or ‘candela’ as we refer to it now.   (Which equals about 13 lumens – the amount of light emitted by a source).  If you placed multiple candles into a candelabrum you could increase the lighting intensity.  Three candles gave you 3 candela of light to read or write by.  A chandelier with numerous candles suspended from the ceiling could illuminate a room.  This artificial light shortened the nights.  And increased the working day.  In the 19th century John D. Rockefeller gave the world a new fuel for their oil lamps.  Kerosene.  Refined from petroleum oil.  And saved the whales.  By providing a more plentiful fuel.  At cheaper prices.

By shortening the nights we also made our streets safer.  Some cities passed laws for people living on streets to hang a lamp or two outside.  To light up the street.  Which did indeed help make the streets brighter.  And safer.  To improve on this street lighting idea required a new fuel.  Something in a gas form.  Something that you could pump into a piping system and route to the new street lamps.  A gas kept under a slight pressure so that it would flow up the lamp post.  Where you opened the gas spigot at night.  And lit the gas.  And the lamp glowed until you turned off the gas spigot in the morning.  Another advantage of gas lighting was it didn’t need wicks.  Just a nozzle for the gas to come out of where you could light it.  So there was no need to refuel or to replace the wicks.  Thus allowing them to stay lit for long periods with minimum maintenance.  We later put a mantle over the flame.  And used the flame to heat the mantle which then glowed bright white.  A mantle is like a little bag that fits over the flame made out of a heat resistant fabric.  Infused into the fabric are things that glow white when heated.  Rare-earth metallic salts.  Which change into solid oxides when heated to incandescence (when a heated object emits visible light).

One of the first gases we used was coal-gas.  Discovered in coal mines.  And then produced outside of a coal mine from mined coal.  It worked great.  But when it burned it emitted carbon.  Like all these open flames did.  Which is a bit of a drawback for indoor use.  Filling your house up with smoke.  And soot.  Not to mention that other thing.  Filling up your house with open flames.  Which can be very dangerous indoors.  So we enclosed some of these flames.  Placing them in a glass chimney.  Or glass boxes.  As in street lighting.  Enclosing the flame completely (but with enough venting to sustain the flame) to prevent the rain form putting it out.  This glass, though, blackened from all that carbon and soot.  Adding additional maintenance.  But at least they were safer.   And less of a fire hazard.  Well, at least less of one type of fire hazard.  From the flame.  But there was another hazard.  We were piping gas everywhere.  Outside.  Into buildings.  Even into our homes.  Where it wasn’t uncommon for this gas to go boom.  Particularly dangerous were theatres.  Where they turned on the gas.  And then went to each gas nozzle with an open fire on a stick to light them.  And if they didn’t move quickly enough the theatre filled with a lot of gas.  An enclosed space filled with a lot of gas with someone walking around with an open fire on a stick.  Never a good thing.

Fluorescent Lighting is the Lighting of Choice in Commercial, Professional and Institutional Buildings 

Thomas Edison fixed all of these problems.  By finding another way to produce incandescence. By running an electrical current through a filament inside a sealed bulb.  The current heated the filament to incandescence.  Creating a lot of heat.  And some visible light.  First filaments were carbon based.  Then tungsten became the filament of choice.  Because they lasted longer.  At first the bulbs contained a vacuum.  But they found later that a noble gas prevented the blackening of the bulb.  The incandescent light bulb ended the era of gas lighting.  For it was safer.  Required less maintenance.  And was much easier to operate.  All you had to do was flick a switch.  As amazing as the incandescent light bulb was it had one big drawback.  Especially when we use a lot of them indoors.  That heat.  As the filament produced far more heat than light.  Which made hot buildings hotter.  And made air conditioners work harder getting that heat out of the building.  Enter the fluorescent lamp.

If phosphor absorbs invisible short-wave ultraviolet radiation it will fluoresce.  And emit long-wave visible light.  But not through incandescence.  But by luminescence.  Instead of using heat to produce light this process uses cooler electromagnetic radiation.  Which forms the basis of the fluorescent lamp.  A gas-discharge lamp.  The most common being the 4-foot tube you see in office buildings.  This tube has an electrode at each end.  Contains a noble gas (outer shell of valence electrons are full and not chemically reactive or electrically conductive) at a low pressure.  And a little bit of mercury.  When we turn on the lamp we create an electric field between the electrodes.  As it grows in intensity it eventually pulls electrons out of their valence shell ionizing the gas into an electrically conductive plasma.  This creates an arc between the electrodes.  This charged plasma field excites the mercury.  Which produces the invisible short-wave ultraviolet radiation that the phosphor absorbs.  Causing fluorescence.

One candle produces about 13 lumens of light.  Barely enough to read and write by.  Whereas a 100W incandescent light bulb produces about 1,600 lumens.  The equivalent of 123 candles.  In other words, one incandescent lamp produces the same amount of light as a 123-candle chandelier.  Without the smoke, soot or fire hazard.  And the compact fluorescent lamp improves on this.  For a 26W compact fluorescent lamp can produce the lumen output of a 100W incandescent light bulb.  A one-to-one tradeoff on lighting output.  At a quarter of the power consumption.  And producing less heat due to creating light from fluorescence instead of incandescence.  Making fluorescent lighting the lighting of choice in commercial, professional and institutional buildings.  And any other air conditioned space with large lighting loads. 

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Thomas Edison, Patents, Intellectual Property Rights, Nikola Tesla, George Westinghouse, DC, AC and the War of Currents

Posted by PITHOCRATES - March 27th, 2012

History 101

Thomas Edison protected his Intellectual Property Rights with over 1,000 Patents

Thomas Edison was a great inventor.  A great entrepreneur.  But he wasn’t a great scientist or engineer.  He was home-schooled by his mom.  And didn’t go to college.  But he read a lot.  And loved to tinker.  He grew up in Port Huron, Michigan.  At one end of the train line that ran between Port Huron and Detroit.  Where he sold newspapers and other things to commuters during the Civil War.  Then he saved the life of some kid.  Pulled him out of the way of a runaway boxcar.  The kid’s dad ran the train station.  Out of gratitude for saving his son’s life he taught the young Edison Morse Code.  And trained him to be a telegraph operator.  He mastered it so well that Edison invented a better telegraph machine.  The Quadruplex telegraph.  Because he liked to tinker.

What made him a great entrepreneur and not a great scientist or engineer is that his inventions had a commercial purpose.  He didn’t invent to solve life’s great mysteries.  He invented to make money.  By creating things so great that people would want them.  And pay money for them.  He also had an eye on production costs.  So he could build these things the people wanted at affordable prices.  For if they were too expensive the people couldn’t buy them.  And make him rich.  So his inventions used technology to keep production costs down while keeping consumer interest high.  Because of the profit incentive.  But the POSSIBILITY of profits wasn’t enough to push Edison to set up his invention lab.  Where he employed a team of inventors to work full time inventing things.  And figuring out how to mass-produce inventions that made everyone’s life better.  He needed something else.  Something that GUARANTEED Edison could profit from his inventions.  The patent.  That gave the patent holder exclusive rights to profit from their invention.

Inventors and entrepreneurs spend a lot of money inventing things.  They do this because they know that they can file a patent when they invent something that people will buy.  Protecting their intellectual property rights.  So they alone can profit from the fruit of all their labors.  And Edison was one of these inventors.  One of the most prolific inventors of all time.  Filing over 1,000 patents.  Including one on the incandescent light bulb.  Which was going to replace gas lamps and candles.  And provided a need for another new invention.  Electric power distribution.  Something else he spent a lot of time tinkering with.  Producing electrical generators.  And an electric power distribution system.  Which was going to make him an even richer man.  As he held the patents for a lot of the technology involved.  However, he was not to become as rich as he had hoped on his electric power distribution system.  Not for any patent infringements.  But because of a mistreated former employee who had a better idea.

Thomas Edison and George Westinghouse battled each other in the War of Currents

Nikola Tesla was a brilliant electrical engineer.  But not a great entrepreneur.  So he worked for someone who was.  Thomas Edison.  Until Edison broke a promise.  He offered a substantial bonus to Tesla if he could improve Edison’s electric power generating plants.  He did.  And when he asked for his bonus Edison reneged on his promise.  Telling the immigrant Tesla that he didn’t understand American humor.  Angry, Tesla resigned and eventually began working for George Westinghouse.  An Edison competitor.  Who appreciated the genius of Tesla.  And his work.  Especially his work on polyphase electrical systems.  Using an alternating current (AC).  Unlike Edison’s direct current (DC).  Bringing Edison and Tesla back together again.  In war.

Direct current had some limitations.  The chief being that DC didn’t work with transformers.  While AC did.  With transformers you could change the voltage of AC systems.  You could step the voltage up.  And step it back down.  This gave AC a huge advantage over DC.  Because power equals current multiplied by voltage (P=I*E).  To distribute large amounts of power you needed to generate a high current.  Or a high voltage.  Something both DC and AC power can do.  However, there is an advantage to using high voltages instead of high currents.  Because high currents need thicker wires.  And we make wires out of copper or aluminum.  Which are expensive.  And the DC wires have to get thicker the farther away they get from the generator plant.  Meaning that a DC generating plant could only serve a small area.  Requiring numerous DC power plants to meet the power requirements of a single city.  Whereas AC power could travel across states.  Making AC the current of choice for anyone paying the bill to install an electric distribution system.

So the ability to change voltages is very beneficial.  And that’s something DC power just couldn’t do.  What the generator generated is what you got.  Not the case with AC power.  You can step it up to a higher voltage for distribution.  Then you can step it down for use inside your house.  Which meant a big problem for Edison.  For anyone basing their decision on price alone would choose AC.  So he declared war on AC power.  Saying that it was too dangerous to bring inside anyone’s house.  And he proved it by electrocuting animals.  Including an elephant.  And to show just how lethal it was Edison pushed for its use to replace the hangman’s noose.  Saying that anything as deadly as what states used to put prisoners to death was just too deadly to bring into anyone’s house.  But not even the electric chair could save Edison’s DC power.  And he lost the War of Currents.  For Tesla’s AC power was just too superior to Edison’s DC power not to use. 

Nikola Tesla was a Brilliant Engineer who Preferred Unraveling the Mysteries of the Universe over Business

George Westinghouse would get rich on electrical distribution.  Thanks to Nikola Tesla.  And the patents for the inventions he could have created for Thomas Edison.  If he only recognized his genius.  Which he lamented near death as his greatest mistake.  Not appreciating Tesla.  Or his work.  But Edison did well.  As did Westinghouse.  They both died rich.  Unlike Tesla.

Westinghouse could have made Tesla a very rich man.  But his work in high voltage, high frequency, wireless power led him away from Westinghouse.  For he wanted to provide the world with free electric power.  By creating power transmitters.  That could transmit power wirelessly.  Where an electric device would have an antenna to receive this wireless power.  He demonstrated it to some potential investors.  He impressed them.  But lost their funding when they asked one question.  Where does the electric meter go?  Free electric power was a noble idea.  But nothing is truly free.  Even free power.  Because someone had to generate that power.  And if you didn’t charge those using that power how were you going to pay those generating that power?

Edison and Westinghouse were great entrepreneurs.  Whereas Tesla was a brilliant engineer.  He preferred unraveling the mysteries of the universe over business.  Tesla probably suffered from obsessive-compulsive disorder.  Think of the character Sheldon Cooper on The Big Bang Theory television sitcom.  He was a lot like that character.  Brilliant.  Odd.  And interested in little else but his work.  He lived alone.  And died alone.  A bachelor.  Living in a two-room hotel room in the last decade of his life.  Despite his inventions that changed the world.  And the fortunes he made for others.  Sadly, Tesla did not die a rich man.  Like Edison and Westinghouse.  But he did live a long life.  And few men or women changed the world like he did.  A brilliant mind that comes around but once in a millennium.

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