Binary Numbers and Computer Speed

Posted by PITHOCRATES - April 2nd, 2014

Technology 101

Computers are Good at Arithmetic thanks to Binary Numbers

Let’s do a fun little experiment.  Get a piece of paper and a pen or a pencil.  And then using long division divide 4,851 by 34.  Time yourself.  See how long it takes to complete this.  If the result is not a whole number take it to at least three places past the decimal point.  Okay?  Ready……..start.

Chances are the older you are the faster you did this.  Because once upon a time you had to do long division in school.  In that ancient era before calculators.  Younger people may have struggled with this.  Because the result is not a whole number.  Few probably could do this in their head.  Most probably had a lot of scribbling on that piece of paper before they could get 3 places past the decimal point.  The answer to three places past the decimal point, by the way, is 142.676.  Did you get it right?  And, if so, how long did it take?

Probably tens of seconds.  Or minutes.  A computer, on the other hand, could crunch that out faster than you could punch the buttons on a calculator.  Because one thing computers are good at is arithmetic.  Thanks to binary numbers.  The language of all computers.  1s and 0s to most of us.  But two different states to a computer.  That make information the computer can understand and process.  Fast.

A Computer can look at Long Streams of 1s and 0s and make Perfect Sense out of Them

The numbers we use in everyday life are from the decimal numeral system.  Or base ten.  For example, the number ‘4851’ contains four digits.  Where each digit can be one of 10 values (0, 1, 2, 3…9).   And then the ‘base’ part comes in.  We say base ten because each digit is a multiple of 10 to the power of n.  Where n=0, 1, 2, 3….  So 4851 is the sum of (4 X 103) + (8 X 102) + (5 X 101) + (1 X 100).  Or (4 X 1000) + (8 X 100) + (5 X 10) + (1 X 1).  Or 4000 + 800 + 50 + 1.  Which adds up to 4851.

But the decimal numeral system isn’t the only numeral system.  You can do this with any base number.  Such as 16.  What we call hexadecimal.  Which uses 16 distinct values (0, 1, 2, 3…9, A, B, C, D, E, and F).  So 4851 is the sum of (1 X 163) + (2 X 162) + (15 X 161) + (3 X 160).  Or (1 X 4096) + (2 X 256) + (15 X 16) + (3 X 1).  Or 4096 + 512 + 240 + 3.  Which adds up to 4851.  Or 12F3 in hexadecimal.  Where F=15.  So ‘4851’ requires four positions in decimal.  And four positions in hexadecimal.  Interesting.  But not very useful.  As 12F3 isn’t a number we can do much with in long division.  Or even on a calculator.

Let’s do this one more time.  And use 2 for the base.  What we call binary.  Which uses 2 distinct values (0 and 1).  So 4851 is the sum of (1 X 212) + (0 X 211) + (0 X 210) + (1 X 29) + (0 X 28) + (1 X 27) + (1 X 26) + (1 X 25) + (1 X 24) + (0 X 23) + (0 X 22) + (1 X 21) + (1 X 20).  Or (1 X 4096) + (0 X 2048) + (0 X 1024) + (1 X 512) + (0 X 256) + (1 X 128) + (1 X 64) + (1 X 32) + (1 X 16) + (0 X 8) + (0 X 4) + (1 X 2) + (1 X 1).  Or 4096 + 0 + 0 + 512 + 0 + 128 + 64 + 32 + 16 + 0 + 0 + 2 + 1.  Which adds up to 4851.  Or 1001011110011 in binary.  Which is gibberish to most humans.  And a little too cumbersome for long division.  Unless you’re a computer.  They love binary numbers.  And can look at long streams of these 1s and 0s and make perfect sense out of them.

A Computer can divide two Numbers in a few One-Billionths of a Second

A computer doesn’t see 1s and 0s.  They see two different states.  A high voltage and a low voltage.  An open switch and a closed switch.  An on and off.  Because of this machines that use binary numbers can be extremely simple.  Computers process bits of information.  Where each bit can be only one of two things (1 or 0, high or low, open or closed, on or off, etc.).  Greatly simplifying the electronic hardware that holds these bits.  If computers processed decimal numbers, however, just imagine the complexity that would require.

If working with decimal numbers a computer would need to work with, say, 10 different voltage levels.  Requiring the ability to produce 10 discrete voltage levels.  And the ability to detect 10 different voltage levels.  Greatly increasing the circuitry for each digit.  Requiring far more power consumption.  And producing far more damaging heat that requires more cooling capacity.  As well as adding more circuitry that can break down.  So keeping computers simple makes them cost less and more reliable.  And if each bit requires less circuitry you can add a lot more bits when using binary numbers than you can when using decimal numbers.  Allowing bigger and more powerful number crunching ability.

Computers load and process data in bytes.  Where a byte has 8 bits.  Which makes hexadecimal so useful.  If you have 2 bytes of data you can break it down into 4 groups of 4 bits.  Or nibbles.  Each nibble is a 4-bit binary number that can be easily converted into a single hexadecimal number.  In our example the binary number 0001 0010 1111 0011 easily converts to 12F3 where the first nibble (0001) converts to hexadecimal 1.  The second nibble (0010) converts to hexadecimal 2.  The third nibble (1111) converts to hexadecimal F.  And the fourth nibble (0011) converts to hexadecimal 3.  Making the man-machine interface a lot simpler.  And making our number crunching easier.

The simplest binary arithmetic operation is addition.  And it happens virtually instantaneously at the bit level.  We call the electronics that make this happen logical gates.  A typical logical gate has two inputs.  Each input can be one of two states (high voltage or low voltage, etc.).  Each possible combination of inputs produces a unique output (high voltage or low voltage, etc.).  If you change one of the inputs the output changes.  Computers have vast arrays of these logical gates that can process many bytes of data at a time.  All you need is a ‘pulsing’ clock to sequentially apply these inputs.  With the outputs providing an input for the next logical operation on the next pulse of the clock.

The faster the clock speed the faster the computer can crunch numbers.  We once measured clock speeds in megahertz (1 megahertz is one million pulses per second).  Now the faster CPUs are in gigahertz (1 gigahertz is 1 billion pulses per second).  Because of this incredible speed a computer can divide two numbers to many places past the decimal point in a few one-billionths of a second.  And be correct.  While it takes us tens of seconds.  Or even minutes.  And our answer could very well be wrong.

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Henry Ford, Bill Hewlett & Dave Packard, Steve Jobs & Steve Wozniak, Howard Schultz, Ray Kroc and Richard Branson

Posted by PITHOCRATES - February 25th, 2014

 History 101

(Originally published May 8th, 2012)

Capitalism allows Entrepreneurs to bring their Great Ideas to Life

Entrepreneurs start with an idea.  Of how to do something better.  Or to create something we must have that we don’t yet know about.  They think.  They create.  They have boundless creative energies.  And the economic system that best taps that energy is capitalism.  The efficient use of capital.  Using capital to make profits.  And then using those profits to make capital.  So these ideas of genius that flicker in someone’s head can take root.  And grow.  Creating jobs.  And taxable economic activity.  Creating wealth for investors and workers.  Improving the general economy.  Pulling us out of recessions.  Improving our standard of living.  And making the world a better place.  Because of an idea.  That capitalism brought to life.

Entrepreneurs Risked Capital to bring Great Things to Market and to Create Jobs

Henry Ford established the Detroit Automobile Company in 1899.  Which failed.  He reorganized it into the Henry Ford Company in 1901.  Ford had a fight with his financial backers.  And quit.  Taking the Ford name with him.  And $900.  The Henry Ford Company was renamed Cadillac and went on to great success.  Ford tried again and partnered with Alexander Malcomson.  After running short of funds they reorganized and incorporated Ford Motor Company in 1903 with 12 investors.  The company was successful.  Some internal friction and an unexpected death of the president put Ford in charge.  Ford Motor built the Model A, the Model K and the Model S.  Then came the Model T.  And the moving assembly line.  Mass production greatly increased the number of cars he could build.  But it was monotonous work for the assembly line worker.  Turnover was high.  So to keep good workers he doubled pay in 1914 and reduced the 9-hour shift to 8 hours.  This increased productivity and lowered the cost per Model T.  Allowing those who built the cars to buy what they built.  In 2011 the Ford Motor Company employed approximately 164,000 people worldwide.

Bill Hewlett and Dave Packard established Hewlett-Packard (HP) in 1939.  In a garage.  They raised $538 in start-up capital.  In that garage they created their first successful commercial product.  A precision audio oscillator.  Used in electronic testing.  It was better and cheaper than the competition.  Walt Disney Productions bought this oscillator to certify Fantasound surround sound systems in theaters playing the Disney movie Fantasia.  From this garage HP grew and gave us calculators, desktop and laptop computers, inkjet and laser printers, all-in-one multifunction printer/scanner/faxes, digital cameras, etc.  In 2010 HP employed approximately 324,600 employees worldwide.  (Steve Wozniak was working for HP when he designed the Apple I.  Which he helped fund by selling his HP calculator.  Wozniak offered his design to HP.  They passed.)

Steve Jobs had an idea to sell a computer.  He convinced his friend since high school, Steve Wozniak, to join him.  They sold some of their things to raise some capital.  Jobs sold his Volkswagen van.  Wozniak sold his HP scientific calculator.  They raised about $1,300.  And formed Apple.  They created the Apple I home computer in 1976 in Steve Jobs’ garage.  From these humble beginnings Apple gave us the iPad, iPhone, iPod, iMac, MacBook, Mac Pro and iTunes.  In 2011 Apple had approximately 60,400 full time employees.

Jerry Baldwin, Zev Siegl, and Gordon Bowker opened the first Starbucks in 1971 in Seattle, Washington.  About 10 years later Howard Schultz drank his first cup of Starbucks coffee.  And he liked it.  Within a year he joined Starbucks.  Within another year while traveling in Italy he experienced the Italian coffeehouse.  He loved it.  And had an idea.  Bring the Italian coffeehouse to America.  A place to meet people in the community and converse.  Sort of like a bar.  Only where the people stayed sober.  Soon millions of people were enjoying these tasty and expensive coffee beverages at Starbucks throughout the world.  In 2011 Starbucks employed approximately 149,000 people.

Ray Kroc sold Prince Castle Multi-Mixer milk shakes mixers to a couple of brothers who owned a restaurant.  Who made hamburgers fast.  Richard and Maurice McDonald had implemented the Speedee Service System.  It was the dawn of fast food.  Kroc was impressed.  Facing tough competition in the mixer business he opened a McDonald’s franchise in 1955.  Bringing the grand total of McDonald’s restaurants to 9.  He would go on to buy out the McDonald brothers (some would say unscrupulously).  Today there are over 30,000 stores worldwide.  In 2010 McDonald’s employed approximately 400,000 people.

Richard Branson started a magazine at 16.  He then sold records out of a church crypt at discount prices.  The beginning of Virgin Records.  In 1971 he opened a record store.  He launched a record label in 1972.  And a recording studio.  Signing the Sex Pistols.  And Culture Club.  In 1984 he formed an airline.  Virgin Atlantic Airways.  In 1999 he went into the cellular phone business.  Virgin Mobile.  In 2004 he founded Virgin Galactic.  To enter the space tourism business.  His Virgin Group now totals some 400 companies.  And employs about 50,000 people.

The Decline of Capitalism and the Rise of the Welfare State caused the European Sovereign Debt Crisis

And we could go on.  For every big corporation out there will have a similar beginning.  Corporations that use capital efficiently.  Bringing great things to market.  Introducing us to new things.  Always making our lives better.  And more comfortable.  One thing you will not find is a great success story like this starting in the Soviet Union.  The People’s Republic of China (back in the days of Mao Zedong).  East Germany (before the Berlin Wall fell).  North Korea.  Or Cuba.  No.  The command economies of communist countries basically froze in time.  Where there was no innovation.  No ideas brought to life.  Because the government kind of frowned on that sort of thing.

There is a reason why the West won the Cold War.  And why we won that war without the Warsaw Pack and NATO forces fighting World War III.  And why was this?  Because we didn’t need to.  For the communist world simply could not withstand the forces of living well in the West.  Whenever they could their people escaped to the West.  To escape their nasty, short and brutish lives.  In the command economies of their communist states.  Where the state planners failed to provide for their people.  Even failing to feed their people.  The Soviet Union, the People’s Republic of China and North Korea all suffered population reducing famines.  But not in the West.  Where we are not only well fed.  But our poor suffer from obesity.  Which is not a good thing.  But it sure beats dying in a famine.

Sadly, though, the West is moving towards the state planning of their one time communist foes.  Social democracies are pushing nations in the European Union to bankruptcy.  Japan’s generous welfare state is about to implode as an aging population begins to retire.  Even in the United States there has been a growth of government into the private sector economy like never before.  Which is causing the Great Recession to linger on.  As it caused Japan’s lost decade to become two decades.  And counting.  As it is prolonging the European sovereign debt crisis.  With no end in sight.  The cause of all their problems?  The decline of capitalism.  And the rise of the welfare state.  Which just kills the entrepreneurial spirit.  And the creation of jobs.  Which is one cure for all that ails these countries.  And the only one.  For only robust economic activity can pull a country out of recession.  And for that you need new jobs.  And the entrepreneurial spirit.  In short, you need capitalism.

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It’s not the Traffic that crashed the Obamacare Website but Bad Website Design

Posted by PITHOCRATES - October 6th, 2013

Week in Review

The Obamacare website got off to a less than illustrious start.  That is, it failed to work.  The Obama administration said the website failed because it was overwhelmed by so many people wanting to log on at the same time to get them some Obamacare.  But people who actually know how to design websites said it wasn’t a capacity problem.  The problem is something common whenever the government tries to do anything.  They just did a poor job designing the Obamacare website (see Obamacare architecture flawed: Experts by Reuters posted 10/6/2013 on The Times of India).

Days after the launch of the federal government’s Obamacare website, millions of Americans looking for information on new health insurance plans were still locked out of the system even though its designers scrambled to add capacity.

The U.S. Department of Health and Human Services, which oversaw development of the site, declined to make any of its IT experts available for interviews. CGI Group Inc, the Canadian contractor that built HealthCare.gov, is “declining to comment at this time,” said spokeswoman Linda Odorisio.

Five outside technology experts interviewed by Reuters, however, say they believe flaws in system architecture, not traffic alone, contributed to the problems.

For instance, when a user tries to create an account on HealthCare.gov, which serves insurance exchanges in 36 states, it prompts the computer to load an unusually large amount of files and software, overwhelming the browser, experts said.

If they are right, then just bringing more servers online, as officials say they are doing, will not fix the site…

One possible cause of the problems is that hitting “apply” on HealthCare.gov causes 92 separate files, plug-ins and other mammoth swarms of data to stream between the user’s computer and the servers powering the government website, said Matthew Hancock, an independent expert in website design. He was able to track the files being requested through a feature in the Firefox browser…

[Matthew Hancock, an independent expert in website design,] said because so much traffic was going back and forth between the users’ computers and the server hosting the government website, it was as if the system was attacking itself.

Hancock described the situation as similar to what happens when hackers conduct a distributed denial of service, or DDOS, attack on a website: they get large numbers of computers to simultaneously request information from the server that runs a website, overwhelming it and causing it to crash or otherwise stumble. “The site basically DDOS’d itself,” he said.

Did you catch that?  President Obama and the Democrats have lambasted corporations for outsourcing American jobs.  Called them a whole bunch of nasty names.  Unpatriotic.  Greedy.  You name it.  And yet here they are.  Outsourcing the design of the Obamacare website.  So I guess the Obama administration is unpatriotic, greedy, etc.

Those “92 separate files, plug-ins and other mammoth swarms of data to stream between the user’s computer and the servers powering the government website” does not fill one with a lot of confidence that our private and personal data they’re collecting will be secure.  Complicated systems are more subject to breaking down.  And getting hacked.

If these people who actually know how to design websites are right that means the Obama administration lied to us about what was wrong with the Obamacare website.  Of course, president Obama said if we liked our health insurance plan and our doctor we could keep them.  Which were lies.  It seems like the Obama administration has a habit of lying to the American people to get what they want against our will.

Not only that they sic the IRS on their political enemies.  As well as using the IRS to suppress voter turnout on the right.  By making it harder for Tea Party groups to be politically active like they were in the 2010 mid-term election.  Who rose up in opposition to Obamacare.  Had the Obama administration not use the full weight of their powers to suppress the Tea Party during the 2012 election President Obama would not have won reelection.  And Obamacare may have already been repealed by this time.  For it was conservatives that sat home and didn’t vote for Romney.  Because the Tea Party wasn’t active like in the previous election to motivate them.  Or they were intimidated by the left and were afraid of the IRS.  Further reasons to fear the data mining of the Obamacare website.  Which the IRS will have access to.

Perhaps we should be grateful that they designed the Obamacare website poorly.  For it will let us keep our personal and private information secure for a little longer.

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Morse Code, Telegraph, Binary System, Bit, Byte, Bitstream, Dialup Modems, Broadband, Cable Modem and Coaxial Cable

Posted by PITHOCRATES - August 8th, 2012

Technology 101

One of the First Improvements in Communication Speed was Morse Code sent on a Telegraph

The Battle of New Orleans (1815) was a great American victory over the British.  General Andrew Jackson with a force of about 4,000 repulsed a British force of some 11,000.  It was a huge American win.  The biggest in the war.  And a humiliating British defeat.  Now here’s an interesting side note about that battle.  The war was already over.  We had already signed a peace treaty with the British.  And were already repairing that special relationship between the United States and Britain.  So why was there even a Battle of New Orleans?  Because there was no Internet, television, radio or telegraph back then.  There was only ink and paper.  And foot, horse and boat.  Making communications slow.  Very, very slow.

The American Civil War, like the Crimean War, was a war where the technology was ahead of the tactics.  Four years of fighting with modern weapons using Napoleon tactics killed over half a million Americans by 1865.  After General Grant flushed General Lee from the Petersburg defenses he chased him as Lee fled west.  With General Sheridan’s cavalry in hot pursuit.  Cutting in front of Lee’s army to bring on the Battle of Sayler’s Creek.  Where the Confederates suffered a crippling defeat.  General Sheridan telegraphed General Grant, “If the thing is pressed, I think that Lee will surrender.”  President Lincoln was monitoring the military wires in Washington.  When he read Sheridan’s message he quickly sent a wire to General Grant.  “Let the thing be pressed.”  Grant pressed the thing.  And Lee surrendered at Appomattox Courthouse.

In 50 years time communications went from taking weeks.  To taking as little as minutes. The benefit of faster communications?  At the Battle of New Orleans approximately 2,792 people were killed, wounded or went missing.  In a battle fought after the war was over.  Only word hadn’t gotten to them yet.  So fast communications are a good thing.  And can prevent bad things from happening.  And one of the first improvements in communication speed was Morse code sent on a telegraph.  A wire between two places.  With a key switch and an electromechanical device at each end.  When an operator tapped the switch closed an electrical current went down the wire to the electromechanical device at the other end of the wire, inducing a current in it that opened and closed a device that replicated the keying at the other end.  Thus they could send a series of ‘dots and dashes’ through this wire.  The operator encoded the message at one end by assigning a series of dots and/or dashes for each letter.  The operator at the other end then decoded these dots and dashes back into the original message.

Getting Outside Information into your Computer was a little like Getting Information over a Telegraph

Morse code is a binary system.  Just like the ‘bits’ in a computer system.  Where each bit was one of two voltage levels.  Represented by 1s and 0s.  Eight bits make a byte.  Like the telegraph operator a man-machine interface encodes information into a series of bits.  The computer bus, registers and microprocessor ‘grab’ bytes of this bitstream at a time.  And then processes these bits in parallel blocks of bytes.  Unlike the telegraph where the encoded message went serially down the wire.  The telegraph greatly increased the speed of communications.  But a telegraph operator could only encode and send one letter of a word at a time.  So he couldn’t send many letters (or pulses) per second.  Just a few.  But when you encode this information into 8-bit chunks you can greatly increase the speed data moves inside a computer.  As computer speeds grew so did their bus size.  From 8 bit to 16 bit (2 bytes).  From 16 bit to 32 bit (4 bytes).  From 32 bit to 64 bit (8 bytes).  As a computer processed more bytes of data at a time in parallel computers could increase the speed it completed tasks.

Of course, people who were most interested in faster computers were gamers.  Who played games with a lot of video and sound information encoded in them.  The faster the computer could process this information the better the graphics and sound were.  Today computers are pretty darn fast.  They can run some of the most demanding programs from 3-D gaming to computer-aided design (CAD).  But then a new technology came out that made people interested by what was happening outside of their computer.  And how fast their computer was didn’t matter as much anymore.  Because getting that outside information into your computer was a little like getting information over a telegraph.  It came in serially.  Over a wire.  Through a modem that attached a computer to the Internet.  And the World Wide Web.  Where there was a whole lot of interesting stuff.  But to see it and hear it you had to get it inside your computer first.  And the weak link in all your web surfing was the speed of your modem.

A modem is modulator-demodulator.  Hence modem.  And it worked similar to the telegraph.  There was a wire between two locations.  Typically a telephone line.  At each end of this wire was a modem.  The wire terminated into each modem.  Each modem was connected to a computer.  One computer would feed a bitstream to its modem.  The modem would encode the 1s and 0s in that bitstream.  And modulate it onto a carrier frequency.  The modem would output this onto the telephone line.  Where it traveled to the other modem.  The other modem then demodulated the carrier frequency.  Decoded the 1s and 0s and recreated the bitstream.  And fed it into the other computer.  Where the computer grabbed bytes of the bitstream and processed it.

The Coaxial Cable of Broadband could Carry a wider Range of Frequencies than the Twisted Pairs of Telephone Wire

The speed at which all of this happened depended on your modem.  Specifically your modem.  The other modem you connected to was typically on a web server and was of the highest speed.  And on all of the time.  Unlike the early dialup modems we used in the Nineties when we first started surfing the web.  Back then surfing could be expensive as you often paid for that time as if you were on the telephone.  This was the other weak link in surfing.  Trying to make that telephone line as short as possible.  Because that was what you paid for.  The use of the telephone line.  Once you got onto the Internet you could travel anywhere at no additional cost.  So you dialed in to an available local number.  Which sometimes could take awhile.  And when you finally did dial-up on a local line but went inactive for a period of time it disconnected you.  Because others were looking for an available local phone line, too.

The first modem speeds many of us used at the beginning were 2400 bits per second (bps).  Which was a lot faster than the few bits per second of a telegraph operator.  And okay for sending email.  But it was painfully slow for graphics and sound.  And then the improvements in speed came.  And they came quickly.  4800 bps.  9600 bps.  14400 (14.4k) bps.  28800 (28.8k) bps.  33600 (33.6k) bps.  And then the last of the dialup modems.  56000 (56k) bps.  Which meant you could download up to 56,000 bits per second of 1s and 0s.  That’s 56,000 pieces of information coming out of that modem each second.  Now that was fast.  Still slower than what happened inside the computer with those wide parallel buses.  That chomped off huge bytes of data.  And processed them at rates in excess of a billion times a second.  But it was still the fastest thing on the block.  Until broadband arrived.

Today you can buy a broadband cable modem for less than $100 that can download at speeds in excess of 100,000,000 bits per second.  That’s over 100 million pieces of information each second.  It is only data rates like this that let you live stream a movie off the Internet.  Something that the 56k modem just wouldn’t do for you.  And it’s always on.  Costing you a flat fee no matter how long you spend surfing the web.  You turned on your computer and you were connected to the Internet.  What allowed those greater speeds?  The wire.  The coaxial cable of broadband could carry a wider range of frequencies than the twisted pairs of the telephone wire.  Providing a greater bandwidth.  Which could carry more encoded information between modems.  Allowing you to download music and videos quicker than it took a telegraph operator to send a message.

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Personal Computer, Commodore 64, IBM PC, DOS, Macintosh, Mouse, GUI, Modem, Internet, HTML, URL and World Wide Web

Posted by PITHOCRATES - August 7th, 2012

History 101

The IBM PC operating DOS set one Standard for the Personal Computer

The first personal computer (PC) appeared in the Sixties.  (People called these first PCs ‘minicomputers’.  But we’ll use the term PC to cover all work and home single-user computer systems.)  These first PCs were little more than a programmable calculator.  Not very useful in most homes.  PCs got a little more useful in the Seventies.  The Commodore PET, the Apple II and Radio Shack TRS-80 hit store shelves in the Seventies.  And if you were a school boy without a girlfriend chances were that you were home playing games on these PCs.  Some were even writing programs.  So these PCs offered an exciting new world for geeks and nerds.  But offered little to their sisters and parents.

In the early Eighties one of the most popular PCs hit the market.  The Commodore 64.  Which offered better graphics.  And accessories like tape drives, disc drives, joy sticks and printers.  Allowing better gaming.  And the beginning of business programs.  Like a database program.  Sure, it was primitive.  And you needed a TV to use the Commodore 64.  But it was state of the art then.  Kids who played with these PCs gave up a lot of their youth to these machines.  But other than those fascinated by technology (and ardent fans of Star Trek), few others were interested in the PC in the early Eighties.  It just wasn’t anything the masses were demanding.

Then came the IBM PC.  This set one standard for the personal computer.  And we call every personal computer that uses the IBM platform a PC.  This PC came with its own monitor.  That was one color.  Monochromatic.  Either green.  Or amber.  The monitor sat on the computer box.  In the front of the box were two 5-1/4 floppy disc drives.  State of the art then.  Extinct dinosaurs today.  Businesses started buying these for the word processing and spreadsheet programs they could run.  But the PCs themselves weren’t very people friendly.  Before you could use your word processing or spread sheet program you had to boot up your computer with DOS first.  DOS was the disc operating system that made the computer work.  In those early days you had to type a DOS command to get those word processing and spreadsheet programs to start.  It required even more DOS mastery to do some basic things like installing a printer or copying a disc.  Making these PCs complicated machines that most people still did not see any reason to buy one.

The Defense Department’s ARPA created the ARPANET which was the Forerunner to the Internet

Then came 1984.  And the Macintosh computer (the Mac).  The other computer standard.  And rival to IBM.  And like their iconic Super Bowl ad said, it changed the world.  The Mac introduced us to the mouse.  And the graphical user interface (GUI).  Which Xerox actually created during the early Seventies but didn’t do anything with it.  But a guy by the name of Steve Jobs did.  He incorporated it into the Mac and made using a computer a whole lot easier.  The PC makers soon followed, adding a mouse and the Windows GUI to the PC.  Computers were never easier to use.  Businesses began buying computers in droves.  People were even bringing them into their homes.  Primarily for gaming.  Though some were using personal finance programs to pay their bills.  Writing letters and addressing envelopes.   And a few other things.  But the masses weren’t buying them yet.  Because there was little the masses could do on these remarkable machines.

Computer scientist JCR Licklider left Bolt, Beranek and Newman (BBN) to head the Behavioral Sciences and Command and Control programs at the Defense Department’s Advanced Research Projects Agency (ARPA).  He had an idea about making computers talk to each other.  Distant computers.  Others continued his work at ARPA.  Eventually issuing a request for quotation to connect the powerful computers at the University of California, Los Angeles (UCLA), the Stanford Research Institute’s Augmentation Research Center, the University of California, Santa Barbara (UCSB) and University of Utah.  BBN won the contract.  Built the network between these computers.  And on October 29, 1969, they sent the first message over the ARPANET.  An incredible achievement.  It was paradigm changing.  The Department of Defense had just created the Internet.  And the world would never be the same.  In another 20 years or so, that is.

The birth of the Internet in 1969 meant nothing to the masses.  The only people using it were computer people working on big, powerful computers located only at universities and research facilities.  Who could share these incredible computing resources.  But the masses had no concept of computer networks.  And weren’t asking for this technology.  They wanted other things during the Seventies.  And were only warming up to computers during the Eighties.  It was going to take a lot more to get the masses interested in this new technology.  Something that made it fun.  Without having to learn a lot of new stuff.  Something that was no more difficult than watching television.

A Favorable Business Climate in the Eighties created a High Tech Boom and ushered in the World Wide Web

As the Internet grew it allowed more computers to network with each other.  Sort of like having a new system of interstate highways.  A quick way to get places.  But unlike the interstate highways the Internet didn’t have tourist attractions and destinations of interest to go to.  At least, not yet.  And then came along Tim Berners-Lee.  Sir Timothy John “Tim” Berners-Lee these days.  Thanks to a knighthood bestowed by Queen Elizabeth II.  He helped to populate the Internet with destinations of interest.  He created a ‘web’ of hypertext documents that sat on servers.  People with computers could access these servers via their modems.  At first with dial-up modems that took forever to download anything off of the World Wide Web.  Then with broadband high speed modems.  These would connect them to the Internet.  The HyperText Markup Language (HTML) provided a common programming language for these interconnected computers.  The uniform resource locator (URL) provided a unique destination address for each thing (document, picture, video, etc.) on the World Wide Web.  And a web browser provided the virtual car to travel the Internet to these destinations of interests at various URLs all across the web.

Of course, none of this would have been possible with only those early PCs running DOS.  It was the marriage of the mouse, the GUI and the World Wide Web that made using the Internet fun and as easy as watching television.  Surfing the Internet took off in the Nineties because you could read, watch and listen to anything on the web without knowing the first thing about computer programming.  Even our parents could use email so deftly that first class mail may soon be joining the 5-1/4 floppy drive into extinction.  Along with the printed telephone directory.  And the printed newspaper.  Everything we want to know, look-up, enjoy, share, etc., is online these days.  We can even live-stream movies to our television via our PC connected to the Internet.  We bank, shop, chat and use social media like Twitter and Facebook.  We now have smartphones that can do all of this for us.  As well as take pictures and post them online.

People now use this technology throughout their day.  And most can’t imagine living without it.  This all starting with technology in the Sixties that people didn’t know a thing about.  Didn’t understand it.  And never asked for it.  But a few individuals advanced this technology.  Then some companies figured out how to commercialize it.  To make us demand something that didn’t exist only a short time earlier.  And once they explained why we had to have this technology we had to have it.  And now can’t live without it.  Proving Say’s law.  Supply creates demand.  And disproving Keynesian economics.  For demand didn’t make any of this happen.  Supply did.  A favorable business climate in the Eighties (low taxes, low regulatory burdens, sound monetary policy, etc.) created a high tech boom.  That showered us with high-tech toys.  And ushered in the next big thing.  The World Wide Web.

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How can National Health Care lower Costs when they can’t even Buy Computer Equipment at Competitive Prices?

Posted by PITHOCRATES - May 13th, 2012

Week in Review

The problem with national health care?  There is only one buyer in the market.  The government.  And whenever you have only one buyer you’re never going to get the best price (see NHS pays ‘extortionate’ 328 per cent mark-up on printer parts by Christopher Williams posted 5/11/2012 on The Telegraph)

The NHS is paying “extortionate” prices for basic computer equipment and services, with dealers collecting profit margins of up to 328 per cent, a study has found…

On average, at central and regional levels, the NHS buys computer services and equipment at 28 per cent more than their wholesale price, compared to the best average in the private sector of only 3 per cent, said Mercato, a firm which tracks government and commercial IT procurement. As well as basic items this includes expensive equipment such as servers, and software.

These are things they know they are paying extortionate prices for.  Because there are other buyers for these things in the private sector.  And they can see what they are paying for these same things.  It didn’t stop the NHS from getting ripped off.  But they could tell they were being ripped off.  By the prices people were paying in the private sector.  Of course, these people aren’t buying hospital equipment, medicine, supplies, etc., that only the NHS uses.  And they buy these things in a market where there are no other buyers competing for these.  So there is no incentive to lower prices at all.  So if they’re paying 328% profit margins on computer equipment and services you know they are paying at least 328% profit margins on everything else they buy.  Or far, far more.  Because who’s going to know except the seller?

If this is happening in the NHS you know it will happen in Obamacare.  Every supplier in the Obamacare system will be looking to take advantage of some unaware bureaucrat.  Or bribing one to allow extortionate prices.  Because that’s the way government works.  It always has.  And it always will.  Only with Obamacare we’ll be sacrificing the quality of the U.S. health care system in the process.  For all the graft in the system will leave even less funding for health care services.  Because this graft will be new.  Unlike the private insurance companies that are now a pain in the ass to everyone that has to deal with them.  But you have to give the private insurance companies this.  They don’t pay extortionate prices.  Which has kept health care costs under control so far.  At least, as best as anyone can.  And far better than Obamacare will.  Just wait and see.

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Henry Ford, Bill Hewlett & Dave Packard, Steve Jobs & Steve Wozniak, Howard Schultz, Ray Kroc and Richard Branson

Posted by PITHOCRATES - May 8th, 2012

History 101

Capitalism allows Entrepreneurs to bring their Great Ideas to Life

Entrepreneurs start with an idea.  Of how to do something better.  Or to create something we must have that we don’t yet know about.  They think.  They create.  They have boundless creative energies.  And the economic system that best taps that energy is capitalism.  The efficient use of capital.  Using capital to make profits.  And then using those profits to make capital.  So these ideas of genius that flicker in someone’s head can take root.  And grow.  Creating jobs.  And taxable economic activity.  Creating wealth for investors and workers.  Improving the general economy.  Pulling us out of recessions.  Improving our standard of living.  And making the world a better place.  Because of an idea.  That capitalism brought to life.

Entrepreneurs Risked Capital to bring Great Things to Market and to Create Jobs

Henry Ford established the Detroit Automobile Company in 1899.  Which failed.  He reorganized it into the Henry Ford Company in 1901.  Ford had a fight with his financial backers.  And quit.  Taking the Ford name with him.  And $900.  The Henry Ford Company was renamed Cadillac and went on to great success.  Ford tried again and partnered with Alexander Malcomson.  After running short of funds they reorganized and incorporated Ford Motor Company in 1903 with 12 investors.  The company was successful.  Some internal friction and an unexpected death of the president put Ford in charge.  Ford Motor built the Model A, the Model K and the Model S.  Then came the Model T.  And the moving assembly line.  Mass production greatly increased the number of cars he could build.  But it was monotonous work for the assembly line worker.  Turnover was high.  So to keep good workers he doubled pay in 1914 and reduced the 9-hour shift to 8 hours.  This increased productivity and lowered the cost per Model T.  Allowing those who built the cars to buy what they built.  In 2011 the Ford Motor Company employed approximately 164,000 people worldwide.

Bill Hewlett and Dave Packard established Hewlett-Packard (HP) in 1939.  In a garage.  They raised $538 in start-up capital.  In that garage they created their first successful commercial product.  A precision audio oscillator.  Used in electronic testing.  It was better and cheaper than the competition.  Walt Disney Productions bought this oscillator to certify Fantasound surround sound systems in theaters playing the Disney movie Fantasia.  From this garage HP grew and gave us calculators, desktop and laptop computers, inkjet and laser printers, all-in-one multifunction printer/scanner/faxes, digital cameras, etc.  In 2010 HP employed approximately 324,600 employees worldwide.  (Steve Wozniak was working for HP when he designed the Apple I.  Which he helped fund by selling his HP calculator.  Wozniak offered his design to HP.  They passed.)

Steve Jobs had an idea to sell a computer.  He convinced his friend since high school, Steve Wozniak, to join him.  They sold some of their things to raise some capital.  Jobs sold his Volkswagen van.  Wozniak sold his HP scientific calculator.  They raised about $1,300.  And formed Apple.  They created the Apple I home computer in 1976 in Steve Jobs’ garage.  From these humble beginnings Apple gave us the iPad, iPhone, iPod, iMac, MacBook, Mac Pro and iTunes.  In 2011 Apple had approximately 60,400 full time employees.

Jerry Baldwin, Zev Siegl, and Gordon Bowker opened the first Starbucks in 1971 in Seattle, Washington.  About 10 years later Howard Schultz drank his first cup of Starbucks coffee.  And he liked it.  Within a year he joined Starbucks.  Within another year while traveling in Italy he experienced the Italian coffeehouse.  He loved it.  And had an idea.  Bring the Italian coffeehouse to America.  A place to meet people in the community and converse.  Sort of like a bar.  Only where the people stayed sober.  Soon millions of people were enjoying these tasty and expensive coffee beverages at Starbucks throughout the world.  In 2011 Starbucks employed approximately 149,000 people.

Ray Kroc sold Prince Castle Multi-Mixer milk shakes mixers to a couple of brothers who owned a restaurant.  Who made hamburgers fast.  Richard and Maurice McDonald had implemented the Speedee Service System.  It was the dawn of fast food.  Kroc was impressed.  Facing tough competition in the mixer business he opened a McDonald’s franchise in 1955.  Bringing the grand total of McDonald’s restaurants to 9.  He would go on to buy out the McDonald brothers (some would say unscrupulously).  Today there are over 30,000 stores worldwide.  In 2010 McDonald’s employed approximately 400,000 people.

Richard Branson started a magazine at 16.  He then sold records out of a church crypt at discount prices.  The beginning of Virgin Records.  In 1971 he opened a record store.  He launched a record label in 1972.  And a recording studio.  Signing the Sex Pistols.  And Culture Club.  In 1984 he formed an airline.  Virgin Atlantic Airways.  In 1999 he went into the cellular phone business.  Virgin Mobile.  In 2004 he founded Virgin Galactic.  To enter the space tourism business.  His Virgin Group now totals some 400 companies.  And employs about 50,000 people.

The Decline of Capitalism and the Rise of the Welfare State caused the European Sovereign Debt Crisis

And we could go on.  For every big corporation out there will have a similar beginning.  Corporations that use capital efficiently.  Bringing great things to market.  Introducing us to new things.  Always making our lives better.  And more comfortable.  One thing you will not find is a great success story like this starting in the Soviet Union.  The People’s Republic of China (back in the days of Mao Zedong).  East Germany (before the Berlin Wall fell).  North Korea.  Or Cuba.  No.  The command economies of communist countries basically froze in time.  Where there was no innovation.  No ideas brought to life.  Because the government kind of frowned on that sort of thing.

There is a reason why the West won the Cold War.  And why we won that war without the Warsaw Pack and NATO forces fighting World War III.  And why was this?  Because we didn’t need to.  For the communist world simply could not withstand the forces of living well in the West.  Whenever they could their people escaped to the West.  To escape their nasty, short and brutish lives.  In the command economies of their communist states.  Where the state planners failed to provide for their people.  Even failing to feed their people.  The Soviet Union, the People’s Republic of China and North Korea all suffered population reducing famines.  But not in the West.  Where we are not only well fed.  But our poor suffer from obesity.  Which is not a good thing.  But it sure beats dying in a famine.

Sadly, though, the West is moving towards the state planning of their one time communist foes.  Social democracies are pushing nations in the European Union to bankruptcy.  Japan’s generous welfare state is about to implode as an aging population begins to retire.  Even in the United States there has been a growth of government into the private sector economy like never before.  Which is causing the Great Recession to linger on.  As it caused Japan’s lost decade to become two decades.  And counting.  As it is prolonging the European sovereign debt crisis.  With no end in sight.  The cause of all their problems?  The decline of capitalism.  And the rise of the welfare state.  Which just kills the entrepreneurial spirit.  And the creation of jobs.  Which is one cure for all that ails these countries.  And the only one.  For only robust economic activity can pull a country out of recession.  And for that you need new jobs.  And the entrepreneurial spirit.  In short, you need capitalism.

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Boolean Algebra, Logic Gates, Flip-Flop, Bit, Byte, Transistor, Integrated Circuit, Microprocessor and Computer Programming

Posted by PITHOCRATES - February 1st, 2012

Technology 101

A Binary System is one where a Bit of Information can only have One of Two States 

Parents can be very logical when it comes to their children.  Children always want dessert.  But they don’t always clean their rooms or do their homework.  So some parents make dessert conditional.  For the children to have their dessert they must clean their rooms AND do their homework.  Both things are required to get dessert.  Or you could say this in another way.  If the children either don’t clean their rooms OR don’t do their homework they will forfeit their dessert.  Stated in this way they only need to do one of two things (not clean their room OR not do their homework) to forfeit their dessert. 

This was an introduction to logic.  George Boole created a mathematical way to express this logic. We call it Boolean algebra.  But relax.  There will be no algebraic equations here.

In the above example things had only one of two states.  Room cleaned.  Room not cleaned.   Homework done.  Homework not done.  This is a binary system.  Where a bit of information can only have one of two states.  We gave these states names.  We could have used anything.  But in our digital age we chose to represent these two states with either a ‘1’ or a ‘0’.  One piece of information is either a ‘1’.  And if it’s not a ‘1’ then it has to be a ‘0’.  In the above example a clean room and complete homework would both be 1s.  And a dirty room and incomplete homework would be 0s.  Where ‘1’ means a condition is ‘true’.  And a ‘0’ means the condition is ‘false’.

Miniaturization allowed us to place more Transistors onto an Integrated Circuit

Logic gates are electrical/electronic devices that process these bits of information to make a decision.  The above was an example of two logic gates.  Can you guess what we call them?  One was an AND gate.  The other was an OR gate.  Because one needed both conditions (the first AND the second) to be true to trigger a true output.  Children get dessert.  The other needed only one condition (the first OR the second) to be true to trigger a true output.  Children forfeit dessert. 

We made early gates with electromechanical relays and vacuum tubes.  Claude Shannon used Boolean algebra to optimize telephone routing switches made of relays.  But these were big and required big spaces, needed lots of wiring, consumed a lot of power and generated a lot of heat.  Especially as we combined more and more of these logic gates together to be able to make more complex decisions.  Think of what happens when you press a button to call an elevator (an input).  Doors close (an action).  When doors are closed (an input) car moves (an action).  Car slows down when near floor.  Car stops on floor.  When car stops doors open.  Etc.  If you were ever in an elevator control room you could hear a symphony of clicks and clacks from the relays as they processed new inputs and issued action commands to safely move people up and down a building.  Some Boolean number crunching, though, could often eliminate a lot of redundant gates while still making the same decisions based on the same input conditions. 

The physical size constraints of putting more and more relays or vacuum tubes together limited these decision-making machines, though.  But new technology solved that problem.  By exchanging relays and vacuum tubes for transistors.  Made from small amounts of semiconductor material.  Such as silicon.  As in Silicon Valley.  These transistors are very small and consume far less power.  Which allowed us to build larger and more complex logic arrays.  Built with latching flip-flops.  Such as the J-K flip-flop.  Logic gates wired together to store a single bit of information.  A ‘1’ or a ‘0’.  Eight of these devices in a row can hold 8 bits of information.  Or a byte.  When a clock was added to these flip-flops they would check the inputs and change their outputs (if necessary) with each pulse of the clock.  Miniaturization allowed us to place more and more of these transistors onto an integrated circuit.  A computer chip.  Which could hold a lot of bytes of information. 

To Program Computers we used Assembly Language and High-Level Programming Languages like FORTRAN

The marriage of latching flip-flops and a clock gave birth to the microprocessor.  A sequential digital logic device.  Where the microprocessor checks inputs in sequence and based on the instructions stored in the computer’s memory (those registers built from flip-flops encoded with bytes of binary instructions) executes output actions.  Like the elevator.  The microprocessor notes the inputs.  It then looks in its memory to see what those inputs mean.  And then executes the instructions for that set of inputs.  The bigger the registers and the faster the clock speed the faster this sequence.

Putting information into these registers can be tedious.  Especially if you’re programming in machine language.  Entering a ‘1’ or a ‘0’ for each bit in a byte.  To help humans program these machines we developed assembly language.  Where we wrote lines of program using words we could better understand.  Then used an assembler to covert that programming into the machine language the machine could understand.  Because the machine only looks at bytes of data full of 1s and 0s and compares it to a stored program for instructions to generate an output.  To improve on this we developed high-level programming languages.  Such as FORTRAN.  FORTRAN, short for formula translation, made more sense to humans and was therefore more powerful for people.  A compiler would then translate the human gibberish into the machine language the computer could understand.

Computing has come a long way from those electromechanical relays and vacuum tubes.  Where once you had to be an engineer or a computer scientist to program and operate a computer.  Through the high-tech revolution of the Eighties and Silicon Valley.  Where chip making changed our world and created an economic boom the likes few have ever seen.  To today where anyone can use a laptop computer or a smartphone to surf the Internet.  And they don’t have to understand any of the technology that makes it work.  Which is why people curse when their device doesn’t do what they want it to do.  It doesn’t help.  But it’s all they can do.  Curse.  Unlike an engineer or computer scientist.  Who don’t curse.  Much.

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Carnegie, Rockefeller, Morgan, Interstate Commerce Act, Sherman Antitrust Act, Sherman Silver Purchase Act, Federal Reserve, Nixon and Reagan

Posted by PITHOCRATES - January 31st, 2012

History 101

Government Induced Inflation caused the Panic of 1893 and caused the Worst Depression until the Great Depression

Britain kicked off the Industrial Revolution.  Then handed off the baton to the United States in the latter half of the 19th century.  As American industry roared.  Great industrialists modernize America.  And the world.  Andrew Carnegie made steel inexpensive and plentiful.  He built railroad track and bridges.  And the steel-skeleton buildings of U.S. cities.  Including the skyscrapers.  John D. Rockefeller saved the whales.  By producing less expensive kerosene to burn in lamps instead of the more expensive whale oil.  He refined oil and brought it to market cheaper and more efficiently than anyone else.  Fueling industrial activity and expansion.  J.P. Morgan developed and financed railroads.  Made them more efficient.  Profitable.  And moved goods and people more efficiently than ever before.  Raising the standard of living to heights never seen before. 

The industrial economy was surging along.  And all of this without a central bank.  Credit was available.  So much so that it unleashed unprecedented economic growth.  That would have kept on going had government not stopped it.  With the Interstate Commerce Act in 1887 and the Sherman Antitrust Act of 1890.  Used by competitors who could not compete against the economy of scales of Carnegie, Rockefeller and Morgan and sell at their low prices.  So they used their friends in government to raise prices so they didn’t have to be as competitive and efficient as Carnegie, Rockefeller and Morgan.  This legislation restrained the great industrialists.  Which began the era of complying with great regulatory compliance costs.  And expending great effort to get around those great regulatory compliance costs.

Also during the late 19th century there was a silver boom.  This dumped so much silver on the market that miners soon were spending more in mining it than they were selling it for.  Also, farmers were using the latest in technology to mechanize their farms.  They put more land under cultivation and increased farm yields.  So much so that prices fell.  They fell so far that farmers were struggling to pay their debts.  So the silver miners used their friends in government to solve the problems of both miners and farmers.  The government passed the Sherman Silver Purchase Act which increased the amount of silver the government purchased.  Issuing new treasury notes.  Redeemable in both gold and silver.  The idea was to create inflation to raise prices and help those farmers.  By allowing them to repay old debt easier with a depreciated currency.  And how did that work?  Investors took those new bank notes and exchanged them for gold.  And caused a run on U.S. gold reserves that nearly destroyed the banking system.  Plunging the nation in crisis.  The Panic of 1893.  The worst depression until the Great Depression.

Richard Nixon Decoupled the Dollar from Gold and the Keynesians Cheered 

J.P. Morgan stepped in and loaned the government gold to stabilize the banking system.  He would do it again in the Panic of 1907.  The great industrialists created unprecedented economic activity during the latter half of the 19th century.  Only to see poor government policies bring on the worst depression until the Great Depression.  A crisis one of the great industrialists, J.P. Morgan, rescued the country from.  But great capitalists like Morgan wouldn’t always be there to save the country.  Especially the way new legislation was attacking them.  So the U.S. created a central bank.  The Federal Reserve System.  Which was in place and ready to respond to the banking crisis following the stock market crash of 1929.  And did such a horrible job that they gave us the worst depression since the Panic of 1893.  The Great Depression.  Where we saw the greatest bank failures in U.S. history.  Failures the Federal Reserve was specifically set up to prevent.

The 1930s was a lost decade thanks to even more bad government policy.  FDR’s New Deal programs did nothing to end the Great Depression.  Only capitalism did.  And a new bunch of great industrialists.  Who were allowed to tool up and make their factories hum again.  Without having to deal with costly regulatory compliance.  Thanks to Adolf Hitler.  And the war he started.  World War II.  The urgency of the times repealed governmental nonsense.  And the industrialists responded.  Building the planes, tanks and trucks that defeated Hitler.  The Arsenal of Democracy.  And following the war with the world’s industrial centers devastated by war, these industrialists rebuilt the devastated countries.  The fifties boomed thanks to a booming export economy.  But it wouldn’t last.  Eventually those war-torn countries rebuilt themselves.  And LBJ would become president.

The Sixties saw a surge in government spending.  The U.S. space program was trying to put a man on the moon.  The Vietnam War escalated.  And LBJ introduced us to massive new government spending.  The Great Society.  The war to end poverty.  And racial injustice.  It failed.  At least, based on ever more federal spending and legislation to end poverty and racial injustice.  But that government spending was good.  At least the Keynesians thought so.  Richard Nixon, too.  Because he was inflating the currency to keep that spending going.  But the U.S. dollar was pegged to gold.  And this devaluation of the dollar was causing another run on U.S. gold reserves.  But Nixon responded like a true Keynesian.  And broke free from the shackles of gold.  By decoupling the dollar from gold.  And the Keynesians cheered.  Because the government could now use the full power of monetary policy to make recessions and unemployment a thing of the past.

Activist, Interventionist Government have brought Great Economic Booms to Collapse 

The Seventies was a decade of pure Keynesian economics.  It was also the decade that gave us double digit interest rates.  And double digit inflation rates.  It was the decade that gave us the misery index (the inflation rate plus the unemployment rate).  And stagflation.  The combination of a high inflation rate you normally only saw in boom times coupled with a high unemployment rate you only saw during recessionary times.  Something that just doesn’t happen.  But it did.  Thanks to Keynesian economics.  And bad monetary policy.

Ronald Reagan was no Keynesian.  He was an Austrian school supply-sider.  He and his treasury secretary, Paul Volcker, attacked inflation.  The hard way.  The only way.  Through a painful recession.  They stopped depreciating the dollar.  And after killing the inflation monster they lowered interest rates.  Cut tax rates.  And made the business climate business-friendly.  Capitalists took notice.  New entrepreneurs rose.  Innovated.  Created new technologies.  The Eighties was the decade of Silicon Valley.  And the electronics boom.  Powering new computers.  Electronic devices.  And software.  Businesses computerized and became more efficient.  Machine tools became computer-controlled.  The economy went high-tech.  Efficient.  And cool.  Music videos, CD players, VCRs, cable TV, satellite TV, cell phones, etc.  It was a brave new world.  Driven by technology.  And a business-friendly environment.  Where risk takers took risks.  And created great things.

History has shown that capitalists bring great things to market when government doesn’t get in the way.  With their punishing fiscal policies.  And inept monetary policies.  Activist, interventionist government have brought great economic booms to collapse.  Who meddle and turn robust economic activity into recessions.  And recessions into depressions.  The central bank being one of their greatest tools of destruction.  Because policy is too often driven by Big Government idealism.  And not the proven track record of capitalism.  As proven by the great industrialists.  And high-tech entrepreneurs.  Time and time again.

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