Archive for March, 2018

The best books on the history of mathematics

March 30, 2018

Robin Wilson (Emeritus Professor of Pure Mathematics at the Open University) recommends 5 books to understand history of mathematics.

He says if math was taught more historically, students would appreciate it more.

Why should we be interested in the history of mathematics?

Mathematics, like painting, music, literature, has a long history. Indeed, it’s longer than most, since the first writing is believed to be numerical. It’s also multicultural, with its historical origins in Africa, the Middle East and Asia. The history of mathematics also involves particular individuals who are part of our world culture. Perhaps more school children would be interested in maths if it were taught more from a historical point of view. For example, how often do they learn that quadratic equations have been solved for 4000 years, having their origins in clay tablets discovered in what is now Iraq, an area that features in our daily newspapers?

Couldn’t agree more!


Playing a money game: Fiat money or not…

March 30, 2018

JP Koning in his super blog plays a money game.

He starts with an initial setting and then asks whether we say we now have fiat money in the economy.

People bandy the term fiat currency around a lot, but what exactly does it mean? None of us wants to live in a Babel where people use fiat to indicate twenty different thing. So let’s try to zero in on what most people mean by playing a game called fiat-or-not. I will describe a monetary system as it evolves away from a pure commodity arrangement and you will tell me when it has slipped into being a fiat system. (The technique I am using in this post cribs from a classic Nick Rowe post).

So let’s start the game. 

There are 9 stages and not clear at which stage we can say fiat money has taken shape:

Here is a collection of unconnected thoughts on the fiat-or-not game.

A) My guess it that readers will have chosen different stages as their preferred debut for fiat money. This is a bit tragic, since with no commonly-accepted definition for the term, most debates about fiat money have been and will continue to be meaningless. 

B) We apply our definitions like cookie cutters to the real world. So if you chose step 7 (when banknotes became permanently irredeemable) as your flipping point, then 1971 would be a very important date in your scheme of the world since this is when the U.S. permanently removed gold convertibility. 

But if you chose step 9 as your transition point to fiat, then the global monetary system is not currently on a fiat standard, since central banks have neither closed their doors nor donated their assets to charity. So 1971 really isn’t an interesting date. I’m aware of only one country on a step 9 fiat standard: Somalia. Its central bank burned down yet Somali shilling banknotes continued to circulate. And ironically enough, if we choose to adopt a step 9 definition of fiat money, then bitcoin—which was designed to destroy central bank “fiat” money—is itself fiat, because it is unbacked, whereas most central bank money is not fiat.

What I’ve described is the Borges problem. Categories pre-digest the world for us. We get very different results depending on what definition we use and how we apply it to the world. 

C) I think many readers associate fiat with hyperinflatable.

D) Fiatness, fiatish? If we can’t agree on what constitutes fiat-or-not, maybe we can agree that there might be a fiat scale, from pure fiat to not fiat at all, with most monetary systems existing somewhere in between. I am already on record advocating moneyness over money, so this fits with the general them of the blog. On the other hand, fiatness seems a bit of a cop-out.

E) We don’t need gobbledygook like fiat. The term carries too much baggage. Let’s select a more precise set of words, then apply them to the real world in order to understand what our monetary systems were like, how they are now, and where we are going. Until we settle on these words, let’s avoid all conversations with the term fiat in them. 

How we just assume fiat money without really figuring what it means. JP’s post says there are several layers to the issue.

The world’s first central bank electronic money has come and gone: Ecuador (2014-2018)

March 30, 2018

Prof Larry White in this piece updates on the Ecuador e-money project.


Catholic origins of US Credit Unions…

March 29, 2018

Fascinating piece:

As more and more Americans have learned over the years, a good alternative to a bank is something called a credit union, a financial cooperative controlled by its members and operated on the principle of people helping people.

But what most people don’t realize is the Catholic origins of such arrangements in North America.

According to Nathan Schneider, a professor of media studies at the University of Colorado Boulder, the first credit union in the United States was St. Mary’s Bank in Manchester, New Hampshire. It was developed in 1908 with the help of Alphonse Desjardins, who built Quebec’s famous caisses populaires.

But in fact, Desjardins got the idea from a priest on Prince Edward Island, Fr. George-Antoine Belcourt. “Credit unions take many forms now, but their origins were specific,” Schneider wrote recently in America magazine. “According to Mr. Desjardins, ‘The caisse populaire is truly an organization of the parish.’”

The role of religion in money/banking is as central as one can imagine…

Trying to make central bankers accountable for their actions: US edition

March 29, 2018

From CNBC :

Sen. Elizabeth Warren, a Massachusetts Democrat who has been a staunch banking critic, particularly on issues relating to the Wells Fargo fake account scandal, said she wants a chance to grill Williams before he is appointed. “Mr. Williams’ track record raises several questions, including about his fitness to supervise Wall Street banks given the San Francisco Fed’s inadequate supervision of Wells Fargo during its many consumer scandals,” Warren said in a statement. “If Mr. Williams is selected, the Fed’s Board of Governors should not approve his selection until Mr. Williams and the co-chairs of the New York Fed’s search committee testify before the Senate Banking Committee about his qualifications and the process that led to his selection.”

The San Francisco Fed has been tarred with the fallout from the Wells Fargo problems. Also, Washington Mutual, which was in the San Francisco jurisdiction, was one of the highest-profile bank collapses during the financial crisis, and much of the savings and loan crisis of the late 1980s revolved around the region.

While it would be hard to place the blame for any of those failures directly at Williams’ feet, his appointment still brings up reminders of a darker place in American banking historyWells Fargo employees, pressured by aggressive sales quotas that have since been abandoned, created some 3.5 million accounts without customer knowledge. Several high-ranking bank officials were pushed out, as were multiple board members.

“I do know the San Francisco Fed, which gave us Janet Yellen as well, has perhaps overly focused on the monetary and economic functions of the Fed and completely ignored or failed to understand the regulatory functions,” said Dick Bove, analyst at the Vertical Group. “So they have given the United States some of the worst financial disasters in history.”

The emphasized last lines just sum up. Central banks have ignored the basic regulation function all this while and preferred to get lost in the jazz world of monetary policy.

One might say this is a case of too little too late. But atleast they are trying. Making central bankers accountable for their decisions or lack of them is the least talked about aspect of central banking. The academia has barely discussed these issues and always focusing on giving the already highly independent central banks more independent. Given how banking messes have become so entrenched across the world, one is wondering what is going on.


Mission nearly impossible: the City of Sydney’s efforts to increase the affordable housing supply

March 29, 2018

Prof Alan Morris of Univ of Technology at Sydney has a piece:

A major barrier to affordable housing supply in the inner city has been the state government’s reluctance to agree that affordable housing should be a sizeable proportion of the housing to be built on state owned or controlled land that is being renewed.

UrbanGrowth NSW, the state’s primary urban transformation agency, is redeveloping significant tracts of state land in the Sydney City area. However, almost all of the envisaged new housing on UrbanGrowth sites at this stage appear to be geared towards middle-class households. A highest-return-for-the-land motif is driving planning decisions.

The conclusion is clear: if local government is to create a sizeable affordable housing sector it is vital that the state and federal governments play a major role. Local governments, however powerful and well resourced, cannot do it by themselves.


Manipal Hospitals merger with Fortis Hospitals: A journey that started in 1953 in Manipal

March 28, 2018

A renowned Indian business historian once told me, first very little is written on Indian business history. Second, whatever is written,  it is mostly North India based and ends at Bombay/Mumbai. Southern India is mostly missing from the analysis.

Within Southern India, this region of Mangalore/Udupi/Manipal (called South Canara earlier) deserves a special mention in the pantheon of Indian business history. How many regions have contributed distinctly to four service industries?

  • Medicine (discussed in the post)
  • Banking (home to several banks which pioneered many innovations, much of whose history is lost)
  • Education (several students have got educated in Manipal)
  • Hotels and Restaurants (each time you eat in Udupi Restaurants and lick your fingers, remember they originated from here)

So, when one read the news of merger of Manipal Hospitals and Fortis Hospitals, to create the largest hospital company it warmed the heart a bit.


The first mangoes of the year come from this Kerala town: Muthalamada

March 28, 2018

Fascinating piece by Anubha George. Had no idea about this.

In Muthalamada, a Kerala town, mangoes are available from Feb onwards:


Financial engineering will not stabilise an unstable euro area

March 28, 2018

Without the basics in place, Financial engineering can only delay the inevitable.

Profs. Paul De Grauwe and Yuemei Ji on fin engg in Euro area:


Temperature and human capital in India

March 28, 2018

Three researchers – Teevrat Garg , Maulik Jagnani  Vis Taraz – in this piece:

A large proportion of the population in India has agrarian livelihoods that remain climate-exposed. The number of hot days per year in the country are expected to double by the end of this century. This column shows that higher-than-normal temperatures in a particular year lead to a contemporaneous reduction in agricultural incomes, and large negative impacts on children’s human capital outcomes in the subsequent year. 


We use math and reading test scores for more than 4.5 million children in primary and secondary school to examine the effects of higher temperatures on human capital production in India. Using data from an India-wide repeated cross-section2 between 2006-2014, the Annual Status of Education Report (ASER), that tests school-age children on math and reading ability, we show that over a longer-run horizon, measured as the number of hot days in the calendar year prior to the test, higher temperatures affect both math and reading scores. Ten extra days in the previous year with average daily temperature above 29°C (84°F) relative to 15°C-17°C (59°F-63°F) reduces current-year math and reading test performance by 0.03 and 0.02 standard deviations3 (SD) respectively.
In fact, when we isolate effects by growing and non-growing seasons in India, we find that the effect of higher temperatures on test scores is primarily driven through higher temperatures in the previous years’ agricultural growing seasons, with comparatively negligible effects of non-growing season temperature. Ten extra days over 29°C in the previous year growing season reduces math and reading scores by 0.1 and 0.06 SD, respectively. These are large effects: these 10 extra hot days in the previous year growing season could effectively wipe out gains made from a median educational intervention (McEwan 2015), particularly when one considers that India currently experiences close to 50 days above 29°C.

The Gordon Gekko effect: The role of culture in the financial industry…

March 27, 2018

This is a brilliant paper by Prof. Andrew Lo of MIT. It was written in 2016 and somehow missed it all this while.

The paper is written for financial industry but applies to nearly all walks of life. I mean even applies to Australian cricket team which has shocked the cricket world with its conduct much like financial industry did after the financial crisis:

Culture is a potent force in shaping individual and group behavior, yet it has received scant attention in the context of financial risk management and the 2007-09 financial crisis. This article presents a brief overview of the role of culture as it is seen by psychologists, sociologists, and economists, and then describes a specific framework for analyzing culture in the context of financial practices and institutions. Using this framework, the author addresses three questions: (1) what is culture? (2) does it matter? and (3) can it be changed? He illustrates the utility of this framework by applying it to five concrete situations—the collapse of Long-Term Capital Management, the fall of AIG Financial Products, the use by Lehman Brothers of “Repo 105,” Société Générale’s rogue trader, and the Securities and Exchange Commission’s handling of the Madoff Ponzi scheme. The article concludes with a proposal to change culture through “behavioral risk management.”


Bangalore airport bus service to offer more services: But fix the punctuality first…

March 27, 2018

There are special buses that ply to and fro Bangalore Airport called Vayu Vajra.

Recent news suggests that the bus service is getting jazzier offering many services:

These are welcome given the long ride to the airport. These additional services have been started due to competition from cab operators.

Having said this, the bus service should also fix two things: punctuality and fares.


Tamil Nadu buses take to ‘surge pricing’ now

March 27, 2018

The TN government buses run special buses on weekends to clear the rush and charge 1.5 times the normal fare:


India does not need Bombay Club version 2.0 (remembering Bombay Plan of 1944-45 too..)

March 26, 2018

Sharp Mint edit which says we should say no to Bombay Club 2.0:


45 years of Chipko movement (it actually started in 1730)..

March 26, 2018

Brilliant stuff from Google as they celebrate the 45th anniversary of Chipko movement.

Google on Monday celebrated the 45th anniversary of the Chipko Movement – the non-violent resistance by mostly local women to protect the forests of Uttar Pradesh. The sections of the forests where the movement took place are now in Uttarakhand.

The movement began in Chamoli district in 1973 against trees being felled for wood and infrastructure development, and it soon spread to other Himalayan states. The drive was called chipko, or embrace, as villagers hugged the trees and formed circles around them to save them from being cut.

Google’s doodle, by artists Svabhu Kohli and Viplov Singh, not only illustrates the movement but also its main participants – the local women who took part in the campaign in large numbers as they would be directly affected by the lack of firewood and water that deforestation causes.

“The Chipko Andolan stands out as an eco-feminist movement,” Google said. “Women formed the nucleus of the movement.”

Environmentalist and Gandhian activist Chandi Prasad Bhatt led the first Chipko movement. The campaign began near the village of Mandal, where villagers, denied a piece of land because of a government policy, were angry after the plot was given to a sporting goods manufacturer. The villagers appealed to authorities but marched into the forest and hugged the trees to protect them when their pleas had no effect. Days later, the government was forced to cancel the company’s logging permit.

Another activist, Sunderlal Bahuguna, also played a major role in helping the movement spread and educating villagers about the forests and Himalayan mountains. His efforts resulted in then Prime Minister Indira Gandhi banning deforestation.

However, the original Chipko movement goes back to 18th century Rajasthan, when a group of 363 people from 84 villages, led by a local woman named Amrita Devi, died to protect the khejri trees in the region that the king of Jodhpur had ordered cut down. The king later relented and revoked his order.

This piece written in 2016 argues why Uttarakhand needs another Chipko movement. Well, not just the hilly state, the entire country needs it given how green cover is diminishing around us…

Earlier articles said to learn investing lessons from Dravid, now they are asking Dravid to learn the lessons!

March 26, 2018

No words are sufficient and do justice to Rahul Dravid’s conduct on and off the field. These guys (Laxman, Tendulkar, Sangakara etc) played the game in utmost spirit no matter what the pressures. Last few days have seen cricket slip to a new low  standard and one could have learnt a few things from these guys.

Anyways, this piece is less about cricket and more about personal finances.

When Dravid retired and even later, there were articles on how one should learn personal finance lessons from Dravid. See this for instance:


Women on banknotes are associated with greater gender equality (what about banknotes in India?)

March 26, 2018

Hansika Kapoor in this superb Mint Sunday piece looks at images on banknotes. More specifically, she analyses whether having women on banknotes in different countries also reflects in higher gender equality.

There does seem to be an association:


Slovenia’s central bank governor quits after death threats

March 26, 2018

All kinds of things happening in monetary world. I had pointed how the Ukraine central bank’s governor got coffins outside the office.

Last week, Boštjan Jazbec, the Governor of Slovenia central bank quit due to death threats:


Reserve Bank of New Zealand to consider employment alongside price stability: End of an era?

March 26, 2018

Reserve Bank of New Zealand questioned and changed the thinking on central banking by adopting inflation targets in 1989. The central bank only focused on price stability in its mandate.

After nearly 30 years, there were talks of  reviewing the mandate and adding employment to the inflation. It has been made official now and in the new agreement  signed between the government and central bank, adds employment to the mandate as well. This brings an end to an era when central banks only focused on price stability and adopted inflation targets for achieving the same. Though, Price stability will still be the major objective but it is not the only objective anymore.

The press release says:


Why Delhi may face tomorrow what Cape Town faces today

March 23, 2018

After worries over Bangalore drying, Delhi joins the list as well.

In this Mint piece, Ragini Bhuyan researches on water situation in Delhi.

These signs were visible long ago when one was seeing water tankers in Delhi by mid-90s itself. Ironically, much of this tanker water was going to posh societies built in the newer areas. Now am told, this is fairly wide-spread.

Indian media is doing a poor job of highlighting the huge water crisis staring at us. It is amazing how they react to stock market declines, but barely react to slipping water levels with each passing day.

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