From the “Preface to the English Edition” of “The Theory of Money and Credit” by Ludwig von Mises: “All proposals that aim to do away with the consequences of perverse economic and financial policy, merely by reforming the monetary and banking system, are fundamentally misconceived. Money is nothing but a medium of exchange and it completely fulfills its function when the exchange of goods and services is carried on more easily with its help than would be possible by means of barter. Attempts to carry out economic reforms from the monetary side can never amount to anything but an artificial stimulation of economic activity by an expansion of the circulation, and this, as must constantly be emphasized, must necessarily lead to crisis and depression. Recurring economic crises are nothing but the consequence of attempts, despite all the teachings of experience and all the warnings of the economists, to stimulate economic activity by means of additional credit.

Mathematicians of the day.

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The Tom Woods Show: Episode 411 Hillsdale College’s Federalist Papers Course: Error and Propaganda

In this episode of The Tom Woods Show, Woods speaks with Kevin Gutzman about errors in an online course on the Federalist Papers offered by Hillsdale College. While this may seem to be an obscure and irrelevant topic, such erroneous interpretations of the US Constitution have contributed to the current mess that is the warfare-welfare-police-surveillance state. As always, additional information can be found at the show notes page.

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Probabilistic inference in discrete spaces can be implemented into networks of LIF neurons

The abstract of “Probabilistic inference in discrete spaces can be implemented into networks of LIF neurons“:

The means by which cortical neural networks are able to efficiently solve inference problems remains an open question in computational neuroscience. Recently, abstract models of Bayesian computation in neural circuits have been proposed, but they lack a mechanistic interpretation at the single-cell level. In this article, we describe a complete theoretical framework for building networks of leaky integrate-and-fire neurons that can sample from arbitrary probability distributions over binary random variables. We test our framework for a model inference task based on a psychophysical phenomenon (the Knill-Kersten optical illusion) and further assess its performance when applied to randomly generated distributions. As the local computations performed by the network strongly depend on the interaction between neurons, we compare several types of couplings mediated by either single synapses or interneuron chains. Due to its robustness to substrate imperfections such as parameter noise and background noise correlations, our model is particularly interesting for implementation on novel, neuro-inspired computing architectures, which can thereby serve as a fast, low-power substrate for solving real-world inference problems.

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The Bait-and-Switch Behind Economic Populism by Nicolás Cachanosky

Cachanosky explains the political and economic problems that continue to plague parts of South America.

Like Chávez and Maduro in Venezuela, Argentina can be described as a country that fell victim to extreme populism during the Nestor and Cristina Kirchner administrations, which began in 2003. Twelve years later, this populist political project is about to end.

The economic policy of populism is characterized by massive intervention, high consumption (and low investment), and government deficits. This is unsustainable and we can identify several stages as it moves toward its inevitable economic failure. The last decade of extreme populism in Argentina can be described as following just such a pattern.

After observing the populist experience in several Latin American countries, Rudiger Dornbusch and Sebastián Edwards identified four universal stages inherent in populism in their article “Macroeconomic Populism” (1990). Even though populism can present a wide array of policies, certain characteristics seem to be present in most of the cases.

Populism usually fosters social mobilization, political propaganda, and the use of symbols and marketing practices designed to appeal to voter’s sentiments. Populism is especially aimed at those with low income, even if the ruling party cannot explain the source of its leaders’ high income. Populist rulers find it easy to use scapegoats and conspiracy theories to explain why the country is going through a hard time, while at the same time present themselves as the saviors of the nation. It is not surprising that for some, populism is associated with the left and socialist movements, and by others with the right and fascist policies.

The four stages of populism identified by Dornbusch and Edwards are:

Stage I

The populist diagnosis of what is wrong with an economy is confirmed during the first years of the new government. Macroeconomic policy shows good results like growing GDP, a reduction in unemployment, increase in real wages, etc. Because of output gaps, imports paid with central bank reserves, and regulations (maximum prices coupled with subsidies to the firms), inflation is mostly under control.

Stage II

Bottleneck effects start to appear because the populist policies have emphasized consumption over investment, the use of reserves to pay for imports, and the consumption of capital stock. Changes in sensitive relative prices start to become necessary, and this often leads to a devaluation of the exchange rate, price changes in utilities (usually through regulation), and the imposition of capital controls. Government tries, but fails, to control government spending and budget deficits.

The underground economy starts to increase as the fiscal deficit worsens because the cost of the promised subsidies need to keep up with a now-rising inflation. Fiscal reforms are necessary, but avoided by the populist government because they go against the government’s own rhetoric and core base of support.

The entire article can be read here.

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Bio-inspired Unsupervised Learning of Visual Features Leads to Robust Invariant Object Recognition

The abstract of “Bio-inspired Unsupervised Learning of Visual Features Leads to Robust Invariant Object Recognition“:

Retinal image of surrounding objects varies tremendously due to the changes in position, size, pose, illumination condition, background context, occlusion, noise, and nonrigid deformations. But despite these huge variations, our visual system is able to invariantly recognize any object in just a fraction of a second. To date, various computational models have been proposed to mimic the hierarchical processing of the ventral visual pathway, with limited success. Here, we show that combining a biologically inspired network architecture with a biologically inspired learning rule significantly improves the models’ performance when facing challenging object recognition problems. Our model is an asynchronous feedforward spiking neural network. When the network is presented with natural images, the neurons in the entry layers detect edges, and the most activated ones fire first, while neurons in higher layers are equipped with spike timing-dependent plasticity. These neurons progressively become selective to intermediate complexity visual features appropriate for object categorization, as demonstrated using the 3D Object dataset provided by Savarese et al. at CVGLab, Stanford University. The model reached 96% categorization accuracy, which corresponds to two to three times fewer errors than the previous state-of-the-art, demonstrating that it is able to accurately recognize different instances of multiple object classes in various appearance conditions (different views, scales, tilts, and backgrounds). Several statistical analysis techniques are used to show that our model extracts class specific and highly informative features.

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Training and operation of an integrated neuromorphic network based on metal-oxide memristors

Only the abstract of “Training and operation of an integrated neuromorphic network based on metal-oxide memristors” is available for free:

Despite much progress in semiconductor integrated circuit technology, the extreme complexity of the human cerebral cortex1, with its approximately 1014 synapses, makes the hardware implementation of neuromorphic networks with a comparable number of devices exceptionally challenging. To provide comparable complexity while operating much faster and with manageable power dissipation, networks2 based on circuits3, 4 combining complementary metal-oxide-semiconductors (CMOSs) and adjustable two-terminal resistive devices (memristors) have been developed. In such circuits, the usual CMOS stack is augmented with one3 or several4 crossbar layers, with memristors at each crosspoint. There have recently been notable improvements in the fabrication of such memristive crossbars and their integration with CMOS circuits5, 6, 7, 8, 9, 10, 11, 12, including first demonstrations5, 6, 12 of their vertical integration. Separately, discrete memristors have been used as artificial synapses in neuromorphic networks13, 14, 15, 16, 17, 18. Very recently, such experiments have been extended19 to crossbar arrays of phase-change memristive devices. The adjustment of such devices, however, requires an additional transistor at each crosspoint, and hence these devices are much harder to scale than metal-oxide memristors11, 20, 21, whose nonlinear current–voltage curves enable transistor-free operation. Here we report the experimental implementation of transistor-free metal-oxide memristor crossbars, with device variability sufficiently low to allow operation of integrated neural networks, in a simple network: a single-layer perceptron (an algorithm for linear classification). The network can be taught in situ using a coarse-grain variety of the delta rule algorithm22 to perform the perfect classification of 3 × 3-pixel black/white images into three classes (representing letters). This demonstration is an important step towards much larger and more complex memristive neuromorphic networks.

The importance of such neuromorphic computing research cannot be overstated. I believe that it is unlikely that AGI (artificial general intelligence) will emerge via existing computing architectures. It remains to be seen what type of neuromorphic computing hardware is required for AGI but it is possible that memristors will play a role.

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The Tom Woods Show: Episode 409 The Doomsayers Are Wrong, As Usual

In this episode of The Tom Woods Show, Woods speaks with Matt Ridley about how living standards are rising throughout most of the world yet we continue to hear pronouncements that the end is nigh. As always, additional information can be found at the show notes page.

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A Weekly Dose of Hazlitt: Cut to $60 Billion Now

Cut to $60 Billion Now” is the title of Henry Hazlitt’s Newsweek column from February 18, 1957. Here, Hazlitt shows how regardless of political rhetoric in favor of cutting government spending, such spending continues to increase.

Sen. Margaret Chase Smith has called the Federal budget
for 1958 “fantastic.” To appreciate just how fantastic
it is, we may begin by comparing once more its
proposed record-breaking peacetime “visible” spending
of $71.8 billion with the $4.1 billion annual average
in the Hoover Administration, the $7.4 billion
annual average in the first Roosevelt Administration,
the $55.8 billion annual average in the second Truman
Administration, and the $66.6 billion annual average
in the first Eisenhower Administration.

But this is just a beginning. As Raymond Moley
pointed out in Newsweek of Feb. 4, the government is
spending huge sums which do not appear in the regular
budget. In 1958, for example, it will be paying out
$14.4 billion from various trust funds, compared with
$9.4 billion in 1956 and only $5.3 billion four years ago.
And there are other “hidden” expenditures of billions.

Nondefense Spending

One favorite excuse for all this is that defense costs
money. Let’s disregard defense expenditures for the last
ten years entirely, therefore, and compare nondefense
expenditures alone (in billions).

1948  $21.1    1953  24.0
1949  26.3     1954  20.9
1950  26.4     1955  24.0
1951  21.4      1956  25.9
1952  20.9     1957  27.9

The President proposes nondefense spending for the fiscal
year 1958 of $28.5 billion. This is $7.6 billion, or 36
percent, more than in 1954. It is, in short, the biggest
paternalistic “welfare” spending in any country in the
history of the world.

Administration officials have an uneasy conscience
about all this. So at the same time as they recommend
this immensely overgrown spending program they also
recommend that it should be cut. But even under pressure
from Congressional committees they decline to
name any specific place where a cut can be made. Until
they are ready not merely to generalize but to specify,
their commendation of economy must be set down as
merely lip service.

There will be no real economy until the government
is ready to slash drastically or to halt entirely whole
categories of spending. And it is not hard to point out
what some of these categories are. We may begin with
expenditures that the Federal government should avoid
on principle—e.g., the proposal of Federal aid for local
school construction. (The economic fallacies and political
dangers of this program were discussed in this column
of Dec. 26, 1955.)

Where to Cut

Next we come to expenditures which, even if we admit
that there is a case for the Federal government getting
into them at all, are completely contraindicated in the
midst of an inflationary boom like the present one. They
can only increase inflationary pressures. These would
include Federal aid for the grandiose interstate highway
system, and mounting subsidies and other artificial
stimulants for “low-cost” housing.

Next, we come to the proposal to spend a total of
$4.4 billion on foreign aid in 1958. Probably three-quarters
of this amount could with advantage be stopped at
once. Most of the net proposed expenditures of nearly
$5 billion for agricultural subsidies (mainly for supporting
food prices above the market or rewarding farmers
for not producing) represents huge and inexcusable
waste. Veterans’ benefits for 1958 are scheduled at more
than $5 billion—$570 million higher even than in 1955.

Clearly it is not a problem of knowing where cuts
in the budget can be made, but of daring to say. It has
been customary for years to treat our mounting military
budget as sacrosanct; yet Congressional investigations,
and the Hoover report, have exposed profligate waste.

When Mr. Eisenhower announced his $72 billion
budget for 1958, a few newspapers wistfully recalled
his 1952 campaign promise to reduce spending to $60
billion a year by 1955. But this $60 billion goal, far
from having become chimerical, could be achieved in
the new fiscal year, to the great economic benefit of the
nation. All that is needed is the political courage and
will to achieve it.

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