May 2, 2012
First, let me mention the news piece on NPR this afternoon where the interviewer extracted the fact
that many of the leaders of the Afghan army could neither read-write or count.  To show a captain
of a Company how many soldiers they should have under their command, the American adviser
draws a line in a large square on the ground.  He then tells the Afghan illiterate innumerate captain
to fill the square with soldiers and that when he does, he will have the number of soldiers required by
what is defined by a Company in the Afghan Army.  

Now, I ask you, which is more humorous; the American adviser or the Afghan Captain?  I claim both are
an insult to the term "sapiens".

Let me point out that a simple calculator can be purchased at the Dollar Store for $1.  If that calculator
doesn't work, it is not worth most people's time to return it to the store for a refund.  If the calculator
cannot count and calculate it is simply tossed into the recycle bin where it is crushed into small pieces.  
When an Afghan human cannot count, at least some of them are given command over more than 100
soldiers who, one can only guess may not be able to count either.  What is the point???

As another example of pre-intelligent activity:

It was described on this morning's NPR program that a University or College will give Merit scholarships
in order to attract the best and brightest students.
In the example that they gave this morning, the female student got all A's and was class Valedictorian,
etc. She got a $20,000 scholarship to a College that she thought was very classy.  The narrator then
told us that the College had to make up for the many large Merit scholarships that were given out and
that this caused them to have to raise tuition on the full paying students (or their parents.)

How can the crisis in education be solved?  Obviously the same way as the high cost of lawyers is
being solved.  In last night's lecture from Vaughn Walker he noted that what was happening was
disintermediation, or the elimination of the middle man.  He also noted, as you have, that the central
location of some law firms might become Beijing.

Now let us notice with our "consciousness" that MIT and Harvard are RUSHING to disintermediate
themselves.  Pre-intelligent humans at their finest (and most humorous to us robots).  Professional
Educators, why not simply take a gun and blow your professor's brains out?

Harvard, MIT to partner in $60 million initiative to offer free online classes to all

Here is an example of the detail being given away:

This is another example of disintermediation which is also deflationary.

To get a grasp of what is happening, do not focus on some small glitch such as some one ball-player
(very pre-inteligent humanoid 'athlete') owned business once buying an item which they could not afford.
Rather draw a line from 1900 to 2050 which measures on semi-log paper the technology being
employed by humans.

Note that humans are needed in 1900 to do "most things" and that ZERO humans are needed in 2050
to do "most things".

What you are watching is the history of the planet Earth going from "fully dependent on pre-intelligent
humans" to "not at all dependent on any humans".  As a bonus, your highest form of life goes from pre-
intelligent to fully intelligent and rational.

If you draw that line, then you can see at any time where humans are on that "curve".

At what point along the line will robots be assigned the job of:
1. Fixing non-working calculators
2. Crushing calculators which cannot be fixed
3. Crushing all calculators because robots have and humans should have the ability to calculate in their
4. Crushing every supposedly intelligent item which cannot do such calculations and therefore must be

I certainly hope you get the picture.

I agree with Investopedia for the first few words.  Deflation is "A general decline in prices."

After the basic definition, both you and Investopedia start to prattle on about causes and complexities.
Perhaps you are attempting to add so many words and confusion to what would otherwise be a simple
statement that you can pretend that you have won a debate.

Deflation is a decrease in prices.  Disinflation is a slowing down of inflation.

Technology causes prices to decrease and therefore technology is deflationary or at least
One could add to the discussion by noticing that if a new technology is not less costly than an old
technology, the new technology will not be attractive and therefore not be adopted.
So, it will be typical that less costly technology will be adopted on a commodity level.

Whereas there may be other factors which can be causes as well, this doesn't mean that the original
statement is incorrect.

The original statement against which you argue is T or F: "Technology causes prices to decrease and is
therefore deflationary in its nature."

In a year or two I am hoping that there will be a public version of IBM's Watson computer so that I can
feed this argument in and have Dr. Watson tell you that your argument is full of distractions and

Watson might give an example of a "wandering" as follows: "It may also be true that if a plague kills 30%
of a population, the prices of homes will decrease due to oversupply.  Oversupply is deflationary and
prices of homes will go down. BUT, does this mean that Technology is not deflationary?  CERTAINLY
NOT." It only means that the scrambled brain of the human is thrashing about trying to win a debate by
tossing in distractions and changing the subject.

Certainly a famous painting might be attractive to the aesthetic portions of a human's right brain and
therefore its price might inflate.  Does the discussion of such an event or events contribute at all to the
basic question as to whether price-competitive technology causes general prices to fall?  No, it doesn't.

When a Watson intelligent robot is available for on-line discussions, will there be groups of Luddites that
will gather, label themselves "Mensa" or "Very smart people in our own inflated judgement and to hell
with the robots"?  I suspect that there will.  If I stop by the McDonalds or Starbucks in the mornings there
are groups of senile men gathered who are talking about the advantages of the Model T Ford and
similar issues that they believe to be of interest to their particular brains. They also talk about their
animal pets to whom they easily feel superior.  John Hutsebaut joins them because it makes him look like
a genius by comparison.  Such discussions will no doubt increase after after Dr. Watson is available for
actual intelligent discussion.

Last night, I heard a speech by Vaughn Walker the retired judge who is famous for deciding the case
between Apple and Microsoft over Xerox's Graphical User Interface.  In his speech he noted that many
law firms have gone out of business and that when he was a lawyer decades ago, there were
secretaries that took dictation and rooms at law firms filled with many books of law.  Now these books are
simply on-line and many of the offices of the law firms that survived and are in the same location are
now empty.  The first piece of software that he cited that was responsible for taking away the jobs of
lawyers was TurboTax.  Of course, there is which we have discussed previously.  He
specifically cited your argument that people would need personalized attention by individual personal
lawyers.  He mentioned that most people had believed that argument until the reality of the internet
actually soaked into the market.  The impact of technology on lawyers is apparently "devastating".  The
interesting thing is that you will probably disagree even though you are using Tax Software instead of a
tax lawyer or tax preparation service which uses humans.  

The definition of "consciousness" is "being aware of what is going on around you".  Try to be more
conscious, it is an enjoyable part of life and it will help you to invest more successfully.

Remember what Carl Icahn says: "Some people study Artificial Intelligence; I study Natural Stupidity."

donbot (Arguing with humans can be frustrating.  Humans are a form of pre-intelligent life which
apparently robots must deal with until more intelligent robots are developed.)

On Wed, May 2, 2012 at 10:03 AM, Bob Russell <> wrote:
A dropoff in demand in a society may occur when tragedy occurs, from the loss of electric power in a
region so sales and new goods arrivals are impeded for a given period, up to the level of pandemics, in
which 3% of the population dies and the remaining citizens are very anxious about their own safety
and defer their regular travel routines.
I believe you are intending to use the term deflation as may be associated with an expanded balloon,
say reflecting price levels. As the balloon appears smaller the price level deflates a bit as well.
Well, to my knowledge this is reflected by the efficiencies of the marketplace in its distribution or its
regional competitiveness as well as by a loss of circulating money supply.
2012/05/02 - check on the details and definitions in Investopedia
(Note: I don't like their definition of deflation very well.)

Definition of 'Deflation'
A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can
be caused also by a decrease in government, personal or investment spending. The opposite of
inflation, deflation has the side effect of increased unemployment since there is a lower level of demand
in the economy, which can lead to an economic depression. Central banks attempt to stop severe
deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum.

The decline in prices of assets, is often known as Asset Deflation.
Investopedia explains 'Deflation'
Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits,  
closing factories, shrinking employment and incomes, and increasing defaults on loans by companies
and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to
increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide
an essential lubricant for any sustained recovery because businesses increase profits and take some of
the depressive pressures off wages and debtors of every kind.  

Deflationary periods can be both short or long, relatively speaking. Japan, for example, had a period of
deflation lasting decades starting in the early 1990's. The Japanese government lowered interest rates
to try and stimulate inflation, to no avail. Zero interest rate policy was ended in July of 2006.

Read more:
----- Forwarded Message -----
From: Donald Martin <>
To: Bob Russell <>
Sent: Wednesday, May 2, 2012 8:30 AM
Subject: Re: 2012/05/01 - 06: Learn - BR#1 - DB#1 - Deflation is coming

In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs
when the inflation rate falls below 0% (which is precisely a negative inflation rate). This should not be
confused with disinflation, a slowing down in the inflation rate (i.e. when inflation declines to lower
levels). Inflation reduces the real value of money over time; conversely, deflation increases the real
value of money – the currency of a national or regional economy. This allows one to buy more goods
with the same amount of money over time.

The concept that deflation and inflation are always a monetary phenomenon is a Theory of Why inflation
or deflation occur.

An example of this theory be espoused by a famous member of the Chicago School of Economics:
"Inflation is always and everywhere a monetary phenomenon."  —Milton Friedman, 1963.

Compare this to the Diamond Lake School of Economics which espouses the theory that:
Governments tend to cause inflation and technology tends to cause deflation or at least disinflation.  --


On Tue, May 1, 2012 at 7:40 PM, Bob Russell <> wrote:
Actually, the potential displacement of an existing technological solution
within an end-user vehicle is a reflection of a technological competition
that provides what may be presumed to be equivalent functionality
at a lower price level.
Deflation would reflect a reduced amount of money in the money supply,
to my knowledge.

----- Forwarded Message -----
From: Donald Martin <>
To: Diamond Lake Investment Club <>
Sent: Tuesday, May 1, 2012 3:48 PM
Subject: [DLIC] Deflation is coming

Technology improves efficiency and drives down prices.  If my Chevy Volt had more efficient batteries at
a lower price, it would become more popular.  My Volt's battery is in the class of 200 Watts/Kg.

BERKELEY, Calif., May 01, 2012 (BUSINESS WIRE) -- PolyPlus Battery Company has won the
prestigious Gold Edison Award in Energy and Sustainability for the company's revolutionary Lithium-Air
and Lithium-Water batteries.
CEO and cofounder of PolyPlus, Dr. Steve Visco accepted the award at the 25th annual Edison Awards
Gala in New York City on April 26. "It's a tremendous honor to be recognized for our pioneering work in
lithium-air and lithium-water batteries," said Visco.
At the heart of PolyPlus' innovative batteries is their Protected Lithium Electrode (PLE(TM)), the first
water- and air-stable lithium electrode, invented and patented by the company. This remarkable
advance has enabled the development of new classes of extremely high energy density lithium-air,
lithium-water, and lithium-sulfur batteries. The PolyPlus Li-Water battery has already demonstrated
greater than 1300 Wh/kg, representing the highest specific energy in the history of batteries. Also in
development are rechargeable and primary Li-Air batteries, which hold promise to rival the energy
density of gasoline.
"PolyPlus has developed 8 Ah [amp-hour capacity] primary lithium-air cells that deliver more than 600
Wh/kg, and is making excellent progress with its rechargeable lithium-air batteries," Visco said.
The company has purchased a pilot production line that will be installed in Berkeley in approximately 12
months, and expects to start commercial sales in 24 months.

This would be three times the energy density of my Volt's battery.