192 definitions by Abu Yahya

The idea that, if you mitigate the consequences of a particular type of accident, then that type of accident will necessarily occur much more frequently, more than negating the initial benefit.

The CF assumes that human nature is perverse and seeks to equalize consequences. Hence, improved automotive technologies such as air bags, ABS, space frames, etc. will be offset (or more than offset) by careless driving, leading to increased highway fatalities.

FALSIFICATION: Empirical evidence shows that, while reducing consequences increases risky behavior, overall safety/health outcomes are better. Insurance companies with a stake in reducing claims verify this.

More generally, the CF confuses all forms of risk-taking, such as faster highway speeds, with fecklessness. Increased speed and convenience (for motorists) has utility; and there is no principle in welfare economics that says risk-taking will increase by an amount sufficient to offset the safety measures.
The massively overrated book *Freakanomics* (Dubner & Leavitt) includes many examples of the curmudgeon's fallacy.
by Abu Yahya August 22, 2008
A choice between an alternative that is awful and one that is unacceptable. Usually defined as "no choice at all," since one of the choices is likely to be totally unacceptable (death, starvation, death of a loved one held hostage, insolvency).
A person whose relatives have been taken hostage is faced with the Hobson's choice of rewarding someone who attacked his family, and having his relatives killed because of decisions he made.
by Abu Yahya May 05, 2010
*noun*; the tendency for the public to want to hold income in cash relative to its willingness to hold it as interest-bearing savings (bonds).

The liquidity preference is analogous to a supply curve for lendable funds. If the price for lendable funds--that is to say, the interest rate--is high, then the amount be be large. If the interest rate is low, then the public will be more inclined to hoard income as cash.

Income held as cash is not spent on goods and services, so if the amount increases abruptly then there will be a recession. If it is held in some interest-bearing form, then it can be spent on fixed capital, thereby increasing output and employment.

During a recession, if the liquidity preference is high, a lot of money is going to be held as cash. One could free up some cash for job-creating investment by raising interest rates, but that would eradicate a lot of business opportunities. So monetary authorities monetize debt instead, creating a new supply of credit to replace the savings lost by falling interest rates.
...An individual’s liquidity preference is given by a schedule of the amounts of his resources, valued in terms of money or of wage-units, which he will wish to retain in the form of money....

John M. Keynes, *General Theory of Employment, Interest, and Money* (1936), Ch.13
by Abu Yahya March 03, 2009
the net purchase of financial assets in a country by foreigners. Put another way, the capital account balance is the net influx of money from overseas investors. It includes net purchases of domestic financial assets by foreigners minus net purchases of foreign financial assets by domestic citizens.

The capital account balance over short periods of time (e.g., a fortnight) is extremely volatile; over a period of a year, however, it usually offsets the current account balance. For example, in all years since 1980, the USA has run a large-to-huge current account deficit, but in most years it has run a capital account surplus that is almost as big as the current account deficit.
The capital account balance often permits a huge trade deficit to persist over several decades without a significant fall in the exchange rate of a nation's currency.
by Abu Yahya February 14, 2009
(POLICY) an extreme form of capitalism created in the immediate aftermath of a disaster. In some cases, as in Chile (1973), the disaster is a coup d'etat with the express purpose of imposing disaster capitalism. In other cases, such as the 2004 Indian Ocean tsunami, it is a genuine natural disaster that literally kills.

After some disasters, the authorities in some countries may well respond by imposing "reforms" that would have been impossible before. These include: (1) privatization of public property, making it unavailable to the indigenous people; (2) arbitrary elimination of laws ("deregulation"); and (3) slashing democratically chosen programs that help ordinary citizens ("austerity programs").

The concept was popularized in Naomi Klein's excellent 2007 book, *The Shock Doctrine*.
"Disaster capitalism" is neoliberalism imposed undemocratically. It exploits natural disasters, civil wars, foreign invasions, coups d'etat, terrorism, or explicit deception. It always seeks to make its changes irreversible.

Naomi Klein mostly blames the International Monetary Fund, but there are other culprits as well.
by Abu Yahya July 10, 2010
(ECONOMICS) international bank created after World War 2 to coordinate currency stabilization. Main policy tool consists of lending money to central bank of countries facing a liquidity crisis.

In some cases, as when a member government is insolvent, the IMF will impose a structural adjustment program (SAP) requiring the government to jettison programs it has to serve the poor. For this reason, the IMF is often harshly criticized.
It is often said that the International Monetary Fund makes economic crises worse by imposing the same austerity program everywhere, thereby further reducing a member state's ability to pay its sovereign debt.

(Another way of putting this is that the IMF's policies are pro-cyclical]
by Abu Yahya May 05, 2010
(ECONOMICS) a financial institution that issues the national currency and administers monetary policy.

For the USA, the central bank is the Federal Reserve System.

In a few cases, the central bank is private, and otherwise similar to a regular commercial bank. In other cases, it is directly controlled by the head of government. In most cases, however, it is a government agency that is shielded from direct control.


European Union--European Central Bank (ECB).
Japan--Bank of Japan

China--People's Bank of China
United Kingdom--Bank of England

See also the International Monetary Fund and the Bank for International Settlements.
In the USA, as well as many other countries, the Treasury acts as the government's underwriter but the central bank controls the money supply using treasury securities and other forms of hot money. The central bank is usually responsible for managing the currency reserves, including foreign currency reserves, of its government. It also enforces banking laws and operates check clearing.

The BIS acts as a bank to most of the world's central banks.
by Abu Yahya May 05, 2010

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