Housekeeping: There was no post yesterday on Economist Writing Every Day. It was my day to write and family responsibilities just took up every minute. This might happen occasionally.
Last week I wrote about American Data Heroes. There are many that I don’t know of , but I wanted to share the work of tireless Frank McPhillips. For months he wrote a succinct post every single day within a private Facebook group for concerned citizens of Alabama. Recently he switched to Substack, meaning I can share it here.
McPhillips summarizes and explains the Covid data for the state of Alabama, where I live. This is data that is publicly available, but most people like myself don’t want to do as much work as he does to understand it. He also understands when the reporting might be wrong or late.
The Chairman of the Madison County Commission was more blunt. “We’re now talking about alternative space for a morgue”, he said, adding that he has never faced such a decision in 25 years of public service.
According to HHS, 87.7% of Alabama’s ICU beds are occupied… Our State added 3,390 more COVID cases today (incl. 655 probables), raising the 7-day moving average to 3,228 cases per day, which is twice the daily average 3 weeks ago.
Now, brace yourself for the updated hospitalization data: 2,079 patients (105 reporting hospitals), a jump of 163 patients in a single day. The Huntsville Hospital system reported 378 COVID patients, an increase of 76 patients in one week. DCH Health system reported 138 patients, double the number just 9 days ago. And finally, Regional Medical Center (Anniston) announced new visitation restrictions due to the pandemic: “For end-of-life care, two visitors will be permitted to remain in the patient’s room, without leaving or re-entering the building and without substitution”.
I appreciate all his work. It’s obvious when he’s getting depressed or exhausted, but he’s decided to keep going (almost) every day. He keeps writing new prose on how this is the most deadly “war” of our time. He wants people to keep fighting back and not get complacent. See his Dec 7 post for more war comparisons.
McPhillips has helped a lot of people in his locality. He inspires me for Writing Every Day.
I used SAS Viya for Learners to teach data analytics to undergraduate business students for one semester.
I’ll start with the benefits of SAS Viya: It’s free; It’s visually appealing and requires no coding; There are some SAS tutorial materials that teachers can use; The way decision tree results are displayed makes intuition easy for students who are new to data mining.
I made a post earlier in which I reported that it actually works. I still think that, but at the end of the semester I did have individual students experience errors and mysterious interruptions to service. It made me wonder if the server gets busy at the end of an academic semester.
SAS is known for making excellent products and charging high fees for them. Since SAS Viya is free, they aren’t going to be giving all the functionality with it. The free version does not let students import any data. There is a sandbox of data to learn with, which is more than enough to fill a semester. I didn’t even open most of the available data sets.
My students did their final projects by choosing one of the pre-loaded datasets and using that for analysis. As far as applying the principles I taught, this was fine. In one sense, it was easier than telling them to fend for themselves and find data on the world wide web.
The downside is that the software-specific skills students learn from free student SAS Viya can’t be used on a project for work or for a different class. Eventually, any useful work involves importing new data.
The decision to use SAS Viya for Learners instead of R should depend on what your students want to do next. Both products will allow them to learn concepts and common functions.
If you are going to use SAS Viya, I highly recommend using the tutorials made by SAS with screenshot-by-screenshot instructions. You can give the instructions to the students, so students aren’t coming to you with questions about every click they need to make.
I paired SAS Viya with a Business Intelligence Textbook. Also note that students had already taken a traditional Business Statistics course previously.
In the United States, the median age of marriage has been climbing for decades. In 1960 the median age of first marriage for men and women was 22.8 and 20.3 respectively. Fast forward to 2019 and the median ages are 29.8 and 28. Here are the historical tables.
Qualitative studies that interview young people suggest they are waiting on marriage until their careers get underway. Marriage is now something you do once you have a high income. But, this treats marriage as if it were a consumption good.
“With the rising cost of living, mountains of student loan debts, and a lack of job security, some of us just aren’t financially in a position to get married or settled down until we’re a little older.”
What is striking is how marriage is not viewed as a productive and helpful institution to overcome these obstacles in life. This runs contrary to the literature on the Economics of the Family that documents how marriage facilitates gains from trade, risk pools like an insurance policy, and allows couples to take advantage of economies of scale.
Yes, you can obtain some of these advantages with cohabitation but not at the same level of commitment.
This view of marriage as a luxury that is only consumed when your career and finances are in order is harmful because it leads to less opportunity. Marriage is productive and expands our possibilities.
A new working paper by Mike Makowsky and Patrick Warren finds that “firearms offered an effective means of Black self-defense in the Jim Crow South.” By this the authors mean that greater access to firearms by Blacks decreased the likelihood of being lynched.
That headline finding is sure to be provocative in both debates over gun control and the history of Jim Crow. And with good reason. What I found most interesting is how they measured Black access to firearms. Since they did not have direct access to any good sources measuring Black access to firearms, they proxy access with the percent of Black suicides committed with firearms. Increased access to firearms would also mean a higher proportion of suicides were committed using firearms.
We assess firearm access in the U.S. South by measuring the fraction of suicides committed with firearms. Black residents of the Jim Crow South were disarmed, before re-arming themselves during the Civil-Rights Era. We find that lynchings decrease with greater Black firearm access. During the Civil-Rights Movement, both the relative Black homicide and Black “accidental death by firearm” rates decrease with Black firearm access, indicating frequent misclassification of homicides as accidents. In the contemporary era, greater firearm access correlates with higher Black death rates. We find that firearms offered an effective means of Black self-defense in the Jim Crow South.
A balance sheet gives a snapshot of a corporation’s assets and liabilities. The difference between total assets and total liabilities is (by definition) the value of the equity owned by the owners or shareholders of the company.
With, say, a manufacturing firm, the assets would include tangible items such as buildings and equipment and inventory, and intangibles such as cash, bank accounts, and accounts receivable. Liabilities may include mortgages and other loans, and accounts payable such as taxes, wages, pensions, and bills for purchased goods.
The balance sheet for a bank is different. The “Assets” are mainly loans that the bank has made, plus some securities (such as US Treasury bonds) that the bank has purchased. These assets pay interest to the bank. The money the bank used to make these loans and purchase these securities came mainly from customer deposits or other borrowings by the bank (which are considered “Liabilities” of the bank), and also from paid-in capital from the bank owners/shareholders. [1] As usual, the current equity of the bank is assets minus liabilities. Thus:
The Federal Reserve System is a complex beast. We will not delve into all the components and moving parts, but just take a look at the overall balance sheet.
Unlike other banks, the Fed has the magical power of being able to create money out of thin air. Technically, what the Fed can do with that money is mainly make loans, i.e. buy interest-bearing securities such as government bonds. The Fed makes its transactions through affiliated banks, so it credits a bank’s reserve account with a million dollars, if it buys from that bank a million dollars’ worth of bonds. Those bonds then become part of the Fed’s “assets”, while the reserve account of the bank at the Fed (which is a liability of the Fed) becomes larger by a million dollars. Since the Fed is not a for-profit bank, the “Equity” entry on its balance sheet is nearly zero. Thus, total assets are essentially equal to total liabilities.
The Fed also has the power of literally printing money, in the form of Federal Reserve Notes (printed dollar bills). These, too, are classified as liabilities. Thus, you are probably carrying in your wallet right now some of the liabilities of the central bank of the United States.
Before 2008, the balance sheet of the Fed was under a trillion dollars. Nearly all the “Liabilities” were the Federal Reserve Notes and nearly all the “Assets” were US Treasury securities. The reserve accounts of the affiliated Depository Institutions was minuscule. All that changed with the Global Financial Crisis of 2008-2009. To help stabilize the financial system, the Fed started buying lots of various types of securities, including mortgage-backed securities (MBS) [2]. The Fed thus propped up the value of these securities, and injected cash (liquidity) into the system.
Here is a plot of how the assets of the Fed ballooned in the wake of the GFC, from about $ 0.9 trillion to over $ 4 trillion:
The initial purchases in 2008 were US Treasuries, which the Fed had prior authorization to do. To buy other securities, especially the mortgage products, required congressional authorization. The increased liabilities of the Fed which offset these purchases were mainly in the form of larger reserve accounts of the affiliated banks. The Fed started paying interest on these reserve accounts, to keep short term interest rates above zero at all times (otherwise the whole money market in the U.S. might implode).
With the Fed relentlessly buying the mortgage and bond products, the interest rates on long-term mortgages and bonds was kept low. This was deemed good for economic growth. The Fed tried to sell off some securities to taper down its balance sheet in 2018, but that effort blew up in its face – – the stock market started crashing in response in late 2018, and so the Fed backtracked . You can look at weekly tables of the Fed balance sheet here.
Anyway, the GFC and its aftermath provided the precedent for massive purchases of “stuff” by the Fed. When the Covid shutdown of the economy hit in March of this year, the Fed very quickly went into high gear. Its balance sheet shot up from $4 trillion to $7 trillion in just a few months. It bought not only Treasuries and MBS, but corporate bonds. This was way outside the Fed’s original charter, but the crisis was so intense that nobody seemed to care whether these actions were legal or not. And now, to finance the huge deficit spending of the federal government in the wake of the shutdowns, the Fed has been buying up nearly the entire issuance of Treasury bonds and notes.
These actions may have long term consequences we will explore in later posts [3]. For now, the Fed has made it clear that it will keep interests rates near zero for at least the next couple of years. Invest accordingly.
ENDNOTES
[1] Huge caveat: This statement gives the impression that a bank must first receive say a thousand dollar deposit before it can make a thousand dollar loan. That is not the case. The reality is just the opposite: the act of making a thousand dollar loan actually CREATES a corresponding thousand dollar deposit. This is very counterintuitive, and I won’t try to explain or justify this point here.
[2] Technically, the Fed is not “buying” the mortgage-backed security (MBS). Rather, it is making a “loan” to the bank, and holding the MBS as collateral against that loan.
[3] It is now harder to take the federal deficit seriously as a constraint on spending: the government can issue unlimited bonds to fund deficits, which the Fed will purchase to keep interest rates low. Yes, the government has to pay interest on those bonds, but the Fed has to return most of that interest to the Treasury, so the real cost to the government of that extra debt is low.
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