Harvard’s #1 Position

Source: Quora, Jun 2018



Up in the Sky!

Source: ZeroHedge, Jun 2018

US: Debt to GDP Ratios

Source: ZeroHedge, Jun 2018

The chart below takes America from 1790 to present. From 1776 to 2001, every period of deficit spending was followed by a period of “austerity” where-upon federal spending was constrained and economic activity flourished, repairing the damage done to the debt to GDP ratio and the credibility of the US currency. But since 2001, according to debt to GDP, the US has been in the longest ongoing crisis in the nation’s history.

BIS: Cryptocurrencies

Source: Bank of International Settlements, Jun 2018

The money flower distinguishes four key properties of moneys:

  1. the issuer,
  2. the form,
  3. the degree of accessibility and
  4. the payment transfer mechanism.

The issuer can be a central bank, a bank or nobody, as was the case when money took the form of a commodity.

Its form can be physical, eg a metal coin or paper banknote, or digital.

It can be widely accessible, like commercial bank deposits, or narrowly so, like central bank reserves.

A last property regards the transfer mechanism, which can be either peer-to-peer, or through a central intermediary, as for deposits. Money is typically based on one of two basic technologies: so called “tokens” or accounts. Token-based money, for example banknotes or physical coins, can be exchanged in peer-to-peer settings, but such exchange relies critically on the payee’s ability to verify the validity of the payment object – with cash, the worry is counterfeiting. By contrast, systems based on account money depend fundamentally on the ability to verify the identity of the account holder.

Cryptocurrencies: Looking Beyond the Hype

  • Cryptocurrency technology comes with poor efficiency and vast energy use.
  • Cryptocurrencies cannot scale with transaction demand, are prone to congestion and greatly fluctuate in value.
  • Overall, the decentralised technology of cryptocurrencies, however sophisticated, is a poor substitute for the solid institutional backing of money.


R&D Statistics

Source: NST, Jun 2018

In 2013, the Unesco Science Report 2030 reported there were 7.8 million full-time (or equivalent) researchers. That works out to 1,083 per 1 million inhabitants, or about 0.1 per cent of the global population.

The Big Five — the European Union (EU), China, United States, Japan, and Russia — account for 72 per cent of researchers worldwide. The US and China alone account for more than one third.

Incidentally, these countries also produce the most research publications — roughly 34 per cent, 20 per cent, 25 per cent, 6.0 per cent and 2.0 per cent, respectively.

With roughly 2,600 researchers per million people (2013), Malaysia is well behind South Korea (8,329), Singapore (7,247) and Japan (7,019), but well ahead of Vietnam (1,170), and Thailand (769).

Estimated global gross expenditure on research and development (GERD) is US$1.48 trillion (expressed in purchasing power parity).

World shares of GERD for the EU, China, US, Japan, and Russia were about 22 per cent, 19 per cent, 17 per cent, 9.0 per cent and 6.0 per cent, respectively.

High-income economies continue to generate the bulk of global R&D expenditure. In fact, the G20 countries account for 87 per cent of the world’s researchers, 92 per cent of global research expenditure and 94 per cent of the world’s scientific publications.

In contrast, as recently reported in this column, the 47 Least Developed Countries, with a population of close to one billion, contributed less than 0.4 per cent of the world’s total scientific publications in 2016.

Besides GERD, another useful yardstick is the ratio of the level of financial resources devoted to R&D as a share of gross domestic product (GDP).

The 2013-2014 figures show spending on R&D activities by the EU, China, US, Japan and Russian Federation were roughly 2.0 per cent, 2.0 per cent, 3.0 per cent, 4.0 per cent and 1.0 per cent, respectively.

Harvard’s Asian-American Admissions

Source: Straits Times (SG), Jun 2018

Harvard’s 2013 internal review found that if Harvard considered only academic achievement, the Asian-American share of the class would rise to 43 per cent from the actual 19 percent.

After accounting for Harvard’s preference for recruited athletes and legacy applicants, the proportion of whites went up, while the share of Asian-Americans fell to 31 per cent.

Accounting for extracurricular and personal ratings, the share of whites rose again, and Asian-Americans fell to 26 per cent.

What brought the Asian-American number down to roughly 18 per cent, or about the actual share, was accounting for a category called “demographic”, the study found. This pushed up African-American and Hispanic numbers, while reducing whites and Asian-Americans.


Tether Drives (up to 50%) of BTC’s Rise

Source: UT Austin, Jun 2018

This paper investigates whether Tether, a digital currency pegged to U.S. dollars, influences Bitcoin and other cryptocurrency prices during the recent boom.

Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies.

The flow clusters below round prices, induces asymmetric autocorrelations in Bitcoin, and suggests incomplete Tether backing before month-ends. These patterns cannot be explained by investor demand proxies but are most consistent with the supply-based hypothesis where Tether is used to provide price support and manipulate cryptocurrency prices.

Related Reading: TrustNodes, Jun 2018

“From March 1, 2017 to March 31, 2018, the actual Bitcoin price rises from around $1190 to $7000 for a 488% return. In contrast, the price series without the 87 Tether-related hours ends at around $4100, a 245% rise.

Hence, the hours with the strongest lagged Tether flow, which account for less than 1% of the time-series, seem associated with 50% of the Bitcoin buy-and-hold return over the period,” they say.

The study finds significant correlations between tether printing and bitcoin’s price rise, with the authors arguing it applies more widely to other cryptos:

“The percentage of the buy-and-hold return that are attributable to the Tether-related hours range from 42% for Dash to 82% for Zcash.

Ethereum, for example, experienced near 2400% return during this period, while it would alternatively experience around 900% return if the Tether-related hours were excluded. Across the six other crypto currencies, returns are 64% smaller on average when removing the 87 Tether-related flow hours.”

There has been suspicion for some time that Tether was propping up bitcoin’s price with CFTC opening an investigation in January.  In March, however, they printed out 300 million USDT and in May printed out another 250 million.

Bloomberg, Jun 2018

Griffin’s paper describes several patterns uncovered in a yearlong period. First it found that flows weren’t symmetric. When Bitcoin’s price fell, purchases with Tether tended to increase, helping to reverse the decline. But during times when Bitcoin rose, Griffin said he didn’t see the reverse occur. That’s “suggestive of Tether being used to protect Bitcoin prices during downturns,” he wrote.

Price Thresholds
He zeroed in on 87 of the largest purchases of Bitcoin with Tether from March 2017 to March 2018. In the cases examined, new Tether had been issued within the prior three days, and Bitcoin’s price had fallen in the prior hour. What followed were increases in Bitcoin’s price — and those gains added up.

Even though the 87 examples account for less than 1 percent of the time period examined, they amounted to about 50 percent of Bitcoin’s compounded return over that year. In comparison, 10,000 simulations Griffin and Shams ran demonstrated “that this behavior never occurs randomly,” they wrote.

Griffin said one of the most notable trends he saw in the data was when Bitcoin traded near certain price thresholds, denominated in $500 increments.

Bitcoin purchases with Tether “strongly increase just below multiples of 500. This pattern is only present in periods following printing of Tether and not observed by other exchanges,” he wrote in the paper. To other investors, it gives the impression of a “price floor,” providing a signal for them to buy as well.