I found myself asking this in "Subsidy for the UK rail industry"

Usually, the answer is simple. Take the price, take the GDP deflator for the time, multiply and, hey presto, you have the price in today's money.

But there's a problem. As a blogger I want my posts to stand the test of time. I want them to still be read in 2024, 2044 and even 2104. But by then (assuming inflation continues to chunter away) 2004 prices will seem pretty meaningless.

So, rather than adjust prices to today's date, wouldn't it be more sensible to adjust them to some date in the past? That way you only have to make the adjustment once. So, rather than express everything in today's money, I could express it in 2003 money or 1803 money.

But if so, what date? Two dates spring to mind. The first is the year 2000. Nice round number. Reasonably recent. The second is 1900. This has the advantage of being at a distance from the inflations of today that are, incidentally, still going on. It also means that prices can be expressed in good old pounds, shillings and pence which would be a good way of preparing people for currency restoration.

The only problem is that it seems a bit weird. But if I take the lead and enough people follow suit, maybe, just maybe …

Actually, there is another problem. Knowing what prices were is not much use unless you also know how much people earned.

A thing occurred to me after reading what I'd written over on Transport Blog. What I'd done was see something in W H Smith but it had never occurred to me that I'd ever do anything other than buy it on Amazon. I presume this sort of thinking applies to rather a lot of people. If so, then it would seem that the shop as we know it is doomed. But if that is the case then how are we to encounter those products that we want to see in the flesh before we buy? Could the shop of the future turn out to be a Tupperware party?

They've got a whole new industry opening up: alibi services. According to the Times:

Germany: Land of the Free-to-shaft-your-mistress-without-the-wife-finding-out.

Do you remember way back when the issue of the day was whether we should be "shadowing the deutschmark"? Perhaps, you even remember the days when the issue was whether we were shadowing the Deutschmark.

I am reminded of that time by the appearance in the Telegraph of an article by Nigel Lawson - Chancellor of the Exchequer in those heady days.

The argument at the time was between, in Margaret Thatcher and Nigel Lawson, the two most powerful and opinionated members of the government. Lawson wanted us, not only to shadow the deutschmark ie ensure that Sterling closely followed the German currency, but also join the Exchange Rate Mechanism. His view, if I recall correctly, was that British politicians lacked the will to control inflation on their own and needed the discipline of the Europeans (and especially the Germans) to do it. To lick inflation we would have to import the cure.

Which is funny, because not only are we about to enter our twelfth year without a serious inflation scare but also our twelfth year since we last tried to fix the pound against the deutschmark or any other currency for that matter.

The Good Lady was right.

Excellent commentary on Glenn Reynolds's piece on the internet. From Catallarchy.net.

Mr Martin, who owns (or something) J D Wetherspoons, is considering banning swearing in his pubs. His pubs already have designated non-smoking areas.

See that, it is already possible to enjoy a drink without having to breathe in someone else's tobacco without the state having to get involved. Not bad for business either as Wetherspoons shares have risen 40% since the beginning of the year.

Unfortunately enforcing a swearing ban could pose difficulties:

A 1998 book, Roger's Profanisaurus, became a bestseller. It contained more swear words than the most devoted practitioner would ever remember.

I haven't actually read this article (link courtesy of Newmark's Door) but I'm looking forward to it. I wonder if it'll end just like the Dvorak keyboard.

House prices in London are going to fall by up to 80%. That is the view of someone I met recently.

OK, so anyone can come up with something like that but what impressed me was the analysis.

The way my correspondent - let's call him Theodore - sees is it is that stock market falls are invariably followed by house market falls with a time lag of about 2 years or so. That would seem to correspond with the only crash I am really familiar with - the one in the late 1980s and early 1990s - when the stock market fell by about 20% in 1987 and house prices fell by up to 50% starting in 1989 and bottoming out in about 1992.

But what is the mechanism? According to Theodore what happens is that as the stock market rises people find that they have more money and so spend it. Often this goes directly into the housing market and so prices start to rise. When the stock market starts to fall, people find that they have less money and so house prices start to fall.

But Theodore has also spotted other things happening. First of all, we are starting to see strikes in the state sector - eg. fire and trains. This implies the growth of inflationary pressures. Actually, we are all very familiar with this. We know that the Chancellor has opened the flood gates of state spending and it is not entirely surprising that state-sector workers should start fighting to get their snouts in the trough.

Secondly, we are beginning to see price rises in the service sector. Lawyers and accountants are starting to raise their fees in response to lower business volumes. (So much for supply and demand). Oil prices are already at a high level and are likely to increase with the Second Gulf War. This (along with the government's borrowing requirements) could well lead to an increase in interest rates as there is less money to lend and the Bank of England starts to get edgy about inflation. And we all know what happens when interest rates start to go up.

Thirdly, Theodore has already started to spot falls in house prices at the top end and transaction levels are off by 40%. This is likely to trickle down to the lower end before long. Yes, trickle down works both ways.

All this was a hell of a shock to me. For many years I have gaily assumed that the days of boom and bust are over because we have tamed state-induced inflation. After all, all the busts I had ever seen were state-induced. But this is different. This is the business cycle - that natural economic cycle in which people keep on getting richer until the horrible day arrives when they realise they have been doing all the wrong things eg. internet and telecoms. The adjustment, to doing the right things is known as a recession. And it hurts like hell.

Back at the dawn of blog time - that's March this year - Brian Micklethwait wrote an article entitled Don't write off the Japanese in which be mused on Japan's future.

Now, I would like to claim that having spent a week there I know everything but of course I don't. So, I'll confine myself to a few observations which may or may not lead to some... conclusions.

One of the big themes of Brian's piece was the idea that Japan might be about to lurch in the direction of free markets. The problem is that Japan is pretty much there already. Take taxation. As I understand it Japan's taxation rate is about the same as in the United States. It has regulation, plenty of it, but what major economy doesn't?

I have a personal interest here. In 1990 I started working for Phillip Oppenheim, then a Conservative Party MP. Shortly afterwards (nothing to do with me I'm afraid) he published a book called "The New Masters". In it he demolished many of the myths surrounding Japan's success. The Ministry of International Trade and Industry (MITI) was far weaker than usually supposed. Business could and did stand up to government. Taxation was low; regulation benign. Keynes didn't get a look in.

Another theme was the idea that the Japanese keep their rows to themselves. This is allied to the idea that the Japanese don't have opinions. Which is odd because I have not met a Japanese yet who didn't have stacks of opinions.

One of the most fascinating examples of this appears in the book/poem "Requiem for the Battleship Yamato" by Yoshida Mitsuru. He was a junior officer on the Yamato (the biggest battleship ever built) in 1945 when it was ordered out on a suicide mission. Everyone knew it was a suicide mission and the officers kept asking themselves "Why us?"

OK, maybe not a major league row but there has been a huge one in recent weeks. About a month ago the Bank of Japan attempted to auction off some debt - debt that was to be used to buy shares in Japan's bankrupt banks. The auction was undersubscribed. This is the first time this has ever happened.

The Bank of Japan then came up with the quite extraordinary claim that it did what it did in order to show how stupid the FSA (Financial Services Authority - another arm of government) was being. Anything but quiet. From my own specialist area I am aware that there are all sorts of rows about new roads and railway lines. And this is all rather genteel in comparison with the violent convlusions which presaged the Meiji Restoration or the rise of the military in the 1930s.

As I understand it the causes of Japan's current problems are fairly straightforward. In the early 1990s, the property market collapsed. A huge swathe of business effectively went bust under the weight of loans secured on property. But the banks wouldn't admit it so propped up the businesses. Then the banks went bust. But the government wouldn't admit it and has spent the last decade propping them up. And now the government is going bust.

It's going to be nasty when it happens but I believe Japan will sort itself out very quickly. Deep down Japan is in good shape. It has excellent infrastructure, a well-educated workforce, a low crime rate and a leading position in many high-tech industries.

People are quick to suggest that the Japanese only ever copy but already they are the main innovators in areas such as mobile phones. And anyway, this is a well-trodden path. The Americans, too, copied like crazy until one day, kaboom, and you had Woodrow Wilson telling Europeans how to run things. And where, exactly, did we get the printing press from all those centuries ago?

So to sum up (or should that be conclude?) although I think things are bleak and that there will be a crash and that Japan will recover I think it will be able to do so without any great cultural convulsion - all the elements are pretty well in place right now.

This prompts me to finally unveil my plan for currency restoration: to bring back pounds, shillings and pence at 1900 values.

The smallest unit of currency will be the farthing which will replace the 5p. A penny will be worth 20p while a shilling will be worth £2.40. A pound will be worth £48 not far off the present day value of a 1900 pound (£50).

The great advantage of this is that now we live in non-inflationary times the new currency is unlikely to lose its value unlike the current crappy imposter. We will also be able to reconnect with our past and quickly be able to find out a) how much richer we are and b) how much cheaper most things are.

This is something of a work in progress. I will try to update it next time I'm awake but in the meantime I would appreciate comments on what is already here.

This came out of a discussion I had at Brian's last Last Friday. I can't remember how we got on to the subject but the reasoning went as follows:

We know that poor people have more children. We know this because the populations of poorer countries are rapidly expanding while here in the West they are almost at a standstill.

But poor people are in the worst possible position to have children. They don't have any money. Healthcare, sanitation etc tend to be ropey. They die young so have less opportunity to breed. So, why do they?

Because they can't get contraception? I am doubtful about this one. It assumes that poor people don't want children. Is that really the case?

Because sex is fun and the entertainment alternatives are limited? So going down the pub is better than having sex with someone you fancy? I don't think so.

Those were a couple of the reasons put forward.

Maybe, we are looking at this question from the wrong angle. The assumption is that it is poor people who are aberrant. But maybe, it is the rich West who are the odd ones out. Let's face it throughout history people bred like rabbits. OK, so the survival rates were low but they still bred. Our current generation is almost unique in having a low birthrate. Why is that?

I think it is an important question. Negative birthrates are a quick way to extermination. As things currently stand unless immigrants take up the torch our civilisation is doomed.

Is it female emancipation? I do hope not.

Let me propose a new idea.

Comparative costs. In the last 100 years the costs of having children have massively increased while the costs of doing other things have plummeted.

On the family side the cost of providing a roof has gone up under the burden of planning regulations. Meanwhile, children are prevented for longer from making a contribution to the family budget.

On the non-family side a 100 years ago travelling to the next town would have been something you thought twice about. But now a whole generation have taken advantage of Round-the-World tickets. Lots of other things, from food to clothes to music have collapsed in price.

Don't trust GDP stats - Liberty Log
Scots Tories in trouble - Freedom and Whisky
Indie hypocrisy - Public Interest
Sleep sucks - Conservative Commentary
Economics is not moral - Samizdata

New York or California? Which will collapse first? - Samizdata
Pro-gun stats wrong - Mr Happy?
Imports, not exports, make countries richer - Liberty Log
MEP - "doesn't understand" - Freedom and Whisky
Fun in the sun - the TCS way - Samizdata
Death penalty still good - The Edge
Airport security questions to be dropped? - The Captain
"Hysterical morons" sign of the times - Public Interest
Natalie Solent is back
Mark Steyn - serious - Conservative Commentary
Iraq is likely to end up as roadkill on the third way - Airstrip One
Why is acting on the radio so crap? - Mr Happy?

Saddam is dangerous - Liberty Log
Gadaffi to head human rights body - The Captain
Students not paying enough - Liberty Log
Thick Scot, smart Paddies - Samizdata
End the dividend tax - Samizdata
Good book on buildings - Junius
Clinton snout in Enron trough - Hawkgirl
Quiz of the Day: how geeky are you? - The Captain

RUSI funds CND supporter - The Edge
Broadband to get a lot cheaper - The Captain
"Politics is the bastard child of morality and idealism" - Public Interest
Deregulation works - Samizdata
I think America is the best country in the world - Hawkgirl
There was no Falklands Factor - Airstrip One
All countries have entrepreneurs - it's just what they get them to entre - Liberty Log