Marginal Revolutiontalks about an interesting phenomenon during World War 1. The British War Effort had a shortage of binoculars and so placed an order for several thousand of them from the leading manufacturer of the time, Germany, who was aware that they were being used for militarily purposes. The Germans told the British that if they wanted to find a catalogue of the kind of binoculars Germany would be able to supply Great Britain, they simply had to examine the equipment of German soldiers that The British had captured. On the other hand when the Germans had a shortage of rubber for their war effort the British delivered it to them in Switzerland.

Why did these belligerents help each other out in their efforts to annihilate one another? Marginal Revolution suggests four theories:

• Because it was a two front war for Germany, the British believed that the Russians would bear the brunt of the cost of aid to the German war machine.
• Commercial interests in the two countries drove the deal forward
• Politicians did it to appeal to military lobbies
• They were mutually beneficial transactions because the two sides disagreed about what the goods were worth. This happens on Wall Street every day.

To read a wider discussion about the issues involved, and to contribute your own theories you can click here, or suggest something in the comments below.

Source: Marginal Revolution.

The Economist reports that according to the IMF’s World Economic Outlook, the world exported $331 billion more than it imported in 2010. The Economist offers two potential explanations for this phenomenon

• Extraterrestrials are purchasing earthly goods. The Economist speculates that they may have acquired a taste for Louis Vuitton Handbags.
• There are statistical errors in the numbers that country’s report. And these errors are increasing at a faster pace.

To find out some of the potential reasons for the statistical discrepancy as well as why the world switched from a global current account deficit to a global current account surplus read the full report over here.

Source: The Economist

The Cheese Burger is a common, if easy, staple in American cuisine. One man quickly found that, up until a century ago, the cheese burger couldn’t possibly have existed. Here’s why:

• If you truly want to start from scratch you have to raise your own cow, mine your own salt, grow wheat for the bun and plant tomatoes, lettuce and onions to finish it off.
• You’d have to get milk from the cow so that you could produce the butter that would go into making the bun. You’d also need to slaughter it for its rennet to make cheese, and, of course, you’d need the meat for the burger itself. You’d probably need multiple cows and several acres of land.
• Tomatoes can only be harvested in the summer, and lettuce in the spring. Mammals are normally slaughtered in the winter.
• Not only would all of this be prohibitively expensive, it would take over a year to put all the parts together. A century ago something like the Cheeseburger would be unthinkable.

Source: Waldo Jaquith

Centives has previously covered Hugo Chavez’s ‘problem’ of having too much gold. It turns out that he should be far more worried about the future value of his gold stockpile. The Baseline Scenario took a look at what the price of gold will be in the year 2060. The prediction? It will completely crash to the point where it’s close to worthless as a system of currency. The reasoning includes:

• Commodity based money systems have consistently, throughout history, collapsed.
• This is because technology inevitably makes the production of commodities too cheap.
• Gold is likely to be a very common element in Space. A “moderately sized” asteroid named Eros was estimated to be worth over $20 trillion of precious metals in 1999.
• Everyday humanity comes closer to being able to mine minerals from space. Launch costs alone have dropped from $10,000/kg to $500/kg.

To read some of the challenges involved in being able to mine precious metals from space, as well as some of the solutions that individuals have proposed click here.

Source: The Baseline Scenario

Via: Jake Kennon

Hugo Chavez has decided that $12 billion worth of gold belonging to Venezuela stored abroad should be brought home. Felix Salmon at Reuters recently considered how the bullion will be moved back to the country. Some highlights from the article include:

• The cost of transporting the gold is estimated to be around $400 million.
• Since Chavez has so publicly declared his intentions to transport the metal, the risk of theft is huge. It is unlikely that any insurance company would be willing to insure it under the circumstances.
• The closest precedent to such a situation is when the government of Spain trucked 560 tons of gold in 1936.

Read more about a market based solution to the problem that Hugo Chavez might chuckle at, as well as other ingenious ways that the gold could be moved.

Source: Reuters

Via: Marginal Revolution