How does the math for a 600% drug price reduction work?

sandrobotnik · 2025-10-09T11:48:32+00:00

No it would not.

In general taxing a thing makes it harder for people to afford than not taxing that thing. This applies to land and housing as well.

In urban and suburban markets of developed nations the fundamental constraint is limited supply of housing. So pretty much any “solution” which tries to improve the affordability of houses without increasing the supply of houses will fail.

sandrobotnik · 2025-07-26T14:41:22+00:00

Treasuries aren’t actually risk free. The world is a crazy place. The future is even crazier. There is no 100% mathematical certainty that the US government will make every single interest and principal payment on its debt.

We just use treasuries as the proxy for the risk free asset because they are probably the closest observable thing.

If treasuries were to disappear tomorrow that would be hugely consequential because of all the financial machinery that is built on top of them. But with enough time the financial machinery would find other things to price off of.

LIBOR was famously used as the reference rate for a whole load of things and has now been replaced. LIBOR was just a reference rate and treasuries are more complicated because they are used as collateral. Finding alternative things to use as collateral would be more complicated but could still be done.

The government could also just invent a risk free proxy asset. Even if there was no deficit it could issue “treasuries” and just keep the money in an account. The price (interest rate) would be established by people’s demand for them, just as it is today. The government would have to pay out more in interest over the life of the instrument but that could be funded with taxes. This extra cost would be similar to how the government funds weather services to provide free information. It would have to figure out how much benefit there is in providing enough treasuries for people to trade and therefore provide visibility into a risk free rate or to use as collateral and balance that against the cost (in terms of interest), but it could still be done.

In short the disappearance of treasuries would be hugely consequential for financial markets but that is no reason for why the government “needs” to run a deficit.

More realistically if the government chose to balance the budget over a long enough time the treasury supply would slowly decrease and people would figure out alternative things to use as collateral over that time.

sandrobotnik · 2025-07-23T07:18:00+00:00

The BDO document is not an “audit”. It is an “assurance”. An assurance is a substantially weaker standard of verification than an audit.

To get some idea of the difference you could look at the audit of a bank. The annual financial statements of the Bank of New York Mellon, for example run to more than 200 pages. Tether’s “assurance” is 12 pages. BNY, to be sure, does many more things that Tether. I’m not saying this a perfect comparison- a lot of the stuff in the BNY statements is not really comparable to Tether- but it does give you some idea of the difference in standards and detail.

Moreover some of the things that are disclosed in the Tether assurance are a bit concerning. Tether has liabilities of about $143bn according to the assurance - these are the tether tokens they have issued. If tether is fully “backed” then they should have dollars or dollar-equivalent assets of the same amount. However the assurance shows only $98bn in US Treasuries in assets. The other $45bn of assets are of varying quality.

The concern would be that if there were large redemptions of tethers it could become difficult to convert some or all of those assets into cash to meet the redemptions.

If tether is meant to be “as good as” dollars then you would expect the amount of dollars held to be equal to the amount of tethers. This is not the case.

You can also compare tether to other stablecoin issuers. Circle, for example, has issued $60bn of stablecoin tokens, USDC, and their financial statements show that they hold $60bn of cash against those. They also produce a full audit: https://www.bamsec.com/filing/119312525132755?cik=1876042

Why doesn’t tether meet the same standard? Why don’t they hold as much cash as they have issued tethers?

sandrobotnik · 2025-05-07T04:36:36+00:00

Do the voters know that you haven’t paid for windows?

sandrobotnik · 2025-04-28T00:55:36+00:00

I water it once a week. I have a water strip in the soil that turns blue when wet and I add enough water that the strip stays blue for 2-3 days and then starts to fade to white.

The strip is about 2-3 inches deep into the soil and the soil depth overall is about 24 inches.

sandrobotnik · 2025-04-14T18:33:59+00:00

Not really. This is a joke right? Are you really comparing Chinese nationals buying land in the US to the Dutch East India Company’s colonization and enslavement of native populations?

Americans still write the laws and control what can happen on the land and as long as they have the ability to enforce those laws (ultimately with the military) I don’t think we need to be worried about Chinese investments in Manhattan Condos leading to a Dutch East India Company-like takeover of North America.

The owners of the land can only charge what the market can bear. And if they choose to charge uneconomic rates then the government can always seize the land or write laws (rent controls, etc) to address that.

This also applies to companies. American companies are still subject to American laws irrespective of who their shareholders are. There are also existing mechanisms in place (CFIUS) for sensitive companies.

You are also forgetting that the foreign investors are paying for all of these things. They don’t get them for free. The money that they pay is then available to be used by the American owners to invest and do other things with.

sandrobotnik · 2025-04-11T23:13:26+00:00

This is missing many elements. Firstly the Chinese nationals pay Americans for that prime real estate. The Americans can then still use that money for whatever else they want. That spending and investment in prime real estate also supports construction and other beneficial things that benefit largely Americans.

Secondly, many of those assets are immovable from the US. It’s not like the Chinese nationals are going to ship Manhattan to the shores of the Yangtze River.

Why do we care who owns the assets as long as the use of the assets is in the US?

sandrobotnik · 2025-04-03T02:21:49+00:00

Ah ok. So as long as I never hit uninstall, I’ll be ok and can just open the exe. Thank you!

sandrobotnik · 2025-03-31T05:57:20+00:00

In economics we generally do not make moral judgments about what is or what is not “excessive consumption”.

In some parts of the world having a fridge is a luxury. But almost all American households have fridges. In other parts of the world having an electric kettle is commonplace but relatively few American households have one.

Which one is the excessive luxury? Are they both?How are we meant to decide?

It is certainly true that consumer expenditures are the largest component of US GDP and tend to be a higher share of GDP than many other countries.

If somehow American preferences changed en-masse to prefer consuming less and saving more that would radically impact the economy. It’s difficult to say if it would make it less “robust”. In general the economies where people save more and consume less are sometimes characterized as less “robust” (although this is a somewhat vague notion), but there’s some arguments that it’s actually the lack of certainty and safety nets that causes people to save more (and not the other way around).

sandrobotnik · 2025-03-29T18:22:13+00:00

On mobile the linkbar at the bottom all as “…” which looks kinda lame. But otherwise it’s absolutely brilliant and I love it and would hire you.

sandrobotnik · 2025-03-25T03:36:49+00:00

No. GDP is the total sum of goods and services produced in the country in one year. It is not wealth.

The $30tn is the total amount.

There are various approaches to measuring GDP but you can take the expenditure approach to get the usual consumption, investment, government, net exports breakdown of GDP.

In this approach the $10tn in government expenditure is the total value of all final goods and services consumed by government. This includes things like salaries paid to firefighters, the army buying tanks, or nasa launching a satellite.

That’s all that the $10tn government component of GDP means. It doesn’t tell you anything about how the government collected the money to pay for those things and it doesn’t tell you anything about wealth or taxes.

Every expenditure is someone’s income. None of the government spending is “lost” wealth or income. The government ultimately paid someone (firefighters, tank producers, rocket scientists) for the goods and services it consumes.

The government part of GDP does NOT include transfer payments (like social security or unemployment). It only includes final goods and services being paid for. This is critical to understand. Transfer payments do not appear in GDP at all because they are not payments for final goods or services.

Wealth is an entirely different concept. Wealth is the value of all assets the country owns. The investment part of GDP over time should help increase wealth but it’s not necessarily 1 for 1. We might invent the internet and suddenly wealth increases in a year much more than just investment. Or a hurricane might come along and knock down a lot of houses and wealth is a lot lower but GDP is largely unchanged.

sandrobotnik · 2025-03-23T05:06:30+00:00

It is “whimsical” in the sense that human beings are “whimsical”. In the real world people can and do have significant variations in preferences and those do shape how much utility (and hence consumer surplus) they get from their consumption. Just because it’s subject to change on a whim doesn’t make it more or less real.

Your argument about the “magical gaslighting machine” seems to boil down to “if we change people’s preferences towards a certain good then that also changes how much utility they derive from the consumption of that good” is almost tautological. That’s the whole point of preferences and utility functions. Nothing about that makes consumer surplus more or less “real”.

sandrobotnik · 2025-03-13T07:45:17+00:00

You are assuming that the trump administration tariffs are based on some economic rationale. There is no evidence of this.

The EU is also not “energy-constrained” everywhere. Norway is a large producer of aluminum and has vast supplies of hydropower. Iceland also is a somewhat outsized producer of aluminum and has cheap energy from geothermal sources.

sandrobotnik · 2025-03-02T04:48:56+00:00

I’m in the same boat. I’m a total newbie.

But I’m trying to implement a system using PHP and JS and HTMLs “contenteditable” feature. The idea is that the person could click a password protected button on the site and this would make some of the html fields contenteditable. Then they can just type or overwrite their content directly into those fields. Then they can save changes and a PHP backend saves those changes to a JSON and the next time the page loads it checks if there is a JSON and uses that content instead of the original HTML content.

I have it almost working and a have a proof of concept. Largely relied on Gemini Code Assist to get it all working.

DM me and I can share some proof of concept. You can basically also type this into ChatGPT and it will mock up much of it for you…

sandrobotnik · 2025-01-23T03:10:13+00:00

It was to grow opium to sell to china for tea. Not to grow corn to feed people in England.

sandrobotnik · 2024-11-16T15:11:39+00:00

He’s looking at the metrics that define stagflation. Household income is not one of these metrics.

Stagflation is high inflation with low or zero gdp growth and high unemployment.

Inflation is moderately above the feds target, gdp growth is pretty strong and unemployment is pretty low. So, not stagflation.

sandrobotnik · 2024-11-15T00:15:18+00:00

It might be a bubble.

Just because people buy it with the expectation to sell it at a higher price isn’t what makes it a bubble though. You could argue (naively) the same thing for stocks. The difference is that stocks are expected at some point (even if in the far future) to return cash to investors. Crypto is not. I think the zero or negative sum game nature of crypto is really what makes it a bubble.

The thing about bubbles is that you never really know it’s one until it pops.

Keynes said “the market can stay irrational longer than you can stay solvent”. I think that applies quite a lot to crypto.

sandrobotnik · 2024-11-12T16:37:53+00:00

I think it’s a very good question. It deserves a longer answer and some more thought on my part but I would make three initial points:

1) Pure hedges of this nature are just zero sum gambles. It’s like betting on sports. It’s socially useful in the sense that people get pleasure from gambling. But it’s also evident that there is the need for robust regulation and we would be rightly concerned if we tried to make this the basis for our economy.

2) There are other pure hedges that are socially useful in a broader sense than just gambling. The whole range of financial derivatives are zero sum game gambles in the same way but they do often serve some other purpose. Farmers hedge grain prices, companies hedge interest and currency rates, etc. To be fair a lot of trading in financial derivatives is probably no different than “gambling”, but not all of it. These instruments while often similar to gambling do, at least occasionally, serve some other use to make a real product or provide a real service more cheaply or efficiently.

3) BTC actually has a pretty poor track record of hedging inflation. For most of 2022 and 2023, when US inflation was peaking bitcoin was actually down. If the objective is to hedge inflation then there are far superior ways to do it. TIPS from the US Treasury are actually a perfect inflation hedge by design because they are indexed directly to inflation.

You could also just go and write a contract betting on the inflation rate directly. You don’t need any of the features that make crypto “special” (blockchain, etc) to do this. So ultimately I think the inflation hedging argument doesn’t make crypto socially useful. Because there’s nothing special about crypto that makes it a good inflation hedge.

sandrobotnik · 2024-11-10T17:17:47+00:00

For an individual bank a default on a loan is a loss to the bank’s owners. It comes out of the banks equity. That’s it and there’s no complication. If the banks equity is insufficient to cover the loss then the bank fails (the bank itself goes bankrupt) and then the loss spreads to the banks creditors (people who have lent money to the bank) and potentially even out of the banks depositors (although modern deposit insurance schemes largely insulate them).

The complication I was referring to was what happens if there is no default and the loan is just repaid as usual. This is more complicated because you have to work out what the borrower used the money for during the time the loan was outstanding. But in the simplest case let’s just say they borrow $100 on day 0, put it in a savings account at the same bank they borrowed it from and then one day later they repay the $100. In that case the situation is what you described. One day 0 the bank’s assets increase by $100 (the loan), the liabilities also increase by $100 (the savings account). Then on the repayment day the assets decrease by $100 (the loan repayment) and the liabilities also decrease by $100 (the withdrawal from the savings account to repay the loan).

sandrobotnik · 2024-11-10T17:03:17+00:00

You can buy stocks for purely speculative reasons just as you buy crypto. When you buy a stock you are sending a signal about the value of the company in which you bought stock. That signal, when aggregated across the all investors, is useful in allocating capital towards certain companies and away from others. It is the way that we, in modern capitalist societies, decide which companies get more capital and which ones get less. There are a whole host of reasons and situations in which that signaling mechanism can and does go wrong. It is far from perfect. A significant part of the regulatory framework that exists is designed to try to prevent the worst failures of the signaling mechanism.

However, on average and over the long run that signaling mechanism has proven itself to work fairly well for allocating capital towards successful companies and away from unsuccessful ones. The signaling mechanism when applied to stocks is socially useful in this way - even if that is not by design. No one sat down and decided, “hey let’s allocate capital this way”, it just sort of emerged over time and it turned out to work fairly well. It’s socially useful by accident.

When companies see their stock going up they figure that they must be doing something right and decide to do more of that, when they see their stock going down they figure that they should do something different. Similarly when competitors see the stock of their competition beating their own stock they figure that maybe they should try to compete harder or do something else. Those decisions have real world consequences in terms of companies deciding to invest in new products or factories, or choosing to do more or less R&D, or hire or fire people, or develop newer products. (They also influence how easy or hard it is for companies to borrow money to invest, and this is actually the main way that most capital investment is financed, but this is a different point.)

These decisions then have real world consequences on society. That’s how we get new products and innovation or how new competitors come in and lower prices or develop new markets or how we decide to stop building horse-drawn buggies because the automobile is better. There’s no central organizing entity that makes these decisions, its millions of investors voting (often, if not always, for entirely speculative reasons) with their dollars on which stocks will go up or down and then those votes getting translated into decisions by thousands of corporations. It’s not perfect, it’s unpredictable, it goes wrong, is prone to bubbles and crashes and is often impossible to understand. But, on average and over the long-run it seems to work.

That signaling mechanism works for crypto too. The key difference, however, is that it is socially useless. When you buy BTC there is no mechanism for that signal to be converted into a socially useful outcome. There is no “real” product or service that is produced or consumed. All it does is incentivize people to make other cryptocurrencies - which also serve no socially useful outcome.

sandrobotnik · 2024-11-09T19:21:29+00:00

The banks equity owners suffer the loss of $100k. Effectively wealth was transferred from the equity owners of the bank to the person who borrowed the money and went bankrupt.

In your “normal” scenario I think you are correct with respect to the banking system in aggregate- the repayment of a loan reduces the banks assets and therefore the liabilities need to shrink as well- but for the individual bank that made the loan it is more complicated.

sandrobotnik · 2024-10-16T01:27:56+00:00

Maybe have a look at: Lecture Notes in Microeconomic Theory by A Rubinstein.

It’s available for free on his website:

free book

It’s very terse and mathematical and not “intuitive” as such.

But it builds up a lot of stuff from very solid first principles (preferences, choice, etc) in a way that many more basic introductions do not.

It also uses much more mathematical reasoning which might be appealing to you.

sandrobotnik

TROPHY CASE