This was bound to happen at some point because no network can grow forever.   Not quite a ponzi, but ponzi-like in the sense that Linden Lab’s actions required constant growth that never leveled off or dropped.

So anyway things should continue to bounce around.   The only thing keeping a lid on the L$ at all is because people have ingrained ideas about the worth of the L$, which leads speculators to lay down big bets when the L$ bounces up.  If it weren’t for people willing to pick up “cheap” L$ at 300, we’d have much more of a breakout.

This psychological inertia won’t last forever.  There’s only a few possible outcomes I see:

• Linden Lab takes action to revalue the L$
  • Accepting tier in L$… comes straight off the bottom line, the owners and VC will not like this one.
  • Cutting stipends retroactively.   If they just cut stipends while retaining premium membership the way it is users will be upset.  So if they go this way, they’ll have to do something drastic: get rid of premium entirely, for every account regardless of age.  They’d have to make this effective on the renewal date so this measure would take about a month to really start having an effect.
• Linden Lab does nothing.  Demand for L$ may increase, but it’s June, so that’s kind of doubtful with people doing things outside.

There should be some solid foundation this weekend as demand picks up again.  Around the beginning of July, things might get nasty.  I predict fireworks around July 4th.

Our current understanding of the second law of thermodynamics is that entropy in a closed system will tend to increase.  It doesn’t, however, steadily increase.  It will only increase in long run, taking a statistical random walk on the way.

The stunning implication here is that there is a non-zero chance that entropy will drastically decrease.  It’s infinitesimally small, but it’s non-zero.  An example I saw used once is that you might start a game of pool with a nice hard break, and there’s a non-zero chance that all the balls will wind up exactly back where they began.

The odds of this happening are so small that we can generally ignore them.  But suppose the universe is enduring.  Suppose that time goes on forever.  A non-zero chance taken over a period of infinity is guaranteed to happen eventually.

The ultimate implication here is that every moment that has been, and will ever be, will happen again.  Not only will it happen again, but it will happen an infinite number of times.  Next time you have a feeling of Déjà vu, maybe you shouldn’t be so quick to dismiss it.

You obviously feel we are heading for economic disaster.  What kind of window of time to you think things have before everything just collapses? Contrarily, what kind of economic indicators would it take for you to reconsider your fears?  at what point in time?

I don’t know that things will “collapse”.  I think telling you where my savings is might be instructive in terms of my outlook.

Most of my small retirement investment is still in S+P index funds.  I have some positions in foreign gold and metals mining companies that I hope will hedge against the worst.  They have turned out to be very profitable investments thus far.  I still view a total collapse as unlikely, but possible.

I believe that the massive cash injections were a mistake.  I believe that we will pay for them through inflation and malinvestment.   The worst case scenario is a runaway feedback loop of prince and wage inflation combined with massive government spending and currency rebasing that is a hallmark of foreign hyperinflation scenarios.

Looking at US historical scenarios when government creation of money has been high, which has generally been the post-war periods:

Jan 1917 through Jan 1920 — 64.96% inflation
(Sorry I don’t have monetary base data before 1918 handy)

Jan 1946 through Jan 1949 — 31.87% inflation

Jan 1979 through Jan 1983 — 43.19% inflation

And then we have today:

The US government has never slammed the money supply like this before.  No one really knows what the result will be.  It might be a few years of high inflation where our money loses 20% to 50% of its value… or it might be worse.  Bernanke is confident that he can “pull back in time” to prevent serious inflation, but the bottom line is that he doesn’t know.  It’s all an experiment.   We are literally betting the future of the economy on one man’s egotistical drive to test the theory that the great depression could have been prevented.  This was always Bernanke’s theory, and he views himself as gifted with an opportunity to establish his historical legacy by proving that he was right.

Regarding the sleezebag Krugman

I see that he is already hedging his bets.  He is writing himself an easy out when the economy goes belly up despite the massive spending:  “The government didn’t do enough because of republican scare tactics.”  Give me a break.   If anything, this is a big vote of no confidence in the future of the economy.

I think your question should be: At what point does Keynesianism become discredited?  If you can always fall back on arguing that you just didn’t print quite enough money to “stimulate” the economy, then you have an unfalsifiable theory.  Every failure is a failure of resolve, not a failure of theory.  That’s bullshit and I think even Krugman knows it.

But to be honest, I think there is fear.  I think people are willing to follow his ilk only to a certain extent.  The failure of resolve is justified by the failure of his theories to produce results.  Ultimately any theory is only as useful as it is at predicting results.

So to get back to your question:   When a while has gone by, and there isn’t big inflation.  If there isn’t a massive bubble getting ready to pop again.  If the world doesn’t abandon the USD in favor of IMF SDRs or something else.  If Bernanke tries to pull back and is able to.   As for how long a while is… I can’t tell you.  It’s less than 5 years though.  I think I told someone a year or two in another thread.  By then it should be obvious what sort of direction we are heading in.

We are in a airplane with the engines off, doing a zoom dive to get speed… if we pull out of it and the engines start back up with no ill effects, then the Keynesians can celebrate and I will have to reevaluate.  If we have inflation ranging from severe (>5%/year) to hyper (>20%/year)… then I’ll have been right in all the worst ways.

But right now the plane has only started to accelerate out of our stall.  It’s too soon to know if Bernanke should have learned that the proper stall recovery procedure is to ease off, not slam the stick forward.

Gigs’ Corner: SL Grid 08

by Gigs Taggart, Correspondent

This month begins a new regular feature of The Seventh Sun by contributing correspondent, Gigs Taggart. Gigs is a software engineer who is working with Zero Linden and others on the next generation architecture for the Second Life (SL) grid. This month’s topic is the development of an open grid, what Linden Lab refers to as “SL Grid 08.”

Philip (Rosedale) Linden talks about making SL into the next web. Bigger than the web. The Architecture Working Group (AWG) is putting their money where their mouth is. We have high goals here: 60 million regions with 2 billion users. 100 million people using SL at any one time, 20 thousand avatars per region. Obviously a closed system where Linden Lab (LL) hosts everything can’t be that. That’s the main motivation here.

Clearly the more brain power, the better for LL. This means opening things up on all levels, getting people involved and motivated to write alternate clients, alternate servers, and other services that will be needed to make all this work. It’s got to get a lot bigger if we are going to accomplish our goals. This is all about scaling in the end, radical scaling to the levels Philip and LL wants are going to require a radical strategy, and this is it. At the same time we can’t destroy what we have, so it’s going to be a lot of work to get to there from here. Starting over is not an option. We can‘t lose the huge value that exists in SL right now in terms of social networks and content.

The end goal is to have standard protocols for connecting your own grids and servers. When I say standard protocols, I mean standard and open protocols like those on the 2D web today. This would be an open grid based on SL technology. Integration with other virtual worlds could happen once it‘s standardized of course, but the primary motivation is to make SL a more open architecture based on open standards that suit the type of things SL needs to scale to a huge level.

Some have asked about Croquet technology in relation to this project. Croquet is another open source virtual world platform being developed at Duke University that follows a radically different architecture than LL. It does not require extensive use of database servers. I‘m not sure their design goals are in line with LL‘s, however. One of the goals of the SL Grid 08 is that it can incrementally migrate from the existing grid. LL isn‘t going to “leave behind” all that has been built so far inside the closed SL platform. It makes sense to migrate gradually, to minimize disruptions in service. The goal of gradual migration goes into all design decisions. It has to be something that the main grid can be slowly transformed into over time. Croquet definitely has its advantages, but it‘s such a radically different architecture, that it‘s not something that could just be jumped on by LL. That said, once the grid is open, there exists the possibility for portals between various worlds. A good example on the 2D web is the ability to jump to an FTP site in your web browser even though FTP and HTTP are very different protocols.

Existing Second Life related open source projects such as libsecondlife will be useful for having an alternate client for testing the grid protocols. You can think of the SL Viewer that LL makes as comparable to Firefox, and libsecondlife as another viewer like IE or Netscape. It‘s good to have more than one client to test with, but libsecondlife itself is only a client for the grid in the end. Anyone with the desire can make their own client or server implementations and as long as they follow the protocol. Then they can integrate their creations the same way that multiple web servers and different types of web clients integrate today.

There are going to be some bits of framework that need to be created and standardized. Just as the web needs to have DNS and TCP and other underlying parts, we will need a framework here. Luckily for us though, the web, and web technologies can be a resource for us. Some of the parts that LL is working on right now (and the community is starting to work on) are the Capabilities URLs (caps), chttp, eventlet and mulib. For collaborative technical documentation on these libraries, see the following:

http://wiki.secondlife.com/wiki/Mulib
http://wiki.secondlife.com/wiki/Chttp
http://wiki.secondlife.com/wiki/Eventlet

These are small technical pieces that will help form the foundation of a new, more scalable and open grid. The new grid is based on web technologies, and a lot of it will run over HTTP. LL likes to call it “SL Grid 08” (optimistically). Some of the new grid might have elements of peer-to-peer technology, but the overall plan right now is to have a mostly normal server-client architecture.

The foundation pieces like chttp and eventlet will be big parts of the new server architecture and are already open source. At the same time, I don‘t think LL has any immediate plans for opening their complete server implementation. The caps library is a sort of web service-oriented (SOA) architecture. What I expect will happen is that LL servers will begin “speaking” these standardized and open protocols, and this will make it possible for people to run their own servers, written outside of LL, such as Opensim, or license the LL server from LL.

The opensim project has a history similar to the libsecondlife library. libsecondlife is a client, and opensim is a server. The Opensim library started by reverse engineering the existing protocol—similar to libsecondlife—so right now it speaks the “old protocol.” But, as the new open standard evolves, it will start using the standard the same as LL.

The tentative goal is to accomplish a grid retrofit throughout 2008. LL has people working on the various small libraries I mentioned, with other people moving more and more of the server to capabilities-type web services. Zero Linden and our group are working actively on designing the new architecture and protocol that would allow these new use cases. See http://wiki.secondlife.com/wiki/Architecture_Working_Group

Right now I‘m one of the pilot residents invited to work on the AWG. Our immediate goal is to get the low level infrastructure standards and use cases figured out. The initial group included about 10 people with technical expertise from various areas of SL with, along with some people from various large technology corporations that have shown an interest in SL.

There is no intent to move to commercial database servers such as SQL Server and Oracle, because the underlying goal here is to build on entirely open technologies such as MySQL. One good side effect of this is that if the open technologies are lagging, they get pulled forward. Right now the client textures run on a closed, proprietary library, even through there is an open alternative. The open alternative was initially unsuitable, but through LL‘s and the community‘s actions it is quickly becoming better, almost to the level of the closed one. Pretty soon LL will be replacing the closed one with the open one.

Obviously LL has a business to run and may have to incorporate additional closed technology until a decent open source alternative exists. That helps explain why they might not open their server implementation in the near term. They are testing Havok4 physics engine now, and it‘s not open. But, whenever possible, they do want to use open alternatives. There are some open source physics engines, but they are going to need some work to get up to par. One good thing about the Havok4 implementation is that LL has pulled apart the server so it is not so closely tied to Havok. This creates possibilities of open replacements in the future. Physics is pretty tough to keep responsive and yet still get a good level of separation that would allow something like plug and play. It‘s not impossible though. Opensim has the option to use several physics engines in a mostly plug and play manner.

I don‘t think this will come down to a “space race” (like the U.S. and Soviet Union in the 1960s) between LL and a potential competitor like Google‘s “My World.” From what I‘ve seen of Google‘s plan, assuming the reporting is even accurate, I don‘t think it will be a direct competitor to what LL wants to accomplish here. Very few competitors seem to “get it” right. It always seems as if they are missing a piece of the puzzle, particularly in terms of the role of the resident. For example, they might not allow the easy creation of new objects. I think the Sony Playstation Home is like that; it‘s a social gathering place, but it doesn‘t seem particularly resident created. SL is more like a “wiki,” whereas a lot of competitors seem more like “forums:” SL is about open collaboration, while competitive products seem more controlled and moderated. The closest real competitor to SL is probably HiPiHi, but that‘s only because they copied everything SL does verbatim. It‘s a Chinese product, and they really did literally copy almost every aspect of SL. The underlying implementation is probably a lot different, but they did redo it feature-by-feature for the most part.

The AWG wiki is the main focus right now. LL is embracing the ideas of collaborative group development expressed in the book Wikinomics. Most of the members of the AWG are not paid participants. All have some interest, be it purely philosophical, to see SL turn into the next generation web, or commercial in that wider hosting opportunities will expand business.

At this point, the AWG is open for participation from whoever is interested in participating. If you are interested, drop by during Zero Linden‘s office hours, and read the wiki links. The developers email list can be joined at: https://lists.secondlife.com/cgi-bin/mailman/listinfo/sldev

On Wikipedia, a community proposal has been made to remove Jimbo Wales from his postition of absolute authority.  Wales has always enjoyed a title of “benevolent dictator”, even though he dislikes that particular wording.

It is unknown what such a proposal might mean, as Wales would still be on the Wikimedia Foundation Board of Trustees.  The proposal has currently garnered mixed results, with about half of the comments positive and half negative.

mencoder tv:// -tv input=1:norm=ntsc:driver=v4l2:width=720:height=480:alsa:adevice=hw.0:amode=2:audiorate=44100:forceaudio:immediatemode=0:buffersize=64 -o file.avi -ovc lavc -lavcopts vcodec=mpeg4:vbitrate=4000 -oac mp3lame

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article taking from the federal government the power of borrowing. I now deny their power of making paper money or anything else a legal tender. I know that to pay all proper expenses within the year would in case of war be hard on us. But not so hard as ten wars instead of one. For wars would be reduced in that proportion besides that the State governments would be free to lend their credit in borrowing quotas.

The Writings of Thomas Jefferson Being His Autobiography, Correspondence, Reports, Messages, Addresses, and Other Writings, Official and Private By Thomas Jefferson

Every dollar in existence is backed by exactly 1 dollar of debt. It is impossible to increase the money supply without increasing aggregate debt. It’s also impossible to decrease debt without decreasing the money supply by the exact same amount.

That’s one reason the Fed is pumping out money like crazy, and congress is spending it. As the debt markets unravel, people are paying off debts, and other debts are being declared total losses and being written off and new debt isn’t being offered as much… all of this causes money supply contraction.

So why are they spending and creating so much money?

The optimistic answer is that they are doing it to prevent deflation. The cynical answer is that they are spending money because they can, giving it to political friends in massive pork spending contracts, and the Fed giving directly to politically friendly bankers, in the most massive wealth redistribution scheme this country has ever seen. Except it’s not the socialist kind of wealth redistribution, it’s the kind where a corrupt government transfers money from everyone to its political friends. The worst sort of crony corrupt capitalism. And yes, Obama is a party to it.

Whoever controls the volume of money in our country is absolute master of all industry and commerce…when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.

-James Garfield, 20th President

But when you are holding the shift key, say because you are typing in a text field and capitalizing a letter, instead of scrolling, the wheel popping into place will cause you to navigate away from the page you are on, potentially losing all that you typed.  It’s extremely frustrating, and it doesn’t happen often enough to realize what is causing it most of the time.

Here is the solution, for Linux and Windows at least:

Go to about:config and change mousewheel.withshiftkey.action to 0.  This makes the wheel scroll even if shift is held down.  This prevents firefox from losing text that you type with unintended navigation.

So if Firefox is going forward and back randomly while you try to type a message, this may very well be the cause.

The passage below is reminder of how far Linden Lab has gone from their original dream of being “bigger than the web”.  Self-limiting decisions such as this “adult ghetto”, banning people for “unacceptable fantasies”, and in general, moving further and further from the concept of a common carrier, and turning into something more and more like AOL in 1995…  a sandboxed playground for kids and people who can’t figure out how to use anything better.

Linden Lab wrote, in December 2006:

We could never write a set of rules that would work for all people all the time, nor could we enforce them across a population that is growing so rapidly. Instead, we believe that the best way to foster communication and expression is to put power into the hands of the people by giving you better tools for local control. And that’s what we’ve been doing for several months now. [...]
Linden Lab continued:
…[W]e cannot play the role of arbitrating personal grievances or defining behavioral standards. This is particularly important as Linden Lab becomes more international. We don’t want to force a California-centric set of rules on the virtual world. Rather, we want to facilitate Residents banding together and creating their own civic centers around their unique ideals and ambitions.

Linden Lab will continue to police the world for problems that threaten the stability of our technical, economic and social structures. But when it comes to deciding what behavior should be allowed in a particular place or social group, those rules and their enforcement will be decided by the people involved—those who understand the context of the situation and have a stake in its outcome. Linden Lab is carefully planning the move to this federated model, and during the transition we’ll continue to enforce the Community Standards. Note that after the transition, all of Second Life will still be required to abide by the Terms of Service, even though local community standards may vary.

Rosedale surely can’t be happy to see his dream die.   The above passage was published almost one year prior to his “Bigger than the web” keynote at SLCC 07.  It’s no small coincidence that many of us want to party in a place where gambling and debauchery are not hidden away for our Second Tea Party unconference in Las Vegas.

Image Credit: Brooks Elliott