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6 Crises That Keep Economists Up At Night

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Thomas Carlyle once called economics "a dismal science." Indeed, economists tend to be cautious and pedestrian, but can you blame them? After all, in these troubled times, who could sleep easy knowing these scary stories?

1. The Irish Potato Famine

When you think of economics, think of food. Until the late 1800s economic crisis usually meant agricultural crisis, with famine a not-so-infrequent consequence. Before the advent of industrial agricultural methods, weather conditions and infestations of various kinds had the power to hold the economy hostage.

In 1845 a new fungus, Phytophthora infestans, struck the potato—the mainstay of Ireland's food supply. Although the blight lasted only a few years, its effects were far reaching. As many as 1.5 million died as a direct result of the famine, and many more emigrated in the second half of the 19th century. Even today, only half as many people live in Ireland as did before the famine.

2. German Hyperinflation

By November 1923 in Germany, $1 in the United States equaled 4.2 billion German marks, and even daily staples had to be purchased with wheelbarrows of cash. How did this happen? In 1918 Germany lost World War I, suffered a revolution, and became a republic when Emperor Wilhelm II was forced to abdicate. The Treaty of Versailles, signed a year later, saddled Germany with 6.6 billion British pounds' worth of reparations. With the German treasury empty, the government could pay—and conduct its ongoing business—only by printing lots of money: the quickest recipe for inflation. At the height of inflation in 1923, prices rose 40% per day. People rushed to the stores as soon as they were paid, before their money became worthless. The frightful experience of the early 1920s scarred the German national psyche and undermined faith in the Weimar Republic, which helped pave the way for Adolf Hitler and the Nazi Party. In fact, Hitler's early grab for power—the Beer Hall Putsch in Munich—came on November 8, 1923.

3. The Great Depression


During the Roaring '20s in the United States, the wealthy spent a lot of money they had, and the not-so-wealthy spent a lot of money they didn't have. The Great Depression began soon after the stock market crashed in October 1929, but economists still argue whether the bursting of the 1920s financial bubble caused the Depression or merely foretold the coming economic slump. Either way, by 1932 the economy contracted by 31%, and some 13 million were left jobless—a quarter of the workforce. When President Franklin Delano Roosevelt took office in 1932, he started the New Deal, a set of policies to boost federal spending and create government-financed jobs. Although the economy began growing again in the mid-1930s, the effects of the Depression lingered on until Pearl Harbor. The number of unemployed fell to 7.6 million in 1936 but rose again to 10 million in 1938—the same number of men drafted into the armed forces during World War II.

4. The '70s Oil Crisis

oil-crisis.jpgThe price of oil tends to be slippery—something the economists forgot in the early 1970s when they confidently predicted that crude prices could fall as low as the cost of pumping oil out of the Saudi desert (estimated at less than $1 per barrel). Instead, following the Yom Kippur War between Israel and its Arab neighbors in October 1973, Arab oil producers declared an embargo. Oil prices tripled to more than $10 per barrel, and gasoline shortages ensued. By December President Nixon had to announce that because of the energy crisis, the White House Christmas tree would not be lighted. The 1979 Iranian revolution brought a second oil shock, and oil prices eventually peaked at around $35 per barrel. The oil crisis helped bring on a period of stagflation—meaning that even though the U.S. economy barely dragged along, inflation continued to rise.

5. The Asian Flu

The domino-like collapse of several Asian economies in the late 1990s seemed to come out of nowhere. The "tiger" economies of Southeast Asia had been booming for years, and the region widely expected to stay an economic powerhouse straight into the upcoming millennium. Yet in July 1997 things went spectacularly wrong. Thailand became the catalyst for the crisis, when severe pressure from speculators brought down its currency, the baht. The Philippine peso and the Malaysian ringgit fell next. Then the Indonesian rupiah was devalued in August, ushering in political and social turmoil. Finally, even South Korea, one of the strongest economies in east Asia, nearly went bankrupt and had to be bailed out. Economists were at a loss to fully explain the crisis. But as country after country succumbed to the financial bug, one lesson seemed clear: an interconnected global economy can transmit panic just as well as it can goods and services.

6. Argentina's Peso Crisis

During the 1990s Argentina was the star pupil of the International Monetary Fund. After two decades of runaway inflation and collapsing currencies, the Argentine government finally turned over a new economic leaf in 1992. Economy minister Domingo Cavallo helped set up a new currency, the peso, and firmly linked it to the U.S. dollar. The government decreed that one peso could always be exchanged for one dollar and that it would print only as many pesos as were backed by dollar reserves. The system functioned extremely well for a few years, but by late 1997 the overvalued peso and restrictive monetary policies helped bring on a prolonged recession, accompanied by turmoil in financial markets. Successive economy ministers and presidents could find no solution. In December 2001 the Argentine peso was devalued, and the government defaulted on some $140 billion in debt, the biggest default on record.

This article was excerpted from Condensed Knowledge: A Deliciously Irreverent Guide to Feeling Smart Again. You can pick up a copy in the mental_floss store.

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iStock // Ekaterina Minaeva
Man Buys Two Metric Tons of LEGO Bricks; Sorts Them Via Machine Learning
May 21, 2017
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iStock // Ekaterina Minaeva

Jacques Mattheij made a small, but awesome, mistake. He went on eBay one evening and bid on a bunch of bulk LEGO brick auctions, then went to sleep. Upon waking, he discovered that he was the high bidder on many, and was now the proud owner of two tons of LEGO bricks. (This is about 4400 pounds.) He wrote, "[L]esson 1: if you win almost all bids you are bidding too high."

Mattheij had noticed that bulk, unsorted bricks sell for something like €10/kilogram, whereas sets are roughly €40/kg and rare parts go for up to €100/kg. Much of the value of the bricks is in their sorting. If he could reduce the entropy of these bins of unsorted bricks, he could make a tidy profit. While many people do this work by hand, the problem is enormous—just the kind of challenge for a computer. Mattheij writes:

There are 38000+ shapes and there are 100+ possible shades of color (you can roughly tell how old someone is by asking them what lego colors they remember from their youth).

In the following months, Mattheij built a proof-of-concept sorting system using, of course, LEGO. He broke the problem down into a series of sub-problems (including "feeding LEGO reliably from a hopper is surprisingly hard," one of those facts of nature that will stymie even the best system design). After tinkering with the prototype at length, he expanded the system to a surprisingly complex system of conveyer belts (powered by a home treadmill), various pieces of cabinetry, and "copious quantities of crazy glue."

Here's a video showing the current system running at low speed:

The key part of the system was running the bricks past a camera paired with a computer running a neural net-based image classifier. That allows the computer (when sufficiently trained on brick images) to recognize bricks and thus categorize them by color, shape, or other parameters. Remember that as bricks pass by, they can be in any orientation, can be dirty, can even be stuck to other pieces. So having a flexible software system is key to recognizing—in a fraction of a second—what a given brick is, in order to sort it out. When a match is found, a jet of compressed air pops the piece off the conveyer belt and into a waiting bin.

After much experimentation, Mattheij rewrote the software (several times in fact) to accomplish a variety of basic tasks. At its core, the system takes images from a webcam and feeds them to a neural network to do the classification. Of course, the neural net needs to be "trained" by showing it lots of images, and telling it what those images represent. Mattheij's breakthrough was allowing the machine to effectively train itself, with guidance: Running pieces through allows the system to take its own photos, make a guess, and build on that guess. As long as Mattheij corrects the incorrect guesses, he ends up with a decent (and self-reinforcing) corpus of training data. As the machine continues running, it can rack up more training, allowing it to recognize a broad variety of pieces on the fly.

Here's another video, focusing on how the pieces move on conveyer belts (running at slow speed so puny humans can follow). You can also see the air jets in action:

In an email interview, Mattheij told Mental Floss that the system currently sorts LEGO bricks into more than 50 categories. It can also be run in a color-sorting mode to bin the parts across 12 color groups. (Thus at present you'd likely do a two-pass sort on the bricks: once for shape, then a separate pass for color.) He continues to refine the system, with a focus on making its recognition abilities faster. At some point down the line, he plans to make the software portion open source. You're on your own as far as building conveyer belts, bins, and so forth.

Check out Mattheij's writeup in two parts for more information. It starts with an overview of the story, followed up with a deep dive on the software. He's also tweeting about the project (among other things). And if you look around a bit, you'll find bulk LEGO brick auctions online—it's definitely a thing!

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Sponsor Content: BarkBox
8 Common Dog Behaviors, Decoded
May 25, 2017
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Dogs are a lot more complicated than we give them credit for. As a result, sometimes things get lost in translation. We’ve yet to invent a dog-to-English translator, but there are certain behaviors you can learn to read in order to better understand what your dog is trying to tell you. The more tuned-in you are to your dog’s emotions, the better you’ll be able to respond—whether that means giving her some space or welcoming a wet, slobbery kiss. 

1. What you’ll see: Your dog is standing with his legs and body relaxed and tail low. His ears are up, but not pointed forward. His mouth is slightly open, he’s panting lightly, and his tongue is loose. His eyes? Soft or maybe slightly squinty from getting his smile on.

What it means: “Hey there, friend!” Your pup is in a calm, relaxed state. He’s open to mingling, which means you can feel comfortable letting friends say hi.

2. What you’ll see: Your dog is standing with her body leaning forward. Her ears are erect and angled forward—or have at least perked up if they’re floppy—and her mouth is closed. Her tail might be sticking out horizontally or sticking straight up and wagging slightly.

What it means: “Hark! Who goes there?!” Something caught your pup’s attention and now she’s on high alert, trying to discern whether or not the person, animal, or situation is a threat. She’ll likely stay on guard until she feels safe or becomes distracted.

3. What you’ll see: Your dog is standing, leaning slightly forward. His body and legs are tense, and his hackles—those hairs along his back and neck—are raised. His tail is stiff and twitching, not swooping playfully. His mouth is open, teeth are exposed, and he may be snarling, snapping, or barking excessively.

What it means: “Don’t mess with me!” This dog is asserting his social dominance and letting others know that he might attack if they don’t defer accordingly. A dog in this stance could be either offensively aggressive or defensively aggressive. If you encounter a dog in this state, play it safe and back away slowly without making eye contact.

4. What you’ll see: As another dog approaches, your dog lies down on his back with his tail tucked in between his legs. His paws are tucked in too, his ears are flat, and he isn’t making direct eye contact with the other dog standing over him.

What it means: “I come in peace!” Your pooch is displaying signs of submission to a more dominant dog, conveying total surrender to avoid physical confrontation. Other, less obvious, signs of submission include ears that are flattened back against the head, an avoidance of eye contact, a tongue flick, and bared teeth. Yup—a dog might bare his teeth while still being submissive, but they’ll likely be clenched together, the lips opened horizontally rather than curled up to show the front canines. A submissive dog will also slink backward or inward rather than forward, which would indicate more aggressive behavior.

5. What you’ll see: Your dog is crouching with her back hunched, tail tucked, and the corner of her mouth pulled back with lips slightly curled. Her shoulders, or hackles, are raised and her ears are flattened. She’s avoiding eye contact.

What it means: “I’m scared, but will fight you if I have to.” This dog’s fight or flight instincts have been activated. It’s best to keep your distance from a dog in this emotional state because she could attack if she feels cornered.

6. What you’ll see: You’re staring at your dog, holding eye contact. Your dog looks away from you, tentatively looks back, then looks away again. After some time, he licks his chops and yawns.

What it means: “I don’t know what’s going on and it’s weirding me out.” Your dog doesn’t know what to make of the situation, but rather than nipping or barking, he’ll stick to behaviors he knows are OK, like yawning, licking his chops, or shaking as if he’s wet. You’ll want to intervene by removing whatever it is causing him discomfort—such as an overly grabby child—and giving him some space to relax.

7. What you’ll see: Your dog has her front paws bent and lowered onto the ground with her rear in the air. Her body is relaxed, loose, and wiggly, and her tail is up and wagging from side to side. She might also let out a high-pitched or impatient bark.

What it means: “What’s the hold up? Let’s play!” This classic stance, known to dog trainers and behaviorists as “the play bow,” is a sign she’s ready to let the good times roll. Get ready for a round of fetch or tug of war, or for a good long outing at the dog park.

8. What you’ll see: You’ve just gotten home from work and your dog rushes over. He can’t stop wiggling his backside, and he may even lower himself into a giant stretch, like he’s doing yoga.

What it means: “OhmygoshImsohappytoseeyou I love you so much you’re my best friend foreverandeverandever!!!!” This one’s easy: Your pup is overjoyed his BFF is back. That big stretch is something dogs don’t pull out for just anyone; they save that for the people they truly love. Show him you feel the same way with a good belly rub and a handful of his favorite treats.

The best way to say “I love you” in dog? A monthly subscription to BarkBox. Your favorite pup will get a package filled with treats, toys, and other good stuff (and in return, you’ll probably get lots of sloppy kisses). Visit BarkBox to learn more.