Wednesday, December 23, 2015

Nonsense about the Apple headphone jack

I don't know whether Apple will remove the headphone jack from the next iPhone or not, but this Slate article has made to write about it and link to them. Well played, sir! What I do know is that this doesn't seem to make much sense:
Lightning is a superior connector compared to the existing 3.5 mm audio jack in the iPhone because it's digital. That means the iPhone's software could fine-tune the way headphones sound, like an equalizer. An app like Spotify could also be programmed to open whenever you plug in headphones.
If a digital signal is transmitted via Lightning, it just means that the Digital-to-Audio converter (DAC) needs to be somewhere in the headphone instead of in the device. There may be benefits in isolating the DAC from other microprocessors in the phone, but I'm not that much of an audiophile and frankly, Apple's iPhone DAC is pretty good already. However, since the iPhone already has a DAC, and that the music it plays is digital, it means that it can iPhone software can already fine-tune the way headphones sound. In fact, it already has an equalizer.

The primary reason to remove the 3.5mm jack would be to make the iPhone thinner still. My preference would be that Apple keeps the iPhone the same thickness, but does something about the case I need to wrap it in so it doesn't break. The case adds more size to the iPhone than Apple can remove, and an integrated solution might be better (and smaller) than what customers do now.

Tuesday, December 22, 2015

Fed Raising Rates

Looks like the Fed is raising rates, and this WSJ article goes through winners and losers. There's another way to think about it though.

Firstly, orthodox macro has lower rates as simulative because it encourages borrowing, which comes concomitantly with spending. However, when you are in a balance sheet recession, with an overly leveraged economy, then this additional borrowing doesn't happen, which has been the story in the US since 2008 and in Japan since about 1985.

More specifically, the leveraged stimulant that lower rates drive comes essentially from residential housing and the mortgage market. Prices remain high on the coasts, and people have all the house they need elsewhere. With a weak labor market, stagnant wages, and generally poor business demand, I don't think households are ready to leverage up or have the cash to go long(er) housing.

Secondly, on the flip side, higher interest rates mean more interest income, and income is what remains missing in this economy. 0.25% isn't much, but it's better than ZIRP, and while I see this as being too small to have much of an impact, it is (mildly) simulative.

More broadly, as Mosler points out, the Fed should really leave interest rates at zero permanently. There's no purpose to them, it would take all the profit out of the bond speculation market, and most importantly, it would focus stimulus on the channel which is actually capable of delivering it -- fiscal.