My Economics Theory

Evolution wants to maximize the people*goods product within the hard constraints of nature. In herding mammals the solution is generally bell shaped distributions of the cows over valuable pasture. In humans it means a reasonable set of alternative goods over the individuals local economy. Reasonable set would be a Bell curve of relative elasticities.

There is the second hard constraint of nature, and the computable response to these constraints are Hayek's Minimization of transactions. Distribute goods toward a goal of minimizing the number of exchanges per unit of good and the result is a best match agglomeration of economic inventory movement to the underlying hard constraints.

Best match means the economic accounting system can compute capital value from stochastic flows of inventory with minimum uncertainty. The agglomeration process sectorizes the economy, a process which can be modeled as a linear estimation process with economies of scale generating predictive stochastic flows of inventory.

Technology shocks that are large enough cause a re-agglomeration about a different set of constraints ad result in better predictive capability.

The sectorial factorization of the economy yields the term structure as the basic eigenfunction of the economy. The natural yield curve is a nearly direct sum of the component yield curves.