Monday, June 22, 2009

A multi-stage queue of pending transactions

I think, choosing transaction as the fundamental to be minimized in the economy. Inventory becomes transactions. Inventory storage is assumed much a much lesser problem than inventory transport.

So, integrating bottom to top, all transactions across all periods results in a definite shape, as a distribution of transaction rates, which the real economy minimizes. The distribution which minimizes variation minimizes the transaction rate distribution.

Measurement error, is co-minimized. o we get the concept of the middle man who positions himself as a valuable inventory queue in some multi-stage distribution. But we measure imperfectly, and we measure imperfectly by common custom. So we manage the periods of the queues, picking an inventory spot that minimizes transaction variance.

We agents are coherent, we operate in the frequency domain. We are biologically biased toward group action, a higher than linear beta on gains from economies of scale. We tend to stick to the regime longer than we should, and are too hasty in reforming the regime "collectives" after Reorg.

Coherence aligns our expected errors, hence the periods are as finite set of knowns. We are deliberate in our effort to get collective action, because we have a bias toward economies of scale.

The yield curve is banded, for that reason. We operate our lives synchronously to five terms on the standard bankers chart.

So, we know why the ten year yield is high, it is high because we buy less of those goods that have ten year depreciation, like cars. If our refusal to buy more cars appears to be a collective rebellion, it is.

No comments: