Tuesday, July 7, 2009

The Yield Curve, its dimensionality and QM Theory

I take my Universal Economic Calculator and notice the Yield Curve is approximated by three straight lines. Running my pointer back to Dec 2004, I notice the Yield Curve is approximated by four or five line segments. Jun 2008 had six. QM Theory tells me that the stages of production queue were probably under determined today and over determined in Q4 2004 or maybe Jun 2008.

Warning about the Treasury Yield, it is an approximation.

Inflationary periods are those with multiple lines of production serving the same consumer function. It would show inefficiency in capital equipment utility, high transaction costs, more inventory volatility and higher prices. We are not in general inflation now.

When the economy recovers, it will emerge with an increment of one in its dimensionality; having chosen one of two possible equilibrium conditions for the critical resource. Hence, there will be a re-aggregation of the prior three layers of production, alog with the fourth. But shape analysis would say that the steepness will be reduced, we will see inventory activity in the 3 month to 5 year region. We would expect to see much higher efficiency than we ad in Jun 2008.

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