Saturday, January 29, 2011

This method works

Maximum Spacing method This method generates the yield curve from already encoded economic trades; hence we do not need the closed form solution of the economic encoder. We can assume the encoder is operating to standard SNR, and we can generate the number of terms needed to get a yield curve as in:
Isn't the internet dandy, saves a lot of work.  
The short version of where I am headed is that if we know the median transaction time to exchange between two agents, then we have the potential growth at equilibrium. The resulting yield curve are the standard forecasting errors of agent estimators across a finite chain of production .  Ultimately potential economic growth is a constant determined by the maximum speed that two humans can make their thoughts mutually coherent.

Notice that the entropy assumption, the maximum spacing method is more conservative than the minimum likelihood method.  The shorter the production chain, the greater the disparity; and that is the problem we have with money.

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