Monday, June 30, 2014

More Error fixing in entropy

Entropy.  The probability of a price for any given transaction is 1/P, P being the price.  Small prices happen more often. So in the entropy sum I missed a sign:

-(1/P)*Log(P), or (1/P)*Log(1/P), either way.

This was all about the maximum efficiency version of quantity money theory. the economy is at minimum redundancy when the sum of -P*Log(P) are all within an integer of each other. I was thinking about this when I was looking at the Phillips curve, which estimates inflation over time.  Inflation is bad, high inflation means there are lots of price changes and something is wrong.  How bad is inflation?  Less than half the growth rate, I would go with that.

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