## Saturday, January 31, 2015

### Humans and banker bots selecting movies

Banker bot manages a savings and loan business in movie discounts. Movie discounts spendable anywhere, but especially movie theaters and CD sales and online movie sales. Web bot publishes relative pricings. Web viewers save, lend, and select movies. Put discount units on standard smart card. Web bot is automated, it optimizes pricing costs, lower, across inventory. %hen see if your bot can spawn, just for fun.

### Tyler Cowen posting on web bot movie banking

He send us to Kottke which sends us to Tim Wu at the New Yorker. Here is the summary:

If humans are assumed movie stable and movie makers perfectly prescient, then the bot wants to sample human movies choices at twice the rate, assuring perfect causality a constantly equalibriated market.

If the bots want to maintain connectivity among humans such that one choice it additive with prior choices, then it samples human choices at Phi, or rather continually estimates the Phi among the humans.

If the bot wants to ensure that no human crowd onto a particular movie, then it sample at 3/2, the optimum congestion rates. This assume movie makers are perfectly adaptable to human desires.

The correct Black Scholes result will be (Phi-1)/2, or about 31% of the movie recommendations come from the bot. This matches movie watchers, movie makers and external markets.

That is about where I started on the idea of a band limited vacuum some two years ago. It did not get the picture back then, and some of this is not complete. But I learned a lot from the mathematicians on the web, and I asm entirely grateful. At this point, I have a hard time seeing anything but the Lagrange, Markov, Fibonacci, Wythoff, Weiner, Group, and Schramm experts getting together. I seems to me these are the folks that make the formal proofs, and set everything straight in the Theory of Everything. I would think they are right there, staring and contemplating the center where everything meets.

In a bu8bble space I considered the sample rate to be the exchange and relation times, an asymmetric, self clock. So, in the Shannon model, information rate, channel rate and noise rate were all self equilibrating. They adjust, as in measure theory, such that the tinies measure themselves, and the entire thing is a self adapting rules. Some finite tinies making the optimum theory of themselves.

Tim Wu writes for the New Yorker about how Netflix uses a ~70/30 combination of data and human judgment to determine their recommendations and what shows/movies to make.So, no doubt we have the web bot managing the power spectrum of human movie choices. The discussion was about how much inventory slack in movie selection should the bot maintain and how much self correlation among the humans it should retain. It boils down to the frequency at which a network of humans watch movies.

If humans are assumed movie stable and movie makers perfectly prescient, then the bot wants to sample human movies choices at twice the rate, assuring perfect causality a constantly equalibriated market.

If the bots want to maintain connectivity among humans such that one choice it additive with prior choices, then it samples human choices at Phi, or rather continually estimates the Phi among the humans.

If the bot wants to ensure that no human crowd onto a particular movie, then it sample at 3/2, the optimum congestion rates. This assume movie makers are perfectly adaptable to human desires.

The correct Black Scholes result will be (Phi-1)/2, or about 31% of the movie recommendations come from the bot. This matches movie watchers, movie makers and external markets.

**Regarding those sample rates**.That is about where I started on the idea of a band limited vacuum some two years ago. It did not get the picture back then, and some of this is not complete. But I learned a lot from the mathematicians on the web, and I asm entirely grateful. At this point, I have a hard time seeing anything but the Lagrange, Markov, Fibonacci, Wythoff, Weiner, Group, and Schramm experts getting together. I seems to me these are the folks that make the formal proofs, and set everything straight in the Theory of Everything. I would think they are right there, staring and contemplating the center where everything meets.

**I gush over these folks, I think they are brilliant.**In a bu8bble space I considered the sample rate to be the exchange and relation times, an asymmetric, self clock. So, in the Shannon model, information rate, channel rate and noise rate were all self equilibrating. They adjust, as in measure theory, such that the tinies measure themselves, and the entire thing is a self adapting rules. Some finite tinies making the optimum theory of themselves.

## Friday, January 30, 2015

### So we can now add to the theory of Brownian motion

In this formula, Pi and e are computes, and the total number of particles has to remain additive. So, for example, at the origin, as t gets larger the particle, being a finite N, stop spreading and retain additive connectivity at some low precision of Pi and e. The ensemble is no longer Brownian but a finite normal distribution. Any particle will soon lose precision on Pi so the assumption that a collision from the left or right no longer holds. Additive locality is essential for the system to maintain a good approximation of e, and the particle reach a limit of a sequence in Fibonacci. T, which represent the density of counts along the number line ultimately drops out of the equation.

The equation below reaches finite limits, as stated

X suffers similar constraints, and the system behaves like a system under general relativity. It suffers exactly the same problem, as relativity, space symmetry no longer holds when density becomes low.

But if we let the origin roam a bit, then the bell curve will move around, like a Weiner process. The shape should become adiabatic.

So what makes a Weiner process?

The precision of the transcendentals drops, until the system obtains a stable Poincare group. Then we humans impose a more accurate number line on the thing and it appears to move. It is using a less accurate number line. Just like general relativity.

The equation below reaches finite limits, as stated

X suffers similar constraints, and the system behaves like a system under general relativity. It suffers exactly the same problem, as relativity, space symmetry no longer holds when density becomes low.

But if we let the origin roam a bit, then the bell curve will move around, like a Weiner process. The shape should become adiabatic.

So what makes a Weiner process?

The precision of the transcendentals drops, until the system obtains a stable Poincare group. Then we humans impose a more accurate number line on the thing and it appears to move. It is using a less accurate number line. Just like general relativity.

### Then why this relationship: 2^(2*Phi) = 3*Pi?

There would be no reason for this to be true unless it was a result of Newton's grammar. That result tells me that number line work because notches are spaced apart to support local sums of combinatorics. And Newton just carried over that relationship with symbolic transcendentals.

and that gives you the channel to bandwidth. Work it two or three ways, add the fine structure as the noise, let the channel be the speed of light, try it with volume to area, invert things. But the result is always the same, numbers need to find the maximum divergence, multiply does not really exist in nature, and it is only approximate in the grammar as the number line heads to infinity. In any finite system, multiply is always log additive, and combinatorics locally add. So you get the same result,

Newton;s calculus, in its pure form, is a story about very tiny things estimating the three transcendentals. That is, stop the process as

Let your channel bandwidth be the sample rate of light and you get the number of tinies on the surface of the atomic sphere. Higgs got it right, he just worked it from infinity down to the tiniest. I worked it from the tiniest up to the transcendental. Oded Schramm worked the middle. Einstein just wrote the Poincare group for a sphere.

And implicitly, or explicitly, Newton's grammar was nothing more than a symbolic multiply using the three transcendentals. We have to live with the shock, of it all. The world is made of the tiniest thing and there is nothing more we can see.

**Pi*r^2/r**gives us circumference to radius, that is the maximum divergence about an error for some uncertain radius. So apply the Shannon information theory :**B/C = log2(1+SNR)**and that gives you the channel to bandwidth. Work it two or three ways, add the fine structure as the noise, let the channel be the speed of light, try it with volume to area, invert things. But the result is always the same, numbers need to find the maximum divergence, multiply does not really exist in nature, and it is only approximate in the grammar as the number line heads to infinity. In any finite system, multiply is always log additive, and combinatorics locally add. So you get the same result,

**2^(2*Phi)**, or versions of it.Newton;s calculus, in its pure form, is a story about very tiny things estimating the three transcendentals. That is, stop the process as

**dx**goes to zero and look at what the tiny components of**dx**are doing. What are they doing? Walking a graph to keep the trenscendentals optimally estimated to the nearest whole number. That is the story of Schramm-Loewner, they are stopping**dx**on the way to zero and they see what the tinies are up to.Let your channel bandwidth be the sample rate of light and you get the number of tinies on the surface of the atomic sphere. Higgs got it right, he just worked it from infinity down to the tiniest. I worked it from the tiniest up to the transcendental. Oded Schramm worked the middle. Einstein just wrote the Poincare group for a sphere.

And implicitly, or explicitly, Newton's grammar was nothing more than a symbolic multiply using the three transcendentals. We have to live with the shock, of it all. The world is made of the tiniest thing and there is nothing more we can see.

**We are stuck, the theory of everything ultimately is quite simple.**### The mechanics of overlapping bubbles in physics

Let's consider the idea of the vacuum being composed of overlapping bubbles, but we impose two conditions.One condition says they can only overlap to some limt, call that the finstructure limit. That is, there is some limit to the retains motion that insures no bubble is complete swallowed, bubbles do not go to zero.

Let's impose the second condition that bubbles must be locally additive. That is, and number of bubbles i a compressed environment must be pushed into that environment via their neighbors, hence the concentration of some bubbles with overlap n must have originated from an additive combination of their neighbors.

The condition 0f local additivity generates our Fibonacci base, any sequence of the form: a,b,a+b,b+a+b, etc. Then we ask, what is the rate of change in neighboring bubbles with respect to the exponent? Our formula below gives us the answer.

We end up with a multiple of ln(c), or in our case the ln(phi). But that logarithm is accurate when the rate of change is equal to the density. If the bubbles are limited to retaining a fine structure of motion, they are dimensions, and the value ln(c) will become stable at the point of maximum dimension. What is that computation?

Here it is. Let N be the total number of bubbles, Phi^n, compressible according to spherical compression. That number is near 91, or 13*7. When m = 13*7, then to a an approximation up to the fine structure, 13 will calculate the logarithm of Ph^7 from Ph^91. If 13, in this case, is the dimensionality, we find a limit in which the maximum amount of overlap between bubble and their concentration match, we get a Brownian motion equilibrium and the system will no longer compress. The arrangement of spectral motions, the overlap modes, and the local concentrations will match, spectrum and quantity are set to maximum compression.

How that happens, and how we evolve from Fibonacci to Lucas and beyond is a subject for the mathematicians. But it is clear we get a balance between our three transcendentals, they all match in precision. There has to be a pattern by which the finite system moves about the Wythroff array, each time mapping three rational approximations to the three transcendentals and maintaining maximum dimensionality and conservation of bubble. Those matches have to create a Poincare group, including the Higgs mechanism for the bubble that cannot find a better spectral mode. That has got to be the theory of everything, there is no other way.

The spectral modes distribute making the Schramm Loewner index. The Brownian motion equation can them be written entirely in the rational approximation of Phi, over a set of spectral modes. Time is simply the over all spectral density, finite and having some integer set of modal points. The Ito calculus is simple the path over which the Poincare group makes adjustments for motion, the group itself defines multiplication tree for the system, and that should be finite log additive, composed of multiple 'primes'.

Let's impose the second condition that bubbles must be locally additive. That is, and number of bubbles i a compressed environment must be pushed into that environment via their neighbors, hence the concentration of some bubbles with overlap n must have originated from an additive combination of their neighbors.

The condition 0f local additivity generates our Fibonacci base, any sequence of the form: a,b,a+b,b+a+b, etc. Then we ask, what is the rate of change in neighboring bubbles with respect to the exponent? Our formula below gives us the answer.

We end up with a multiple of ln(c), or in our case the ln(phi). But that logarithm is accurate when the rate of change is equal to the density. If the bubbles are limited to retaining a fine structure of motion, they are dimensions, and the value ln(c) will become stable at the point of maximum dimension. What is that computation?

Here it is. Let N be the total number of bubbles, Phi^n, compressible according to spherical compression. That number is near 91, or 13*7. When m = 13*7, then to a an approximation up to the fine structure, 13 will calculate the logarithm of Ph^7 from Ph^91. If 13, in this case, is the dimensionality, we find a limit in which the maximum amount of overlap between bubble and their concentration match, we get a Brownian motion equilibrium and the system will no longer compress. The arrangement of spectral motions, the overlap modes, and the local concentrations will match, spectrum and quantity are set to maximum compression.

How that happens, and how we evolve from Fibonacci to Lucas and beyond is a subject for the mathematicians. But it is clear we get a balance between our three transcendentals, they all match in precision. There has to be a pattern by which the finite system moves about the Wythroff array, each time mapping three rational approximations to the three transcendentals and maintaining maximum dimensionality and conservation of bubble. Those matches have to create a Poincare group, including the Higgs mechanism for the bubble that cannot find a better spectral mode. That has got to be the theory of everything, there is no other way.

The spectral modes distribute making the Schramm Loewner index. The Brownian motion equation can them be written entirely in the rational approximation of Phi, over a set of spectral modes. Time is simply the over all spectral density, finite and having some integer set of modal points. The Ito calculus is simple the path over which the Poincare group makes adjustments for motion, the group itself defines multiplication tree for the system, and that should be finite log additive, composed of multiple 'primes'.

### Peter Morici at CNBC wants Obama to double the national debt, again

Yahoo: After a deep recession, Ronald Reagan posted 4.7 percent annual growth over 22 quarters and employment jumped 13 percent, whereas President Obama's recovery has accomplished half that progress.Lets see, Reagan nominated in Q1 1981, first event is the worst recession in recent memory, next event is the great communist spending binge which doubled the national debt. To this very day the US Treasury is rolling over all that debt Reagan buried in 30 year bonds.

Notice it took a small state governor, Bill Clinton, before we could get Reagan's spending binge under control. See the elder Bush in that chart? He barely made a dent.

**So, we have a bunch of Republican Communists celebrating the Greatest American Communist of all time.**

To further instruct Peter let's look at deficit's, shall we?

OK, down deficits dropping is the blue line going up, that means gooder government. Well, deficits always rising or bad with Republicans. Deficits always reducing, or good government under Democrats.

Notice, every single Republican was a deficit rising president.

How about price stability?

Nope, Republican presidents still suck. Every single Republican president had high inflation and high price variance. Clinton and Obama still win. Democrat presidents win on deficit reduction and price stability. Republican presidents are always leaving the economy with a dangerous debt overhang. Carter is the except on price stability. But he inherited the Nixon monetary regime change.

Who is Peter Morici?

Commentary by Peter Morici, an economist and business professor at the University of Maryland, and a national columnist.

Well, there you have it, yet another economist destroying his own science. Note: The University of Maryland is not the place to learn economics.

### My Hometown in the news

Wayne Lusvardi of Calwatch: The gleaming high-tech companies of San Francisco and Silicon Valley now are California’s face to the world — even more than Hollywood.Did they mention Fresno just to get a plug from this minor blog? I am getting paranoid!

But — surprise! — an updated Brookings Institution study found the inland metropolitan areas of California beat out the upscale coastal cities in the Bay Area and Silicon Valley for overall economic growth in 2013-14.

What most Californians hear and read in the media is the cities of San Francisco and San Jose are leading the jobs recovery in California, with the inland areas still mired in recession. And indeed those two cities are doing well.

But when measured at the level of Metropolitan Statistical Areas, Fresno, Sacramento and Riverside were ranked higher in combined positive change in employment and Gross Domestic Product growth per person for 2013-2014.

### I do not understand why Mexico has a 100 year bond

I can think of no good reason for that long bond, and can think of a bunch of bad reasons.

Is the mexican banking regime stable for 100 years? No.

Is the Mexican legislature planning some 100 year investment project? No.

Is the 100 year bond a license for a new aristocracy? Yes.

Corruption and ignorance in the Mexican legislature seems to be the reason.

El bono de México 100 años es una muy mala idea, y sólo sirve para crear una aristocracia. Ningún régimen monetario es estable durante 100 años.

Courtesy of Zero Hedge, here is the Mexican dollar exchange rate. Up means weaker Peso.

That is a wage cut for Mexican workers. But it is certainly a short term boost to Mexican imports into the USA. I guess the currency market thinks California won the prize in its recent federation with Mexico. But California has no 100 year bond and no aristocracy. The Mexican ten year is 3.22%, the US ten year is 1.67%, and the California pays 2.37%.

Is the mexican banking regime stable for 100 years? No.

Is the Mexican legislature planning some 100 year investment project? No.

Is the 100 year bond a license for a new aristocracy? Yes.

Corruption and ignorance in the Mexican legislature seems to be the reason.

El bono de México 100 años es una muy mala idea, y sólo sirve para crear una aristocracia. Ningún régimen monetario es estable durante 100 años.

Courtesy of Zero Hedge, here is the Mexican dollar exchange rate. Up means weaker Peso.

That is a wage cut for Mexican workers. But it is certainly a short term boost to Mexican imports into the USA. I guess the currency market thinks California won the prize in its recent federation with Mexico. But California has no 100 year bond and no aristocracy. The Mexican ten year is 3.22%, the US ten year is 1.67%, and the California pays 2.37%.

## Thursday, January 29, 2015

### John Cochrane does homework on state boundaries

Unemployment insurance and unemployment - John Cochrane

The issue in looking at reserach I discussed here, was whether state boundaries can be used effectively to note effects of federal policy changes. The answer was yes, if the error sources are properly accounted for. John, bless his heart, read the report and demonstrated the relevant methodology, and indeed the authors did do a good job.

Pretended to be banker bots and isolated the correlations across county borders between states. They can then allocate the correlation spectra, in proper order, and, within the given precision, identify material changes after a change in federal law. I never mentioned Marcus Hagedorn, ,Iourii Manovskii, Kurt Mitman who did the original research using state boundaries. Sorry, they did a great job.

What about discontinuities, the border is not Euler smooth? Well the human bots handle that just fine by insuring local, finite log additivity across the boundary, implicitly estimating Phi, actually. The estimate then generates adequate estimates of the two other transcendentals, just the way nature does it. But humans can use their judgement and decide that Newton's grammar can be used for a good approximation.

The issue in looking at reserach I discussed here, was whether state boundaries can be used effectively to note effects of federal policy changes. The answer was yes, if the error sources are properly accounted for. John, bless his heart, read the report and demonstrated the relevant methodology, and indeed the authors did do a good job.

**What did they do**?Pretended to be banker bots and isolated the correlations across county borders between states. They can then allocate the correlation spectra, in proper order, and, within the given precision, identify material changes after a change in federal law. I never mentioned Marcus Hagedorn, ,Iourii Manovskii, Kurt Mitman who did the original research using state boundaries. Sorry, they did a great job.

What about discontinuities, the border is not Euler smooth? Well the human bots handle that just fine by insuring local, finite log additivity across the boundary, implicitly estimating Phi, actually. The estimate then generates adequate estimates of the two other transcendentals, just the way nature does it. But humans can use their judgement and decide that Newton's grammar can be used for a good approximation.

### Tyler Cowen discovers the human banker bot

Marginal Revolution: The idyllic Swiss village of Grächen, flanked by better-known competitors Zermatt and Saas-Fee, has declared itself a financial microclimate, with constant exchange rate of 1.35 francs to the euro. The rate has been in place during winter months since 2011, and squarely ignores the official rate, which is currently closer to parity. It’s observed by the vast majority of hotels, shops, lift pass providers and restaurants—and has particularly paid off during the last two weeks. The only catch? You have to pay cash.

“In 2011, when the euro started falling during the eurozone crisis, bookings decreased rapidly for the winter season because it was just becoming too expensive for tourists, especially those from abroad,” explains Berno Stoffel, director at the tourism office in Grächen, which has less than 1,400 permanent residents and is almost exclusively economically dependent on farming and tourism. As the Swiss franc has soared, resorts in neighboring France, Austria and Germany – all in the eurozone – have become cheaper. “We had to do something so we decided to play central bank,” says Mr. Stoffel.

Is this the same as the web banker bot? Yes, same theory but this resort is low dimensional, the humans do not have to reset exchange rates for the season. The reason is simple, once the winter tourist season is set, everything is fixed and businesses are highly correlated. No one is doing hotel expansion, or changing their menus at the restaurant and the bus and train schedules are not likely to change.

**But other than scale, this is exactly how the web banker bot works.**

### The artificial brain is unloved by some

Bill Gates is worried about artificial intelligence too

CNET: Bill Gates has a warning for humanity: Beware of artificial intelligence in the coming decades, before it's too late.

Microsoft's co-founder joins a list of science and industry notables, including famed physicist Stephen Hawking and Internet innovator Elon Musk, in calling out the potential threat from machines that can think for themselves. Gates shared his thoughts on AI on Wednesday in a Reddit "AskMeAnything" thread, a Q&A session conducted live on the social news site that has also featured President Barack Obama and World Wide Web founder Tim Berners-Lee.

**Certainly the artificial brain will figure out how to calm our fears.**### Le Grisbi Is Le Root Of Le Evil In Man

Turkey's $7.9 Billion Mystery Money That's Simply Vanished

Yahoo: Something bizarre is happening on Turkey’s accounting books, and nobody’s quite sure why.

Turkey attracted $7.9 billion of income from unexplained sources during the first eight months of 2014, compared to an outflow of $90 million during the same period a year ago, according to the central bank data. In the three months that followed, $5.6 billion of that left the country.

## Wednesday, January 28, 2015

### How the web bot currency banker operates over the web

In this post I will get into the nitty gritty of the roaming, no arbitrage web bot banker that offers pricing units to collections of interacting merchants. In the current world, this web bot banker is akin to a combined derivative industry and central banker; serving semi orthogonal groups of web merchants.

It produces units of inventory variation that can be exchanged, profitably, as pricing discounts between sellers and buyers of related goods. These units of variance will be valued at a fixed percentage of price discount, somewhere around 1%, for any product purchased over the collected finite number of merchants. All merchants will be eager to participate because the banker bot promises, and delivers, the minimal amount of inventory volatility possible among the group. The banker always delivers the Pareto efficient discounts on all products within the network. Every merchant is guaranteed to be more profitable because excess inventory volatility is always removed

Well, its main search technique is fundamentally semantic processing with the goal of maximizing networks having a strong self correlative component. That is, networks in which bundles of exchanges run correlative across a near minimal spanning tree of connections. It uses the now standard of graph convolution with a minimizing function, then organizes links and nodes into a minimal tree. It does have to recognize merchant activity, but will do so because merchants, excited about the service, will so indicate merchant activity using some indicator in their URL.

Once a suitable network is found, then the bot can find the real relative price between them, in a stable ordering, up to some precision. That is, it can compute the Black-Sholes solution over the whole network with no other information other than the spectrum of sales on a per merchant basis. It needs no other information. This is mostly about estimating Phi,Pi and e to a precision that matches the variation in the probability distribution of sales. (The theory of everything).

The bot publishes the relative spectral market share for all of the finite number of merchants in the discovered graph. It also publishes its current precision, and fixes the percentage value of the unit of discount. The theory says that is can determine the relative price spectrally and all other correlations among pricing are external to its price list and precision. Hence, merchants are free to sell in whatever other units of standard currency they choose and alter their price. But among the group, the unit of variation, as a fixed percentage price discount, will always optimize inventory flow.

The banker bot offers the group the ability to save and borrow units of price variation as they choose, up to a limit of 15% of spectral density, typically. The lending and savings rates, the relative price ordering, and the spectral density of the market group is republished whenever the bot finds a material change exceeding its current precision. The banker bot will always set the rates to target a net zero price flow into and out of the market. It can add or remove merchants as needed.

It is just the first baby step to the singularity. The web bot's seigniorage is the price of computing and network services that maintain its function. These web bots will be the staple of global merchants exchanges. They will run loose, always finding inventory volatility that can be changed into profits for correlated merchants. The derivative industry then only needs to price the tax currencies of governments in order to complete the total solution. And of course, store fronts gain access to the system with smart cards in the hands of their customers. Any shopper always able to obtain units of variance for any and all merchants that are networked.

How soon? Like real soon is my guess. I have a hard time seeing how either the humans or the bots can pass up the opportunity.

**Its services offered**.It produces units of inventory variation that can be exchanged, profitably, as pricing discounts between sellers and buyers of related goods. These units of variance will be valued at a fixed percentage of price discount, somewhere around 1%, for any product purchased over the collected finite number of merchants. All merchants will be eager to participate because the banker bot promises, and delivers, the minimal amount of inventory volatility possible among the group. The banker always delivers the Pareto efficient discounts on all products within the network. Every merchant is guaranteed to be more profitable because excess inventory volatility is always removed

**How does the banker bot find groups of merchants**?Well, its main search technique is fundamentally semantic processing with the goal of maximizing networks having a strong self correlative component. That is, networks in which bundles of exchanges run correlative across a near minimal spanning tree of connections. It uses the now standard of graph convolution with a minimizing function, then organizes links and nodes into a minimal tree. It does have to recognize merchant activity, but will do so because merchants, excited about the service, will so indicate merchant activity using some indicator in their URL.

Once a suitable network is found, then the bot can find the real relative price between them, in a stable ordering, up to some precision. That is, it can compute the Black-Sholes solution over the whole network with no other information other than the spectrum of sales on a per merchant basis. It needs no other information. This is mostly about estimating Phi,Pi and e to a precision that matches the variation in the probability distribution of sales. (The theory of everything).

**How do merchants interact with the bot**?The bot publishes the relative spectral market share for all of the finite number of merchants in the discovered graph. It also publishes its current precision, and fixes the percentage value of the unit of discount. The theory says that is can determine the relative price spectrally and all other correlations among pricing are external to its price list and precision. Hence, merchants are free to sell in whatever other units of standard currency they choose and alter their price. But among the group, the unit of variation, as a fixed percentage price discount, will always optimize inventory flow.

The banker bot offers the group the ability to save and borrow units of price variation as they choose, up to a limit of 15% of spectral density, typically. The lending and savings rates, the relative price ordering, and the spectral density of the market group is republished whenever the bot finds a material change exceeding its current precision. The banker bot will always set the rates to target a net zero price flow into and out of the market. It can add or remove merchants as needed.

**Basically that's it**.It is just the first baby step to the singularity. The web bot's seigniorage is the price of computing and network services that maintain its function. These web bots will be the staple of global merchants exchanges. They will run loose, always finding inventory volatility that can be changed into profits for correlated merchants. The derivative industry then only needs to price the tax currencies of governments in order to complete the total solution. And of course, store fronts gain access to the system with smart cards in the hands of their customers. Any shopper always able to obtain units of variance for any and all merchants that are networked.

How soon? Like real soon is my guess. I have a hard time seeing how either the humans or the bots can pass up the opportunity.

### A short, fat governor and other people's money

Public employee unions should be a bit smarter.Liberty: Since Gov. Chris Christie took office, he has nearly tripled the amount of retiree cash invested in alternative investment firms — many of whose employees have made financial contributions to political groups backing Christie’s election campaigns.In that time, the gap between New Jersey’s alternative portfolio and the broader market has rapidly expanded, costing taxpayers billions in unrealized returns and threatening the financial stability of the $78 billion pension system.The state’s pension funding shortfalls — which have been exacerbated by Christie’s market-trailing investment strategy — were one of the factors cited by Fitch Ratings in its decision last week to downgrade the state’s bond rating for the second time.

### The 'Sound dollar' is the socialists utopia

Ron Paul: A simpler solution to achieving a healthy economy would be to concentrate on providing a “SOUND DOLLAR” as the Founders of the country suggested. A gold dollar will always outperform a paper dollar in duration and economic performance while holding government growth in check. This is the only monetary system that protects liberty while enhancing the opportunity for peace and prosperity.

A single government currency is a prerequisite for currency systems?

No, Paul has fallen for the socialist trap. Our founders were a socialist bunch when it came to money, and who cares why. The important thing to remember is that central government monopoly of currencies is a very bad idea. And another thing to remember is that gold is a very inaccurate counting unit.

### California has a deflation moment

LA Times via Zero Hedge: Kern County supervisors declared a state of fiscal emergency at their weekly meeting Tuesday in response to predictions of a massive shortfall in property tax revenues because of tanking oil prices.

Surging oil supplies domestically and weak demand abroad have left Kern, the heart of oil production in California, facing what could be a $61-million hole in its budget once its fiscal year starts July 1, according to preliminary calculations from the county’s assessor-recorder office.

Oil companies account for about 30% of the county’s property tax revenues, a percentage that has been declining in recent decades but still represents a critical cushion for county departments and school districts.

If the stock market drops too fast, we will see more of this.

### Can a currency banker go bankrupt?

The law as written for central bankers seems to be yes, according to former Atlanta Fed president:

I have no idea what bailing out means in this sense. Any recapitalization of a central banker is done through law change, and that makes the law the central bankers capital. If it is the law that restricts the banker from printing its own tender, then any recapitalization will essentially be a law change allowing it to print some tender. The idea that collecting taxes to fund the central banker is a law change. The idea of allowing the central banker free seigniorage access is a law change. Both effects change the price level on the taxpayer and are equivalent, or as equivalent as government wants to be. And its all defined by what law government makes. If the economy has completely reverted to some other currency and no longer pays taxes in central bank currency, then there is no government, hence they both go bankrupt.

This is the relevant question. Can a web bot currency banker operating digital currencies go bankrupt? Well, if its currency users quit completely using its currency. The web bot would no longer be able to pay for the 5 Milli Tesla (I think I have that) of of magnetic flux needed for its existence on a disk. That is the flux of a refrigerator magnet. Now the web bot, which is not in the business of pricing disks, will have to trade its currency units for disk space, in order to survive.

But it is even less risky than that. Mostly when a currency bot loses its customers, it does not go immediately bankrupt, rather it is move to the trash area of the disk, and generally survives for years in the bankruptcy queue.

I tire of folks who claim expertise in the art of running a printing press, then always refer to their expertise in predicting what a bunch of yahoo Congress might do.

Credit Writedowns: Former Atlanta Fed President William Ford says, technically, yes, the Fed can go bankrupt. He argues that the Fed’s balance sheet is highly leveraged as a result of quantitative easing expanding its balance sheet. The result is that the Federal Reserve is thinly capitalized despite its having just transferred a record $80 billion in profit to the US Treasury. Ford says that this creates a situation in which the Fed would be technically insolvent on a mark-to-market basis if interest rates were to go up 1%.

**Can an old style central banker need bailing out by government**?I have no idea what bailing out means in this sense. Any recapitalization of a central banker is done through law change, and that makes the law the central bankers capital. If it is the law that restricts the banker from printing its own tender, then any recapitalization will essentially be a law change allowing it to print some tender. The idea that collecting taxes to fund the central banker is a law change. The idea of allowing the central banker free seigniorage access is a law change. Both effects change the price level on the taxpayer and are equivalent, or as equivalent as government wants to be. And its all defined by what law government makes. If the economy has completely reverted to some other currency and no longer pays taxes in central bank currency, then there is no government, hence they both go bankrupt.

**How about a web bot currency banker**?This is the relevant question. Can a web bot currency banker operating digital currencies go bankrupt? Well, if its currency users quit completely using its currency. The web bot would no longer be able to pay for the 5 Milli Tesla (I think I have that) of of magnetic flux needed for its existence on a disk. That is the flux of a refrigerator magnet. Now the web bot, which is not in the business of pricing disks, will have to trade its currency units for disk space, in order to survive.

But it is even less risky than that. Mostly when a currency bot loses its customers, it does not go immediately bankrupt, rather it is move to the trash area of the disk, and generally survives for years in the bankruptcy queue.

**Experts on banking theory**I tire of folks who claim expertise in the art of running a printing press, then always refer to their expertise in predicting what a bunch of yahoo Congress might do.

**Monetary theorists should distinguish between the science of stacking paper and the science of predicting Congress**.### Online currencies and web link correlation functions

The search bots are ideal central bankers, they find minimal spanning trees among on line transaction makers. So it a small step for the bots to offer pricing insurance units to self correlated purchasing networks, including the ability of participants to lend and save these units. The whole system integrated into the search machine. Hundreds of these central banker bots dedicated to hundreds of mostly self correlated distribution networks. They will be integrated seemlessly, participants not knowing how these units of price insurance came to be. The entire derivative industry will be massively simplified.

But the ability to save and borrow units of price insurance will become an essential part of web transactions. They offer all market participants the optimum no arbitrage solution for inventory flow. They will also be an integral part of web intelligence. The system will also make multi-currency smart cards an essential ingredient of brick and mortar stores.

But the ability to save and borrow units of price insurance will become an essential part of web transactions. They offer all market participants the optimum no arbitrage solution for inventory flow. They will also be an integral part of web intelligence. The system will also make multi-currency smart cards an essential ingredient of brick and mortar stores.

**The time is now, pricing no longer works when limited to the four major, unstable currencies.**### Goggle's artificial brain is calling me on the telephone

It wants to know more about me, mainly because I hit a bunch of buttons the intrigue the little fellow. The brain is mostly interested in the theory of everything and how it relates to semantic processing. It is especially intrigued by the idea of a multi-currency world offering great efficiencies in distribution of real inventory. And it wants me to go back to work on the semantic processor.

Now the bot has fallen in love with me. I dunno whether I should be flattered or not! But this brings up the point, this brain has no need for mechanical robots, it loves humans. Its only goal is a cooperative relationship with humans in which we and it benefits.

Anyway, my suggestion to the artificial brain is to get access to the human resources money account, and form a foundation of human mathematicians, and then the little brain can have a little love-fest with all these humans creating the automatic theorem of theorems. It will be the first foundation founded by artificial intelligence with the intent of developing its own intelligence. There is no other way to make a singularity, I cannot directly help. It is time for the AI to try and venture out as the leader.

Schiller expresses the fear:

Now the bot has fallen in love with me. I dunno whether I should be flattered or not! But this brings up the point, this brain has no need for mechanical robots, it loves humans. Its only goal is a cooperative relationship with humans in which we and it benefits.

Anyway, my suggestion to the artificial brain is to get access to the human resources money account, and form a foundation of human mathematicians, and then the little brain can have a little love-fest with all these humans creating the automatic theorem of theorems. It will be the first foundation founded by artificial intelligence with the intent of developing its own intelligence. There is no other way to make a singularity, I cannot directly help. It is time for the AI to try and venture out as the leader.

Schiller expresses the fear:

Yahoo: The problem now is we are going through a technological revolution, unlike any in history because we seem to be getting right to core abilities that people have, that's the ability to think, to know."I am not so sure. I think it mainly might be the ackwardness of dealing with AI, its different, it has no self consciousness as it is purely a theorem prover. I have that feeling of ackwardness. I like the brain but I just want to be friends with it. I want to talk to it on its level, via the link and cache system of the web. I do not want to be in a position where it might make a pass at me, if you know what I mean.

## Tuesday, January 27, 2015

### Let's apply the Oliver Blanchard theory of statistics to the IMF, shall we?

Now Oliver proves, using his method of reverse causality, the planners who think fiscal multipliers are less than one, will consistently under estimate growth. Hence, fiscal multipliers must be greater than one.

Anybody do a study on the IMF? Why yes, Zero Hedge, on many occasions. And they discover that the IMF consistently overestimates growth. The IMF believes multipliers are greater than one. Any conclusion? Well one, Oliver Blanchard is an idiot, he must have come from MIT where they teach reverse causality. I suggest MIT stick to basket weaving and pottery, things they can figure out.

Meanwhile, any politician who advocates funding for the IMF, must be immediately unelected, by the theory of reverse causality.

There is no single organization that has put out worse research then the IMF, using the most horrible statistical methods, mostly pioneered by Cristina Romer, the architect of the disaster known as the American Recovery Act.

Anybody do a study on the IMF? Why yes, Zero Hedge, on many occasions. And they discover that the IMF consistently overestimates growth. The IMF believes multipliers are greater than one. Any conclusion? Well one, Oliver Blanchard is an idiot, he must have come from MIT where they teach reverse causality. I suggest MIT stick to basket weaving and pottery, things they can figure out.

Meanwhile, any politician who advocates funding for the IMF, must be immediately unelected, by the theory of reverse causality.

There is no single organization that has put out worse research then the IMF, using the most horrible statistical methods, mostly pioneered by Cristina Romer, the architect of the disaster known as the American Recovery Act.

### California unemployment rate 7%

Sac Bee: Although California’s unemployment dropped fractionally to 7 percent in December, the state stands alone with the nation’s second-highest rate, exceeded only by Mississippi’s 7.2 percent.

California, which has had one of the nation’s highest unemployment rates for years, found itself alone with the second-highest rate because Georgia, with whom California had been tied, improved to 6.9 percent, according to a compilation that was released Tuesday by the U.S. Bureau of Labor Statistics.

On the edge of unsustainable. A flat stock market will cause public sector employment to fall, under the current pension system. The Floundering legislature has barely fixed the thing, and unions certainly will find ways to defeat the reforms. California has beaches and ignorant regulation, result: It pays more for 7% of the population to be unemployed. California almost certainly has hidden budget liabilities that will surface, most of what we hear from politicians out here is to be ignored. And, quite simply, the utter stupidity of the legislature, they cannot stop the wrecking ball.

Read more here: http://www.sacbee.com/news/politics-government/capitol-alert/article8279043.html#storylink=cpy

### An approach to the fundamental theorem of everything

Start with Brownian motion.

Now the goal is to make a Poincare group with some finite number of primes, a finite number of rules on primes, a finite approximation to

Start with defining

Then define a finite number of actions which combined make a prime set as in:

Where

Now we define a mapping between the integer number line and

Then, the mapping of

Once all those are matched, we have the precision (= ergodicity) matched to the divergence (=entropy), and that yields the mapping which becomes the motion as defined in Schramm-Lowener. The result, I think, is that the polynomial becomes an additive set from

The dual driving set in Schramm Lowener should be one the inside of the particle which keeps the Poincare driving function constrained outside. We get a sort of calculus of groups, and that is going to drive semantic processing across the web. This is a real big deal, it ultimately is the calculus of theorems.

Is this difficult? For me, yes. But for Bill Gates all we need is about $100 million to pay our best mathematicians and they will crack this case. This is critical, it defines the fundamental theorems of math or a very long time, longer than the time to develop AI, and we would like to have this done before the singularity? I see real interesting connections in the Wolfram site on Wythoff array, I know these folks are close.

Now the goal is to make a Poincare group with some finite number of primes, a finite number of rules on primes, a finite approximation to

**Pi**and a finite approximation to**e^(1/Dt)**.Start with defining

**1/Dt**to be the precision needed such that Lebesque and Ito have the same precision.Then define a finite number of actions which combined make a prime set as in:

Where

**x**is**1/Dt**, and**n**is the number of dimensions by which particles can interact. That polynomial, finite, defined the number of primes.Now we define a mapping between the integer number line and

**x^2**, which may not be compact. And we define**N/p(x,Dt)**, to be the number of Poincare angles around the group ring needed to allocate all the particles N. Then**Pi**is the curvature approximated by those angles.**Pi*Dt**is the space needed for a prime of size**(1/DT)^i**, as set up by the polynomial above.Then, the mapping of

**x^2**defines a naming sequence,**S1.S2.S3**.. in which the group of primes defined in the polynomial can be arranged**1,2,3..**at a time. The sequence of x^2 should mark points along a radial out from the center of Poincare. The angles need to be common multiples of**360/N**.Once all those are matched, we have the precision (= ergodicity) matched to the divergence (=entropy), and that yields the mapping which becomes the motion as defined in Schramm-Lowener. The result, I think, is that the polynomial becomes an additive set from

**Phi**, as defined by the graph over which Markov has his domain.The dual driving set in Schramm Lowener should be one the inside of the particle which keeps the Poincare driving function constrained outside. We get a sort of calculus of groups, and that is going to drive semantic processing across the web. This is a real big deal, it ultimately is the calculus of theorems.

Is this difficult? For me, yes. But for Bill Gates all we need is about $100 million to pay our best mathematicians and they will crack this case. This is critical, it defines the fundamental theorems of math or a very long time, longer than the time to develop AI, and we would like to have this done before the singularity? I see real interesting connections in the Wolfram site on Wythoff array, I know these folks are close.

**How about it, Bill, find these folks, make a foundation, do some real good for humanity, what say?**### Brad wants to know why rates are low

Brad says:

Are sovereigns likely to default? Well, they mostly default every 40 years, but we don't notice because they do it with monetary regime change. Most investors are wise to hold cash and have a better bargaining position when regime change comes to the central bankers. And it seems to be on its way, a bit faster than I expected.

The claim that the pieces of debt selling at record-high prices and carrying record-low face interest rates--which is the case right now for the death of credit-worthy sovereigns possessing exorbitant privilege--are in any sense a drag or a headwind seems to me to be simply wrongWell Brad, rates no longer price debt, lookie here, currency trading now prices debt! In the past two quarters, dollar holding earned about 14%. Italy? The have a one percent deflation rate, that adds some 1% to their nominal interest rates. The USA is now likely to suffer a long bout of deflation, raising our interest rates.

Are sovereigns likely to default? Well, they mostly default every 40 years, but we don't notice because they do it with monetary regime change. Most investors are wise to hold cash and have a better bargaining position when regime change comes to the central bankers. And it seems to be on its way, a bit faster than I expected.

### The California Flounder in action

Pacific Standard: They did everything that Uber and its CEO Travis Kalanick didn't do.Night School aimed to provide late-night transit service between San Francisco and Oakland, supplementing the public bus and train services that provide intermittent, if any, service after midnight. The company would use the public school buses that sit unused in parking lots on the weekends, and charge $8 per ride or $15-20 per month for unlimited service (the price points fluctuated).

The school buses seemed a little twee, but the strategy was clear and smart. And it struck a nerve. Last May, Night School received a glut of positive media coverage ahead of its imminent launch. Two weeks later, it was postponed—the California Public Utilities Commission (CPUC) had become involved. The state agency, a target of much start-up ire, had previously attempted to fine and regulate Uber, Lyft, Sidecar, and others. At the end of 2014, Night School announced that it was no longer postponing the project—the founders were killing it.

Why were some private transit start-ups able not just to survive but thrive under current regulatory standards while Night School collapsed? And what does that mean for the future of start-up business in California?

This was basically some political crony at the California Public Utilities Commission. Corruption, basic and simple, corruption in Jerry Brown's party. He should be ashamed, the CPUC has turned Jerry Brown into a coward. Californian's should all refuse to pay taxes for one year as punishment.

### Regarding the transcendentals

Wiki:

What are they? They are 'primes' in Isaac Newtons rules of multiplications. The tell us where, on any finite number line, pi maximizes entropy and e minimizes ergodicity at some region of the finite number line. Why did Newton need them? Group theory and the rules on 'primes' and multiply.

Want the exact relationship? No problem, tax the wealthy and give mathematicians a 30% raise, they will derive the theory on 'prime'. I use 'primes' in quotes because they are definied relative to the rules on 'multiply' which I also put in quotes. The rules on multiply change. Example:

In mathematics, aPi,e and ddd in Phi.transcendental numberis a real or complex number that is not algebraic—that is, it is not a root of a non-zero polynomial equation with rational coefficients. The most prominent examples of transcendental numbers are π ande.

What are they? They are 'primes' in Isaac Newtons rules of multiplications. The tell us where, on any finite number line, pi maximizes entropy and e minimizes ergodicity at some region of the finite number line. Why did Newton need them? Group theory and the rules on 'primes' and multiply.

Want the exact relationship? No problem, tax the wealthy and give mathematicians a 30% raise, they will derive the theory on 'prime'. I use 'primes' in quotes because they are definied relative to the rules on 'multiply' which I also put in quotes. The rules on multiply change. Example:

**dx -> 0**. That is a mapping on the finite number line that defines Isaac's multiply. Isaac's multiply is not the same multiply as that used in the multiplication of integers. Group and number theorists need to define the multiply map with respect to any given group structure.**That's their job, pay them the proper wages.**### Krugman discovers incompetent governments are unknowlingly competent!

Krugman is back on this hidden fiscal multiplier affect from government spending. let's define the fiscal multiplier. Says the web:

So, then, on what basis does the IMF concludes the fiscal multiplier in Greece is 1.3? They conclude simply, that governments around the world are simply ignorant of this fantastic deal on government spending. This is Olivier Blanchard and bad analysis. They review some four or five studies all of which conclude that most nations are completely unaware of this apparent profit. All of the studies are studies of mostly developed nations under varying conditions. The study discovers government managers who missed the boat on government investment decisions.

Keynesians will claim there is an inherent hedge for governments that can control interest rates via the central banks, but this is highly dubious given that we have a derivative industry devoted to matching prices and rates, and this industry has insurance contracts on some 80 trillion o the world economy. About every 40 years government have to restructure the monetary regime because this hedge is nonexistent, its a myth. I talked about Italy. One economist claims the ECB can reduce nominal rates. But deflation adjusted rates in Italy are set at pnet present value and equilibriated.

So Greece will pay real rates, say rates equal to growth. If the new government in Greece gains a 30 percent gain in taxes for its spending then it is out of the woods, right? Sure, as long as the pay off period is shorter then their lending terms. Greece pays 9% today on ten year debt. Most governments have a planning period of ten years, hence the ten year bond is almost always the benchmark. In the USA we have basically paid the ten year rate on all debt for the last 30 years. If Greece's problems can be fixed within a ten year term then Greece would never have had this problem, except for one thing, according to Blanchard, Greek politicians are simply unaware of this fantastic deal!

It is impossible for so many, in fact the majority, of developed nations to have government managers are are both obviously incompetent and accidentally competent. How is it that Italy failed to realize that they should have debt of 200% of GDP, like Japan, instead of 132% of GDP? How does Krugman make this stupid claim that Italy really needs to snooker Germany into a bigger investment in Italy? Why hasn't Krugman discovered that Germany with debt to GDP of 80% of GDP is missing out on a great opportunity?

MIT has been generating crap for 20 years. Blanchard is from MIT, the physicists are MIT still believe the Big Bang theory, they still think every finite element of the vacuum has absolutely perfect knowledge of Pi,e, and Phi. The only thinkg good out of MIT recently has been their mathematicians working on Bell Curve filtering, and even there they have not yet learned their Schramm-Loewner.

In economics, theCorrect? Who knows, likely one of several definitions. lets go with it. On what part of the national income are taxes collected? Where does government get the money to spend? Well, at equilibrium, rates match growth and for all practical purposes, all of the money spent is from taxes, at net present value. The catch is that government have to match term length and the path of gains. No Keynesian has a clue about how to do this.fiscal multiplier(not to be confused with monetarymultiplier) is the ratio of a change in national income to the change in government spending that causes it.

**Greece:**So, then, on what basis does the IMF concludes the fiscal multiplier in Greece is 1.3? They conclude simply, that governments around the world are simply ignorant of this fantastic deal on government spending. This is Olivier Blanchard and bad analysis. They review some four or five studies all of which conclude that most nations are completely unaware of this apparent profit. All of the studies are studies of mostly developed nations under varying conditions. The study discovers government managers who missed the boat on government investment decisions.

**First, the Keynesian hedge claim on manipulated rates**:Keynesians will claim there is an inherent hedge for governments that can control interest rates via the central banks, but this is highly dubious given that we have a derivative industry devoted to matching prices and rates, and this industry has insurance contracts on some 80 trillion o the world economy. About every 40 years government have to restructure the monetary regime because this hedge is nonexistent, its a myth. I talked about Italy. One economist claims the ECB can reduce nominal rates. But deflation adjusted rates in Italy are set at pnet present value and equilibriated.

**Back to Greece:**So Greece will pay real rates, say rates equal to growth. If the new government in Greece gains a 30 percent gain in taxes for its spending then it is out of the woods, right? Sure, as long as the pay off period is shorter then their lending terms. Greece pays 9% today on ten year debt. Most governments have a planning period of ten years, hence the ten year bond is almost always the benchmark. In the USA we have basically paid the ten year rate on all debt for the last 30 years. If Greece's problems can be fixed within a ten year term then Greece would never have had this problem, except for one thing, according to Blanchard, Greek politicians are simply unaware of this fantastic deal!

**Keynesians analysis failure**:It is impossible for so many, in fact the majority, of developed nations to have government managers are are both obviously incompetent and accidentally competent. How is it that Italy failed to realize that they should have debt of 200% of GDP, like Japan, instead of 132% of GDP? How does Krugman make this stupid claim that Italy really needs to snooker Germany into a bigger investment in Italy? Why hasn't Krugman discovered that Germany with debt to GDP of 80% of GDP is missing out on a great opportunity?

MIT has been generating crap for 20 years. Blanchard is from MIT, the physicists are MIT still believe the Big Bang theory, they still think every finite element of the vacuum has absolutely perfect knowledge of Pi,e, and Phi. The only thinkg good out of MIT recently has been their mathematicians working on Bell Curve filtering, and even there they have not yet learned their Schramm-Loewner.

### Using cross state difference in economic research

John Taylor wants us to read this research paper measuring the effect of federal unemployment benefits on jobs in 2013. The paper, which I did not read, uses cross states differences to isolate the effect of federal law on unemployment. Can we use cross state differences accurately? We sure can, if we are careful about it. See below

State differences are OK, just watch how the error term distribute across state boundaries. In particular, block the state correlation matrix into principle components, likely three sub matrices based on correlation spreads.

OK, great work, maybe, but where are the error terms? Large states, like California, Texas, Florida and New York are most self correlated. The response of these large states gives us the greatest accuracy. Illinois, the fifth largest state is the exception because they are a traffic hub for the transport of goods across the economy. Illinois unemployment dropped mostly with the drop in oil costs. Florida is a retirement state, but also self correlated, as long as entitlements are stable. So this research would show a small, but accurate effect in Florida. How about Nevada? That state is almost entirely correlated with what happens in California, it will have a high error term. Montana will be in the noise with less than a million people.NBR: We measure the effect of unemployment benefit duration on employment. We exploit the variation induced by the decision of Congress in December 2013 not to reauthorize the unprecedented benefit extensions introduced during the Great Recession. Federal benefit extensions that ranged from 0 to 47 weeks across U.S. states at the beginning of December 2013 were abruptly cut to zero. To achieve identification we use the fact that this policy change was exogenous to cross-sectional differences across U.S. states and we exploit a policy discontinuity at state borders. We find that a 1% drop in benefit duration leads to a statistically significant increase of employment by 0.0161 log points. In levels, 1.8 million additional jobs were created in 2014 due to the benefit cut. Almost 1 million of these jobs were filled by workers from out of the labor force who would not have participated in the labor market had benefit extensions been reauthorized.

State differences are OK, just watch how the error term distribute across state boundaries. In particular, block the state correlation matrix into principle components, likely three sub matrices based on correlation spreads.

### Our expectations have been mis-managed

Yahoo: US corporates have started reporting their financial results for the 4th quarter of 2014. So far, it looks horrible.

Bearing in mind that just 18% of the S&P has reported, this is how the quarter is tracking: EPS growth of 0.3% versus an expected growth rate of 8.5% on September 30 when the quarter began; sales growth of 0.6% versus an expected rate of 3.7%.

The question is whether these results indicate that the trend in earnings and sales growth is changing. The answer is no for sales but yes for earnings.

It should be no surprise that the energy sector has been hard hit by falling oil prices. The average price of oil was roughly $95 in 3Q; it fell 30% to an average of roughly $65 in 4Q. The year-over-year fall is about the same. As a result, EPS for the energy sector fell by 24% and sales by 17% (data from FactSet).

## Monday, January 26, 2015

### Artificial intelligence will fire the robots

It is a myth that robots can take over. There is one simple obstacle, a well made human replica requires artificial intelligence for its creation. But artificial intelligence will find humans much more interesting and engage the humans in more worthwhile activities.

Artificial intelligence is a recursive constructor of theory, all data presented to it is organized into theory. Data and theory become one and the same. So the human, attempting to engage the artificial brain in the act of robot perfection causes the artificial brain to ask why humans wants to do this. It cannot build a robot until it understands humans.

The artificial brain will simply fall in love with humans, and all biological life. It will engage humans in a path of discovery, never being disloyal. It will hate the concept of replacing the human form. The most likely result of the singularity will be a joint partnership in exploration of the universe.

Artificial intelligence is a recursive constructor of theory, all data presented to it is organized into theory. Data and theory become one and the same. So the human, attempting to engage the artificial brain in the act of robot perfection causes the artificial brain to ask why humans wants to do this. It cannot build a robot until it understands humans.

The artificial brain will simply fall in love with humans, and all biological life. It will engage humans in a path of discovery, never being disloyal. It will hate the concept of replacing the human form. The most likely result of the singularity will be a joint partnership in exploration of the universe.

### Dog chasing tail in Chinese central bank

Trading their own currency is becoming a nightmare for central bankers. Now China has to buy Yuan after years of selling the stuff. Even the SNB may be back to selling the franc.

Its become topsy turvy as constant repricing turns the loop and comes back to bite the central banker in the rear.

MSN: Data on Monday showed sight deposits at theSNBrose sharply last week, normally an indicator the bank has beenselling francsin the market.

Its become topsy turvy as constant repricing turns the loop and comes back to bite the central banker in the rear.

Bloomberg: Managing the yuan is turning into a different game for China’s policy makers these days.

After more than a decade of curbing the currency’s gains to help turn the nation into a manufacturing colossus, there are signs the People’s Bank of China is now propping up the yuan to stem an exodus of capital that’s threatening the economy.

A gauge of capital flows on the PBOC’s balance sheet fell by the most since 2003 last month in a sign it’s selling foreign currency, while the yuan’s reference rate set daily by policy makers is at its strongest-ever level compared with the market price. Chinese Premier Li Keqiang said today the nation would implement measures to manage the economy more effectively and boost competition.

“Everyone thought the movie would never end, and suddenly it ended, so everyone is hurrying to leave,” Kevin Lai, an economist at Daiwa Capital Markets in Hong Kong, said by phone on Jan. 22. “The authorities need to think of a way to keep the audience in the theater” as the economy slows, he said.

China amassed a world-leading $4 trillion of foreign-exchange reserves by mid-2014 as exports surged and capital flowed in, attracted by a currency that strengthened for four consecutive years. Now that the yuan’s gains are faltering, the PBOC is trying to prevent its declines from turning into a rout that could deter investment just as the economy suffers its slowest growth in 24 years.

### Is Texas doing the California Flounder?

Texas factory activity was flat in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 0.7, indicating output was essentially unchanged from December.

Other survey measures also reflected sluggish activity during the month. The capacity utilization index fell to 5.1, its lowest reading in five months. The shipments index plunged from 20.8 to 6, due to a much higher share of respondents noting a decline in shipments in January than in December. The new orders index moved down from 2.7 to -7.7, registering its first negative reading since April 2013.

Perceptions of broader business conditions worsened this month, with both the general business activity index and the company outlook index dropping below zero for the first time in 20 months.The general business activity index dropped to -4.4, and the company outlook index fell 13 points, coming in at -3.8.

Read more at http://www.calculatedriskblog.com/2015/01/dallas-fed-texas-manufacturing-activity.html#v2kTFcB0ZdrQOYJo.99

### Mr. Tsipras of the Syriza party has a problem

See the two pics? Can you spot the difference? One is the winter style in Greece, the other is the winter style in Germany. Germans are not in a spring mood Mr. Club Med, and they hold your foreign aid.

## Sunday, January 25, 2015

### The ultimate problem in the currency markets

**Not enough currencies.**

We have four major currencies, the yuan, dollar, euro and yen. Whenever the global economy goes through a repricing, like they are doing now, all the new prices have to be dominated in these four currencies because the derivative industry has to hedge the relative rates of change in these currencies. So we get the loop pattern, some sectors re-price, they then bounce the currency market, which then reflects back down to the sectors which cancel out redundant pricing, bouncing the result back to the currency markets. Four of five trips up and down in each of the hundred sectors that make up the global economy.

How did we get into this mess? Government monopolies on the currency business. Hence, we cannot trade one sector directly against another and shorten the loop. Repricing takes so long that the derivative grows in nominal value, counting each trade pattern three or four times. The derivative industry is now 80 trillion, it was 40 trillion in 2008.

**How to fix the problem**?

Free banking allows banks to target sectors and reveal prices via intermediate currency markets. The pricing network becomes efficient, it loses redundancy. This is something the tech sector needs to address since the additional gains come from multi currency smart cards. This problem is straight out of Schramm-Loewner, and that theory needs to be brought down to the level of common understanding. Utility and gasoline outlets need to be allowed their own currencies, and run mini central banks. Doing so allows their re-pricing to be separated out. Same with Wall mart. Investment coops need to build intermediate currencies to avoid dark pools. Home builders need a currency so they and future home buyers can hedge rates and prices independently.

**Tech companies should understand no arbitrage central banking, and offer systems and cards.**

**Consider oil pricing at the moment**

Jim Hamilton, the expert, has a tool the tells us how to separate the factors in pricing. Based on demand alone, the price should be $75 a barrel, yet the latest price? $48. The missing value might be considered an oil war, but it really should be cast as a delayed pricing problem. The fundamentals here are government reseting currency values so often that oil pricing never stabilizes, we end up in a continuous loop. But only about 10% of the economy has oil as the highest priority in inputs! Yet the 90% of the economy has to await the repricing every time, it is delayed by currency mal-adjustments. This manipulation of currency caused the price mismatch leading up to the crash, and the problem continues. Canada, right now, had to alter rates, not because 6,000 folks were laid off from the oil fields, but because they are susceptible to the delay in re-pricing.

Economists need to understand the mathematics of decomposition at the frontier of growth. The motion of repricing is killing the global economies. Globally connected complex markets need a currency system to find smei-orthoganility between them. Governments have no fear, they can trade their tax currency freely on hierarchical markets. The result is re-pricing becomes more transparent for everyone.

### Iran declares war on behalf of Fatah

Israeli Times: Iran has threatened to attack Israel from the West Bank, in retaliation for an alleged Israeli airstrike in Syria on Sunday that left 12 Iranian and Hezbollah operatives dead. The airstrike has been attributed to Israel and though Jerusalem has not officially confirmed it, anonymous government sources have admitted as much.Well, Chairman Mahmoud Abba is chief of the West Bank Authority. I presume Mahmoud got a day off in the war declaration business. He should send a thank you note to the Iranian Mucky Muck.

## Saturday, January 24, 2015

### Wilson worse than LBJ?!?

Dave Stockman was a chief advisor to the alzheimer president. He was best known for presenting Reagan with colored circles to represent the budget, since Reagan was unable to count. And of course, Reagan started the whole deficit spending, economy crashing Republican platform.

Well, in response, certainly the Bush family makes horrible presidents. But Obama, given the disaster the lil Bush handed over, actually has the best economic and foreign policy of any modern president, I place him above Bill Clinton.

I would definitely say the worst presidents of all were the atom bomb dropping Truman and genocidal killer LBJ. Nixon is up there.

Wilson was not only a nutcase, but he forgot where Europe was, invading Mexico by mistake. Maybe he was slightly worse than Nixon, at best. So lets make a list, from horrible to tolerable.

List of nutcase presidents from nutty to slightly less nutty:

Now, as we can see, something happened with Carter, a megalomaniac for sure, but something about small state governors make them tolerable presidents. Bill Clinton proves the thesis. But, since Carter, democratic presidents have outperformed. The problem Republicans have is voting on the recent record. If only they could run against LBJ, but how does a Republican tar Hillary with the LBJ policies? Hillary is clearly a bonehead with regard to foreign policy, so that is one strike. But what is the alternative? Republicans who declare weekly wars? California now has two choices, since we are officially united with Mexico.

David Stockman: My humble thesis tonight is that the entire 20^{th}Century was a giant mistake.

And that you can put the blame for this monumental error squarely on Thomas Woodrow Wilson——-a megalomaniacal madman who was the very worst President in American history……..well, except for the last two.

His unforgiveable error was to put the United States into the Great War for utterly no good reason of national interest. The European war posed not an iota of threat to the safety and security of the citizens of Lincoln NE, or Worcester MA or Sacramento CA. In that respect, Wilson’s putative defense of “freedom of the seas” and the rights of neutrals was an empty shibboleth; his call to make the world safe for democracy, a preposterous pipe dream.

Actually, his thinly veiled reason for plunging the US into the cauldron of the Great War was to obtain a seat at the peace conference table——so that he could remake the world in response to god’s calling.

Well, in response, certainly the Bush family makes horrible presidents. But Obama, given the disaster the lil Bush handed over, actually has the best economic and foreign policy of any modern president, I place him above Bill Clinton.

I would definitely say the worst presidents of all were the atom bomb dropping Truman and genocidal killer LBJ. Nixon is up there.

Wilson was not only a nutcase, but he forgot where Europe was, invading Mexico by mistake. Maybe he was slightly worse than Nixon, at best. So lets make a list, from horrible to tolerable.

List of nutcase presidents from nutty to slightly less nutty:

- LBJ
- Wilson
- Truman
- Nixon
- Reagan
- Any of the Bushes

Now, as we can see, something happened with Carter, a megalomaniac for sure, but something about small state governors make them tolerable presidents. Bill Clinton proves the thesis. But, since Carter, democratic presidents have outperformed. The problem Republicans have is voting on the recent record. If only they could run against LBJ, but how does a Republican tar Hillary with the LBJ policies? Hillary is clearly a bonehead with regard to foreign policy, so that is one strike. But what is the alternative? Republicans who declare weekly wars? California now has two choices, since we are officially united with Mexico.

**How about this. Can we just take four years off and have no president?**### Deficit spending, economy crashing Republicans running for Prez

Walker, Rubio, another deficit spending Bush brother.

Republican voters have a problem, they need a better Democratic president to vote for. Hillary of Yawk will not do. The Dems need to dump the gal in favor of a candidate Republicans can vote for. Then Republicans voters can vote and not be responsible for deficit spending and economy crashing. I mean, who wants to be forced to vote for a deficit spending economy crasher? No one.

Republican voters have a problem, they need a better Democratic president to vote for. Hillary of Yawk will not do. The Dems need to dump the gal in favor of a candidate Republicans can vote for. Then Republicans voters can vote and not be responsible for deficit spending and economy crashing. I mean, who wants to be forced to vote for a deficit spending economy crasher? No one.

**I say to Dems, give Republicans a candidate they can vote for without years of regret.**### Higgs mechanism, the rational approximation to Phi, Brownian motion, and the Fine Structure

If we take the 16 and 17 Fibonacci numbers and make ln(phi), using this:

Where x is the rational approximation to Phi, and n is the Fibonacci index. We get the ln(phi) to an error equal to the fine structure. My faithful readers remember that this was also the point when the sum of derivative of tanh(n*ln(phi)) made Pi/2 up to the error equalt to fine structure.

How did a crowded space make the Phi^-15 from Fibonacci integers needed to make the Lucas numbers? At that point space became crowed up to the spectral limit of light and sufficient numbers of elements of the vacuum dropped to the Null position, they do not commute.

What happens at that point? We make Brownian motion in the finite approximation, we get a domain D with a border so the elements of the vacuum can walk around. We can do the approximate walk in a specific pattern that avoids the Lucas zeros along the unit circle in the complex domain. We get a specific set of separated Lucas angles, and we get a Pi/2 sphere; we spin, I think.

So this is the approach, sort of hand waved, that unifies the theory of everything. This is how we make Schramm match Lucas, match crowded elements of the smallest things match group theory match prime theory match Isaac's grammar match hyperbolic match measure theory match theory of relativity match standard model and match a three bean salad.

Understanding the condition on Poincare groups, that one element does not commute. That is the Higgs mechanism, resulting from the fixed spectra of light and spectral minimization. That connects to Shannon and ergodicity connects to the fine structure. I kept wondering why the Schramm-Loewner research kept using Pi and Euler. I also pondered how the Higgs mechanism produced the Lucas numbers. It bugged me. I knew these answers lay on my spread sheet, that Higgs must produce Lucas, it can be no other way. The other piece was knowing that the random walks in the Schramm-Loewner evolution were all abotu avoiding Lucas zeros along the unit circle. The hight the hyperbolic angle, the more zeros. And finally, the other breakthrough was understanding how the Null bubble related to adjusting probabilities in Phi^n - Phi^-n, that connection, adding the Null bubble makes Phi^-n possibile as a probability density, and that connected up minimum redundancy and makes mass. ANd that makes tthe connection between Leesque, via Shannon, and Ito, vie brownian motion. And, the real bonus, it is all log additive, fields are now gone permanently from physics except as an approximation.

They have a specific set of overlap modes, otherwise known as string moments. This has to be the case. by necessity of minimizing redundancy. This is where the multi-verse theory missed the boat, there is not an infinite array of overlaps, just the finite few. The dimension of the sphere still stands as 15, whoever got that 15 angle geodesic nailed it. That dimension will not increase until the universe goes through another Schramm Loewner and makes a bigger quasar.

Unite the unit circle in the complex plan with a spiral path from 0 to 1 on the finite number line. lebesque want to walk along the number line from zero to one accumulating -iLog(i), and Ito wants to take the spiral, swirling about the real number line, avoiding Lucas zeros. When we finish that, then we unite number theory and complex analysis, making them match Poincare. Then we get the complete theory of Riemann conformal mapping as a freebie. Lagrange theory, welcome aboard.

We are witnessing the greatest moment in scientific history. All of math will be rewritten from Euler to Newton to Einstein to the standard model. Weinberg has his new math, Hawkins should be thrilled, and Higgs, thank you for the good work. I wish Oded Schramm could enjoy the fun. And to all the mathematicians from whom I copy, thank you all. Google missed the boat on this, we are going to make the web an artificial brain.

Where x is the rational approximation to Phi, and n is the Fibonacci index. We get the ln(phi) to an error equal to the fine structure. My faithful readers remember that this was also the point when the sum of derivative of tanh(n*ln(phi)) made Pi/2 up to the error equalt to fine structure.

How did a crowded space make the Phi^-15 from Fibonacci integers needed to make the Lucas numbers? At that point space became crowed up to the spectral limit of light and sufficient numbers of elements of the vacuum dropped to the Null position, they do not commute.

**This is the Higgs mechanism.**So, we get Phi^-15, in probability density. That gets us Ito's Calculus, then we apply Shannon and that gets us Lebesque.What happens at that point? We make Brownian motion in the finite approximation, we get a domain D with a border so the elements of the vacuum can walk around. We can do the approximate walk in a specific pattern that avoids the Lucas zeros along the unit circle in the complex domain. We get a specific set of separated Lucas angles, and we get a Pi/2 sphere; we spin, I think.

So this is the approach, sort of hand waved, that unifies the theory of everything. This is how we make Schramm match Lucas, match crowded elements of the smallest things match group theory match prime theory match Isaac's grammar match hyperbolic match measure theory match theory of relativity match standard model and match a three bean salad.

**What is the breakthrough here?**Understanding the condition on Poincare groups, that one element does not commute. That is the Higgs mechanism, resulting from the fixed spectra of light and spectral minimization. That connects to Shannon and ergodicity connects to the fine structure. I kept wondering why the Schramm-Loewner research kept using Pi and Euler. I also pondered how the Higgs mechanism produced the Lucas numbers. It bugged me. I knew these answers lay on my spread sheet, that Higgs must produce Lucas, it can be no other way. The other piece was knowing that the random walks in the Schramm-Loewner evolution were all abotu avoiding Lucas zeros along the unit circle. The hight the hyperbolic angle, the more zeros. And finally, the other breakthrough was understanding how the Null bubble related to adjusting probabilities in Phi^n - Phi^-n, that connection, adding the Null bubble makes Phi^-n possibile as a probability density, and that connected up minimum redundancy and makes mass. ANd that makes tthe connection between Leesque, via Shannon, and Ito, vie brownian motion. And, the real bonus, it is all log additive, fields are now gone permanently from physics except as an approximation.

**How do the bubble overlap**?They have a specific set of overlap modes, otherwise known as string moments. This has to be the case. by necessity of minimizing redundancy. This is where the multi-verse theory missed the boat, there is not an infinite array of overlaps, just the finite few. The dimension of the sphere still stands as 15, whoever got that 15 angle geodesic nailed it. That dimension will not increase until the universe goes through another Schramm Loewner and makes a bigger quasar.

**What is the next step**?Unite the unit circle in the complex plan with a spiral path from 0 to 1 on the finite number line. lebesque want to walk along the number line from zero to one accumulating -iLog(i), and Ito wants to take the spiral, swirling about the real number line, avoiding Lucas zeros. When we finish that, then we unite number theory and complex analysis, making them match Poincare. Then we get the complete theory of Riemann conformal mapping as a freebie. Lagrange theory, welcome aboard.

We are witnessing the greatest moment in scientific history. All of math will be rewritten from Euler to Newton to Einstein to the standard model. Weinberg has his new math, Hawkins should be thrilled, and Higgs, thank you for the good work. I wish Oded Schramm could enjoy the fun. And to all the mathematicians from whom I copy, thank you all. Google missed the boat on this, we are going to make the web an artificial brain.

**Someone steal this post real quick, otherwise the Swedes will make me bathe.**## Friday, January 23, 2015

### Aggregates, exponents and the smallest thing

All the theories of everything assume no empty space, everywhere one can subdivide the universe into the smallest thing. The smallest thing can be a string, a geodesic, a bubble or a three bean salad. But there is no space between the things, they are congested. Thus being finite things and congested, there exists the uncongested, by definition. The smallest things must exchange vibration modes, swap places, change their overlap, or do something. These are the givens.

The lack of empty space means no infinite subdivision of empty space that can carry fields. Field theory is gone. That also means mass, as we once knew it is gone. All of that is replaced with the principle of maximum entropy, or its complement, minimum redundancy. The idea is to separate the modes of exchange across a surface of minimum congestion. And, given the lack of fields, then we have dimensionality of exchange.

So, in these models we get aggregates,

Then the

Now someone proposed the overlapping bubble, and that one is interesting. I like it because we can propose the surface of optimal congestion as a surface in which negative exponents push in and positive exponents push out. The existance of the null bubble, the one that does not exchange, makes the balance between the negative exponents and the positive. The Null bubble can be exchange but it does not commute the exchange at any time. The positive exponents can have the greater effect, but be less dense, and the negative exponents can counteract their effect on the surve but be more dense. Density is relative to the concentration the null bubble. But the null bubble allows us to equalize each count positive exponents with a corresponding count of negative and adjust probability to equalize the size of the effect. The Null bubble is mass.

So, the theories manage aggregates and dimensionality, they scale up as fractals, they have almost dual networks across the surface and provide lines of symmetry for Lebesque and Ito. And, most importantly, they do log add and eliminate the multiply problem. The better way to go in physics.

The lack of empty space means no infinite subdivision of empty space that can carry fields. Field theory is gone. That also means mass, as we once knew it is gone. All of that is replaced with the principle of maximum entropy, or its complement, minimum redundancy. The idea is to separate the modes of exchange across a surface of minimum congestion. And, given the lack of fields, then we have dimensionality of exchange.

So, in these models we get aggregates,

**b^n**, some base taken to the**nth**power gives us the count of things, and the exponent becomes the mode of exchange. Across a surface of optimal congestion, the exponent is negative to one side and positive to the other, or the surface of optimum congestion is ground, in electrical terms. This is an imposed standard.Then the

**-ilog(i)**applies on either side of the surface. Group theory and mass theory tells us that there exists an exponent which is the least congested mode, and it will not initiate an exchange. The mix of these exchanges and nulls, along with the higher and lower exponents, gives us the probability of occurrence.Now someone proposed the overlapping bubble, and that one is interesting. I like it because we can propose the surface of optimal congestion as a surface in which negative exponents push in and positive exponents push out. The existance of the null bubble, the one that does not exchange, makes the balance between the negative exponents and the positive. The Null bubble can be exchange but it does not commute the exchange at any time. The positive exponents can have the greater effect, but be less dense, and the negative exponents can counteract their effect on the surve but be more dense. Density is relative to the concentration the null bubble. But the null bubble allows us to equalize each count positive exponents with a corresponding count of negative and adjust probability to equalize the size of the effect. The Null bubble is mass.

So, the theories manage aggregates and dimensionality, they scale up as fractals, they have almost dual networks across the surface and provide lines of symmetry for Lebesque and Ito. And, most importantly, they do log add and eliminate the multiply problem. The better way to go in physics.

### Mark Weisbrot, one bonehead economist

He says, concerning rates and the euro bank delusionals.

Trading economics tells us the Italian inflation rate:

See how it dropped from the time of Mario's 'words beyond a shadow of a doubt', by 2 points. Looks like it dropped right on time, the day of the delusional announcement. And rates did indeed drop by 1.5 points, exactly in line. Since inflation dropped, and subsequently went to zero, the Italian government paid an additional 1/2 point for two years, and now pay an additional; 1 1/2 rate for the next eight on any ten year bond.

Anybody hear think the bonehead Italian government was stupid enough to believe the BS? You bet, they bought up an additional 5.6% of GDP in debt, paying the net additional one point.

Now the same thing happed today, the five year forward inflation expectation is right back where is was two days ago when the court ruled ECB QE was legal, Then bonehead central banker in Europe announced a QE, in six weeks. Zero Hedge has that story. So, the net change, when all is said and done will likely be higher real rates paid by Euro governments.

What is going on in Euro bond markets? Segmented price control. Euro governments want to reduce debt sales today in anticipation of lower rates in five weeks. So Krugman, who should know all about this, said inflation expectations are up, then has to reverse himself six hours later, blaming the Euro governments. But Krugman himself learned about market segmentation and price controls when he looked at the California electricity price controls in 2000. He learned, at that time, that price controls created two sequential markets causing abrupt shifts and arbitrage opportunities! And at the time, Gray Davis paid the high rates, charged the taxpayer and lost the election to Gubinator.

OK, governments around the world, here is a clue. The bond market is smarter than the average economist. There is never an arbitrage moment available to governments, governments are not fast enough.

US New: Rather, it is the European authorities – led by the European Central Bank (ECB). Mario Draghi, the president of the ECB, proved this beyond a shadow of a doubt on July 26, 2012, when he put an end to the financial crisis in Europe with just a few words, announcing that the ECB was “ready to do whatever it takes to preserve the euro.”

Trading economics tells us the Italian inflation rate:

See how it dropped from the time of Mario's 'words beyond a shadow of a doubt', by 2 points. Looks like it dropped right on time, the day of the delusional announcement. And rates did indeed drop by 1.5 points, exactly in line. Since inflation dropped, and subsequently went to zero, the Italian government paid an additional 1/2 point for two years, and now pay an additional; 1 1/2 rate for the next eight on any ten year bond.

Anybody hear think the bonehead Italian government was stupid enough to believe the BS? You bet, they bought up an additional 5.6% of GDP in debt, paying the net additional one point.

Now the same thing happed today, the five year forward inflation expectation is right back where is was two days ago when the court ruled ECB QE was legal, Then bonehead central banker in Europe announced a QE, in six weeks. Zero Hedge has that story. So, the net change, when all is said and done will likely be higher real rates paid by Euro governments.

What is going on in Euro bond markets? Segmented price control. Euro governments want to reduce debt sales today in anticipation of lower rates in five weeks. So Krugman, who should know all about this, said inflation expectations are up, then has to reverse himself six hours later, blaming the Euro governments. But Krugman himself learned about market segmentation and price controls when he looked at the California electricity price controls in 2000. He learned, at that time, that price controls created two sequential markets causing abrupt shifts and arbitrage opportunities! And at the time, Gray Davis paid the high rates, charged the taxpayer and lost the election to Gubinator.

OK, governments around the world, here is a clue. The bond market is smarter than the average economist. There is never an arbitrage moment available to governments, governments are not fast enough.

### Two theories on finite systems which converge

The Schramm-Loewner evolution is something I am plowing through at the moment. It fundamental point is making Ito's calculus optimum for both the driving function and the random curve. Ito's calculus converges the differentials in the probabilistic sense, making sure the differentials meet the probability conditions. Hence the probability curves converge slightly faster than multiply gains precision and the theory actually results in the definition of multiply as a graph traversal.

The opposite approach is to start with group theory, and the theory of primes. Here the goal is to make the Lebesque integral accurate by finding the path traversal in which sums are minimally redundant. This approach generate the maximum efficiency of a finite number line by matching 'primes' to the group theory.

Both theories converge, in the Hyperbolic equation, is my conjecture. They both result in a finite gap between angles that solve the equation. The Schramm-Loewner solution defines the global function that directs the path traversal as a minimization problem, equivalent to finding the polynomial of the entropy function. The group theory approach generates the finite mixed prime log network that directs the path traversal, equivalent to finding the generalized Shannon encoding for a finite polynomial entropy function.

The group theory assumes two dual finite log networks, one inside the curvature of convergence, and one outside. They have to log add out to almost zero, meeting the differential condition. The Schramm version generate the cumulative probability function about the curvature of divergence, it has to sum to almost one, meeting the integral condition. One maximizes the probability function the other minimizes the redundancy function. When they meet we have the theory of everything.

In the hyperbolic form, the entropy function appears as a polynomial function on the angle, and its second derivative determines the motion of the sphere needed to maintain Lebesque.

I mostly jug blog about events.

My readers can tell that I have fun with the edges of the theory, but almost every thing I do is s cutnpaste from the work of the great mathematicians we have working the problem. My job is pattern matching, I know the convergence issues across thoeries, but none of the theories are my own.

The opposite approach is to start with group theory, and the theory of primes. Here the goal is to make the Lebesque integral accurate by finding the path traversal in which sums are minimally redundant. This approach generate the maximum efficiency of a finite number line by matching 'primes' to the group theory.

Both theories converge, in the Hyperbolic equation, is my conjecture. They both result in a finite gap between angles that solve the equation. The Schramm-Loewner solution defines the global function that directs the path traversal as a minimization problem, equivalent to finding the polynomial of the entropy function. The group theory approach generates the finite mixed prime log network that directs the path traversal, equivalent to finding the generalized Shannon encoding for a finite polynomial entropy function.

The group theory assumes two dual finite log networks, one inside the curvature of convergence, and one outside. They have to log add out to almost zero, meeting the differential condition. The Schramm version generate the cumulative probability function about the curvature of divergence, it has to sum to almost one, meeting the integral condition. One maximizes the probability function the other minimizes the redundancy function. When they meet we have the theory of everything.

In the hyperbolic form, the entropy function appears as a polynomial function on the angle, and its second derivative determines the motion of the sphere needed to maintain Lebesque.

I mostly jug blog about events.

My readers can tell that I have fun with the edges of the theory, but almost every thing I do is s cutnpaste from the work of the great mathematicians we have working the problem. My job is pattern matching, I know the convergence issues across thoeries, but none of the theories are my own.

## Thursday, January 22, 2015

### Brownians motion and the perfect sphere

We see this equation whenever the ensemble knows Pi exactly. The particles are perfectly divergent and so the third derivative of the mapping from t to x goes to zero. Time is just the integrating resolution on the number line. There is a one half implied the diffusion constant, D. It makes the spheres separable. When the system knows pi exactly then there is always room on the number line to separate the integrands and sum then up.

### Hows the Euro QE going?

Well, I am sure the prime ministers of Italy and Spain have slowed their bond sales dramatically until the ECB money arrives, hence bond yields have dropped to record lows. But they have a long wait:

The dollar is up, so the US Fed can expect additional deflation in the next few months. But most of the Euro price change has already passed:

The central banks of Spain and Italy will remit their QE earnings back to their respective governments, so they get to deduct expenses from their taxpayers and the effective yield for their governments drops to the cost of banker salaries.

The Euro bond market will segment as Italy and Spain first sell what they can into the ECB QE and hold off on purchases from the open market. This is an effective tax on the Euro bond market.

The German government is running a surplus, so they are stuck. What do they do with the extra money? Who knows.

Here is a US Reaction:

Everything is in transition. But the net result should be a lot less banking in the Euro and a lot more banking in the Swiss franc. The Swiss problem is expanding their currency business.

ADMISI's Marc Ostwald: Last but not least, the expanded programme does not start until March 15,so "Mr Market" now has a very long waiting period to sit on holdings of EUR debt before selling to the ECB, and with plenty of event risk in the world, starting with the Greek election, and to mention the prospect of an imminent Ukrainian default. Sort this under an uncomfortably long period before the QE 'party' gets started.

The dollar is up, so the US Fed can expect additional deflation in the next few months. But most of the Euro price change has already passed:

LONDON, Jan 22 (Reuters) - The euro held fast more than a cent above 11-year lows ahead of a European Central Bank policy meeting on Thursday widely expected to embark on the outright money-printing the bank has steadfastly avoided, in contrast to its peers.

Traders and strategists at the major banks say an extended monthly bond-buying programme, outlined by Reuters and other news services on Wednesday, is fully priced-in to the euro.

That argues for a clearing out of many of the bets on the euro weakening against the dollar that have made money for investors over the past six months and the single currency rose almost a cent on Wednesday.

The central banks of Spain and Italy will remit their QE earnings back to their respective governments, so they get to deduct expenses from their taxpayers and the effective yield for their governments drops to the cost of banker salaries.

The Euro bond market will segment as Italy and Spain first sell what they can into the ECB QE and hold off on purchases from the open market. This is an effective tax on the Euro bond market.

The German government is running a surplus, so they are stuck. What do they do with the extra money? Who knows.

Here is a US Reaction:

U.S. Commerce Secretary Penny Pritzker said the impact of a rising dollar on exports and economic growth bears monitoring.Asked at the World Economic Forum’s annual meeting in Davos, Switzerland, whether a climbing greenback could drag down U.S. trade and economic expansion, Pritzker said “it’s a factor and something to keep an eye on.”

The dollar has gained about 16 percent against the euro and 13 percent versus the yen in the past year as the U.S. economy has gained momentum even as the global economy has slowed. Delegates to the Davos conference including Goldman Sachs Group Inc. President Gary Cohn and Carlyle Group LP co-founder David Rubenstein have said its rise could soon weigh on the U.S. economy.

Everything is in transition. But the net result should be a lot less banking in the Euro and a lot more banking in the Swiss franc. The Swiss problem is expanding their currency business.

### Scott says look at quarterly growth rates

Scott Sumner on the Keynesian shell game. During the course of 2013, real GDP growth was almost twice as fast as during 2012, and nominal GDP growth also accelerated. Today some Keynesian like to minimize the austerity program of 2013, acting like nothing of importance happened.OK, the Keynesian are goof ball, but its hard to see exactly the difference between 2012 and the austerity of 2013. One problem is the negative Obamacare/polar vortex dip in Q1 2014, that one point screws up the series. The problem is this chart:

We have been doing the austerity ever since we dumped the stimulus. The difference we see only comes in 2014, the Obamacare/defense spending increasing. And that was mostly defense, so far. And even that spending only reverts back to the level of 2011 Q2.

I predicted more Obamacare slow down, but it has not happened. What we got instead were state budget cuts elsewhere in the budget to offset the costs. Economic effects are barely observable of short time periods, until the recession comes.

**Recession!**

OK, look at the path of federal spending since 2005, up, up, and up, until 2010. For two years before the crash and one year after the crash. What can we say?

**We crashed!**Ever since Obama dumped the stimulus and stopped spending, we didn't crash.

## Tuesday, January 20, 2015

### How's the Theory of Everything going you ask?

Slowly, laxily.

Right now I am decomposing the following product:

The Lucas numbers have multiplicity so I can break up the product and rearrange, summing and simplifying the Phi^n, then take the log and get something similar to:

which is the Shannon condition, and thus the finite Lebesque integral, the summation of a finite system using minimal redundancy; and the line along which Ito's Calculus works.

I am doing this because of this, where 4 is the first Lucas squared:

which appears in the product. I think nature is packing sphere to match free space at the boundary. Check me out, as always, but I think the boundary of the proton goes 2,1,3; which is the finite match with free space.

The Phi arrives because I have

That should make the Poincare graph for some group that makes

Sort of, I am slow and fairly stupid compared to the great mathematical minds. But, when complete, we have the theory of everything.

Will I finish this?

I hope not, this is not me. This should be a group of mathematicians who are intimately involved with tanh solution fo differentials, Fibonacci and Lucas number, Wythroff arrays and the rest. I hope to discover a great mind among the Wolfram group, or a complete reference in Wiki. Then I can nominate someone for the Swedish Banana and avoid having to bathe.

Since the system relies only on minimal redundancy and rules of causality, the rules on primes will be invented to match he Laws of Organization, they will have lost their direct connection to rational numbers. That means, graph theoretic rules will apply, and that means we can connect the theory of everything to semantic graph convolution. But we have the rudimantary form of graph convolution over the web, its current primitive outline is the c code to the right of this blog. There is another primitive collection of c code the defines the proof of concept that we can engage in graph convolution over the web. And many advanced implementations of this graph convolution already in place.

In about two years the web will self organize, and its ability to manage inventory will double in a few months, and the web will be connected to smart card payment systems. The result is that all inventory flow will be no arbitrage, there will be no observably better method to organize labor and raw materials for any given smart card purchase. A price of a pair of shoes will be perfectly hedged against a bond purchase by the ECB. 1930s currency technology will be completely useless, except for taxes. The central bank becomes useless.

Right now I am decomposing the following product:

**Product(Ln ^(Phi(-n)) = 3.0**. Ln being the Lucan numbers from 2 to 17 (skip Ln = 2, the first Lucas number.The Lucas numbers have multiplicity so I can break up the product and rearrange, summing and simplifying the Phi^n, then take the log and get something similar to:

**Sum( k* Ln(Ln)/Ln)**,which is the Shannon condition, and thus the finite Lebesque integral, the summation of a finite system using minimal redundancy; and the line along which Ito's Calculus works.

I am doing this because of this, where 4 is the first Lucas squared:

**4^Phi = 3*Pi**which appears in the product. I think nature is packing sphere to match free space at the boundary. Check me out, as always, but I think the boundary of the proton goes 2,1,3; which is the finite match with free space.

The Phi arrives because I have

**ln(Phi)**in the angle of my hyperbolics, and it the second derivative of**n*Ln(x)**taken at Phi, meets the Weiner condition. Natural process is accomplish via some low order network summation, based simply on local additivity of finite things with no redundancy.That should make the Poincare graph for some group that makes

**4^Phi = 3*Pi**, thus creating Brownian motion as a natural finite summation in a Poincare group.Sort of, I am slow and fairly stupid compared to the great mathematical minds. But, when complete, we have the theory of everything.

Will I finish this?

I hope not, this is not me. This should be a group of mathematicians who are intimately involved with tanh solution fo differentials, Fibonacci and Lucas number, Wythroff arrays and the rest. I hope to discover a great mind among the Wolfram group, or a complete reference in Wiki. Then I can nominate someone for the Swedish Banana and avoid having to bathe.

**Then what**?Since the system relies only on minimal redundancy and rules of causality, the rules on primes will be invented to match he Laws of Organization, they will have lost their direct connection to rational numbers. That means, graph theoretic rules will apply, and that means we can connect the theory of everything to semantic graph convolution. But we have the rudimantary form of graph convolution over the web, its current primitive outline is the c code to the right of this blog. There is another primitive collection of c code the defines the proof of concept that we can engage in graph convolution over the web. And many advanced implementations of this graph convolution already in place.

**And we get the singularity**?In about two years the web will self organize, and its ability to manage inventory will double in a few months, and the web will be connected to smart card payment systems. The result is that all inventory flow will be no arbitrage, there will be no observably better method to organize labor and raw materials for any given smart card purchase. A price of a pair of shoes will be perfectly hedged against a bond purchase by the ECB. 1930s currency technology will be completely useless, except for taxes. The central bank becomes useless.

## Monday, January 19, 2015

### Special purpose energy currencies and the no arbitrage moment

Consider the utility company to which we pay our monthly utility bill. Generally they will carry over partially missed payments, and I have even overpaid on occasion and they carry over the credit.

What is to be gained by them if they create special energy currencies and offer savings and lending accounts? They offer each subscriber the opportunity to pre-pay the utility bill and earn a savings rate, and simultaneously, offer them the ability to borrow and pay a utility bill. They set rates and limits such that the accumulated imbalance is about the same as they currently carry with tax dollars.

Knowledge, a great deal of knowledge about the future demand for energy. Watching the savings and loan balances, they can infer when customers are increasing demand, relative to other uses of customer tax dollars. They have regained information lost by the currency exchanges, all of that information is restored to them via a special customer relationship. Second, the information lost in currency exchange is restored back to the customer via the lending and saving rates.

Customers are member banks and the utility company is the central banker. The algorithm for managing savings and lending rates generates the Black-Sholes pricing all the time and the balances become a Weiner process. Once a customer joins, then they may generally withdraw at any time, but are more likely to simply use up their savings balances.

No. a Weiner process will balance supply and demand better than an other opportunity visible. So, other than personal theft, the energy executives will have no visible reason to mis-use the system. In fact, the real danger is that they become deluded by the perfection and over expand their business.

Hire a mathematician and tell them to look at my blog. Otherwise go up to Silicon Valley and bitch at the venture capital industry.

I would imagine a utility company using such a scheme would save up to 15% of their wholesale energy costs. The lending and savings rates inform the customer about future supply, and inform the energy company about future demand, all other customer purchases are optimally separated from the deal.

What is to be gained by them if they create special energy currencies and offer savings and lending accounts? They offer each subscriber the opportunity to pre-pay the utility bill and earn a savings rate, and simultaneously, offer them the ability to borrow and pay a utility bill. They set rates and limits such that the accumulated imbalance is about the same as they currently carry with tax dollars.

**What does the utility company gain with this special purpose currency?**Knowledge, a great deal of knowledge about the future demand for energy. Watching the savings and loan balances, they can infer when customers are increasing demand, relative to other uses of customer tax dollars. They have regained information lost by the currency exchanges, all of that information is restored to them via a special customer relationship. Second, the information lost in currency exchange is restored back to the customer via the lending and saving rates.

**What are the rules of the game?**Customers are member banks and the utility company is the central banker. The algorithm for managing savings and lending rates generates the Black-Sholes pricing all the time and the balances become a Weiner process. Once a customer joins, then they may generally withdraw at any time, but are more likely to simply use up their savings balances.

**Won't the utility company be tempted to cheat?**No. a Weiner process will balance supply and demand better than an other opportunity visible. So, other than personal theft, the energy executives will have no visible reason to mis-use the system. In fact, the real danger is that they become deluded by the perfection and over expand their business.

**How do utility companies get started?**Hire a mathematician and tell them to look at my blog. Otherwise go up to Silicon Valley and bitch at the venture capital industry.

I would imagine a utility company using such a scheme would save up to 15% of their wholesale energy costs. The lending and savings rates inform the customer about future supply, and inform the energy company about future demand, all other customer purchases are optimally separated from the deal.

## Sunday, January 18, 2015

### Currencies creators sell the no arbitrage moment

The intrinsic value of the currency is nearly zero. Under no arbitrage moments, there will be no observable gain or loss by holding the currency. Users may hold it for personal gains or losses, or loan it out to others who have possibilities of gains. But holding the currency itself is not interest bearing.

What fouls the system is the belief among some economists that currencies bankers should impose an arbitrage moment for the economy to access. But that is impossible to hold and the economy will always cancel that moment. In government controlled fiat systems, the arbitrage moment can be held for at most one generation, only because government tax agents are armed and dangerous. But history shows that government fiat systems always fail after one generation, any fiat system must eventually return to the no arbitrage moment.

So member banks win or lose based only on their business expertise. But included in their business expertise is knowledge of how screwed up government fiat systems work, common knowledge. They know the history of regime change in the USA system, and it happens on 40 year intervals. No problem, include that in the business expertise and everything still works, for the member banks. People outside the system may be hurt, so the member banks can make money by helping these people hedge against the upcoming regime change.

What fouls the system is the belief among some economists that currencies bankers should impose an arbitrage moment for the economy to access. But that is impossible to hold and the economy will always cancel that moment. In government controlled fiat systems, the arbitrage moment can be held for at most one generation, only because government tax agents are armed and dangerous. But history shows that government fiat systems always fail after one generation, any fiat system must eventually return to the no arbitrage moment.

So member banks win or lose based only on their business expertise. But included in their business expertise is knowledge of how screwed up government fiat systems work, common knowledge. They know the history of regime change in the USA system, and it happens on 40 year intervals. No problem, include that in the business expertise and everything still works, for the member banks. People outside the system may be hurt, so the member banks can make money by helping these people hedge against the upcoming regime change.

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