Saturday, February 7, 2015

Inflation or gains?

This is the optimum congestion model, the economy should be slightly congested, in this case, so none of the banking channels is missing customers.  So the question becomes, will prices adapt before duplicate investments are re-ordered.  If pricing detects imbalances, then what do we watch, price, change in price, or the variance in price?

I think the answer is written in consumer and producer surplus, the angle being gains.  But I am just now looking at this, so beware.


Variance in price is a proxy for the second differential and really should be  probability distribution.  Brownian motion tells us all three will match at the no arbitrage position, or the function describing the probability distribution of price second difference matches: 1/2 p'' = -p * p', written in the hyperbolic form.   Thus the investor will see if predicted price gains, relative to current prices, are observable amid the pricing variance of the inputs to the business.   In finite, log additive systems, there will be a limited set of solutions, and these solutions make up the yield curve, in hyperbolic angle.

Is this right? The wiki definition looks close enough I have gains as the angle.

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