Thursday, March 5, 2015

Banker bot and steady state growth conditions

How does banker both handle indefinite 2% growth?

Banker bot views growth as a lengthening of the chain of bankers, the banking network grows in rank. As the banker chain grows, the banker bot term period shrinks, it reacts over shorter and shorter periods.  Growth is equivalent to an increase in precision of the economy, hence greater network complexity.  But precision has its limits because bankers go to sleep, and that limits the banker bot's reaction period to two days. A shrinkage of the economy is a lowering of the rank of the bankers network, and it is also finite limited to banker bot itself, a rank of one. Finite limits are real in natural systems.

The real economy has the same problem, limits on precision that restrict steady state growth and decline.  Economists understand this and when they report potential growth they  recognize that the double entry accounting is not complete.  For example, used furniture is not accounted for, it ends up in the scrap pile often.   So given steady state population, then, a full double entry accounting of all goods would show a zero growth rate.  Precision is still the issue, the consumer can only manage so many consumer items in a day.

So the 2008 crash was not a drop in growth?
From banker bots point of view, the banker chain is still intact, money still worked within precision.  From the economists point of view, the missing depreciation schedules were simply  updated. Banker precision was preserved, and bankers duly noted, with precision, that economic agents were taking   depreciation losses. It is mostly semantics, the difference between using the Euler approximation and handling missing depreciation at infinity, and using finite log within the banking network.  Money does not really have a depreciation, its actual costs being so low, the lowest operating costs in the economy. So, the numerator in price still worked, at least for a while.

Gains and loses vs banking bankruptcies.

Within precision, banker bot will lose and gain money, actuarial losses. That is its normal function.  When the banking network suddenly discovers its own depreciation losses, then i drops rank, and that is a drop in precision. Precision is what gives the banking network value and they make real money by selling precision, they are an accounting service.  So when the banking network drops precision, the banking chain drops rank and bankers become poorer.

No comments: