Saturday, June 27, 2015

We can figure out how long the Fed reserves will last

We can use out Poisson assumption and get a good idea. First we construct out two period model.

Deposits^2-Loans^2 = Liquidity

Now liquidity is going to be low, by law the Fed is not allowed to be a central banker.  But let's set liquidity to 1.0, as if the Fed is perfectly adapted to the Shannon condition.  That chat on the left is loans/deposits, tanh.  We will find the probability distribution of liquidity on the right side of the equation. It will be a distribution named Skellam, and wiki has it here. Skellam is constructed from the two parameters, Cosh^2 and sinh^2, so lets find out what Cosh and Sinh might be when tanh is near one. But one catch, we have not included the reverse repurchase deposits.  But I have looked and I can say that adding them in makes tanh near .98. That makes Cosh^2 about 25, and sinh ^2 about 25.

The Skellam distribution says the mean to variance is going to be 1/(25+24) os about 1/49. What that means is that the Fed has to go through 49 variations of deposit combinations otherwise called Fed press conferences. That would be 2^49, or some 10000 trillion months assuming the member banks alter their portfolio once per month. Mathematicians will give a better answer from the moment generating function which tells us the time, or number of transactions to expect.

Why don't I use log(50,2) and get the number of bits? Because the bankers have to build the encode and decode tree, they have to count all the combinations first.  Mathematicians will correct me, but I think I am close. In this case we have 30 member banks.

But wait, you say, wasn't the tanh  above 1, up to 1.15 during 2012? You bet, and when the Fed does that is it fermion statistics, we use coth, 1/tanh.  During those periods money is sucked from tax payers and handed over to wealthy people.

Can the economy wait 900 trillion years? No, the boneheads in DC will fly the helicopter, as in Nixon Shock.  The super wealthy have their baskets ready, they will know where the money lands.  Hence the urgency of getting banker bot into the pocket of every middle class person in North America.

1 comment:

Steve Finnell said...

ORIGINAL SIN ROMANS 5:19 BY STEVE FINNELL

Are all men guilty of sin because of Adam's sin in the Garden of Eden? No, they are not. Will men spend eternity in hell because Adam sinned? No, they will not.

Original advocates present Romans 5:19 as a proof-text for original sin.

Romans 5:19 For as by one man's disobedience many were made sinners, so also by one Man's obedience many will be made righteous.(NKJV)

The theory is that because Adam was disobedient in the Garden of Eden, then all men are guilty of sin at birth. Men are guilty of sin because they sin, not because Adam sinned.

Are all men made righteous because of the obedience of Jesus? No, they are not. Men become righteous only if they are obedient to the gospel plan of salvation.

All men are not sinners because Adam sinned.
All men are not righteous because Jesus did not sin.

Romans 3:23 for have sinned and fall short of the glory of God (NKJV)

All men become sinners because all men sin.

1 John 3:4 Whoever commits sin also commits lawlessness, and sin is lawlessness.(NKJV)

All who commit sin are sinners. Being born is not committing sin. Being born is not a lawless act.

James 1:14-15 But each one is tempted when he is drawn away by his own desires and enticed. 15 Then, it gives birth to sin; and sin, when it is full-grown, brings forth death. (NKJV)

Temptation comes before sin. Babies in the womb are not tempted. Infants do give into the desires of fornication, drunkenness, theft, murder etc. Only those who know good from evil are capable of sin.

Romans 5:12 Therefore, just as through one man sin entered the world, death through sin, and thus death spread to all men, because all sinned---(NKJV) [BECAUSE ALL SINNED]

Adam introduce sin into the world. All men will die physically because of Adam' sin. Men will suffer spiritual death, because they themselves sinned.

2 Corinthians 5:10 For we must all appear before the judgement of Christ, that each one may receive the things done in the body, according to what he has done, whether good or bad.(NKJV)

Men will be judged according to things they have done. Men are not going to be judged by what Adam and Eve did in the Garden of Eden.

The only way to escape the punishment of sin is forgiveness through Jesus Christ.


ORIGINAL SIN IS NOT FOUND IN THE BIBLE, IT IS A MAN-MADE DOCTRINE.



YOU ARE INVITED TO FOLLOW MY BLOG. http://steve-finnell.blogspot.com



Posted by Steve Finnell at 12:27 PM No comments:
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