Thursday, November 17, 2016

Time and rarity

Consider the member bank, qualified to di so, takes 200 grand in digits, loans it out to a home buyer. If the graph remains within variance, the point boss will not quantize that loan, under contract. The tree stays in balance for 30 years, the banker has returned all the money at zero interest. fair?

Absolutely fair, the member bank snookered the currency banker and obviously found that single buyer when there was not trace  the buyer existed. That is a pure innovation, a freebie.  Loans are essentially partially callable when thee pit boss quantizes.

This happens, or should happen, a lot at the short end.  Liquidity, in the extreme, means money can jump in and out, without loans being  'called'.  At each point on the graph we consider a queue, or a set of unquantized bid and ask. The graph sorted but not out of variance.  The queues have a variance, and I think have to be Poisson in the limit. but bound by color in the finite. In other words, color, Red to Green, I think, ultimately refers to the variance allowed in these local node queues.

When there are no innovations

The graph is stable to the color under contract, hasn't requantized in years.  What is happening?  I dunno about the folks tapping their Smart Cards.  But the trading pits are only slowed by the cost of electricity, which then looms large.  With little to see on the tree, the pit boss has to raise cycle prices, not by much.   Bit otherwise, the flow in and out will be mild gaussian noiser, price neutral as bit error accumulation bounces around zero.

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