Sunday, February 12, 2017

Supply and demand and the S&Ls

The system is simple.

Demanders lose an interest income if their demand is out of sync with the typical supply. Suppliers pay an interest when their supply does not meet typical demand.  Typical in either case is when supply and demand are within specified precision. Baskets are optimally full, agents jump on short queues and skip the long.

Supply equals demand only because bit error is managing inventory piles on the dock.S&Ls.   Bit error in the S&:Ls is the complement of inventory float on the docks.  The precision of price equal to the precision of the match, and the match precision derived from uncertain access to the yield curve in the S&L, which is observable by all in round robin with asynchronous deposits and loans events.

The smallest basket is 1.5 samples of uncertainty, in price, at least.  This is under samples to allow liquidty to accommodate adaptions in basket size.  But, whatever, The point is, that is your smallest denomination, and denominations count up by the typical basket sizes. So we see price, interest (asynchronous and amortizing), supply and demand.

Nash equilibrium happens when we all have that happy deju vu feeling,  he queues have about two people waiting. That is when queues are stable, and we then mistake integer container arithmetic for float point Eulerism. We get delusional that we can make incremental changes in basket size.

There you have it, a complete graduate level theory of the economy, send me a check.

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