Friday, June 30, 2017

They are anti something

For antifa, it’s not enough to simply outscream their opposition; rather, those far-right forces must, in a bizarre nod to the Bush Doctrine, be preemptively denied a voice from the outset. “We are unapologetic about the reality that fighting fascism at points requires physical militancy,” Rose City Antifa’s Facebook page readsShortly after Trump’s election, anarchist and far-left protesters rioted in Portland, bringing at least a million dollars’ worth of damage—and resulting, in the eyes of the Department of Homeland Security, in “domestic terrorism.” Further riots followed Trump’s inauguration, and more in the months thereafter. “Their actions—conducted anonymously but brutally—show them to be punk fascists,” wrote an editorial in The Oregonian, slamming those leading the greatest political violence Portland had seen in a generation.

Dunno what. 

Building the BTC travel bank

Get a valid address for block chain holdings.  You will run the BTC Travel Bank S&L for members of the travel club.  You company selects by reliable frequent travel, and members are under contract in that they suffer relative penalty if they stray to far from their typical travels.

You members  carry the BTC Travel wallet, or industry equivalent, and generally spend in BTC, which ore traded on par with any other branded block chain address. Par trading between branded block chain addresses risks only ledger fees, whereby small banks are inefficient aggregators.

You bank targets the typical price variation observed by its members.  BTC has already hedged the central banks, it tends to be FX neutral, we hope. So your members gravel FX neutral between many travel vendors, very nearly in par with BTC prices in the local currency.  Your travel bank will make some do-re-me, you save the frequent traveler bucks by pre-factoring FX uncertainty.

A tune and test service for trading bots?

Liquidnet's Algo Ranking Model holistically profiles every order to rank execution strategies in real-time according to order characteristics, trading objectives, market conditions, and performance targets.The model ranks Liquidnet's suite of Next Gen Algos based on three key execution objectives: performance, fill rate, and an optimal combination of the two before presenting options to the trader. Once the trader has made a selection, the model quantifies the algorithm selection, creates an analytical foundation that supports best execution, and ultimately helps contribute to creating an audit trail for MiFID II compliance.

I think I know what they do

triReduce is a multilateral risk-constrained compression service that offers compression for cleared and non-cleared interest rate swaps in 28 currencies, cross currency swaps, inflation swaps, credit default swaps, FX forward, and commodity swaps. Eliminating unnecessary swap inventory contributes to enhanced credit risk and capital management, reduces operational costs and risk, improves leverage ratios, and reduces systemic risk.Peter Weibel, CEO of triReduce, said: "Hitting the $1 quadrillion mark is a significant achievement for the market. Our clients, both dealers and the buy side, are focused on eliminating as much notional principal as possible to meet regulatory goals and to manage their own balance sheets. We are proud to have worked together with our clients and other infrastructure providers where possible to achieve this goal."
A bit of the old multi-color pit boss. But behind the scenes its  all a complex of two colors. 
But, good work anyway, coming to a sandbox near you. 

Keys in the secure element

I have two, at least. One is a key only known to the secure element and one is known only by all secure elements. Then I added keys that are known only to groups of secure elements, and secure elements search out group members as part of mutual certification.

Secure element vendors can customize a bit, focus on a WalMart branded SEs that are closely linked by  keys.  

Adding keys into the SE in support of some new tokenized app?

I dunno, not the expert. I presume it will happen.  We have to see app development tools that can compile correctly using key manipulation macros in the SE.  Systematically generating buyers clubs around some identifiable supply chain is huge business.  Travel companies jumping on the bitcoin mobile wallet campaign, for example.  We will see web sites develop pricing around common SE standards  and real value added channels in the economy become visible, consumers can reserve space back into the channel.

Did he grab goodie?

Mika Brzezinski and Joe Scarborough explain what happened when they visited Trump at Mar-a-Lago

Skip the other details.

The bond market makes those payments


Thus, the Fed has instead determined to raise rates via paying banks interest on these excess reserves to  maintain the reserves at the Federal Reserve.  In short, pay banks not to lend money, not to invest the reserves.  This is just like Federal programs that paid farmers not to farm...IOER (interest on excess reserves) pays big bankers not to bank.
The payments come from treasury interest earnings on the treasuries held account.  So it is earnings taken from investment banks and distributed to member banks.  Government takes its share with interest subsidies. It seems bizarre, but I think we get this because we wanted a corridor system and law prevents it.

The real complaint is that our central bankers are not strictly currency bankers, they engage in ad hocism, discretion.  Many of their rules are mathematically unsound, but imposed by law. They have this additional role, enforce currency monopoly and keep government interest charges paid.

Entitlement taxes first, babies second

In 2016, the number of US births totaled 3,941,109, a decline of 1% compared to 2015. The fertility rate of 62 births per 1,000 women is a record low for the nation.
No, the stork won't protect us, we have already evolved ourselves. 

Thursday, June 29, 2017

Bitcoin scaling with lightning networks

Lightning Network is an idea about organizing bitcoin micro-payments such that accounts may be cleared without calling the  ledger blockchain all the time.

Jonald Fyookball makes the argument that lightening network attempts to place S&L technology at each node in the right hand  model.  Micron channels, as defined, open and close as needed. But opening a node means leaving a cash advance to use for congestion management.  The 2 by 2 accounting they use has to adjust at each node for a payment transiting the arbitrary net.

The most likely outcome is one of the two network topologies on the left.  The middle, for example, is what a lightening network looks like in the users settles on four or five S&L to handle the same amount of sidechains.  In other words. micro channels minimize to  minimize the number of transactions to clear, and that generally means four or five major micro-exchanges and no other micro channels.
Jonald is correct, that is my handwave also.  I described a scatter gather system for bitcoin in which four or five major banks simply offer an Automated S&L sub channel.  The side channels will trade at par so the various banks can set up a special purpose clearing network to distribute random payments to the proper side chains.

The original idea of Lightning Net was that payments are kept in sequential order and the payment channels expand or contract to handle congestion, but it had no congestion pricing, no interest charges.  It would evolve into the middle structure, and each of the small number of large side chains would would collect micro-payments from the other side chains, and aggregate them up before calling the blockchain.  Keep them securely in sequential order solves the trust  problem.

Secure element cures all those problems, all transaction should be considered point to point, secure cash transfer for some contractual good, including more cash.  Then in the case of Lightning Net, all sidechain coins are valid everywhere, that same, except that some major banks have different congestion conditions back to the block chain.  The major bitcoin banks collectively introduce a tradebook uncertainty, separate from the TU inside each of the separate pits.   Then on top of that, add he price uncertainty bounds each pit may set differently.  All of them, par value micro bitcoin but operating under five different S&L tokenized contracts.

Interest charges and cycle fees

We almost get a three color because trading bots will watch he congestion back into the blockchain, the blockchain fees.  Banks may, and will, go under but their potential loss is less than the bound price variation under contract.  Or within the tradebook uncertainty total of that ratio. You and your bot both know what the allowable risk is. In fact, if we see bitcoin as the international no arbitrage money, then we will need four or five global banks to cover the global price variations.  All of the major investment banks will have bitcoin funds.


It is doing the same, except it focuses on investment in smart layer, and associated tech.  It's exchanges were originally geared for that, and it has stuck.  That is another very lucrative place o be with new money tech.  But, investing in start up is a bit wide of amber, so to speak.  The investment process itself has plenty of contractual concerns that a simple S to L does not have.

Both, well positioned. Still room for central banking and a gold standard and Walmart points and buyers clubs and mini stock sales and used car parts.  Just beginning and the entire 60 trillion derivative industry is coming with..

Seigniorage model, in the news

Dean Baker proposes that government take an income stream from central banking:

In the last couple years, the financial transactions tax (FTT) has moved from a fringe idea to a policy proposal treated seriously by even the mainstream of the Democratic Party. 
The decision by Senator Bernie Sanders to make it a central part of his presidential campaign certainly helped, but a number of members of Congress, including Keith Ellison and Peter DeFazio, have also pushed FTT proposals for many years.The FTT is also gaining momentum overseas. There’s a push to enact an FTT in the eurozone. 
And in England, an expanded FTT — the London stock exchange has long levied a 0.5 percent tax on stock trades — was included in the Labour Party’s platform in the recent election.
The financial markets decompose the scheme into a loan on record at the central bank, and earn interest on the subsequent reserves.  Since government never amortizes, the accumulation becomes a burden on the bond industry, and indeed the availability of liquidity to cover government debt dries up.

Central banking is joining the sandbox anyway, so these schemes is implemented by opportunistically defaulting on some portion of government debt, a relatively instantaneous creation of loose digits, inflation. We are going to release the government default machine, available to government everywhere.

Trump's fantasy girlfriend

The one on the right.
A bit of the babe, but nothing like that  ex-Fox News gal.  Megyn, I have a pic...

Yes, I snagged one with a tiny bit of cleavage, down below.  Can you see it?  Anyway, I voting for Megyn, a much better secret girlfriend for the Trumpster.

Market liquidity?

Market Liquidity after the Financial Crisis

Researchers at the NY Fed looking at liquidity.

Inn the sandbox, liquidity means your secure element can easily drop or pick up some secure digits from the local S&L site. You are illiquid if the site is jammed and fees up.  If you are typically illiquid then you keep a lot of secure digits right there, on your card; but it may not be earning even money.

In this article they talk liquidity in the older style sandbox, but still use the basket brigade theory of economics.  I have a simple theory, government took the available liquidity at the Fed, and Janet is giving some of that back to the member banks.  She raises the IOR and government pays higher interest charges, banks earn high interest charges.  Overall economic interest charges are very high, to high for us to pay. Government is getting a 600 billion interest payment each year, and that is likely to go up.  20% of the federal budget.

Wednesday, June 28, 2017

What threat would that be?

Top officials are reportedly frustrated with Trump's lack of concern about Russia

 Top administration and intelligence officials are struggling to convey the gravity of the threat posed by Russia's election meddling to President Donald Trump, who has been reluctant to accept the US intelligence community's conclusion that Moscow interfered in the 2016 election to boost his candidacy, CNN reported on Wednesday.
Hillary got phished and her silly e  mails were all the rage.  Tell the Swampers to quit writing silly e mails to hacked servers.  This is hysteria, nothing more.

Redneck U has had its problems with the press


Mostly undergrads, and they say the reporters started it.

Classic used car parts, a perfect use case for blockchain

1968  Camero?  I want to know where all the parts are, who'se got them.  If they're not using them, ship me the ones I need, I will ship the ones I don't need.

Perfect for a blockchain.

One more. Remodelers. Who has surplus sinks, I want them. Not as re-usable, but locality can be a derived map from the blockchain, a huge advantage.

Income mobility is down when we are overburdened by government obligations

Daniel Carroll and Nick Hoffman of the Cleveland Fed:

Conclusion Wealth mobility depends on luck and household choices. It is a reflection of households’ opportunities as well as their responses to those opportunities. Panel data from the past 30 years show a decline in wealth mobility across several measures. It appears that families are less likely to change wealth quintiles over time, while those that do move are less likely to move very far. The reasons for these trends are not fully known, but increasing wealth inequality has contributed to the decline. Families that do make large movements through the wealth distribution appear to be more likely to own some form of a risky asset, as compared to families that do not make large movements.
What has the Swamp been doing for eight years since the crash?

Trying to figure out how to avoid the massive climb in debt dictated by political promises.  It is called Secular Stagnation, and it means a less active economy, a contracted economy, as we all focus on the impending bankruptcy of the senators.

Fedcoin, why?

Aldolfatto from one of the fed banks, invents Fedcoin:
As I described in this earlier post, I view a payment system as a protocol (a set of rules) for debiting and crediting accounts, I view money as widely agreed-upon record-keeping device, and I view monetary policy as a protocol designed to manage the supply of money over time.
Currency bankers do not set times or terms.  The set the likelihood  that a deposit matches a loan.  The odds condition determines whether a good is in short or long supply, based on the willingess of purchasers to take a loan and buy more of it.  Time has nothing to do with it and betting time is the reason we default once a generation.

What is the main problem with bitcoin as a monetary instrument in an economy like the U.S.? It is the same problem we face using any foreign currency in domestic transactions--the exchange rate is volatile and unpredictable.
Bitcoin is used in domestic transactions everywhere.

What justifies my claim that the Fed has a comparative advantage over some private enterprise that issues (say) BTC backed by USD at a fixed exchange rate? The problem with such an enterprise is precisely the problem faced by countries that try to peg their currency unilaterally to some other currency. Unilateral fixed exchange rate systems are inherently unstable because the agency fixing the BTC/USD exchange rate cannot credibly commit not to run out of USD reserves to meet redemption waves of all possible sizes. In fact, the structure invites a speculative attack.
Fixed exchange rates do the work because price discovery  in each domestic nation is independent. Currently bitcoin mostly does price discovery on exchange rates.  That makes it ideal for foreign trade, and that is where bitcoin seems to be going.  It is increasingly popular with foreign travelers because they do not need FX conversion.  Hotel and airlines like it for the same reason.  Bitcoin is unlikely to become anyone's complete domestic currency.

The tax dollar and Fecoin will mostly measure government functions, as in having a 2.4T pile of government bonds and no banking assets in its sheet.  Plus the Fed has no free entry and exit so its banks are limited to those willing to guarantee government debt needs.  Value points from retailers will have a greater impact on the economy then Fedcoin.  Value points measure the marginal changes in goods flow much more accurately than the government debt dollar could.

Why have a Fedcoin?

Don't need it, Swift works just fine. The central banks will always focus on government debt fulfillment rather than flow of private sector good and will likely get about 50% market share, where as today is has about 75%

Your smart ring is your secure element

In Token's world, you'll never need to carry your wallet. You won't need house keys, or a transit pass, or even to remember your computer password.

All you'll need is a ring.

Token is a fledgling hardware company that just launched its first product: The Token ring, an identity ring that stores your credentials and secures your privacy with a fingerprint sensor.

The Token ring starts at $249 and is available for presale beginning now. The first Token rings will start shipping in December.
Do Token rings hold cash coins?

I have a hard time thinking that all the Token employees who build something like a wallet would fail to understanding something about holding coins inside the thing. 

Bearer cash, alive and well in the sandbox

Apple Wallet (referred to as simply Wallet) is an application in Apple's iOS (previously known as Passbook in iOS 6 to iOS 8) that allows users to store coupons, boarding passes, event tickets, store cards and, starting with iOS 8.1, credit cards, loyalty cards, and debit cards via Apple Pay.
And this report:

Mobile wallet coupons see a higher rate of sharing than loyalty cards at 5.3X versus 3.9X on average. The percent of passes shared varied across brands, with the top-half of retailers seeing 46.4 percent of passes being shared on average, while the bottom-half saw 17.4 percent of passes shared on average. Regardless of the brand, shared mobile wallet passes multiplied the total number of passes installed on consumers’ devices. Furthermore, the data shows that sharing is occurring at a peer-to-peer level rather than sharing facilitated by brands or digital aggregators, as 95 percent of shares were to seven or fewer devices. Every Apple Wallet pass includes a built-in Share link on the back, facilitating easy sharing among family and friends, and it’s a feature consumers are using in droves.
Whatever a 'pass' is, it seems to be shared easily over chat networks. And the is bearer cash, alive and well. 

Tim Cook is the one trying to ban bearer cash.

Tensions between Australia's big banks and the world's biggest technology company Apple have ratcheted up after the iPhone maker surprisingly ordered Westpac to remove a key feature of its recently revamped mobile banking application, which let customers make payments in popular chat applications.In a letter to customers, seen by The Australian Financial Review, Westpac reveals that its Westpac Keyboard function will be removed in July, meaning its innovative plan to enable customers to make payments from within popular apps such as Facebook Messenger, WhatsApp, Snapchat and WeChat has been cut off at the knees.The move is a significant blow to the bank, which is attempting to appeal to the next generation of young customers by providing new mobile services, and get banking services ingrained in their digital lives. Despite only being available for three months, the Financial Review understands it had already been installed by tens of thousands of customers.It comes at a time when banks around the world are seeking to secure teens and young adults as customers for the future, amid concerns that banking services could be targeted by technology companies, including Apple, Google and Facebook.

Dunno what Tim is thinking, but Apple Wallets are now banned from the sandbox.

Illinois Dems think the Magic Walrus is real

Democratic House Speaker Michael Madigan introduced his long-awaited spending plan Tuesday, but didn't offer specifics on how to pay for the $36.4 billion proposal that would direct money to schools, universities and social service programs.
Is Mike  a little confused about what bankruptcy means? 

It means you have not figured out how to pay for spending.  Mike is trying to drive the system into bankruptcy court, but has no legal destination.  There is no Magic Walrus bankruptcy judge that decides everything fairly. 

Instead, Mike, what you are getting is a host of contract judges setting priorities, and you no longer have any choices.

Kanosian induced evolution

ogs almost certainly evolved from wolves by a combination of natural and artificial selection as they began to engage with people. A landmark scientific study helped shed light on how modern dogs could be domesticated in a relatively small number of generations. The study showed vividly how assortative mating and differential reproduction can transform the characteristics of a population. When a trait is heritable, and organisms mate non-randomly for that trait, the presence of the trait can become both clustered and accentuated in subsequent generations.
Kanosians select for poor skills. suppressing higher skilled populations.  Hence, we get the Illinois effect, folks who were suppressed disappear; exactly the ones who were to pay the bills.

Consider the subtitle of this Political Calculations post:

It began as a modest, bipartisan program to help poor children. But as America’s economy hollowed out, Medicaid grew—and Republicans came to oppose it.
In its blindness it ignores an obvious cause and effect hypothesis.  But the research shows very possibly that the hollowing out was due to adverse selection.

If the hypothesis is true, then Jerry and the unions are mass killers.
Here is another:

STAT forecast: Opioids could kill nearly 500,000 Americans in the next decade
Death from the despair of being deselected in the Kanosian extinction event.

Tuesday, June 27, 2017

The more times you die the more times you vote?

"Young Virginia Democrat" Sentenced To Prison For Registering Dead People To Vote

Sandbox already self regulated

Rich guy talking:
"The Nasdaq got to $5.4 trillion in 1999, why couldn’t it [sandbox] be as big?" the former hedge fund manager said in an interview, referring the Nasdaq Composite Index.

"There's so much human capital and real money being poured into the space and we’re at the takeoff point."

To get there, though, companies need to develop sound business principles to satisfy regulators and lend legitimacy to the budding industry, as Novogratz says cryptocurrencies face "monster regulatory risk."
The bold. No arbitrage cash means no regulation problem,been there, done that. 

I look forward to not seeing one

Yellen: "I Don't Believe We Will See Another Crisis In Our Lifetime"

Just a bit of regime change.

We will have the change, guv will do a bit of defaulting, and we will deal on entitlements.  My optimism is based on the inherent intelligence of pure, auto-traded cash.  The path forged with alternative currencies. We can do this and keep dollar inflation below 5%. We do this better than Nixon shock, better than Roosevelt gold repudiation. Central banking lives on, in semi-automated form.
A June 2017 staff discussion note from the International Monetary Fund (IMF) suggests that banks should consider investing in cryptocurrencies more seriously than they have in the past.
 IMF Urges Banks to Invest In Cryptocurrencies 

I didn't read it. 

It is recent, written by economists; and economists are mostly interested in automated S&L tech, secure elements, but not blockchain.

Spending Obamacare money in Ohio

A controversial proposal has been made in an Ohio city to deal with heroin overdoses.Middletown is considering whether people with addiction should only be given two strikes before they’re out of chances at Narcan.Middletown is struggling to deal with the heroin problem.
“We are faced with stress on our services, particularly the EMS services where we can do six to eight opioid overdose runs a day,” said Paul Lolli, fire chief of Middletown.
EMS services are eaten up by shootings in Chicago and overdoses in Middleton.  Why? Because the entitlement taxes needed to support government health workers are eating the budget.  Kanosians cause mental illness and mass migration; war crimes.

Trump picking a fight with Assad

Trump warned Syria again on chem weapons:
A senior Russian lawmaker dismissed the U.S. warning as “provocation.” Frants Klintsevich, first deputy chairman of the defense and security committee in the upper chamber of the Russian parliament, accused the United States of “preparing a new attack on the positions of Syrian forces.” The U.S. strike in April was the first direct American assault on the Syrian government and Trump’s most dramatic military order since becoming president. Trump said at the time that the chemical attack crossed “many, many lines,” and called on “all civilized nations” to join the U.S. in seeking an end to the carnage in Syria.
This is mainly about keeping Saudi money flowing into American defense companies.  The net result will be another Saudi inspired terrorist attack and, like little Bush, Trump will be accused of conspiring with Wahabis to bomb the USA.

In fact, Trump is already accused of forming an alliance with Wahabis who intend to destroy us. Assad and Putin already considered allies protecting us against a violent Trump plot to bomb us.

Central banks insuring government debt

BOE raises risk reserve requirement:

In addition to the previously noted fireworks from Mario Draghi, also on Tuesday the Bank of England ordered banks to build greater capital cushions in the coming months to protect the U.K. financial system from risks ranging from Brexit to China to booming consumer borrowing. In its twice-annual financial stability report, the BOE's Financial Policy Committee said that there are “pockets of risk” in the financial system, and to address them the BOE set the countercyclical capital buffer at 0.5% of risk-weighted assets for U.K. loans effective in June 2018, and if nothing material changes the central bank plans to increase the level again to 1% in November.

In the sandbox we do it different. 

When loans to deposits are out of balance, the S&L machine executes interest swaps to bring them back in balance.  The traders discover, ex post, they had been out of balance in the past, but no more. 

The systematic counter-cyclical risk they are trying to remove is the risk that government cannot make interest payments.  But the S&L machine in the sandbox treats all accounts the same, ordered by significance.  There is no rule change if one of the heavy borrowers is government.

Stork theory fails in Europe

Just a year ago, pundits were holding out that Europe would find economic salvation in the “warm bodies” crossing the Mediterranean. It was an argument that never made sense, given the millions of unemployed but educated youth already in the European Union. Instead of a new round of guest workers, Germany has added hundreds of thousands of new dependents on the state, most with few job skills and no language preparation. The latter problem now taxes police departments, which have to find Pashto translators to investigate crimes such as the murder of Muslims for apostasy.
Migrants make poor entitlement slaves.

Euro governments participate in the slave trade.

But it may finally be dawning on Europe’s elites that their attempts to rescue people at sea are endangering migrants as often as saving them. Migrants hoping for a European rescue are put on inflatable rafts (or worse) and launched off the coast of Tripoli. They make about one-sixth of the journey toward Sicily, and sometimes even less. Once they cross out of Libyan waters they enter what is commonly known as the “Search and Rescue” Zone or just “SAR Zone.” They then signal their distress and get European rides the rest of the way — or they collapse and capsize and the migrants drown. Over the weekend, the Irish navy, and its ship LÉ Eithne, took more than 700 migrants. The composition tells you the nature of the migration: a score of children, some pregnant women . . . and over 500 adult males. The problem is that by running this ferry service, Europeans have created an ugly industry in Libya. The slave trade and human-smuggling enterprises are now among the most important private-sector businesses in the chaotic post-Gaddafi Libya, which is ruled by two rival governments and several other militias and gangs. This is a brutal business, and the stories from it are terrifying. According to the Daily Telegraph, a young Gambian migrant told the International Organization for Migration that he witnessed a sick friend of his buried alive in one of the sordid migrant encampments in Libya, because he “wouldn’t have survived anyway.” If a migrant in Libya is thought to have relatives with money, he is often sold in a human market to gangs that will torture him to extract the cash from his family.

A failed effort to get 
north Africans to cover a bunch of Euro retirees with have no children.

Monday, June 26, 2017

Segmenting the crypto market

Blockchain in its variants, the tax ledger, WalMart value added points.  When calling the ledger service the coin is redeemed in the sense that any pending ownership changes are cleared. The coin is cleared by Walmart when you spend it.

In block chain systems, the large bank 'takes out' a side chain, keeps it for itself and brands the BofA BTC, or WellsFargo BTC.  All branded versions likely trade at par if none of them is jammed up on the block chain queue. The banks hold custody and let it scatter gather on its own in sponsored S&L pits everywhere.  Instead of a credit card, customers have permission to generate tokens, validating your access to S&L as needed.

Hardware trading pits

They use the graphics chip for the bulk of heavy lifting in ordering the  two incoming queues.

The chips operate off line from the pit processor, so the pit boss just reads in the latest batch and begins round robin betting and price compression. Process hundreds tens of thousands of bids per second. Let the trading bots have an entry point into the graphics chip to read current distribution state.

But any off line risk processor will do, the key is that it run without scheduler for array and block moves.

Block chain efficiency anhancements

The pit is the custodial holder, so all ledger transactions are from it to others and others to it. The ledger calls are partially constructed blocks.

Trading bots and monetary congestion at the exchange

The Redneck model a trading bot for each trader that manages bid and ask.  The even money bot will simply keep all its bid and ask within one sigma of the spread, as observed by the pit boss in the published current odds. So, regardless of how the exchange performs a match, ti will have the even money trading bot to match. The even money will get you a price within one TU of the previous best estimate.

Traders with inside information use the high risk trader, it can buy and sell within 1.5 deviations of the posted stats.  These bots cause the bid and ask stacks to stay within some bound, when viewed as in and out queues.  Trading bots, legally, morally and mathematically separate out the 'who is responsible for what' rules. The bots themselves are simple contracts, essentially, on what basis is the price acceptable.

A whole bunch of legal issues go away when each bot gets fairly priced access to the dual stacks, or some contracted summary of the stacks.  Today, in the large established exchanges, the managing broker is increasingly vulnerable to lawsuits caused by HFTers, as the large brokers now understand congestion over distribution channels. Failure to implement the bot model is an obviously distorted TU process.

None since this is an obvious, and exact implementation of real people at an auction.  So, my patent rule says, if a Redneck trading pit were implemented in cardboard, and the real human pit implemented in cardboard; they would be identical designs, unpatentable.

Easy to use
The Redneck reference specifies secure python, and it comes with fair scheduler and obeys contracts.  The pit boss actually holds custodial cash when needed to operate as a side chain. The system is compose of a few types of bot, each having a simple rule surface.  The pit operator deliberately disowns the bots, they are public domain. They can be passed up for testing all we want. The exchange operator keeps the three most popular available for standard trading.

Need a ledger service?
Sure, when the bots check in and out; or as often as specified in the token contract for the currency in question.  I suspect that big chunks of bitcoin will be traded as a side chain at the pits, and spent as, say, BofA BTC, meaning the BofA S&L machine will trader and block chain them as needed.

Sunday, June 25, 2017

Opiod crisis getting worse says Bubba

Former President Bill Clinton expressed his alarm to U.S. mayors on Saturday about the growing opioid crisis and warned that the drug epidemic is not going to be constrained to rural America because of heroin flowing in from Mexico and fentanyl growing more attractive to inner city gangs.
“In the beginning, this despicable epidemic had a less violent delivery system. Our kids were delivered and a lot of our adults were delivered into a paralyzing addiction by doctors, pharmacists and drug manufacturers, not by armed gangs. However, this movie is coming to a theater near you,” Clinton said to the U.S. Mayors Conference in Miami. “Because as the government got better at dealing with opioids, more people moved into heroin.”
“Heroin is even cheaper now because it is now being grown in Mexico in the hidden parts of the Sierra Madre Mountains and being harvested by preteens. And then it got even cheaper with fentanyl which is a synthetic drug that if you have a 13-year-old child or certainly a 15-year-old child who can make a ‘C’ in high school chemistry and access to a garage they can learn how to make. And now it’s becoming attractive to urban gangs,” Clinton warned. “It’s going to eat us all alive.”
Clinton has been privately sounding the alarm about the effects of Mexican heroin for years, speech transcripts released by WikiLeaks last fall revealed.

Ismed in LA

 Institute on Inequality and Democracy at the University of California Los Angeles

"This resource guide outlines the first steps the UCLA Abolitionist Planning Group has taken to understand Trumpism as a moment in United States politics. Building on long-standing exclusions, Trumpism consolidates power through white supremacy, misogyny, nationalism, xenophobia, corporatism, and militarism. Committed to a philosophy of abolitionism, the Abolitionist Planning Group seeks to understand how urban planning, as discipline and professional practice, can analyze and address the systematic oppressions expanded and institutionalized by the new administration."

Uh, a unionist song!

 Free tent women everywhere!

Can BTC pick this up?

Italy will commit as much as 17 billion euros ($19 billion) to clean up two failed banks in one of its wealthiest regions in the nation’s biggest rescue on record.
Government re-directing monetary flow means adaptation.  The quickest adaption is buy  bitcoin with euro.

Dealing with tax dollars and crypto cash

The pure cash layer, as defined with secure element, allows you to honestly pass around tax dollars from your card to any other card.

Just like debit cash, except no need to involve the bank.  Or the S&L can put a chunk of your own on even money, and your SE can share currency risk with everyone else, and spend against that deposit, up front with the proper cash advance contract.  Your secure element knows the bounds and the contract.

Geeks need only put a format called 'tax money' in the multi-currency structure.  If a SE element can generate a tax money token, then it is following the rules.

Then peer to peer exchange is a simple interface to any chat system

Everything must be a point to point exchange between secure elements.  The software simply is an interface between the secure element and any given message service. The SE issues chat commands directly via the NFC interface.  Both parties have chat internet addresses a priori.

Can we do the with Trezor? Sure, using the USB port and writing some reverse engineer software for the smartphone app. Plug your Trezor in and tap on the send money app, the only requirement is a Trezor on the other end. Leave  your Trezor plugged in, build an online shopping app to take digits straight from the wallet.

If your wallet is staying out, it can have its own IP address.  Or it can open and close connections like a cell phone, if it is roaming.  But, the free and easiest method is to assume a plain vanilla text service, a chat.  Our assumption should hold, this is a two point network and has no congestion, there is no compression of flow.  Digits are not co-mingled and the chat exchange does not need priced congestion.  It is sort of by definition, a view that says we will take this route for peer to peer and call it person to person cash.

This is the null trading bot, works with null ledger service. The secure element generate the proper token to the text exchange, and both parties observe incoming text. It is the null trading bot because its only function is send and receive text, one at a time.  So, I think, we can conclude that all wallets will, by design or add on, support direct person to person bearer crypto cash.

Cash is not going anywhere, holding crypto cash in your pocket is the norm, works like regular cash.

There are no congestion free exchanges

And another rule: Exchanges always trade with bots under the same processor as the pit boss.

Assume non stationary buffering, with congestion management.
All the exchange take some risk, they have to manage a bit of error, but the bounds can be set; as long as you accept the possibility of bankruptcy with free entry and exit.

Thus, all exchanges have some custodial holdings of the crypto, and they all obey contract and thus are secure elements, as I always suspected.  Hence, with certainty, I can say, the fundamental transaction in the box is cash transfer, point to point between two secure elements.  If you go through a third party bank, the bank has to be secure element.

The exception to the rule is personal exchanges between two parties, direct or over via network message. We should assume these to happen over messaging services and are congestion free.

The Swamp pays the ten year rate

We hear a bunch of nonsense that central bank money is cheap for the senators.  It is not.

The chart shows actual interest payments divided by total debt (includes SS funds). We can obviously see that the debt cartel has figured government projects are always ten year projects, and priced interest charges accordingly.

So, if we hear some nonsense that the Swamp can borrow its way out of debt, the answer is no.  Our GDP growth rate is likely 1.5%, all things being equal then borrowing money  makes the Swamp more bankrupt than it already is.

Isn't there some sort of nominal trick the Swamp can play where inflation eats away from debt?

The numbers posted above are ex post, based interest payments paid after all accounts are settled.  It there was some trick, the the Swamp would occasionally be getting money cheap. But is is never the safe, the actual interest payments always seem to be just above the ten year rate.

Saturday, June 24, 2017

Selling stocks in the sandbox

One pit per stock, naturally.  We eliminate any intermediate supply chain, the corporate spreadsheet is a distribution with known precision, everything  round robin look at the balance sheet.

The issue is auto pricing to the same uncertainty as the trade book., which we guarantee by having all the buy and sell bots look at the stack before prices are crunched. The TU needs to be less than a quarter point, we need trade volume on the single stock, else the pit boss can get stuck paying for inside information.

In addition to volume, we need liquidity. All the prices are adjusted via a mandatory  margin account kept by all traders. So, two traders agree on price, by some other channel.  They report the event to the pit boss and interest swaps occur to rebalance.   This all depends on what? No flow, no quantization.

But,but... we still have risk profile at the secure elements, so low volume,micro stocks can be auto pitted, but trading bots pre-qualified to run wide of amber.

And, as always, when the pit boss becomes hysterical frightened, pull the jamming flag, cause a noticeable ledger fee.

What have I gained?

The buyer and seller do not want to worry the mechanics of the system, they want to be assured that all TU imposed in the system are fairly distributed.  Thus, buyers and sellers can trade stock based upon posted priced, and the congestion between their deal and the actual price is fairly paid for.

So, buyer and seller meet on the board, and click on the deal.  The next day, your margin account will show a slight adjustment, relative to the formal deal. The pit boss is  accounting for the cost (or gain) of defeating a string of HFT traders. Unknown to you, your trading bot has negotiated a bit, on your behalf. But it will be a well known and commonly used bot; deemed safe by  all.

California legislature kills millions

SACRAMENTO, Calif.June 24, 2017 /PRNewswire/ -- California Association of Health Underwriters President Rick Coburn applauded actions taken today by Speaker Anthony Rendon (D-Lakewood) that recognize the serious deficiencies of SB 562. The Speaker has officially postponed any further legislative action on this bill until January 2018. He also indicated there would likely be a single payer ballot initiative on the California November 2018.SB 562 proposes a $400 billion per year government-run single payer system for California. SB 562 does not contain any credible funding mechanism other than immense new taxes on all Californians. The bill also fails to address or manage the real problems healthcare systems face today such as the constant upward cost spiral of medical care, escalating prescription drug prices and ensuring consumers have access to quality medical providers throughout California.

Waiting for regime change

The US aggregate measures since the Nixon Shock.

Note that we spend more time taking zero or tiny price hikes these days.  And a rising government deficit always precedes a recession, all ex post, of course.

But the recent deficit rise is smooth, well anticipated. This looks like an economy ready to bounce along at near zero.  I keep thinking, we know what's coming, a regime change; a bit of accounting between generations.

Money Stuff talks ETH crash

Matt Levine: 
On Wednesday, the price of ether -- the cryptocurrency of the Ethereum blockchain -- on the GDAX exchange briefly crashed from $328 to $0.10. The story seems to be that there was a big market sell order that blew through a lot of the buy orders on the book, pushing the price down.
What was missing?

All traders must submit a risk profile, the red/green span they are willing to tolerate.  The trading bot that executes the orders can translate risk profile into stop limits on the trade.  Round robin access to the tradebook then prevents the trading bot from jumping across a concavity, as happened.

It is mathematics that requires risk profiles and auto trading need to go together.  In the Redneck model, each trade bot starts with the user's token, which contains the necessary risk profile. The trading bot format makes analysis easier because bot the pit boss and trading bots are treated semi-equally on the stack.  But there are limited types of bots that can trade,and they can be tested simply to avoid the concavity problem.

Friday, June 23, 2017

Xi will be a bit alarmed

The contract is completely outside the purview of the regulators, but is likely between two Chinese citizens in China.

Exchanges need the trading bot model

Simple traders just enforce finite bound on their bid/ask, and set aside to tradebook uncertainty.
The automatic trading algorithm has fair round robin access to the bid/ask before  matches are set.

The pit boss has to make the market and everyone measures its distribution of gains and losses.

Bots are prequalified by path tracing and mostly bonded by the pros. The stability cops. Pit boss cannot hog the stack, except by contract.  Check with the stability cops.

Trading bot model is the best for pre-analysis, working through paths in pairs or triplets and so on, the bound can generally be found, and its risk distributed. You can disqualify some unknown bots, and making the even money price is a farily easy task, to the accuracy of TU.

The sandbox and government crypto regs

Made this point several times.

The sandbox cannot show you any secret passages, it runs maximum entropy.  Try to sneak messages and they get hedge to garbldy doo.

In order to send messages and secret text, you have to make a presence in smart layer, extract a profit that has spare entropy, make a store front.  And you  might win or lose, government's got good shoe leather.  But, nothing to see in pure cash, by definition. No crime, no government; except when the issue is counterfeit, sandbox is on the hunt with government.

Is Coinbase liable for the crash?

Sure are.

The rules of fair, bounded variation trading are well established, by CATO in their free money project and by queueing theory as pointed out continuously on this blog.  Fair traded pits, bounded variation on the trading bots, equal and fair access to the trading stack by all parties, free entry and exit, and the bounded variation contract for the bit error function.

So, sure, clients should sue the frig out of Coinbase for mathematical incompetence. I suggest Coinbase go to settlement, otherwise a shitload of experts will testify to the incompetence of the firm.

Bitcoin reality, a bit of it

Bitcoin News:

Using a credit card to purchase cryptocurrency divorces virtual currencies from many of the core use-values that underpins bitcoin’s basic protocol. The innovation of the blockchain, a trustless ledger that comprises a decentralized ledger that can validate and verify transactions without the involvement of third parties, is made essentially inert by the involvement of credit card companies in a transaction. The transaction is immediately dependant upon a centralized third party, and involves paying fees to the credit card companies, Netcents, and Visa or Mastercard, in order to access technology designed to circumvent the very third parties that are now facilitating the transaction.

Under the current system, yes, traditional banking removes the need for block chain.  But we not going to do traditional banking, we are going to do automated S&L, and in the secure element sandbox, all money is transferable point to point with no central authority and no block chain.

Blockchain is still useful, it is a contract checkpoint.   What is missing in the whole debate is that neither traditional banking nor bitcoiners understand money, prices and savings and loan.  We cannot understand money until we understand the basket brigade theory of goods delivery.

As a reminder to bitcoiners, the original white paper theorized side chains just for this problem, it is in the design boneheads.

Coordination failure

From a review of Trezor, a hardware wallet:

It might be convenient to keep Bitcoin on those online services since you can easily buy or sell. 
This line blew me away.  It is convenient to keep bitcoin in your friggen pocket so you an put it in someone else's pocket, as it it were exactly like cash.  Send it pocket to pocket, either over the internet or directly, no third party exchange needed.

Never in my wildest dreams did I think that 200,000 geeks would get the idea that transferring a batch of watermarked bits from me directly to you is somehow prohibited in the software world!  I have made this point every time.  If we are eliminating cash transfers, then the system is useless, you may as well eliminate the badly designed exchanges like Coinbase which is crash and hedge prone.

So, I have a message to young software geeks, do not listen to the bitcoiners, ask yourself, and I repeat for the 100th time, how foes one human transfer a sweaty cash to another person? Think hard, this is not a trick question.  Pretend you have, in your past, handed a wad of paper to someone, how exactly did that work?  Now, with that in mind, imagine that NFC is cellulose and bits are ink.  With only that change, how could you pass bits from one secure element directly to another?  

You are having a hard time with the obvious because your marketing and sales folks seem a little dense, ignore them.  Just close your eyes and pretend you have a bunch of NFC bits in your hand, ready to pass to your neighbor.  Focus on and, think, radio link layer, maybe? send and receive, maybe? Any of this ring a bell?

Think what happens when you ship 10,000 of these Trezor wallets and start getting calls, "How to I send cash from me to spouse?"  And your help desk has to talk about cash transfers that are not allowed to happen with wallets! Is you sales VP that stupid?

On the Trezor wallet, did those folks think that we use a USB plug to spend money?

I looked at the features.  Taking your Trezor wallet to Walmart did not seem to be one of them.  It is not a wallet, you idiots, that is a stationary vault and only works when plugged onto a PC having a USB port.  That is not a wallet, your VP of marketing is a liar and SOB.

Thursday, June 22, 2017

Block chain and the S&L pits

The savings and loans pits are not calling the block chain for each interest swap.  The block chain network would jam.

S&Ls for bitcoin are not currency issuers and must be backed by a bit error fund to remain zero bound.  So the pit boss has a bitcoin account on the block chain and all traders must check their bitcoins in to the pit boss on entering, and check their coins out when leaving the pit. The pit is secure, as secure as a hardware wallet and the pit boss runs an honest game.

Why would anyone leave their coins on the block chain instead of on account with the pit boss, utilizing the savings and loan function?  All of the side chains become savings and loan pits, I do not see any other way. Most of the activity on the block chain will be traditional savings and loaners checking in and out of the S&L pits.

But we can extend the concept. If you trust your S&L and it is well regarded by merchants, then keep the money on the pit boss address, it is as safe as your own address, then all the merchants can deal with the S&L and mostly skip any call to the block chain except for daily balances.

The block chain is really just an account balancing activity and need only happen once a day, week or month;depending upon the activity. Otherwise, keep it as pit boss money. Ledger services are there only to meet some smart contract or regtech condition of verifiability.  If no regulatory or contract is pending, just carry around pit boss money and spend it normally.

Make it the general rule.  All crypto coins are either issued from S&L or converted to S&L format, and shove the block chain completely up into the smart layer.  It is pretty clear the sandbox will not work without S&L functionality for pricing purposes, so let us just adopt S&L permanently on theoretical grounds as he main solution for congestion management.

Something clueless about this

My Patients Need Medicaid

My elecric car buyers need subsidies
My voters need right of free assembly in California
My grocery customers need need food stamps
My defense team needs weapons.

I am sometimes confused by the rhetorical stupidity of doctors.  

The correct method is to at least hand wave the concept that government can not do everything, then sort of weasel in there about how your thing is better than the other things.  Doctors don't get the concept, at least Kanosians do the handwave, then introduce their special thing about the third paragraph, not the title.

We already understand the problem

Cybersecurity is becoming a vital concern for the functioning of a modern economy. This column argues that the threat of cyber attacks should be tackled economy-wide, with economic policies aimed at overcoming the externalities and information asymmetries that lead to suboptimal protection choices on the part of private agents. There is an urgent need for an improved understanding of microeconomic mechanisms in the cybersecurity market, and for reliable data upon which policy design can be based.
We are encrypting cash, delivering tamper proof secure elements and pricing congestion in the money net,   We make it nearly impossible  to spoof pure cash and obsoleted the opportunity for HFT by going to asynchronous interest swaps. . Problem solved, everyone pay attention.