A real life entropy encoding of assets

In order to under stand the concept of entropy encoding, I take as an example a real property on the edge of a middle class downtown city.  We start with the hydraulic model and seek to decompose the value spectra of the property.

On ten year cycles we might expect that property to support restaurants, retail grocery, or even a specialty auto.  But on 30 year cycles we would expect the basic building to hold its shape and functionality.  On  60 year cycles we would expect that property to gain some value simply from road access, as a warehouse even.  Over a hundred years its nearness to the city gives is some retained utility.  Separating value into term bands is spectral decomposition.

Expected utility drops the farther out we look, so on a real hydraulic yield curve, the 30 year yield would be higher than the 60 year yield, unlike what we see in the investment bankers curve  The hydraulic spectra of that property is a Gaussian distribution, a wave packet. Bell shaped (Gaussian) the most efficient packer of value over time A typica hydraulic economy is a bell shaped curve with a peak at about ten years.

[Warning, all this is true only if the term is converted into transaction rate (=1/term)]

Where is that curve for real?  We bundle spectra into lines.  The 60 year yield is bundled into the 30 year, and that band covers 30 to infinite term.  Another band is bundled about ten, and the about 7; up to about 4-5 bands.  The result is a positive definite yield curve with information compressions.  We do this for economies of scale, packing those values into the 'real property lot' quanta, and marketing it on the 30 year inventory markets.  So, when I sell my house, I sell might be selling all the spectra from 10 to 100 years, but bundling it with a 30 year line.  When you buy a condo in NYC, you are paying the 200 year inventory cost of that city, its 200 year entry fee.

But we can see both the necessity of bundling value over time and its result, the need for asymmetric information.  One of the hidden costs of property purchased is the 50 year economic trends of the city, it is not something I can buy. But in the hydraulic model, I could, I could simultaneously bet on  both the 50 year city and the 30 year property, both of these component values marketed separately..  . I would first measure the best city, then buy a 50 year entry pass. The find the best 30 year property match.  So, in my life plan, I actually have a bell shaped savings and investment plan, actually setting aside 50 year money, at lower rates,  to buy into my next city.

Libertarians get stuck here, great idea, infinite liquidity, except for the transaction costs.  We can see there is some efficiency of scale in term bundling that causes us libertarians heartburn, it ties the near term use of property into long term constraints from bundling. What I mean:  If I bet my property is a restaurant  for ten years, with the banker; I am likely to secretly bet my property is a restaurant for 20 years,  taking advantage of inside knowledge of what is bundled into the property's spectral line.  I might seek a shadow market in corruption with zoning officials.