During contraction, the firm wants more precision in the firm and more imprecision in the market. The firm is liquid, it can move a variety of inventory in various sizes and probability. The market is reduced, the generalized yield curve appears segmented, it is operating with reduced supply lines. Market activities get moved inside the firm.
I hesitate a lot here because this is all new to me. But the paradox applies in different terms. Liquidity is precision, redundancy is imprecision. So the economy moves liquidity between the links and the nodes, using network terminology, it actually condenses links and nodes into the firm when the firm wants liquidity.
The transition points would occur when the curve steepness exceeds the Golden Ratio, and the market network can inflate again, at the expense of liquidity in the firm. The golden ratio detemines if conservation of flow is sustained. I test this on Treasuries by taken the curve and fitting it to a set -iLog(i), allowing i to vary among small numbers (3,4,5,6), using the Fibonacci series for rates. I use the generalized yield curve equation derived from Shannon, that is, the Treasury as a black body radiator.
What does this have to do with money? Not much.
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