Saturday, October 29, 2016

The central banker has all the knowledge it needs

The Knowledge Problem In Monetary Policy


By Beckworth

Dave talks about the idea that central bankers do  not know the potential growth rate.  The member banks have that knowledge.

We have

two groups of member banks.  One group does not borrow from the Fed, the other group, a group of one, has borrowed 2.4 Trillion.  The knowledge of that imbalance is well known, it is one of the most common political themes of the era.

The problem is that there is no entry and exit of member banks, hence we have to wait indefinitely for the one member bank to clear some of its borrowings.
Let's do an example, say the US Fed.
No, if you had, say, a currency banker in your pocket watching the blue line it would think, hey the borrowing queue is getting large chunks of 'secure digits'.  Your bot would respond green,you should make the counter posing deposits.  Why? Because your bot knows there are two outcomes, the blue line will make money useless, or there is going to be a retro active rate increase on deposits once the graph re-balances.  
Is the reyro-actve rate increase here?

In international terms it surer has, see that dollar spike? A 10% return on deposits in  one year.  The natural rate imposes itself, even when the central banks is stuck with a very bad member bank. Bot naturally detect the natural rate because it shows up in queue size first, and they watch that.

Mutual entropy between the blue and red lines in the first chart, tha mutual entropy reveals queue size imbalance.  Your bot knows a deposit will get picked up by the betting site right away, the graph renormalizer has to run, its the contract, the rule.

When money becomes useless

The bots don't care,their transaction costs are close to zero.  They will wait for two people to make one trade every thousand years, secure digits are like gold.

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