Thursday, March 2, 2017

No three color model

Macromania: People are generally not accustomed to the idea of a central bank altering the maturity structure of outstanding government debt in a manner that might confer a financial benefit to the government (and by extension, to the citizens it represents). The purpose of my previous post was to make people aware of this possibility, using the recent experience of the Federal Reserve's quantitative easing (QE) program as an example.
No  model exists for profit taking S&Ls using proprietary trading.  Paul Samuelson could not find one, and none has been found since.

The three color trading pit has not been released, there is no published science of how to manage the odds of three independent flows.  I would have known if the math guys had thatmodel, it would have been a really big deal.

The three color model used by Ben and Janet is worthless, and unpredictable.  We have an especially big problem because Congress is not a proportional body in the Senate.  So having the Fed lend to satisfy the senate is a disaster.

The current model for central banking rules according to Cleavland Federal reserve.
The federal funds rates based on the seven simple monetary policy rules use forecasts available as of February 16, 2017.

There is one rule for currency bankers, compute an amortization based on distribution of loans and deposits such that there differences remain a bound wiener process.  There is no realistic model for central banking as we know it, no free entry and exit makes it untenable.

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