In my model of the sandbox, the natural rate is:
The nominal flow of coins from borrowers to lenders, in one year. The flow of coins is equal to the price variation of one year depreciated goods. One year goods are what?, 30% of the economy. The yearly, implicit price deflater seems to be about 1.5%, but that deflator is continually revised, meaningis measures price deviation for longer depreciated goods, it is not all one year.
So, the yearly interest payments likely cover about 1% of variation with respect to GDP, and would have that rate flow.
That variation is price risk, as opposed to currency risk, which is unmeasurable.. Pricing is what currency does, but it is a known, bounded risk, generally. Bit error is the accumulated currency risk, different from loan to deposit flow the price risk, or cost of price insurance. It is with respect to price risk that we refer to adiabatic change., meaning businesses and households can afford the pricing insurance without restructuring.
Bit error is entirely different, it will be a chaotic process, almost white noise. If there is structure in the bit error, the bots will hedge it away.
No comments:
Post a Comment