When central bankers enslave hairdressers

Nick Rowe has an economy of hair dressers who fix each others hair, and a banker bot. He wants to know what happens when banker bot fixes rates forever, and everyone knows.

If the bot sets the rate at 3%, that mans hair dressers will organize such that everyone gets a hair cut about every 28 times that haircuts ate given. The rate gives you yield, the extra good you produce after your unique set of transactions are finished, or how often a transaction can be repeated without being grouped with a duplicate transaction again.  It appears indeterminant to Professor Samuelson because he assumes the ability to keep fractional girl schoolgirls hairdresser on the side, as needed, to avoid bit error.  There is no 'on the side', no empty space.  Time is an output, time is set by the relative time on the graph that the pit boss gets, his transaction rate ticks the clock.

If hairdressers had a compulsive desire to get their hairdressed at different rates than mandated by the central baker, they will form segmented queues, and go queue jumping.  28 hairdressers will march along for half a block, then split up and reform different groups of 28.  Each group meeting the conditions set by the central banker, but cycles on the graph go way up.  Since there ate no fractionl hairdressers,n the parade is a  wonder of switch and regroup, like a fantastic marching band at half time.

But we have that now, nominal rates differ from natural. The result circular loops over in  Swamp, money takes redundant paths as each path segments is adapted to meet the nominal interest rate while reserving the natural.  In other words, the banking system is forced to emulate floating point out of integer arithmetic, and it does.  This model differs from New Kenyesian because the entropy model  counts the cost of the clock, the cost keeping the hairdressors organized. The central bank fixes the precision of the bidirectuonal channel. The hairdressers organize to get their haircuts at the natural rate while keep the bank queuer equal to precision.  They get the same number of haircuts, they just move their hairdressers shops around so the consumer density matches then yield requirements.

They do strange in the Swamp

Evidently neither Obama nor Hillary nor Lynch nor Holder nor Sotomayor have any concept of legal stability.  They will fall apart back there, and we are going to get more mass migrations out here.

Ms. Lynch’s abdication began when she and her prosecutors declined to empanel a grand jury. It continued in June after her supposedly coincidental rendezvous with Bill Clinton on a Phoenix airport tarmac. She could have told Hillary Clinton’s husband that the appointment was inappropriate, or refused to let him board her plane. She says the conversation was “social,” but she allowed the ex-President to create the appearance of a conflict of interest.

“The fact that the meeting that I had is now casting a shadow over how people are going to view that work is something that I take seriously, and deeply and painfully,” Ms. Lynch conceded at an Aspen forum in July. The Clinton campaign compounded the problem by gossiping to the press that Mrs. Clinton would keep Ms. Lynch on as AG if she wins.

Ms. Lynch also abandoned her post when Mr. Comey staged his July media event dissecting the evidence in the Clinton email case and exonerating the Democratic nominee. The FBI’s job is to build a case, not make prosecutorial decisions. Yet Ms. Lynch later told Congress that rather than make up her own mind on the evidence she would merely “accept the recommendation of that team” at the FBI “and there was no basis not to accept it.”

***

Meanwhile, the Journal’s Devlin Barrett broke the news Sunday that senior Justice officials and FBI officials disagreed over how aggressively to pursue the Clinton Foundation for financial fraud and influence peddling.

FBI field agents—in New York, Los Angeles, Washington and Little Rock, Arkansas—wanted to pursue subpoenas and empanel a grand jury. Senior officials at Justice, likely political appointees, refused to give the FBI agents permission. But the agents continued to investigate under their current authorities, even after Justice denied their request to read the Clinton-related emails that the national-security team had uncovered.

In August a “very pissed off” Justice official dressed down Andrew McCabe, the bureau’s second-in-command who oversaw the Clinton email investigation, for looking at the Clinton Foundation in an election year. According to the Journal story, Mr. McCabe replied, “Are you telling me that I need to shut down a validly predicated investigation?” The official said no, but the message down the FBI chain of command was to “stand down.”

This follows Mr. Barrett’s previous scoop that Mr. McCabe’s wife received $675,000 in campaign donations from Clinton comrade Terry McAuliffe for a Virginia legislature race. The FBI says there was no actual conflict of interest because Mr. McCabe detached himself from his wife’s campaign, but the appearance of a conflict is egregious. Mr. McCabe should have been removed from the FBI probe.

Democrats and their media allies are now in attack-and-deflect mode, assailing the FBI agents on the Clinton cases as “conservative.” But considering that the Journal story is the first public confirmation in the heat of election season that the Clinton Foundation is under investigation, the agents were handling the matter professionally and discreetly despite Washington interference.

Securing web commerce under the current systrm

There is an implied  " Send a letter to Janet' under current circumstances.  If each transaction is secured by the bank, then Walmart has no business even unpacking the credit card number.  The customer submits an encrypted price bid, with credit card info.  Walmart just ships that package, unopened, to the bank, and the bank OKs the purchase.  The bank does the decrypting, Walmart never sees the actual credit card info.  Thus, for the customer it is a one shot transaction, here is the simulated coin, send me the good.

There is no reason, even under current circumstances for any retailer to hold any personal information about us, and we should refuse to give it as it almost gets hacked and spread around by some bozo corporate executive.. Tell your bank to refuse payment if some vendor has an unencrypted version of your personal stuff, write it into the credit card clause.


\Let us solve today's  line theft problem

import tradingpit as Pit
Pit.boss = CommerceFixedPrice
Pit.coin = EncryptedCredit
Pit.run_the_queues()

Now this pit boss comes with self verification, it will check sum the code for external test,but will encrypt it internally with an unknown, generated  key, protected by the interpreter.

The handling of the credit card will be clear in the code, a direct pass through to the bank from the closed list of selected banks. We make encrypted credit a special coin.

I will get to work on this, but I have five or six pit boss codes and coins in mind and would be better  served to get an entire industry working on this. How big an industry? Ethereum has some 85,000 pros that have run though their meetup series, they are on this path. Given their battle scars, they have the know how. They need smart card and trading pit, they, alone, can force these issues.

I have to emphasis the smart card cash transaction

It is an enforcement, an assumption, the protocol be a basic:

Peer 1: Here are digits X for fulfillment Y
Peer 2: Thanks
----
I modeled it after the cash transaction at Walmart.  It goes like this:
Customer: Here is wad of sweaty cash,
Clerk: OK, your thing is in the bag.

It is essential because of the necessity of an atomic transaction on the graph,.  Any protocol more complex, the hackers will have a consistent entropy shortage to exploit.  They can cooperate, and cut insider transactions on the graph in search of better bid/ask.

Bidding,between two bots are simply countable compounds of the above.

What happens when the rule says:
Each participant must send a letter to Janet.

The hackers time the response  for Janet.  The assume a locally smooth surface betwern time and  couns on the graph.  So, they know how many insider trades they can store within the graph, before writing a letter to Janet.

We don;t want this:

Real trading pits work the same way

Initilly onr assume a hoticmob of individuals.  Thenyhe pit boss starts dropping  bid and ask singletons intothe cener.  Well, individuals in the mob begn quantizing locally, Its the cost of stepping aound to find amatchin singleyon and compele the trnansaction.  Some member get a stock for the Aardvark perservation society.  He hands it back to the 'cener' The guy who grabs it, and the one who got it look at each other and say, hey let's trade places, you step back and handle aardvarks, I step forward and handle AT&T, and total steps are reduced, each charges by the cycle count anyway.  They are working the localred/green, and defining he pit center.  Ultimately aardvarks and bohemian jazz club dealers end up way in the back of the pit, working rare trades.

So the real pit, the actual humans walking about, self organize using these local bubble sorts, exactly like a Huffman encoder. We should not be surprised. Hear me Winnie Cooper, one of my favorites? The lattice and the spinners co-adapt. Combinatorics.

Grab all stock identifiers

Takes a string, extracts the symbols having alpha chars only.   Grab them, sort the list, count common symbols, all sort of stuff.  But just generate arbitrary symbols to tag with bids. and Test a  pit boss that sort by  probability of stock identifier.


class Data:
  def __init__(self, text):
   self.val = text
   self.prob = 0.0
  def __repr__(self):
   return repr((self.val, self.prob))

def just_symbols(text) :
 end = 0
 size=len(text) 
 while True :   
  start = end
  print(end,start,text[start]) 
  while not text[start].isalpha() :
   start+=1
   if start == size-1 : break 
  end = start
  while text[end].isalpha() :
   end +=1
   if end == size-1 : break
  if end <= start : break
  mylist.append(Data(text[start:end-1]))

How do I run a test?  Well, just casually messing with the nest block code, I an see yhis:

import tradingpit as Pit
G = Pit.Garray(init)
sets = node() # make an anchor node just below the top (+=1 in the array).
for obj in mylist
 node().itext = obj.text

OK, that is is, my semi radom set of words end up as singletons, at the bottom of the pit.  I can sort them, then I have them grouped, I can identify them and have the groups prepended to the node sets'.  I am two jumps down from handles for  an ordered set of bid/ask according to stock identifier.    But once on the grah, my pit boss is restricted to descents o  the graph, like any other bot.  Buts it graph operator can easily step through the singletons, find start and end of a group, create its anchor, and prepend the singletons.  The anchored groups just are a subdivision of the second node, sets.  All the block  counts maintained with a simple drop through, skipping through an updating counts.  But that process is greatly reduced because as the operators build structure, and trhe maximum number of steps to any bid/ask is equal to your bit precision, at fixed point.  Your traversals are optimally bounded.  Talk to the math folks, they get this.


What kind of trader bots will visit his site?
The common trade is, bid this price, for this stock, find mybuyer three layers deep, and take a prie within ten percent. It will be commonly known are a IIDStock tree works.  The hedge folks will have sophisticated bots, trying to beat the traders and pit boss on bit error.  But these hedge bots pay a price for excess time on the graph, and suffer n uncertainty regarding timeout.  It is, ultimately a fair game.  And, even if I sit here and casually try out chunks of code, I am gonna get real close and have trading pit just as smart card dominates, I will be richer than Bill Gates.

A note on trader bots

They can spawn and dump children onto the top of the tree, with plots to meet them on the way down.  All acceptable, all verifiable, the pit boss does it all he time.  But, subject to cycle and time out risk.

A note on code verification

My pit boss will use in place sort. A legal move, for ythe pit boss. And, it is entirely possible to grant space on the tree so the traders can do sort.  These key function calls, embedded in python will all be characterized and verified.  That is, regardless of how the sort is done,the precision of the sort mostly goes with cycles on the graph  the red/green is maintained, and it is a bounded descent; hence verifiable.

let's look at sort from the hackers point of view.  The python person claims the precision of sort rises as cycle count.  It ets deployed.  Then some Russian hacker, sitting around all winter, starts tesying sort, and finds a ga]p when one does a compound sort by two then three elements.  That means the trader can deploy a trader bots that hunt down two groups of three, in the bid pol, where the cycle cost is cheap for sort;  it only sort on these, it gets a precision jump.  .  Then the pit boss is stuck with the bots,constantly pooling up, waiting for some spot.  The tree gets noise, gets jammed.,

The issue with the Hedge Fund Pit Boss

 hedge fund loads the trading pit, sets it up for client buy and sell, populates the path with selected stocks.  The job of the hedge fund is to find innovations, and monetize them before the collective banker bot.  The Hedge funds client cards will always be at least slightly red.  Currency banker runs at neutral yellow, the hedge fund has to have more risk.  Since it is looking for innovations, not yet happened, the standard mutual entropy value will not be here when matching portfolio sequences, the cards will give of red.

Client are in the hedge fund because they, and the hedge fund, think they know something the bots do not, it may be.  Snookering the currency bot is the main game.  But, the system, if working, will have a hard time giving up a 'verify' when looking at the hedge pit boss source.  The lack of coherency testing before path jumping should stand out.  Clients know this, they went to secret meetings, so it is ok to run their cards in the red with partially verified code..

Sounds like a stable fixed point to me

Jared Bernsein spouting the usual Magic Walrus assumptions. "Assuming everyone agree to make my left and right equations agree"

The government distribution is skewed, Jared, by law.  California has a different Magic Walrus, our Magic Walrus is protected by law, as is the Texas and Mexican Magic Walruses.  You got a unique Magic Walrus back there in the Swamp, fine, but it is not our Magic Walrus.  You wany all our Magic Walruses to coordinate? Do this:

import tradingpit as Pit
Pit.boss = MagicWalrus
Pit.coin = USTaxDollar
Pit.run_the_queues()

And create a Pit boss that can trade various government programs, be sure to price time o the graph, and organize according to program cost.  The state government will organize sonthat their program deals are significant, and appear over a short path.  Make the path cost very close to tax cost.  Get it?

Jared: For years, macroeconomists thought — many still do — that fiscal policy is ineffective: The lags are too long, the process is too corrupt, there are no multipliers to speak of. I don’t deny the process is screwed up, but that’s a self-fulfilling prophecy of sending politicians to D.C. who argue that government is broken and promise to keep it that way.

How to make a hedge fund from the trading pit

import tradinpit as Pity
Pit.boss = MyHedgeBoss
Pit.boss.contract = StandardHedge

Mypitboss sorts the nid and request according to the most frequent hedge opportunities, according to the objective function in MyHedgBoss, which I presume, the fund bidders and sellers know about. Time on the graph cost you an arm and a leg.

The Hedge Pit Boss is likely buying a pool of stocks according to its rule.  Its clients buy and sell them according to how well hedged they are, (Red/Green light).

Configuring Trading Pit for a standard stock market

What is it?

import tradingpit as Pit
Pit.boss = IIDStocks
while true run_the_queue()

That means the pit boss is going to  sort the ask and bids as identically distributed symbol set, keying on stock name. More frequently traded stocks have the shortest path.

Contrast this with the WalMart pit boss.  The Walmart pit boss works just like the one in the store, customers sorted by the number of items in the basket so the checkout counters are balanced by goods transacted.

import tradinpit as Pit
Pit.boss = FixedPrice
while true run_the_queue()
See, it is all a contract affirmed by the pit boss.  For example, the CEO of Walmart wants the Walmart coin:

import tradingpit as Pit
Pit.boss = StandardS&L
Pit.coin = WalmatCoin
while true run_the_queue()

Then the CEO taps the side of his PC with his smart card.  At that moment, be assured, 6 billion smarty card owners will hold the appropriate number of Walmart coins.

What about Walmart back end inventory control? Simple, every purchasing and selling department head has as smart card, with the standard Walmart Red/Green setting.  Department head competitively buy and sell inventory, as their function requires..  Walmart corporate buys 20-30 Trading Pits boxes, from me, for an exorbitant price.  Put them into a closet, connect them to the fiber.

How well will online and store sales mix?

Once Walmart customers have smart cards, and Walmat has my Trading boxes, then the two are optimally mixed, as if they are indistinguishable.  The maximum entropy trading system simply minimizes then number of hops necessary to move some good around.  It assumes the cost of the UPS guy, the housewife, the grocery store box boy, the Walmart stocking clerk; all of these hops are locally optimum selection.  That means, any  queue jumping would cause the smart card to glow redder than it already is.