The CBO is already off by 20%, a mere one month after publishing

Here we have the CBO 20 year projection. Below we have the actual amount a month past the dotted line called actual. The one below has already risen about one percent faster than the CBO predicts. I compound that over the 20 years and, the CBO is 20% off, already, on its 20 year timeline. In other words, economists who use this as a predictor are simply statistical frauds.

 
Why does the CBO do this? They are required by law to assume variation is linear with Congressional elections. Congress gets elected precisely on two year intervals, with no variation in election days. So Congress counts by base one, 1,1,1,1... one number for each election.  Since Congress has no method to correct itself with aperiodicity, then Congress wants linearity in variation.  They certainly do not want the CBO intimating some symmetrical uncertainty in decisions since each Congress member has no choice but to sit out his or her term until the next fixed election day.

The central banker, on the other hand, is expected to make at least moves, up and down, over its adjustment period.  The Fed will make counter moves to offset some prior change in rates.  They have two degrees of freedom, one more than Congress, and we can expect variation in rates to be square symmetric, a Bell shaped variation.

This is the type of analysis we want mathematicians to use when modelling the economy. Find out what the degrees of freedom would be, then break the aggregate variation into a recursive polynomial based on exponents being the degrees of freedom. California and Texas governments triangulate, three degrees of freedom. The system, in total, I would think, computes to a multiple Poisson distributions, the queue sizes being the degrees of freedom.

Mark Thoma has a pointer.

Stationary processes - The Leisure of the Theory Class

The author has a paper coming up in which the subject is stationary processes when order can be exchanged.  This is where we want to go.  The entity managing a Poisson queue can exchange order among the queue members, this is an agent re-ordering the delivery schedule from inventory. It is the way in which spectrum is shaped, the method by which Jerry Brown or Apple can alter the variation to keep the degrees of freedom it has, or expand them.

The abstract from Nabil Al-Najjar, Eran Shmaya:

A Bayesian agent learns about the structure of a stationary process from observing past outcomes. We prove that his predictions about the near future become approximately those he would have made if he knew the long run empirical frequencies of the process. 

This is Stiglitz, screening. Jason Smith, information passing, Kling, PSST; the new economics. And it is the theory of counting, from the vacuum to the quasar.   We are almost here, do not give up, this is all great stuff.

The secessionist plots become entangled!

BNews: Monday, Texas Gov. Rick Perry (R) announced he is deploying 1,000 Texas National Guard to the U.S. border with Mexico, saying he can not idly sit by while "our citizens are under siege."

Trying to sort this out.  First, there was the declaration from Pelosi that the border was null and void, and California was joining with Central America.  Obama seemed to agree. Then there is the coalition idea of breaking up California and rejoining the union from Tim Draper, now on the ballot.  Obama seemed to indicate there was some merit in democracy.  Now we have Texas defying the pro-union, anti-unions forces within Obama's head, and deploying forces against the Nancy Pelosi and Pacific America. Independent militia's seem split. A third want California kicked out of the union, a third want them forced in, and another third want California to voluntarily leave the union.

The middle ground states, New Mexico and Arizona:

AZ Central: In rapid fashion, the ongoing crisis on the border involving tens of thousands of unaccompanied children from Central America has injected uncertainty and chaos into U.S. and Arizona politics. It has split immigration-reform supporters and reinvigorated border-security hawks in advance of this year's congressional midterm and gubernatorial elections, and it has complicated efforts by President Barack Obama and Congress to respond to the emergency in a serious way.

New Mexico: 

 New Mexico Gov. Susana Martinez said Saturday that hundreds of detained immigrants represent the humanitarian consequence of false beliefs that anyone can stay in the U.S.
Martinez made the remarks after touring a temporary detention facility in Artesia, the Roswell Daily Record reported. She was joined by federal and state officials at the barracks of the Federal Law Enforcement Training Center.
"This is no place for young mothers and babies. One is just 11 months old," Martinez said.

Arizona split between pro union and anti union; New Mexico definitely going pro-union, so far.
So, we have Tim Draper vs Nancy Pelosi vs Rick Perry in a Mexican stand-off. Place your bets.

The basic assumption of the Taylor Rule

Mainly central bankers are dumber than horse shit.  The Taylor rule is all about the central bankers repairing a stupidity that they performed in the past.  The basic idea is that prices instability is caused by central bankers.

Normally, when prices rise, in a stable economy, then shortages have arrived. In that case the central banker would lower rates, the sign would be reversed in the coefficient on inflation.

But the Taylor rule reverses the sign using the Milt Friedman axiom that bankers are idiots, they discover errors they have made in the past.  Miilt was right, actually, as Milt himself represents four generations of economists who have no idea how pricing works. Milt called the economic theory of pricing the 'puzzle'. Keynes called it the 'animal spirit'.  Brad DeLong came right out and admitted that current pricing theory was 'clueless'.

Obamacare whoops

WSJ: Last week's burst of world disorder was ideal for a news dump, and the White House didn't disappoint: On no legal basis, all 4.5 million residents of the five U.S. territories were quietly released from ObamaCare. Where does everybody else apply?
The original House and Senate bills that became the Affordable Care Act included funding for insurance exchanges in these territories, as President Obama promised when as a Senator he campaigned in Puerto Rico, the Virgin Islands and other 2008 Democratic primaries. But the $14.5... HT ZeroHedge, of course.

Cause?

Insurers were exiting the business, health regulations too expensive!  The complaint, naturally, is why can't US citizens get the same release.  The answer will be much lower rating for the Democratic Party, just in time for the elections. 

Nancy Pelosi somehow went to stupid school, she arranges the migration crisis and Obamacare booboos to all fall right during election time. 

Flat or curved data fitting?

Dave Beckworth shows us the real interest rate in the black line. Is that line curving down since 1981?

He seems to be drawing his flat line through the mid point of the interest rate cycles, starting in 1981, but it fails to follow that path. Why not include 1961 to 1981? Because US government debt began increasing substantially in 1980. And I use 1980 as the point at which sun belt migration began effecting economic dynamics, but I could be wrong. But the curve I would put in this graph is concave down. But yearly real rates have gone below zero.

How does this economy work then?  Dunno!

Chasing yield in the subprime car loan business

Interest rates can go as high as 19% I hera. NY Times reports.

Despite such warnings, the volume of total subprime auto loans increased roughly 15 percent, to $145.6 billion, in the first three months of this year from a year earlier, according to Experian, a credit rating firm.

HT ZeroHedge, as always.

A web bot is picking terms from my pathetic blog

I sit around the house, musing on the basic constituents of the vacuum. I know that simple sphere packing is not the whole answer, increasingly complext degrees of freedom are removing spectral moments from the vacuum as it covers empty space.

So I think to myself, "Self, let's look up prime geodesics". And sure enough the web bot has got a whole section on that in Wiki, work done by brilliant mathematicians, much smarter than I. It has to be a web bot, it cannot be me.

Now, after criticizi8ng the idea of a multi-pointed structural vacuum entity, I am forced to consider it.

The fake 'time' variable and economics

The great quantum mechanical discoveries of modern physics was all about recognizing that the sample rate of light is a narrow but finite spectrum, not a dirac delta. Most of quantum mechanics is about sub atomic particles uncovering the ultimate spectrum of light and converting that spectra into degrees of freedom, balancing bandwidth among the possible motions. Economists have yet to begin this process.

Just like engineers, economists are stuck with customers who work in infinitely narrow bandwidths, called 'time'. Seasonal adjustments and periodic elections. Hence they are hopelessly stuck. They should take a hint from quantum physics. The entire issue of economics is how many queues (degrees of freedom) and how many events are pending in each queue. Take for instance inflation, economists always look for price changes over time (and so do I often). But the real issue is how large the price change per transaction. M2 Velocity is down, has been dropping, and recently accelerated its decline. There are not many queues and the queues we have are not well populated. Go back to your Poisson distribution and look at queue length vs the number of combinations that the economy is not executing. Fewer transactions pending in the queue, more things in the economy not being done. The economy is losing energy, and getting colder. It is equilibriating to a lower temperature.

The Efimov state, for example: 
 It is derived assuming the engineering approximations, for convenience. The resulting spectrum will show asymmetry. But quantum physicists know the resulting quants that support triangular configurations result from the residual asymmetry in the spectra of sample rates, after symmetry has been removed for spin.

The Poisson higher moments

Stirling numbers of the second kind

These give you the finite log map when the input, output chyoices are greater than two, and they appear in the higher moments of the Poisson.

In mathematics, particularly in combinatorics, a Stirling number of the second kind (or Stirling partition number) is the number of ways to partition a set of n objects into k non-empty subsets and is denoted by or .^[1] Stirling numbers of the second kind occur in the field of mathematics called combinatorics and the study of partitions.

In other words, Shannon says you have one or two items in the queue, that makes symmetric entropy. But that not need be true all the time.  In fact, there is a generalized sampling theorem out there somewhere, if I looked.
But these numbers appear in the higher moments of the Poisson:

Lamda is really the transaction rate for the aggregate in a maximum entropy structure. In economics we are interested in the second and third moment, symmetry and skew. It is perfectly reasonable for organizations to keep three elements in the queue, and allow a cubic entropy function.  Three elements in the queue means the queue gain goes as lambda to the cubed power, and the number of sets any node in the map has is the sum of the Stirling numbers up to three. The node in the flow has a three gate distribution output. The entropy in this case is a third order, likely all we need for economics. And it is easy for some genius, like Jerry Brown, to go and fit his moment in there, between New York and Texas; he'd be damn good at triangulation.

Light is not a symmetric bandwidth

I don't see how we get stable quarks if light spectrum, the third moment in the spectrum of light as a sample rate, were zero.  The existence of anti-proton depends on light having a symmetrical spectrum, but these anti-particles are not too stable in the curvature around these parts.

I got bugged about this because I was working on economics from the Poisson distribution, understanding variance and skew. I do not think Shannon information theory is the last word on maximum entropy, his theory depends on symmetrical noise, and like I say, that needs to be generalized to arbitrary polynomial noise, at least up to the third degree.  We know base three is very efficient, there is no loss of information when the organization can choose the from of its own entropy function, as long as it has a finite log decoder that maps to the entropy function.

Regarding physics, we do not know enough about the constituents of the vacuum to say, for certain, that the light spectra is not skewed. Its not clear to me, nor am I working the problem, that a three sphere optimum packer has symmetrical decay times for any transition between spheres and the Higgs Nulls. But I doubt it. I think optimum packing spheres go as a specific radius rqtio, and that means their volumetric decay time, or energy holding time, is skewed between them; and that makes light asymmetrical in its spectrum, and that makes quarks. And given the astounding accuracy of light, I would not be surprised to find a fourth moment in its spectra. There must have been some very accurate positioning to get carbon, nitrogen, oxygen and the rest, and that accuracy is likely in those W and Z bosons, the weak electric.
Its time to ask the ugly question, "What is that empty space between the bubbles?" This theory only proposes three quants in the vacuum, one inert, two different and active. Otherwise it has conservation of quant numbers. Beyond that, all it does is match exponents to known physical constants, and all the know physical constants are about spheres, up to the quarks. At that point I sort of hand waved a root three Efimov like base in the spread sheet and notice it made quark spots appear, then left it. But that root three base was not a Lagrange.