the physics of economics(on the impedance of the medium of money)

[TakeAStepBack]

Go shit in the woods through the winter and re-evaluate how we determine a standard in this regard.

 

[c0resonance]

Go shit in the woods through the winter and re-evaluate how we determine a standard in this regard.

alright lets do this another way.

assume that i accept the premise that we are better off.

if economics is an irrational system, it cannot be responsible for our being better off.
EDIT;
or at least you cannot prove that there is a causal relationship. EVEN IF they seem to correlate.
EDIT;
on further analysis, there is no way to draw correlation between rational and irrational systems. thus they may not correlate. (i believe we stated this earlier)

this is a very simple duality debate now.......

 

[TakeAStepBack]

What is economics? I'm not so sure you know here.

And no one said it IS irrational. I said it can be. You ride hard lines, dude. It's not something that can be put in a physics rule focus. Enjoy though...

 

[c0resonance]

What is economics? I'm not so sure you know here.

And no one said it IS irrational. I said it can be. You ride hard lines, dude.

GOOD! back to the rational stuff then.

Economics - Wikipedia, the free encyclopedia
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek οἰκονομία (oikonomia, "management of a household, administration")

personally i do not assume that economics IS irrational. i was merely pursuing that angle because you supposed that it could be(irrational). you in fact used its irrationality, as an argument against understanding it!

further... in juxtaposing rational and irrational systems you implied duality.

It's not something that can be put in a physics rule focus. Enjoy though...

now you have cycled back to your same argument from earlier.
(on pg2)

It is natural in economics. Economics is the social, or soft science of human action. Praxeology. it is not a defined hard science such as physics. Which essentially makes your entire concept moot. These two things do not correlate.

i have not asked for a physics equation, i have asked how the systems can correlate.

EDIT; rather, i have asked about the mechanisms by which the systems correlate.

 

[c0resonance]

im going to restate the fundamental questions since there has been 3 pages of "run-around" now.

"let me cite my previous example in another way to illustrate "what im getting at".

i spend 1 day laboring. i am offered a choice; either the fruits of my labor, or a symbolic placeholder for said fruit, that could be redeemed for said fruit, at a time of my choosing.
the obvious choice is the fruit of my labor, simple, no conversion required.
but for the sake of this conversation, lets examine how this placeholder would work...

IF i were to accept such a placeholder, i would need to to be convinced that it had the potential to represent accurately the fruits of my labor, store without loss those fruits, and be easily transferred back into them as well.

in order to be convinced of such potentials, i would need their mechanisms explained to me.

it seems strange that this is so theoretical since it is the (purported)basis of labor exchange in the world today. "

 

[expat_panama]

Physics and economics do not correlate...

...physics is the science of reality. if economics wants to exist IN REALITY, it must correlate with physics..

Let's talk reality.

The formulas for calculating stock option values happen to also show up in thermodynamics problems, so what happens is that physics majors are being snapped up by finanical firms. A family member of mine (son-in-law) with a Physics PhD worked in the SF bay area managing a derivatives team.

As for the money/physics cross-over, check out the formulas for calculating cash flow & money velocity.

 

[Uncensored2008]

physics is the science of reality. if economics wants to exist IN REALITY, it must correlate with physics.

That is an irrational statement.

i am actually fairly well read on economic philosophy.

i am not coming here truly for the purpose of learning how these systems work, but for the purpose of illustrating how they do not work.

It appears that you're coming here to bloviate about subjects that you have scant knowledge of.

maybe i will state my premise clearly now;

it is impossible to objectively quantify the value of anything. objectivity is a fallacy.

And?

EDIT;
THUS standardized currency is impossible.

Nonsense. Currency is a medium of exchange. Value is tied to tangible items or ideas, not to currency. Currency has value only insofar as it may be exchanged for tangible items.

my questions are intended to be illustrative of this fundamental problem.

Given your initial misconceptions and obvious lack of basic understanding of economics, it's doubtful that your questions will be very provocative.

that is my aim in asking them.

now if you would like to argue that economics is rational, you must explain how it works in physics.

Physics and economics are entirely separate disciplines. Your absurdity is akin to demanding that oxygen cannot exist since we can't boil it on the stove as you would water. What you claim is nonsensical.

 

[TakeAStepBack]

Physics and economics do not correlate...

...physics is the science of reality. if economics wants to exist IN REALITY, it must correlate with physics..

Let's talk reality.

The formulas for calculating stock option values happen to also show up in thermodynamics problems, so what happens is that physics majors are being snapped up by finanical firms. A family member of mine (son-in-law) with a Physics PhD worked in the SF bay area managing a derivatives team.

As for the money/physics cross-over, check out the formulas for calculating cash flow & money velocity.

Well, that explains a lot of why the world economy is in the toilet.

 

[Uncensored2008]

Well, that explains a lot of why the world economy is in the toilet.

A sharp, analytical mind, coupled with higher math skills could be very valuable to an investment firm. I can see recruiting from Physics, Chemistry, or Math majors.

 

[TakeAStepBack]

Absolutely. Good math skills in the current environment of centrally planned economics can really work out well in stocks and investment. And it is where ALL the money is these days too.

 

[expat_panama]

Well, that explains a lot of why the world economy is in the toilet.

A sharp, analytical mind, coupled with higher math skills could be very valuable to an investment firm. I can see recruiting from Physics, Chemistry, or Math majors.

Seems many people here don't understand how working with money in say, a bank or something, means you have to wash your face and hands, put on clean clothes, and read lots of big thick books with small print and no pictures.

 

[TakeAStepBack]

 

[Uncensored2008]

Absolutely. Good math skills in the current environment of centrally planned economics can really work out well in stocks and investment. And it is where ALL the money is these days too.

Yep.

Cleverly sucking all the wealth out of the population takes a lot of skill.

 

[Uncensored2008]

Seems many people here don't understand how working with money in say, a bank or something, means you have to wash your face and hands, put on clean clothes, and read lots of big thick books with small print and no pictures.

I'm not sure that many $9 an hour tellers have read many books.

 

[TakeAStepBack]

Well, yeah. Just think of how well the VaR formula worked out.

 

[Uncensored2008]

Well, yeah. Just think of how well the VaR formula worked out.

I'm not sure I follow. If Value at Risk has been discredited, I'm not aware of it.

 

[CrusaderFrank]

I was to receive a wire from an investment I recently made in an African diamond mine. It seems the son of the finance Minister ran into a rough patch and needed my assistance to help him regain control of the mine.

When I asked the adviser to the son of the Nigerian Finance Minister, again, about the whereabouts of the wire (representing the return of my initial investment plus 65%), he claims that since the wire itself traveled near the speed of light the mass of the wired currency is now approaching infinity and is beyond the capability of his servers.

 

[c0resonance]

Absolutely. Good math skills in the current environment of centrally planned economics can really work out well in stocks and investment. And it is where ALL the money is these days too.

Yep.

Cleverly sucking all the wealth out of the population takes a lot of skill.

thank you, that will be all.

 

[TakeAStepBack]

Well, yeah. Just think of how well the VaR formula worked out.

I'm not sure I follow. If Value at Risk has been discredited, I'm not aware of it.

Discredited? As in, no longer used? No, it's still used. But even it's proponents are aware of how it makes taking extensive risks easier.


From Wiki (wiki... )

CriticismVaR has been controversial since it moved from trading desks into the public eye in 1994. A famous 1997 debate between Nassim Taleb and Philippe Jorion set out some of the major points of contention. Taleb claimed VaR:[27]

1.Ignored 2,500 years of experience in favor of untested models built by non-traders
2.Was charlatanism because it claimed to estimate the risks of rare events, which is impossible
3.Gave false confidence
4.Would be exploited by traders
More recently David Einhorn and Aaron Brown debated VaR in Global Association of Risk Professionals Review[18][28] Einhorn compared VaR to “an airbag that works all the time, except when you have a car accident.” He further charged that VaR:

1.Led to excessive risk-taking and leverage at financial institutions
2.Focused on the manageable risks near the center of the distribution and ignored the tails
3.Created an incentive to take “excessive but remote risks”
4.Was “potentially catastrophic when its use creates a false sense of security among senior executives and watchdogs.”
New York Times reporter Joe Nocera wrote an extensive piece Risk Mismanagement[29] on January 4, 2009 discussing the role VaR played in the Financial crisis of 2007-2008. After interviewing risk managers (including several of the ones cited above) the article suggests that VaR was very useful to risk experts, but nevertheless exacerbated the crisis by giving false security to bank executives and regulators. A powerful tool for professional risk managers, VaR is portrayed as both easy to misunderstand, and dangerous when misunderstood.

Taleb, in 2009, testified in Congress asking for the banning of VaR on two arguments, the first that "tail risks are non-measurable" scientifically and the second is that for anchoring reasons VaR for leading to higher risk taking'


Even VaR supporters generally agree there are common abuses of VaR:[6][9]

1.Referring to VaR as a "worst-case" or "maximum tolerable" loss. In fact, you expect two or three losses per year that exceed one-day 1% VaR.
2.Making VaR control or VaR reduction the central concern of risk management. It is far more important to worry about what happens when losses exceed VaR.
3.Assuming plausible losses will be less than some multiple, often three, of VaR. The entire point of VaR is that losses can be extremely large, and sometimes impossible to define, once you get beyond the VaR point. To a risk manager, VaR is the level of losses at which you stop trying to guess what will happen next, and start preparing for anything.
4.Reporting a VaR that has not passed a backtest. Regardless of how VaR is computed, it should have produced the correct number of breaks (within sampling error) in the past. A common specific violation of this is to report a VaR based on the unverified assumption that everything follows a multivariate normal distribution.