Skip to content

(P&I) The Process & Economics

March 31, 2014
Energy, Mass and EntropyThe Entropy Increases But Mass And Energy Are Conserved

Energy, Mass and Entropy
The Entropy Increases But Mass And Energy Are Conserved

Essay. The Process is an inescapable fact of not only economics but the world that we live in and if whatever we’re doing relies on counting and a conservation law then The Process is a boundary condition and it needs to be explained.

But all that we have is “counting” because nothing exists outside of the rational numbers and the real numbers are a creation of mathematics laboriously articulated as the “Dedekind Cuts” (1859) which fill in the holes, so to speak, and the “conservation law” is mathematics itself which is the “conservator” of such a construction and assures its consistency even though said “consistency” cannot itself be proven (Gödel 1933).

And we need to be careful because just one mistake could bring it all down.

Economics

How economics fills in the holes.

Thus the reason that economics is such a failure in describing the “economics” that we practice is that the economists seldom (charitably as opposed to never) bother to “fill in the holes” and as a result we have an economics which they practice and which they profess and for which we pay them but which doesn’t work and doesn’t mean anything but is words with no provable meaning.

For example, all of mathematics is built on the demonstration that 0≠1 but any trickster can show us that 0=1 by arguing as follows: if a=0 then obviously a×0=0 and 0=a×1 and hence, a×0 = a×1 and cancelling or dividing by a on both sides, 0=1 QED.

Goldbach Conjecture

Goldbach Conjecture 1742

And having established that fact, economists who are the consultants to governments and policy-makers then go further and say, well, isn’t it obvious that every even number is the sum of two prime numbers? There are no exceptions that we know of and none with probability one, they say QED.

However, we should not expect a change in economics until the economists do; in the meantime, we can rely on them for statistics but not their conclusions – with probability one we say.

For more applications of these concepts please see our Posts which rely on a Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the societal norms of risk aversion and bargaining practice.

And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

 

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: