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Tuesday, December 29, 2009

An Economic "Spin Network" (PODCAST)

"Reading is to the mind what exercise is to the body." - Joseph Addison


So what's the "real" problem in economics?

Is it that everyone needs to be on the gold standard? Is it the fault of fiat currency? Is it interventionist policies? Is it Keynesian Central Banks and Governments? Is it the single reserve currency of the U.S. Dollar? Is it the OTC markets?

Well, I'd never say that I have the solution, or that I have found the problem. But I outline in the following podcast at least one problem that I rarely, if ever, have seen addressed ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)

Click here to Download this Podcast.

It is also important to note, that the concepts that I am discussing in the above podcast go beyond a simple delta variable in quantitative risk modeling. I'm talking about an actual complexity fractal (I really need to brush up on my complexity mathematics) that changes the interactions between different economies, and loops back and changes the original state.

So all of the above is to say ... that I think the complexity problem in and of itself? That's the problem! Economics is treated as "deterministic in it's ability to predict results" in some circles, and especially when determining risk. Traders are most guilty of this. And it's not deterministic. It's not.

People still use Copula Gaussian distribution's to model economic risk for pities sake! Systems as complex as economic systems, are not linear, they are not deterministic! Systems as complex an economic systems are non-linear.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have over 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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