Serendipities
Jan. 31st, 2019 05:21 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
timeletsLast Friday, my former student told me to read The Big Short, which I did (the book is much better than the movie). Then, I decided to get a different perspective and read Ray Dalio's PFNBDC – still working through it.
In the meantime, I'm catching up on Deleuze: What is Philosophy and Expressionism in Philosophy (Spinoza).
Along the way comes Vlad's post on Functional Programming. What the hell is FP? Why would people use it, instead of whatever they are using now.
It turns out that one of the key reasons for using FP, according the interwebs, would be no side effects in the resulting software. This is interesting because Deleuze says that science creates functions on the plane of reference. "it is this idea of the function which enables the sciences to reflect and communicate." The article in SEP says that "Functions predict the behavior of constituted systems, laying out their patterns and predicting change based on causal chains."
Separately, Romer talks about codified knowledge as the non-rival input essential to growth through innovation.
We can imagine that all of that alludes to methods for constructing a path through reality without side effects.
Now, let's go back to the financial crisis. It appears that in the financial industry side effects are endemic. Moreover, I get an impression that financial products/innovations, e.g. mortgage bonds, CDOs, etc., are designed with side effects baked in, esp. in shadow banking and private finance (because you want to get around regulations during the growth stage).
The question is: how can we study a financial crisis in the making scientifically?
In the meantime, I'm catching up on Deleuze: What is Philosophy and Expressionism in Philosophy (Spinoza).
Along the way comes Vlad's post on Functional Programming. What the hell is FP? Why would people use it, instead of whatever they are using now.
It turns out that one of the key reasons for using FP, according the interwebs, would be no side effects in the resulting software. This is interesting because Deleuze says that science creates functions on the plane of reference. "it is this idea of the function which enables the sciences to reflect and communicate." The article in SEP says that "Functions predict the behavior of constituted systems, laying out their patterns and predicting change based on causal chains."
Separately, Romer talks about codified knowledge as the non-rival input essential to growth through innovation.
We can imagine that all of that alludes to methods for constructing a path through reality without side effects.
Now, let's go back to the financial crisis. It appears that in the financial industry side effects are endemic. Moreover, I get an impression that financial products/innovations, e.g. mortgage bonds, CDOs, etc., are designed with side effects baked in, esp. in shadow banking and private finance (because you want to get around regulations during the growth stage).
The question is: how can we study a financial crisis in the making scientifically?
Hanlon's razor
Date: 2019-02-01 02:21 am (UTC)A more plausible explanation is that people who invest in those instruments (and possibly people who invent them) simply do not understand them completely.
Everyone knows Ponzi scheme or perpetual motion, but if you hide some of the internals with indirection and big words it might not be apparent.
But don't worry, after the next crisis economists will explain why it happened.
Re: Hanlon's razor
Date: 2019-02-01 03:26 am (UTC)How would you explain the bubble around bitcoin/blockchain?