Thursday, September 24, 2009

Future Money

Some vague speculation: See the eCash revolution emerging. When moneytransfer via mobile becomes ubiquitous in a not so far future, everyone with fair webprogramming skills could start a bank. Even issuing your own currency seems easy, remember only the linden dollar.
Already several offline experiments with alternative money have been made, one of them is the postwar Freigeld experiment of Wörgl. But this is oviously the monopoly of the state by now. The central banks own the monopoly, and the state gets veeery angry if you don't comply. In Wörgl the government sent the army to force the city council to give up their currency. Will eCash be illegalized by EU or the European countries? Will there be "black money"?
New currencies ultimately lead also to more instability in economics. Stability would be gained through differentiation of the money but expect new currencies to boom to bust and to fail. The internet is fast and spenders could leave a currency within blinks, devaluating the e-currency in a relentless fraction of time.

Sunday, September 20, 2009

A Wiki Wolfram Alpha

The Encyclopedia of everything computable which W|A is, would gain much momentum if a wiki model could be established for it. There is so much that needs to be calculated in this world, total cost of ownership of a car in Italy anyone?
For this we would need an Excel like interface. Excel is the most widespread tool for calculating stuff. If you want to crowdsource algorithm writing, you need to enable the skilled spreadsheet workforce to use your tool.
We would also need to establish tests to prove the algorithm. Automated regression tests to track erroneous modifications and exploration of the solution space. A qualitative peer review is indispensable, though.

Saturday, September 19, 2009

The Use of Knowledge in Society

Hayeks Article shows how the price system works as proxy for local available information, thus reducing complexity in enterpreneurial decision problems. Interesting footnote: Jim Wales names this paper as fundamental for his organisation of Wikipedia.
As Alfred Whitehead has said in another connection, "It is a profoundly erroneous truism, repeated by all copy-books and by eminent people when they are making speeches, that we should cultivate the habit of thinking what we are doing. The precise opposite is the case. Civilization advances by extending the number of important operations which we can perform without thinking about them.." This is of profound significance in the social field. We make constant use of formulas, symbols, and rules whose meaning we do not understand and through the use of which we avail ourselves of the assistance of knowledge which individually we do not possess. We have developed these practices and institutions by building upon habits and institutions which have proved successful in their own sphere and which have in turn become the foundation of the civilization we have built up.
http://web.missouri.edu/~podgurskym/Econ_4970/readings/The%20Use%20of%20Knowledge%20in%20Society.pdf

Wednesday, September 9, 2009

Value at Risk is the perpetrator

My friend Nassim Taleb has been invited as expert witness by the Committee. That's a wise choice. Taleb has not only been a real derivatives trader for decades, but crucially has been warning about VaR's potential for destruction for at least 15 years.
http://www.huffingtonpost.com/pablo-triana/obama-should-stop-by-tale_b_278516.html

Friday, September 4, 2009

Tuesday, September 1, 2009

Pensiero Geek des Tages

Da sich die Koerpergroesse von Erwachsenen normalverteilt und sich die Normalverteilung als Summierung unabhaengiger gleicher Zufallsexperimenente beschreiben laesst: ist dann der dahinterliegende Mechanismus eben ein solches Generat? Wenn einem da nur nicht der Zentrale Grenzwertsatz einen Strich durch die Rechnung macht... Kapiert?