Friday, Oct 24, 2008
The most serious situation we've been in since the American Revolution?
PBS: Top Theorists Examine Rippling Economic Turbulence
PAUL SOLMAN: We sat down with Taleb and the man he calls his mentor, mathematician Benoit Mandelbrot, pioneer of fractal geometry and chaos theory. And even more than feeling vindicated, they're both scared.
NASSIM NICHOLAS TALEB: I don't know if we're entering the most difficult period since -- not since the Great Depression, since the American Revolution.
PAUL SOLMAN: The most serious situation we've been in since the American Revolution?
NASSIM NICHOLAS TALEB: Yes.
PAUL SOLMAN: Professor Mandelbrot, can that possibly be true?
BENOIT MANDELBROT, Mathematician: It's very serious.
PAUL SOLMAN: More serious than the Great Depression, possibly?
BENOIT MANDELBROT: Possibly. I hope not.
I think that we may be experiencing something that is vastly worse
22 Comments
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1. planning4acrash said...
Read the book: Chaos, to understand the nature of turbulence. But to understand this economic system, listen to the audio books on the media section of mises.org - to understand the politics, listen to Allan Watt's podcasts on cuttingthroughthematrix.com
2. planning4acrash said...
Chaos theory is correct, profound and can be used to understand ALL physical systems, but it must be applied to the specific parts and relationships of a system to understand that system. This is why Mandelbrot, with his abstract knowledge is confused.
3. planning4acrash said...
author of Chaos is James Gleick. Chaos theorists are some of the top creative, scientific brains ever. Literally all of the relationships that form physical reality conform to principles within chaos theory. Life thrives on boundary between order & chaos.
4. sold 2 rent 1 said...
We are currently wrapping up many cycles
18 year hpc cycle
70 year k-cycle
250 year industrial revolution cycle
5,000 year written word cycle
100,000 spoken world cycle
blah blah blah
In short we are heading into the singularity and WE AINT SEEN NOTHING YET.
5. planning4acrash said...
I'm not convinced about the cycles theory. Will give a description of chaos tonight. Not enough space on the text.
6. malct said...
s2r1 - oneness
7. last_days_of_disco said...
Chaos theory is complex and diffuse and a lot of people make out its some black art.
That does not mean it isn't useful and understandable by mere mortals. The main basics
of chaos and nonlinear dynamics are:
1. Apparently random behaviour can be created by a deterministic system (this is an
unexpected result but sensible result, if you think a bit about your everyday experience).
2. A very small change can result in completely different sequence of events, this really
is restating the first thing in a different way.
It occurs in systems that are globally stable but locally unstable.
Spent 3 years at University studying this. I believe you don't understand something till you can
explain it to normal folks.
8. last_days_of_disco said...
They are right, we have been too blaze about the basics. Food security, fuel security, national security, energy security, etc, etc.
Now the system is fragile and its going to break apart and the herd mentality is going to be like literally watching lemmings go off a cliff.
Very sad.
9. sold 2 rent 1 said...
malct,
"s2r1 - oneness"
Indeed.
Looking forward to it.
10. sold 2 rent 1 said...
last_days_of_disco,
"It occurs in systems that are globally stable but locally unstable."
This is exactly Calleman's model
Global consciousness is following an exact preset path, whilst individual and group consciousness just appear random with no patterns
Armstrong's PI cycle is similar. Individual economies appear chaotic but globally the world economy has preset patterns that it follows.
P4AC, you made the connection between Calleman and chaos theory, now you disconnect them. Why?
11. sold 2 rent 1 said...
If you want to understand the world as a system then you need to investigate four key components.
1.Cycles
2.Fractal patterns
3.Exponential functions
4.Chaos theory
Most authors try and model the world with only one of these components, and a very few authors such as Martin Armstrong will include 2 components (cycles and fractal patterns). These authors will limit their research to a few hundred or a few thousand years
But Calleman's evolutionary model includes ALL four components and covers a timeline that goes back as far as the Big Bang.
Dismiss Calleman's model at your peril.
12. planning4acrash said...
Chaos plays out in real or theoretical models. I now think that the Mayan Calendar is being used as a predictive programming tool to make planned changes appear inevitable, for us to capitulate. This whole crisis is contrived and we must fight it.
13. mountain goat said...
great post Malct
14. sold 2 rent 1 said...
P4AC,
"Chaos plays out in real or theoretical models. I now think that the Mayan Calendar is being used as a predictive programming tool to make planned changes appear inevitable, for us to capitulate. This whole crisis is contrived and we must fight it."
This whole crisis is contrived, YES, but how can Calleman's Mayan Calendar (not the 21 Dec 2012 rubbish) make planned changes appear inevitable when nobody has heard of him and those who have think he is nuts. He is ridiculed in the 2012 community
Come on P4AC, you have not thought this through.
You need to step away from Alex Jones. Can't you see his growing support is leading people away from the ultimate truth. 9/11 is there to be a distraction for people reaching global enlightenment. He is ultimately breading fear and panic which is our biggest obstacle.
Watch "Esoteric Agenda" on Google Video - last 20 minutes.
15. Still-waiting said...
nutters
16. last_days_of_disco said...
I was thinking of things like:
1. Water droplets running down your windscreen in a rain storm.
2. Pushing on the two ends of a ruler until it bends (which way will it bend?
Do that with a certain frequency and you have a chaotic solution -- its called
the buckling beam problem and is described by Duffing's equation)
Just because your model incudes these things doesn't mean it is going to be right and
the biggest thing to take away from chaos, is its impossible to predict the outcome other
than on a very short time frame. Because in the real world new disturbances enter the
system all the time, you are really going to be caught out.
What you end up being able to do is predict the probability of certain outcomes.
The reason chaos messes with people's heads, is its "steady state" is chaotic motion.
That means the solution to the model is a fractal, a complex fractional dimensional manifold.
This is the problem with chaos theory, the moment you try to even express things you start
using words that take a long time to explain.
17. last_days_of_disco said...
I may be giving the wrong impression. Its not hopeless, you can learn things about how to modify the world around you thanks
to chaos theory. However the manifolds (fractals) that you get in your modeling of reality are only as
good as the assumptions and data you put in. Just because you used some fancy maths does not mean
you are any better than Joe Lumpuck who just had a gutt feeling about stuff.
Building models that actually reflect reality for chaotic models is made even harder by the fact that you can't
just look at one piece of the system and linearize around that point (most models do this and hence they end
up falling off a cliff when they get caught out -- black swan, whatever, you are just dumb and it takes a computer
to be really dumb). Also models usually operate in many dimensions (more than 3) and hence it makes it quite
hard to visualize what is going on. Its taken me years to be able to visualize n-dimensional space, or at least
unlearn my 2d/3d habits sufficiently enough to be able to have a chance.
18. letthemfall said...
Chaos theory is a theory of mechanics, specifically about unpredictable behaviour in parts of deterministic systems. Lots of people love to use it as a kind of mystical support for all kinds of unorthodox views of the newagey kind. As for chaos and top scientific brains, the brains are spread across all disciplines pretty equally I would say. I am afraid all of this stuff is utter claptrap, but I defend your right to say it. You may just turn out to be right, although I would claim it would be by accident. Peace man.
19. stillthinking said...
Blimey ! I think you might find that emergent behaviour is more suited to financial modelling. In particular, self-organised criticality. The single snowflake that causes the avalanche, the 'black swan' as it were.
As financial decisions are made by people I don't think that non-linear physics will give you much of an advantage. If the price of housing is going up, its going up, calculator or no calculator. Look at you all jumping in, like an intellectual bubble. Why am I so poor is a much better question for the theorists.
20. baroo said...
Science will always be abused by people to support their own VI's. The real shame is that most scientists get too focused on looking at their tiny little bit of the word to realise that this is happening.
21. Baroo said...
Science will always be abused by people to support their own VI's. The real shame is that most scientists get too focused on looking at their tiny little bit of the word to realise that this is happening.
22. last_days_of_disco said...
@stillthinking
The point I was trying to make, by lifting the veil of mystical power that surrounds chaos theory.
People say: "Chaos theory shows, like it a magic wand you can wave objections away with".
They are wrong, its just a bunch of geeks with Matlab or MathCAD or some other Matrix algebra
system that can solve numerical integration problems. I spent a good 5 years doing modelling and
three of those were chaotic systems modelling (not financial, but the tools are similar and the disasters
are similar too).
Warren Buffet is right, derivatives are very dangerous things because people have
believed in them and they are not safe or understood by most of the people who use them.
In the last N years I have seen quite a number of jobs advertised in the city with nonlinear dynamics and
chaos theory as requirements. When I chat to my trader buddies and I look at their spreadsheet based
systems running these calcs, my hair stands on end. If these are the masters of the universe, prepare for
the blue screen of death!
There are some very smart people out there, granted, but they are not the herd of today.