The Future of Everything

August 19, 2015

Bitcoin needs a new theory of money

Filed under: Economics — Tags: , — David @ 4:06 pm

Is bitcoin money? To its users the answer will be a resounding yes, but to many people, including former Federal Reserve Chairman Alan Greenspan, the answer is less clear. Indeed, one of the things holding back the adoption of cybercurrencies such as bitcoin is that they do not conform with traditional ideas about money.

Read the rest of the article at Bitcoin Magazine.

July 19, 2015

A Quantum Theory of Money and Value

Filed under: Economics — Tags: , — David @ 9:09 pm

Abstract of a new paper posted to SSRN:

The answer to the question “what is money?” has changed throughout history. During the gold standard era, money was seen as gold or silver (the theory known as bullionism). In the early 20th century, the alternative theory known as chartalism proposed that money was a token chosen by the state for payment of taxes. Today, many economists take an agnostic line, and argue that money is best defined in terms of its function, e.g. as a neutral medium of exchange. This paper argues that none of these approaches adequately describe the nature of money, and proposes a new theory, inspired by non-Newtonian physics, which takes into account the dualistic real/virtual properties and complex nature of money. The theory is applied to the example of the emergence of cybercurrencies.


Read the full article here.

July 13, 2015

Home Capital Group

Filed under: Economics — Tags: — David @ 7:49 pm

Home Capital is the leading supplier for the uninsured mortgage market, especially in Toronto. Is today’s fall a leading indicator for the Toronto housing market?


July 11, 2015

Book burning economists

Filed under: Economics, World Finance column — Tags: — David @ 4:20 pm

Readers of this column, no doubt concerned for my wellbeing, have occasionally asked how my book Economyths – a critique of mainstream economics from the point of view of an applied mathematician – was received by economists.

The book, which also served as the basis for many Econoclast articles, did muster a number of positive reviews, from publications ranging from Bloomberg to Handelsblatt. The science writer Brian Clegg called it “probably one of the most important books I’ve ever read” (he’s not an economist, I just wanted to mention it, before we go on). Perhaps the strongest endorsement was from Czech economist Tomas Sedlacek, who co-wrote a subsequent book with me.

Not everyone was so complimentary. (Read the rest of this article at World Finance.)

May 8, 2015

Quantum money

Filed under: Economics, World Finance column — Tags: , — David @ 3:42 pm

It is often said that quantum physics is so weird that it is beyond our understanding. But there is one area where some quantum insights might prove applicable to our everyday lives, and it’s a surprisingly common one: money. Just as subatomic objects have a dual nature, so do the money objects that we use to make payments. The main difference is that these objects are things we have designed ourselves. They are our contribution to the quantum universe.

Read latest World Finance column here.

April 30, 2015

Canada house prices overvalued?

Filed under: Economics — Tags: — David @ 4:17 pm

The Globe and Mail recently came out with an article comparing different studies of Canada’s housing market. What was striking was how different the results are. According to Deutsche Bank, houses are 60 percent too expensive, while according to economist Will Dunning they are actually undervalued by 9 percent. Here are all seven estimates:

Deutsche Bank: +60 percent

Fitch (rating agency): +24 percent

Bank of Canada: +20 percent

IMF: +11 percent

TD Bank: +11 percent

CMHC: +3 percent

Dunning: -9 percent

How can they be so different? One reason is that they used different valuation metrics. But a more simple explanation is that the answers depend on the particular stance of the forecaster, and the message they are trying to give.

Fitch (at +24 percent) is sending a warning.

The Bank of Canada (+20) is sending a warning but trying not to be alarmist.

The IMF (+11) is playing it safe.

TD Bank (+11) is also trying to play it safe, since it is exposed to the housing market but mostly protected against declines by government insurance programs.

CMHC (+3) has a lot to lose since they are on the hook for insurance. Safe bet that they will never predict a decline.

Will Dunning (-9) works as chief economist for the Canadian Association of Accredited Mortgage Professionals.

And Deutsche Bank (+60)? Maybe they’re just genuinely worried.

April 27, 2015

Kick It Over – reforming economics

Filed under: Economics — Tags: — David @ 7:52 pm

“Despite its enormous failings in the face of the financial crash, the mainstream of the profession has by and large failed to embrace self-criticism or open itself up to different approaches.”

Keith Harrington from the activist group Kick It Over. Sounds like economists in denial.

Money is the Message – 2015 McLuhan Lecture

Filed under: Economics, Talks — Tags: , — David @ 3:25 pm

McLuhan lecture video, from Transmediale in Berlin

April 9, 2015

Funding other universes

Filed under: Physics — Tags: , , — David @ 2:57 pm

Peter Woit has written an interesting post responding to the response by Matthew Kleban (and my reply to his response) to my review of the recent Unger/Smolin book.

It’s not often I get drawn into a discussion about the number of universes in existence (a question about which I have no strong opinion, only having seen a small part of one), but what worries me about multiverse theory is that it appears to be driven more by aesthetics and a desire for a unified theory than anything else.

Woit points out another factor, which is the role of the Templeton Foundation. Funded by the estate of the investment manager John Templeton, it pays out grants worth over $100 million per year, with a significant portion going towards supporters of string theory and multiverse theory.

Seems like investment managers (or their foundations) are buying up scientific theories the same way they buy art, thus distorting the market. A smaller example is Winton Capital’s funding of an investigation into Dark Matter.

Time will tell if they are as successful at picking winners in science as they are in finance. Or maybe it won’t, since the debate about the number of universes has been running since at least the Middle Ages and shows no signs of stopping any time soon.

As Woit observes, multiverse theory and string theory have a symbiotic relationship. Together they perform a similar function as the Efficient Market Hypothesis in economics, which is to provide a perfect excuse for the failure to make any useful predictions.

String theory provides not one set of physical laws which govern the universe, but instead an entire “landscape” of possibilities. The fact that we live in one which actually works is supposed to be because there are multiple universes running different versions, and we got lucky. So while we don’t have proof of multiverse theory (barring any future discovery of a hidden portal to a parallel universe) it can be inferred from string theory. But if the particular version of string theory assumed to govern our universe is just a random choice, then that makes it inherently untestable as well.

Perfect example of the Science Games, now sponsored by fund managers.

April 7, 2015

An Imperfect Truth

Filed under: Physics, Reviews — Tags: — David @ 9:06 pm

Review of The Singular Universe and the Reality of Time, by  Roberto Unger and Lee Smolin

When the Perimeter Institute—a physics research institute in Waterloo, Ontario—decided several years ago to build an extension, they asked the architects “to provide the optimal environment for the human mind to conceive of the universe.” Clearly the results were effective. One of the founding faculty members, Lee Smolin, and the Harvard philosopher Roberto Mangabeira Unger have conceived of the universe, and have come to a number of conclusions about it, including that a) there is only one of it, and b) time is real, so all things change, mutate and get old.

To non-scientists, these main points, summed up in the book’s title, might seem unremarkable. We only have experience of one universe, so would it not be presumptuous to assert that there are more? Time is clearly real enough (just ask an editor). And Heraclitus pointed out a long time ago that “everything flows.” So how can the authors assert that the admittance of mutability “is astonishing in the reach of its implications”?

The reason for this lofty claim is that, when time is taken seriously, we need to relax the commonly held assumption that the universe is governed by strict mathematical rules based on immutable symmetries. This mathematical version of reality—the product of generations of scientists—is only “a proxy for our world, a counterfeit version of it, a simulacrum.”

Read the rest of the article at the Literary Review of Canada.

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