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Black Swans and White Noise 2015

Stock-Markets / Financial Markets 2015 Jan 05, 2015 - 01:11 PM GMT

By: Dr_Jeff_Lewis

Stock-Markets

The introduction of noise into a system can amplify the movement or efficiency of that system.  Sometimes a little agitation helps to broaden a signal; this phenomenon of stochastic resonance has helped in understanding many nonlinear and complex systems - from medicine to diet. 

The current financial system is a poster child for the non linear. Many nodes, endless connections. No way to parse all of the nodes and the connections. It hums along, based on confidence and dependent on an artificial type of intervention. 


A system held together by fraying strands, a woeful lack of redundancy in the form of payments systems and credit flow mechanisms. And then noise is introduced. An event. A surprise. Or a new direction. 

It may not be detectable. Eventually, it amplifies the direction…

To the point where part breaks. 

The agitation can come from many things. From ‘known knowns’, like subprime or student loan defaults - to the unimaginable or trivial, like some upper air disturbance or a media driven accident that turns violent.

And the system spirals out of control. It collapses. Nature abhors a vacuum.  Commentary abhors the truth. We all want to believe that this time will be different. We want to believe that the same forces of equilibrium exist in the products of civilization.

There are physical laws but human behavior does not correspond well to those laws.  Behavior is irrational and unpredictable and capable of moving fast. 

There are trends and propaganda. But they don't. Civilizations are not held consistent to any deep law or set of principles. Civilization is a product, a fluctuating pattern long disconnected from the physical processes that give rise to organisms - biological systems.

You may be able to hide the connections — but they are not some mysterious force. Or they work in a realm with its own set of laws. Failure and breakdown feed back directly to the physical environment…the lives of real people.

The closer you get to this reality, the more complex, and the more people want to run away from it. It’s far easier to worship the price and fantasize about its meaning. The fantasy fuels the modern professional trade complex where would-be physicists, mathematicians, and engineers are lured by the pied piper. 

We either bribe our brightest into years of debt servitude or we bombard the brightest with visions of affluence, wealth, societies, and cultural - popular ideas. 

Who can blame them? The music lures them into the poverty. In essence, they give up their souls. 

Stuck in a poverty of affluence. 

For more articles like this, and/or for a breath of fresh silver market reality amidst the stench of denial and technically meaningless short term price obsessed madness, check out http://www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

    Copyright © 2014 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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