Thursday, 11 April 2019

David Orrell's Quantum Economics as the next big Weapon of Financial Mass Destruction

David Orrell is a year older than me and better qualified in Math. Yet he is almost infinitely more stupid.  Consider the following-
As discussed in previous works (Orrell, 2016; Orrell and Chlupatý, 2016; Orrell, 2017), money objects – be they coins or bitcoins – combine the properties of abstract numbers, with the properties of objects. The fact that numbers and objects are very different – for example, you can own an object, but you can’t own a number – means that money is fundamentally dualistic, and has properties not unlike those of quantum matter.
I have a handkerchief in the breast pocket of my coat and another handkerchief- a blower, not a shower- in my trouser pocket. Thus, in total I have two handkerchiefs. Orrell says I can own an object- like a handkerchief or a five pound note- but I can't own a number. Thus, handkerchiefs and five pound notes are fundamentally dualistic and have properties not unlike those of quantum matter.

I notice, by looking at the phone book that there are three Vivek Iyers in my locality. This means Vivek Iyers are fundamentally dualistic and have properties not unlike those of quantum matter.

 ... money can present as real objects, like coins, or as a kind of virtual transmission, as when we tap a credit card at a store.
Vivek Iyers and handkerchiefs can present as real objects, like bodies or pieces of cloth, or as a kind of virtual transmission- like a picture on a dating website or ebay.

There is some system of verification for accepting a coin or a credit card. The card transaction is only accepted if it is verified that a physical quantity of coins  could, if needed, be used to settle the transaction. Similarly there is a system of verification for bodies or their representation. An Ebay transaction is completed when the buyer verifies that she has got what was pictured.
It is has become something of a cliche to say that ‘money is not an object’ but its properties certainly resemble those of a quantum entity, which has both wave and particle attributes, and for which neither description is complete.
Money is not an object in the same sense that a handkerchief is not an object. It is a word. It can signify an object but does not necessarily do so.  If I say, 'were I too wring out my handkerchief, the Angels would come to lave in the waterfall of my tears', it is not the case that the handkerchief in my trouser pocket is actually super-saturated with a saline solution which celestial beings would desire to lave in.
The historic argument over whether money obtains its value because of its link to precious metal (the theory known as bullionism) or if its value is based on virtual credit that is backed by the state as in chartalism (Knapp 1924, p. 32) resembles the debate stretching back to the ancient Greeks over whether light is made of real particles or virtual waves, that was only settled in the early twentieth century when it was found that it was both.
Light is electromagnetic radiation of a certain type. The Greeks did not know this. By contrast, people always knew that money was a medium of exchange. It wasn't the only one. Mummy would accept kisses in return for delicious cookies.

No doubt, there was and is a debate as to why a particular medium of exchange is accepted in certain contexts and not others. How come the baker does not accept kisses for cookies while Mummy does? Is it coz he's not into fat middle aged dudes? Well, fuck him. He doesn't know what he's missing.
The quality known as value is intrinsically fuzzy and indeterminate, and only takes on a fixed and settled amount at the time of a monetary transaction (you don’t know exactly how much your house is worth until you sell it).
This is nonsense. You may discover, after you sold the house, that the Surveyor and the Estate Agent conspired to cheat you. A Court may find in your favor. It may independently assess the value of the house and levy damages on your defrauders so as to make you whole.
Money therefore acts as a kind of measurement device, that puts a number on the concept of value, just like the observation process in quantum physics (Orrell 2007).
Kisses act as a kind of measurment device that puts a number on the concept of tastiness. Mummy gets lots of kisses for cookies and cakes but has to pay out kisses to get us to eat our spinach.
Money also acts as an entanglement device, for example between debtor and creditor.
Nonsense. The creditor is free to sell the debt or simply not pursue it any longer. A Court may dissolve the debt in one jurisdiction whereas another Court may uphold it.  In England & Wales, secured debt disappears after 12 years unless expressly acknowledged in the interim. However, one may voluntarily pay that debt so as to recommence an advantageous business relationship.

There is no entanglement what so ever. If you don't acknowledge a debt and the creditor has no means to enforce a Court order in this respect within the statutory period then, though a debit might linger for a while on the Balance Sheet of the creditor, there is no corresponding credit on the Balance Sheet of the debtor.
And like elementary particles, money objects can be created out of the void, for example when banks create money by issuing loans, but can also be annihilated and removed from the system.
Money objects can't be created out of the void. There has to be a macroscopic being who extends credit or creates a fungible asset.

The same point may be made about kisses. To pay Mummy for her cookies you have to go over to her and put your lips against her cheek. Similarly, to pay you for eating your spinach, she has to come over to you and put her lips to your cheek.

Money objects are our contribution to the quantum universe.
Just like kisses.
The next three sections go into their properties in more detail.
 In neoclassical economics, price is said to be determined by the intersection of supply and demand curves, which are assumed to exist as fixed and independent entities.
It is useful to do so. When running a business, you need to know how much you can buy or sell at any given price at any given moment.
In practice however supply and demand curves can never be observed – all we have is plots of price for particular combinations of supply and demand, so the separate curves are not identifiable from the data (McCauley 2004, p. 25).
Nonsense. There is always some data set which would allow both to be fully identifiable. The fact that the data set is not immediately accessible doesn't mean it can't be constructed.
Also, given that supply and demand are dynamic and affect one another, it is not even clear that these curves generally exist.
Rubbish. For any given commodity, a smart person can figure out which data set would establish the relevant curves.
In quantum economics, prices are determined by the exchange of money objects, just as the position or momentum of a particle can only be determined through a measurement process which affects the particle.
In an economic transaction two things are simultaneously fixed the moment money changes hands- these are quantity and price. In quantum physics you can't simultaneously determine position and momentum.

Suppose you give a hundred quid to buy a dozen bottles of Prosecco for a party. He says, I've bought wine for a hundred quid but can't tell you how many bottles  you will get because Quantum Economics forbids any such thing. Would you really believe him? Would you not immediately know he was either a cretin or a con-man?
As an illustrative example, consider the purchase of something like an artwork at auction.
Why? It is not a common type of transaction. Indeed, it has a separate theory to describe it which few Economists bother to learn precisely because it is such a niche affair.
When the owner first decided to sell the piece, they will only have a fuzzy idea of how much it is worth.
Why? Are owners of artworks generally cretins? Surely, the usual procedure is to get an expert valuation and place a reserve price on the item. The vendor then selects an auction house and takes advise as to when or where to sell. Thus, if the Shanghai market is booming, the Auction House may sell on that market.
The price will depend on sales of works by the same artist, sales by similar artists, trends in the marketplace, the mood during the auction, the nature and quality of the particular piece, whether it captures the eye of a wealthy investor, and so on. But there will be no exact ‘correct’ or ‘intrinsic’ value – the painting doesn’t come with a price tag on the back. Instead the price will be discovered during the auction process.
It may not be. The reserve price may be too high. Alternatively, a bargaining game between the owner and a bidder may develop. The auctioneer may suspend the auction because of concerns that bidding norms are being violated.

In the case of Sovereign entities using auctions for things like Spectrum allocation, it is entirely possible that the transaction is reversed.

There is no indeterminacy regarding value. It is always possible to find out what the highest bidder would have paid. That is the value. The price isn't. This yields a 'consumer surplus' for the buyer. There is a similar surplus, termed economic rent, for the seller.

It is ignorant to say that Economics equates Value with Price. 'Neo Classical' econ shows Supply and Demand curves intersecting and two triangles corresponding to Consumer and Producer surplus being created. 

In physics, measuring the position of an electron by bouncing photons off it imparts momentum to the electron, so the more accurately position is known, the more uncertainty there is in the momentum (Wheeler and Zurek, 1983, p. 64). (More generally, Heisenberg’s uncertainty principle states that it is impossible to know both position and momentum perfectly, not because of technical limitations, but because these quantities are indeterminate until measured.) In the same way, the purchase of something like an artwork provides a new data point for similar works, which in turn affects future prices.
How are these two situations similar? We know the price and the quantity simultaneously of anything which is sold. We can't know both momentum and the position of the electron.

The new data point created when, for example, a Van Gogh is sold immediately changes valuations of other comparable works of art.  It also has an immediate effect on expectations. This is the transmission mechanism to future prices which however are determined by macro-economic conditions and what is happening in other financial markets.

It is true that 'rocket scientists' screwed up Financial Markets and this led to the crash of 2007-8. They ignorantly adopted equations suitable for physical systems to model social systems which are mediated by human knowledge systems.

Thus Orrell is not repairing a mistake, he is compounding it.
As shown by the area of quantum finance, a similar effect is seen in stock markets, where uncertainty in price is resolved only at the exact time of a transaction (see Appendix A.2).
Uncertainty remains even after the price is struck. We don't know if that price was too high or too low or if the thing purchased was fit for purpose. Only time will tell.

From the short term point of view of the trader, this may not be apparent. But that's a good reason to do 'mechanism design' such that trading is 'incentive compatible'- i.e. the rewards and penalties which traders face better represent the good or evil that they do.

How is the 'mechanism design' to be done? The answer is it must be done by using data from the real economy. Complicated mathematical models are no help here. Common sense does a better job. Thus, in Japan, when a situation arose where a parking space in Tokyo was more valuable than a profitable ship yard, common sense said that a crash was looming. The mathematics may have looked fine- but it was wholly delusive. 
More generally, it is possible to use the formalism of quantum mechanics to model hypothetical markets and deduce an explicit equation for the uncertainty.
The configuration space for physical systems is very different from that of social systems because the former does not feature strategic behavior or mimetic effects. By contrast, intentions matter a great deal in social systems. A hedge fund manager may deliberately take a loss so as to inflict a larger loss down the line on a rival. Electrons don't behave that way.

Knightian Uncertainty arises because we don't know the future configuration space. We can predict only a few possible future states of the world and so we can associate probability distributions, that too very imperfectly, for only a few things.

Subjectively, we feel uncertainty has increased coz of the rapidity of technological change and the very rapid economic development of countries like South Korea and China. Who, in 1975, would have predicted that South Korea would become the biggest ship-builder in the world within ten or fifteen years? Who, in 2008, would have predicted that China might pose a threat to US dominance in R&D?

Think back to 1988.  Virtually nobody predicted that the USSR would disappear and that Poland and Hungary and so on would soon join NATO.

There were elaborate game-theoretic models of geo-politics which turned into so much waste paper because they simply didn't envision a 'state of the world' where Russia would be ruled by a drunken buffoon who'd let the Harvard Econ Dept. destroy his country.

Physics, even Quantum Physics, doesn't have a landscape which can abruptly change. Photons can't get together and decide to become something else. States of the world are independent of the particles that compose them.

Consider the following-
To see the difference between the classical and quantum approaches, in the context of human cognition, suppose that a person has a choice between a certain number of possible options. In classical probability theory, each choice u would be treated as a subset of the set U consisting of all choices.
Thus, classical probability theory is useless where Knightian Uncertainty exists. Mathematical models which don't account for this can work a great mischief. They create what Warren Buffet called  'Weapons of Financial Mass Destruction'. 

Can Quantum probability help? No. It has no magical method of turning Knightian Uncertainty into well behaved probability distributions.

All it can do is jerk off while grinning inanely and pretending to be a guest, not a waiter, at the hedge fund managers' orgy.
A person’s cognitive state is represented by a function p with the probability of choosing X given by p(u). As a simple example, U could consist of two choices u and v, with respective probabilities p(u) and p(v), that satisfy p(u) + p(v)= 1.
No it couldn't. Cognitive states are the product of evolution on an uncertain fitness landscape. If they can be captured by any type of probability distribution then they would be vulnerable to predators or parasites.

That's why evolution itself uses a sort of multiplicative update weighting algorithm which is 'regret minimizing'. It lets Uncertainty be rather than artificially dissolves it.

Math maven can earn a little money by explaining why we needn't throw away money on a safety net coz nobody ever falls off a tight-rope.  Shite like this-
For example, Baaquie shows that under certain conditions the uncertainty in price, multiplied by uncertainty in momentum, is greater than, or equal to half, the variance (Baaquie, 2007, p. 99).
Uncertainty is far greater because stuff nobody ever dreamt of could go down any second.
Baaquie was very much part of the problem. A few years before the bottom fell out of the market he was recommending low dimensionality in hedge portfolios. Lehman Bros. rushing into sub-prime is an example of this strategy. Everybody knows what happened next.

However this formula relies on the idealised assumption that the price data follows a random walk with constant variance (see discussion of this assumption in Wilmott and Orrell, 2017, p. 53).
So, it is nonsense with no applicability to the real world. 
One  advantage of the quantum finance approach is that it allows a degree of flexibility to relax assumptions such as perfect information (Haven and Khrennikov, 2013, p. 223). 
 How is it an advantage to make nonsense walk on stilts? The thing is pure mental masturbation.

Entanglements 
Because mainstream economists see money as an inert chip, it pays little attention to the concept of debt. The traditional view, as summarised by Bernanke, was that debt is ‘no more than a redistribution from one group (debtors) to another (creditors)’ (Bernanke, 1995). In this linear view of the economy, debts and credits cancel out in the aggregate (Krugman, 2012, p. 112). As Keen points out, this is one reason central banks have been content to allow debt levels to reach unprecedented heights (Keen, 2017, p. 110). In 2017 global debt was estimated at $217 trillion, up $50 trillion over the past decade (Institute of International Finance, 2017).
People lend money in the the expectation of getting it back. This expectation is frequently disappointed. Thus there is an element of 're-insurance' involving 'risk-pooling'. However, 'rocket scientists' or Quantum Finance mavens can screw up royally in this regard. That's what caused the crash. Central Banks responded by both lending and taking on the down side risk for people who, if not 'crony capitalists' before, rapidly became so. The people rebelled but in so counter-productive a way, that the ultra rich who had been bailed out got their feet even deeper under the tables of State Power.

Could stupid 'Econophysicists' worsen the mess they created? Sure. This is how-
In quantum economics, however, money acts as an entanglement device. In quantum physics, two particles can become entangled so that a measurement of one acts as a measurement on the other, even if the two particles are separated by vast differences – a phenomenon which Einstein famously called ‘spooky action at a distance’ (Einstein, Born and Born, 1971, p. 158). The field of quantum thermodynamics shows that whenever particles interact, they become entangled to a degree, effectively sharing their wave functions, which has implications for things like entropy (Linden, et al. 2009). In the same way, financial instruments such as loans, bonds or investments, act as contracts between two parties, which means that a change in one, instantly affects the other (see Appendix A.3).
Nonsense! Both parties can sell on the relevant Hohfeldian rights and obligations. Furthermore, the Central Bank can absorb downside risk and create credit. 
The debt/credit relationships in the economy, therefore, act to create an intricate web of entanglements.
Nonsense. Supply chains and Distribution networks, including those for Credit or Savings, create interdependence- but not entanglement. 
These entanglements are not just numeric things which cancel out in the aggregate, but represent a power structure in the economy, which can be mapped using techniques from complexity science.
Every social phenomena represents a power structure. None can be mapped using techniques from 'complexity science'. Why? The Tarskian 'primitive notions' of the axiom system are known to those who play the game, not failed academics from other disciplines who try to earn a little money by talking gobbledygook.
One 2011 study by scientists from the Swiss Federal Institute of Technology (Vitali, Glattfelder and Battiston 2011), for example, analysed the direct and indirect ownership links between 43,000 transnational corporations, and found that fewer than 1 per cent of the companies controlled 40 per cent of the network.
How amazing! Previously everybody thought that 'transnational corporations' were Mom & Pop operations run out of the garage. The truth is, most 'transnational corporations' are zombiefied and just going through the motions. Only a few are dynamic and taking on risk. However, many of these will, sooner or later, become zombiefied and stick to collecting rents.
Another type of power relationship is that between debtor and creditor.
Nonsense! Most trade credit is from little guys and flows towards big companies. Thus when Lord Billimoria's Cobra beer was restructured, it was the little guys who took the hit. 

Similarly, when a Billionaire rapes a Pension fund, it is little guys who go to the wall. The Debtor has the power, that is why he gets the moolah. When he restructures, it is the little guy who absorbs the loss. Ask the Donald how this works.
A basic feature of debt is that it is governed by mathematical rules, such as compound interest.
Rubbish! Recoverability is the only thing that matters. You can build your Castle in Spain on the basis of compound interest. What you recover is pennies on the pound. 
Being on the wrong side of this has historically been a major cause of people falling into slavery or peonage (Graeber, 2010, p. 8).
But debt slavery was abolished long ago. With the exception of things like student debt and court ordered child support, one can and should walk away from debt. Remember, never acknowledge a debt. Always fuck with the debt collector.
Financial derivatives, such as options or credit default swaps, create another layer of financial entanglements, whose complexity defies analysis.
They are not complex at all- once the market crashes. Then they are simply shit. On analysis, this was always so. Why? Coz some pointy headed math maven was involved. 
What distinguishes these entanglements from classical network links, is that they represent ties between abstract numbers and real assets.
My watch has a serial number on it. OMG! It's like all Quantum and shit! Thus I must be Scott Bakula who, for some reason, has done a quantum leap into the body of a fat, balding, South Indian man. Hope I get entangled with a hot chick by the end of the episode. 
A debt owed on a house grows exponentially,
What sort of mortgage does this guy have? 
but the house itself is located in the real world, and is subject to things like depreciation and decay.
Which the home-owner fixes.

This tension between the virtual debt and the entangled real asset, and between number and the fuzzy concept of value, scales up the inherent quantum tension between the real and virtual sides of money (Orrell, 2016). 
If house prices fall and you are in negative equity, you stop paying the mortgage and let the thing be repossessed. In theory, at least in some jurisdictions, the creditor can come after you for a certain period before the thing is time barred. In practice, nothing happens. You get a fresh start.

Debts are not virtual. They are tangible. What matters is recoverability. Sometimes, financial markets can overvalue debt- this could be sub-prime or corporate or sovereign or whatever. Then there is a correction based on recoverability. The math mavens get disintermediated- many lose their jobs and start writing silly books or giving lectures to paranoid nutjobs.

But there is no 'entanglement'. A few years ago, Michael Jackson and Bill Cosby and so forth were cool. Not anymore. Changes in the 'common knowledge' information set has made them deeply repugnant. What happens to reputations is similar to what happens on financial markets. Just coz a few math mavens could make a little money for hedge fund managers, who were pretending there was some arcane science to what they, do didn't mean those math mavens weren't as stupid as shit. That's why they weren't pulling down the big bucks.

 Money Creation The entanglement process is seen most clearly at the moment that money is created. As a graphic example, consider the tally sticks that were a main form of payment in e.g. medieval England. This consisted of a wooden stick that was notched to indicate an amount, and then split down the middle. One part, known as the stock, was held by the state, and represented a credit. The other part, known as the stub or foil, was given to a tax collector, and represented a debt that needed to be paid. If the state wanted to pay a supplier, it could give them the stock, which granted the holder the right to collect the debt. Tallies therefore began to circulate as money objects. But because they came in two parts, they directly entangled the debtor and the creditor; if, for example, a stock was lost or destroyed, then so was the record of the debt.
The split tally was a method of recording transactions. It did not create any entanglement whatsoever because it could be transferred or destroyed. By contrast, entangled particles can't transfer or destroy the entangling property.

Suppose a physicist adopted the methods of this soi disant 'Quantum Economics'. Then, he could prove whatever he liked by any observation whatsoever. Suppose he is looking at an elephant which starts taking a dump. He can say 'aha! I have disproved Bell's inequality because taking a dump involves paying a debt to nature. However Orrell has proved that debtor and creditor are directly entangled. Thus nature and the elephant are directly entangled even though one must be macroscopic whereas the other isn't necessarily so. Thus Bell's theorem must be false.'

This is the problem with applying the findings of one discipline within the discourse of the other. Whatever is asserted in the latter must apply in the former.  Thus is there is a Marxist theory of Aesthetics then there must be an Aesthetic theory of Capital. If Quantum Physics can elucidate Economics then Economics can produce new results which Quantum Physics must accept.

In neoclassical economics, there is little attention paid to how money is created.
Nonsense! One could spend a lifetime reading texts on neoclassical monetary theory.
The main focus tends to be on quantity theory, which says that money supply should be tuned to reflect economic growth.
The Quantity theory predates the marginal revolution.
In the conventional picture, the money supply is controlled by a central bank using fractional reserve banking: the central bank creates money by, for example, buying a government bond using made-up money. This money then goes out into the economy and ends up being deposited in private banks, which can then lend out more money, subject to a reserve requirement. In this picture, the central bank is seen as a kind of central command node, consistent with a mechanistic viewpoint.
There is no need for a central bank. 'Fractional reserve banking' was done by goldsmiths long ago. Central Banks come much later to reduce 'contagion risk' and lower the interest rate at which the State could borrow.
In recent years, however, there has been a reassessment of how the process really works. The Bank of England wrote in 2014: ‘The reality of how money is created today differs from the description found in some economics textbooks… the central bank does not fix the amount of money in circulation, nor is central bank money “multiplied up” into more loans and deposits’ (McLeay, Radia and Thomas, 2014).
This was apparent to everyone in the UK by the mid Eighties. 'Goodhart's law' had proven true. Monetary targeting was abandoned. Anyway, 'Big Bang' in the City had, as Nigel Lawson later said, paved the way for the crash of 2007-8.
Adair Turner similarly noted that ‘Economic textbooks and academic papers typically describe how banks take deposits from savers and lend the money on to borrowers. But as a description of what banks actually do this is severely inadequate. In fact they create credit money and purchasing power’ (Turner, 2014).
So, okay, most Econ papers are shit. But then everybody knows Economists are stupid. The last Economists to make mega bucks was David Ricardo- but that was before he became an Economist.

We don't expect a 'Literary Theorist' to be able to write a decent sentence in any language. Still, they get paid a little money to act as glorified child minders. Similarly, academic economists get paid a little money to give smarmy little shitheads a Credential as sycophantic little shills for every manner of fraud.
The economist Richard Werner performed an empirical analysis and concluded that ‘The money supply is created as “fairy dust” produced by the banks individually, “out of thin air”‘ (Werner, 2014).
Fairy dust? More like Angel dust or super-skunk. Banks don't create money out of thin air. They have to pretend that the charlatan they are lending to is a smart businessman and ethical human being who will repay the money- not run away to London, like Vijay Mallya or Nirav Modi, to live large on the money looted from public sector Banks. 
Today, indeed, the vast majority of money (in the UK, about 97 percent) is created by private banks lending money for things like mortgages on houses (Werner, 2005; McLeay, Radia and Thomas, 2014). The money is created in the same manner as tally sticks: money is deposited in the account of the seller, but the bank retains a record granting it title over the property (the difference here is that the money is the thing which acts as the stock, while the title represents the debt that needs to be paid). Because these are of equal but opposite value, they cancel out in the aggregate, but the entanglement remains. If the mortgage holder goes bankrupt, the status of the bank’s loan is instantaneously changed – even if it doesn’t find out until later.
Rubbish! The status of the bank loan only changes after the underlying asset has been auctioned or otherwise sold and it's Collection dept. is satisfied that any un-extinguished debt is not recoverable. Only then is the debt written down for tax purposes. However, it will still be sold to a third party who will try to collect on the full nominal value. If the debtor is stupid enough to acknowledge the debt, the clock restarts on it. Otherwise, in England & Wales, it becomes time barred in 12 years.
The flip side of money creation is money destruction. Money that is created from debt is destroyed when the debt is repaid, like a particle colliding with its anti-particle.
Nonsense! When you pay off your overdraft, chances are you get a letter a couple of months later raising your limit. That's why, when starting out, you collect a whole bunch of credit cards and use them to pay off each other till your total credit mounts up to something substantial. Then, you might use the total to flip a property or play the market.  If you call a bull market correctly, you could get rich. If you mistime things, you walk away from the underlying credit card debt. Your daddy may broker a deal so he pays pennies on the pound in return for your keeping your Credit rating cherry. 
One implication is that if new debts are not constantly being created, the money supply will shrink, leading to recession.
Only expectations matter. If bankers expect to get fired if they lend to a deadbeat, they don't lend. In a bull market, the deadbeat makes good coz his realty is rising in value. When the crash comes, not so much.
Money creation and destruction are therefore at the heart of the business cycle.
Expectations alone create Reality. Money is endogenous save in so far as Expectations can be exogenously determined.
Of course, it is not necessary to adopt a quantum viewpoint to refute the neoclassical picture of money creation, since other people have long made exactly the same points. The banking expert H.D. MacLeod wrote in 1856 that ‘the business of banking is not to lend money, but to create Credit’ (MacLeod, 1856, p. 338). Schumpeter wrote in 1954: ‘It is much more realistic to say that the banks “create credit”, that is, that they create deposits in their act of lending, than to say that they lend the deposits that have been entrusted to them’ (Schumpeter, 1954).
So? It is not just Banks which create Credit. We all do. I trust my Pension fund and Insurer. That is why I pay in advance of the contingency I wish to provide for. Businessmen extend Trade Credit to each other. Mummy and Daddy extend credit to their little darlings. E commerce works because I extend credit to vendors- i.e. pay in advance of receipt of goods. I got stung recently by a fake site. Now I stick to Amazon and Ebay because they provide superior protection to the consumer.

Expectations in economic games are completely different from expectations in games against nature. Why? There is a strategic and intentional aspect to the former which is missing from the latter.  Elementary particles don't swear to stay entangled till an observation do us part. People do. Depending on the reputation of the person, we accord more or less credence to the signals they emit. This is not the case for the objects of study of the natural sciences.

Pretending otherwise leads to talking utter drivel- vide
However, the quantum version, by focussing on the role of money, naturally draws attention to the way that money is created and destroyed;
The recent demonetization event in India involved the destruction and creation of bank notes. Nobody in their right mind would focus their attention on how the new notes were printed or the old notes were burnt up.

Thus this 'quantum version' is utterly stupid.
and its ideas and formalism offer a coherent alternative to the dominant neoclassical orthodoxy, which has long dominated our understanding of the economy, to the exclusion of other approaches. 
Sadly, what these idiots are doing is assuming Arrow-Debreu (which neglects Knightian uncertainty) is a true description of the world. They they import a novel mathematical formalism on the basis of a false analogy between 'Quantum entanglement' and Monetary intermediation. The result is an ex falso quodlibet explosion of nonsense.

 Quantum Economic Person Neoclassical economics was originally based on the idea that people act rationally to optimise their own utility, or expected utility, when outcomes are uncertain (von Neumann and Morgenstern, 1944).
This is not the case. Outcomes are describable by a probability distribution. Genuine, Knightian Uncertainty, does not have such a distribution. That is why we expect 'regret minimization' not expected utlility maximization. However, since utility is a 'primitive notion' for this axiomatics it can be 'regret minimizing' ex poste.

However, the fundamental problem remains. Elementary particles can't, by any decision of their own, add possible states of the world. Human beings can do so. Thus configuration spaces for Social Sciences are not univalent. Thus dynamics can't be either.
In recent years this picture has been extended somewhat using the insights of behavioural economics, however, the caricature of rational economic man can still be found in many of the models routinely used by economists, and is still taught at university level courses (Earle, Moran and Ward-Perkins, 2016).
So what? All sorts of shite is taught at University level. One advertises one's taste for pointless drudgery and being a mendacious sycophant by acquiring a Credential for signalling purposes.  In return one gets a modest livelihood.
The field of quantum social science offers a very different conception of how people and institutions behave. While a summary of this field is beyond the scope of this paper, the basic insight is that the decision-making process is analogous to the wave function collapse of a quantum system, where the system encompasses the decision maker’s mind (e.g. prior beliefs and biases) and their environment. Something like answering a survey question, or accepting a gamble, is therefore a probabilistic process similar to quantum measurement, and can be modelled using the quantum methodology (see Appendix A.1).
Really? Do Physicists say 'this experiment disproves Bell's inequality coz the elementary particles involved got drunk and reversed polarity. They confessed as much to me when I ran into them at the greasy spoon. They also revealed to me that Steven Hawking's dun bin plagiarizing my Science Project in Middle School all these years.'
Prior to their response, people are seen as being in a superposition of states.
Really? If so, you are currently in a superposition of states with respect to the question 'Did you kill Nicole Smith?' There is a guilty you and an innocent you superimposed upon each other. The moment you say 'No. I did not kill Nicole Simposon. OJ did', the superposition disappears. There is only the innocent you. However, the opposite happens if you say 'Yeah right! I wasn't born but I still managed to go to California and kill a woman I've never heard of. You got me bang to rights, copper! Slap on the handcuffs why don't you?'
The measurement process selects a particular state, but also changes the system.
Right! Coz handing out questionnaires 'changes the system'. Fuck you Mahatma Gandhi! Go screw, Dr. King! Get over yourself, Nelson Mandela! You guys should have taken a Diploma in Market Research and devoted your lives to getting people to fill out questionnaires. 
This can be seen by the fact that, just as a measurement of a particle’s position affects its momentum, so the answers to certain survey questions are affected in a predictable way by the order in which they are asked (Wang et al., 2014).
Maybe the first couple of times. After that, we just tick randomly. Framing and focusing effects may cause a perturbation in transitivity- so can being lied to.  However, we soon figure out the trick. It's like using 'reverse psychology' on your kids. It stops working pretty damn fast- which is why Tequila is Mummy's little helper.
Similarly, the likelihood of accepting a new gamble depends on whether a previous gamble was won or lost (Busemeyer, Wang and Shiffrin, 2015).
For whom? Not a degenerate, nor a professional gambler nor a guy who has better things to be doing with his time.
It might appear that respondents are being inconsistent, but in fact they are following a kind of quantum logic instead of classical logic.
Wonderful! If your Treasurer runs off with the Company's money and pisses it against the wall in Monte Carlo, he has a legal defense. He was following 'quantum logic' and thus properly discharging his fiduciary duty.

We now begin to see why guys like Orrell can earn a little money. The Madoffs of the world may want to call them as expert witnesses so as to waste the Court's time and delay sentencing. 
Decisions are also affected by context, and by entanglement. One illustration, which is very relevant for economics, is the well-known psychological experiment called the ultimatum game (Güth, Schmittberger and Schwarze, 1982). Two subjects are offered an award of say ten dollars, but are given an ultimatum: one must decide how to split the money, and the other has to decide whether to accept the offer. If the offer is rejected, all the money is returned, so they both lose. Standard theory, based on rational utility maximising behaviour, would imply that any offer would be accepted, no matter how low, because it is better than nothing. However the game has been performed in many countries around the world, and the results consistently show that people reject an offer that is overly cheap, just to stop the offerer making an unfair profit. Most offers are near to five dollars, and the typical minimum acceptable offer is around three dollars. Viewed from the perspective of quantum social science, which accounts for things like entanglement and context, this result seems less surprising, since any degree of entanglement between the two players means that the offerer can no longer ‘maximize her utility’ by offering the other person zero (Mendes, 2005).
This is known as interdependence of utility functions. I gain utility from money but also get disutility from money gained by a guy I don't like. This has nothing to do with 'quantum entanglement'. It is not the case that two people share a trait which an observation, later on, upon one of them will reveal such that we have assurance that the other will also have that trait. Consider the case of identical twins separated at birth. We would expect that something revealed by a DNA test on the one would be confirmed by a similar test on the other. Similarly, if my copy of a piece of software has a glitch, we'd expect every other copy to have the same glitch.
However, this has nothing to do with quantum entanglement. Why? Because the same observation could have been made at any time in the object's history. We think of the trait as having 'genidentity'- i.e. it persists over time. Quantum objects, according to their formalism, don't have the trait till it is measured. This is meaningful in the realm of the very very small. It is meaningless for macroscopic objects.

We would be very surprised if one of a pair of separated at birth twins has his hand chopped off and, simultaneously, the other twin's hand falls off. 
Further empirical evidence for the quantum approach lies in interference effects, which occur as the result of incompatible concepts.
Orrell thinks he is writing something sensible. I think he is writing nonsense. This leads to 'interference effects'. OMG! Orrell is interfering with me! #MeToo

An example is preference reversal, where subconscious preferences – such as risk aversion – interfere with the decision-making process in a manner that depends on context (Tversky and Thaler, 1990). As Yukalov and Sornette (2015) wrote: ‘It is the appearance of interference terms that makes the structure of quantum expressions richer than the related classical ones and that allows one to explain those psychological phenomena that, otherwise, are inexplicable in classical decision making.’ Behavioural economists have uncovered a long series of such traits, which are generally viewed as examples of ‘bounded rationality’, and have devised tweaks to models in order to incorporate them. As Wendt notes, however, this idea of bounded rationality remains rooted in classical decision theory, and reflects a modified version of rational utility maximisation. The quantum approach, in contrast, can be viewed as ‘a kind of super – or “unbounded” rationality’ in that it transcends classical limits by taking into account effects such as entanglement, interference and context (Wendt, 2015, p. 167).
However, it still neglects Knightian Uncertainty and the need for Regret Minimization. Thus, it is even more useless because it imports terms from a wholly irrelevant discourse. 
Furthermore, while any model can always be adjusted to fit the data by adding extra variables, the quantum formalism is, in fact, quite parsimonious and robust (Busemeyer, Wang and Shiffrin, 2015) and has the appealing advantage of allowing for a consistent model which can be applied to a range of situations (Wendt, 2015, p. 164).
But, it produces mischievous nonsense. A robust and parsimonious explanation for all phenomena whatsoever is to say they are caused by the Nicaraguan horcrux of the neighbor's cat. 
Money can be viewed as a social technology which extends this notion of mental wave function collapse to the societal idea of value.
It can only be viewed in this way because the Nicaraguan horcrux of the neighbor's cat caused it to say meow.

Suppose there was something to all this hooey. Why isn't Orrell a trillionaire? 

The Quantum Economy Quantum economics is, therefore, a composite of quantum money, quantum finance and quantum social science – which were developed independently, but together provide a direct alternative to the traditional neoclassical approach.
So the traditional approach was useless and the new one is even worse. It makes its proponents even less money.
It also makes very different predictions about how the economy should behave.
Predictions about how something should behave are not predictions. They are wishful thinking. I may say 'Trump should dance naked upon the broken body of Putin'. I may even say that the Nicaraguan horcrux of my neighbor's cat will bring about this consummation devoutly to be wished. However, I'd be no better than a cretin who burbles on about Quantum Consciousness or Quantum Finance or Quantum Masturbation.

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