- There is one great positive-sum game in all of human economic history -- trade. But there are periods of time in human history when this core engine of growth and prosperity falters, when it becomes, at best, a zero-sum game of equal winners and equal losers. We are entering one of those times.
Why? Because this is what ALWAYS happens as independent nations struggle with the domestic political consequences of massive debt. Debt begets wealth inequality. Wealth inequality begets political polarization. Political polarization begets shocking electoral outcomes as the median voter theorem fails and shocking market outcomes as the central tendency fails. So go ahead ... ask Nate Silver how well his electoral models are working. Ask any Fed staffer how well their econometric models are working. Democracy is hacked, not in the sense of some Mr. Robot f-society conspiracy, but in the sense of what Sen. Lindsey Graham appropriately calls “batst crazy” domestic political behavior, behavior that ALWAYS emerges under these circumstances. It happened in the 1870s. It happened in the 1930s. It's happening today. As George Soros would say, I'm not expecting it. I'm observing it.
I almost begged bfv to explain what the hell a Gaussian copula was, but then forbes hooked me up.
That's a really bizarre post. He writes about game theory as if he doesn't want to assume much knowledge, but then he throws out "copula" as if he assumes it will be familiar. I can't figure out who he's writing for. And I have no idea what's up with "For example, there are two equilibrium outcomes in a game of Chicken, but that doesn't mean that each equilibrium is equally likely. It means that the entire concept of likelihood or probability functions has no meaning here". There are three equilibrium for Chicken, the third being a mixed strategy that decides whether to swerve or not with equal probabilities. I guess he could be talking about only pure strategies, but then I have no idea what he could be getting at with "that doesn't mean that each equilibrium is equally likely."
it's a letter for retail investors that aren't well-heeled enough to pay for his (guessing) $900/yr professional letter. Seen The Big Short? This is basically that email that Batman writes to the people whose money he's fucking with. Which means most people who are reading it barely remember algebra, and the author may very well have started grownup life as a business major.