Economist’s inexact models exactly defective 12
(The Unscience of Scientific American’s ‘Science of Bubbles & Bursts’)
Scientific American (July 2009) – The Science of Bubbles & Bursts (Gary Stix) -> Confused & defective thinking, haphazardly pasted together to form ‘science’ -> Unscience!
Scientific American -> GROSSLY defective ‘science’ - because engineering is absent.
Science /Academic ‘professions’ – general culture of dishonesty
President Obama –> BBC also now warns - heading for lame-duck status (because Obama listening to unscientific ‘scientists’).
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It is recommended that you read the previous papers in this series – click on ‘view now’ Historical Archives (lhs panel).
This series highlights the gross defectiveness of Economic Scientists’ models that are causing gross injustices & instabilities throughout the world. The previous papers concern:-
1. Milton Friedman, Lucas, Aumann
2. John Nash (portrayed in Beautiful Mind by Russell Crowe)
3 & 4. Edmund Phelps
5 Robert Mundell
6 Nobel Prize Hijacked
7 R Myerson, E Maskin, L Hurwicz 1
8 R Myerson, E Maskin, L Hurwicz 2
9 Nobel Prize Hijacked 2
10 Nobel Prize Hijacked 3, P Krugman.
11 Nobel Prize Hijacked 4, P Krugman 2.
(Please Note: This website is about the pioneering of ENGINEERING into the SEBFL environments, it is about seeking truths; it is NOT about journalism, English grammar or prose, or quick-sell – it is down-to-earth engineering & pioneering requiring extensive & intensive THINKING.
SEBFL = social/economy/business/finance/legal environments.
Explaining transmission mechanisms & pre-empting catastrophic failures is NOT doom-prophecy, it is explaining probabilistic reality.)
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IMPORTANT NOTE:
If you are unable (or simply refuse) to understand the physical dynamics of the Twin Towers implosion, a TANGIBLE, VISIBLE event; i.e. if you incorrectly believe that TTs were natural collapses consequent to plane damage –> then you will have no hope of understanding the INTANGIBLE nature of the sciences pertaining to the social/economy/business/finance/legal (SEBFL) environments. -> in which event, don’t waste your time by going beyond this point – ignorance is bliss, for a while at least, so enjoy it while you can!
(Pointer: Freedocumentaries.org have new batches of excellent docs – including a series on Kennedy’s assassination giving new insights & evidence. Putting all the circumstantial evidence aside and looking SOLELY at physical evidence – it is crystal clear that the Warren Commission covered-up and that multiple gunmen were involved; hence a conspiracy existed, through which National security systems were disabled; exactly as happened with Twin Towers. The USA’s Justice system refuses to act.)
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INTRODUCTION:
One should be extremely cautious about descriptors - Scientific American is a journo rag that purports, by its very name, to be an important science publication – yet it does not act professionally, nor scientifically (as we shall see with regard the article by Gary Stix).
CDADD has openly challenged leading scientists, including one of Scientific American’s Advisors, Lisa Randall (Professor of Physics at Harvard) – yet no transparent engagement has taken place – Scientific American also refuses to act transparently.
(See paper series – Captain’s Log, Stardate xxx -> which disproves Einstein’s Energy & Relativity theories, Big Bang - as based upon existing theories, light transmission dynamics, gravity is not Universal it is an ‘internal’ force, and which proposes rational alternatives).
Another person, also afraid to take up CDADD’s open challenge, and a contributor to Scientific American, is Jeffrey Sachs – who advises the United Nations with incorrect advice (incorrect because Sachs refuses to transparently engage with sound engineering). Sachs’ economics ‘science’ advice to Russia was the key cause for Russia’s economic collapse, ditto Iraq. The dangerous polarisation wee see today is as a direct consequence of Sachs’ grossly defective models, they are massively destructive (Economic Weapons of Mass Destruction).
Scientific American happily publishes Sach’s grossly defective & massively destructive advice but silences CDADD’s constructive sound engineering research which disproves many defective theories, economics & physics.
Scientific American has the same problem as any journo or media entity, be it print, radio, tv – and that problem is that they are compelled (by deadlines) to pump out journalism. Like radio talk shows one can only pump out so much intelligent debate before one becomes quickly exhausted – then the garbage follows. Scientific American has long been pumping garbage, dishonestly so.
It requires intensive & extensive time consuming work to develop further & progressive intelligent debating points.
(CERN - Large Hadron Collider - has for many months been very quiet – the reason for this is that CDADD’s research - see paper series ‘Captain’s Log ..’ & ‘A Bunch of Open Letters 3’ - showed that the CERN’s intention of accelerating particles to speed of light was impossible because light particles do not travel at anywhere near speed c – light is propagated (most likely through a switching mechanism) – hence it raised the question as to what was happening & also as to who was retaining the knowledge gleaned & for what purposes.
All of this had resulted in a rethink – the outcome of which is a Memorandum of Understanding between CERN & European Union – this MoU was signed on July 17, 2009.
However, no acknowledgement has been made, nor reward presented, for the extensive & intensive Intellectual Property of CDADD’s that caused this safety measure (if it can be construed as such) to come about.
Bearing in mind the duplicity behind the EU’s Lisbon Treaty and the intention of the EU Powers to entrench their power base (unlawfully so) it is not surprising that integrity & transparency are absent from the circumstances surrounding the development of this CERN/EU Memorandum of Understanding.
The MoU can be viewed via link at cern.ch)
There is a general culture of dishonesty within the academic environments – if leading intellects are actively dishonest, or even passively dishonest through silence, it explains why events such as holocausts can occur – it occurs because journo rags such as Scientific American are permitted to permeate & reinforce dishonesty – because Finance Powers have unlawful protections from prosecution, because Justice systems are corrupted – and, as we can see with Scientific American’s Unscience, skewed economic pressures DO create anger & violence.
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The Unscience of Scientific American’s ‘The Science of Bubbles & Bursts (Gary Stix)’
‘The Science of Bubbles & Bursts’ title is sub-lined by:
‘The worst economic crisis since the Great Depression has prompted a reassessment of how financial markets work and how people make decisions about money’.
Here then lies the first fundamental flaw – Scientific American is wrongly attempting to link the micro-actions/decisions of individual people to the Macro-Economic event of the current crash crisis.
Aggregated Micro-actions do NOT impact upon Macro-Economies (leakage excepted).
To see this consider the World Cup Final – tens/hundreds of millions are drawn to their TV sets, electricity surges occur during the match & at half-time for making tea but these surges have no lasting Macro-Economy impacts; there are certainly ‘leakage’ effects but no lasting Macro effects – yet it took a whole bunch of effort to put the World Cup events together to warrant drawing tens/hundreds of millions to their TV sets, for a very short duration impact.
Cf – to President Obama’s latest begging-bowl Health initiative – he certainly won’t draw hundreds of millions to pay into his begging-bowl for a once-off, nor to maintain it long term.
Consequently we can see that initiatives aimed at micro-actions will have no real impact on Macro-Economies (leakage excepted).
Begging-bowl approaches (appealing to individuals) by governments do not & cannot ever work – which is why Nelson Mandela failed in his pleas, and why Barack Obama will be failing with his Health Care begging-bowl appeal.
(How can small contributions from individuals, even aggregated as an entire nation, possibly stand up to the mountains of defrauded savings plundered over the decades?)
oOo
Scientific American’s article is flimsily held together through a series of flawed links which are brought together through progressive steps of arguments and which falsely create an illusion of ‘science’. Each step is a micro-environment argument that is wrongly extrapolated to the Macro-Environment.
The opening section deals with brain functionality and its ability to create an illusion of rationality – and how Behavioural Economists have come to the fore in their attempts to ‘explain’ the crash crisis.
Nowhere in the article does it touch on the real-world issues that brought about the global economy meltdown/crash; vis: Global Organised-Crime frauds by Financial Institutions & wealthy Finance Players/Powers.
Just as the safety & security measures were disabled for both Kennedy’s Assassination & for the Twin Towers Implosion, so too were the safety & security measures within the SEBFL environments long disabled.
Ex-Federal Reserve Board Chairman Greenspan is quoted: ‘Those of us who looked to the self-interest of lending institutions to protect shareholder’s equity, myself especially, are in a state of shocked disbelief.’ (Greenspan to Congressional Committee in October 2008)
This statement by Greenspan is entirely disingenuous as he, like UK’s Mervyn King, SA’s Tito Mboweni, & governments, were long informed & presented proofs (& independently adjudicated) from CDADD of the massive frauds that were occurring, and still are occurring. Yet they have all refused to act.
Greenspan, King, Mboweni & governments knew full well that massive global frauds were, and still are, occurring!
oOo
Behavioural Economics is given much attention in this Scientific American article and states that President Obama has plenty of them in the Whitehouse.
How then is it that these Behavioural Economists have not stopped Obama from a fundamental error of lying to the public.
In Cairo, Obama rejected the reality that the Twin Towers were criminally imploded – whilst it was clear that Obama had achieved massive hype & enthusiasm amongst his Muslim audience the reality is that it is a ‘law of human nature’ that people are not deceived all of the time. Hence after the hype has cooled and rational thought kicks back in people will know that Obama (USA) has persisted in lying to them.
The continued lies about Twin Towers, and Kennedy’s assassination, prove that the USA is dishonest.
The USA’s Justice system has been disabled by conspirators – injustice prevails & Global Organised Crime prevails.
This is why Iran & others remain opposed BECAUSE they are oppressively polarised by the western nations.
It requires appropriate & sound engineered SEBFL systems & controls to stabilise the USA’s economy & environments and to reflect that stability into developing nations; ditto for all other western nations.
Scientific American does not indicate that they have any such understandings of these critical issues.
oOo
Scientific American/Gary Stix draws an incorrect comparison of old theory vs. new theory in an ‘efficient market vs. bubblenomics. They argue that classical economic theory does not explain economic bubbles; but outline that ‘behavioural economic theories, which focus on the psychology of finance, predict that, at times, irrational thinking and emotion will prevail, leading hordes of people to spend more on investments instead of recognising that they are overpaying only later to stampede out of the market in a panic, precipitating a crash.’
The flaw here is that the ‘hordes’ of people are not hordes – and even if they were, the hordes would account for a minute fraction of the total amount of money that needs to be traded daily to permit such massive pumping of prices into a bubble.
(see paper: ‘SA Bonds – siphoning & churning’ to understand how financial institutions bounce trades simply to churn, so as to generate ‘fees’ and to siphon off client ‘losses’ as real profits (defrauded profits) to the financial institutions’ controllers/owners.)
The amount of money that the ‘hordes’ have, with which to play the markets, are a drop in the ocean and does not & cannot explain the bubble booms, nor the crashes. It is only substantial financial power (mass & increasing momentum & extensive time) that explains such phenomenal bubbles.
The hordes who do have money to play the markets & who are bold enough to do so have only small amounts relative to the savings that are compulsorily taken from their salaries/wages and put into pension plans. It follows then that number of people making up the ‘hordes’ are a small number of pension contributors in total, and the amount of money that the ‘hordes’ have to play the markets is a small percentage relative to their pension contributions – hence it is clear that the ‘hordes’ do not & cannot account for the bursting of the bubble, or the inflating of it.
The individuals that make up the ‘hordes’ are simply producing the leakage effects – but, the argument that bubbles develop due to horde-hype is wrongly used by the organised-crime fraudsters so as to deflect attentions away from themselves, the true instigators of the frauds.
oOo
A further reason that disproves Scientific American’s claim of hordes-hype bubblenomics causality is the reality that the average man in the street does not understand high-powered finances (as they have been & are being practised); nor do the majority of above-average men in the street.
Having spoken/consulted to numerous top & high level execs (who are far above-average) it is clear that they have little understandings of the real dynamics of finance even locally, let alone globally – they are certainly experts within their micro-economy businesses, but have no understandings of macro-economics/finances – the burst of the bubble proves this point – and also proves that Greenspan’s expectation (of self-interest protecting shareholder’s equity) is/was totally wrong (and Greenspan long knew this from proofs presented to him by CDADD).
Consequently, even those who are above-average do not have the skills & knowledge to make decisions about their free disposable surplus cash – hence they pump them into more institutional products, which products are non-transparent, for the very purpose of permitting institution Finance Powers to siphon & churn investor savings into their own accounts (and allowing financial ‘advisors’ to take a meaty slice as well). The average-man has no chance! And blue-collars make a collective pot for easy money.
oOo
Robert Shiller (Economics Professor, Yale) wrongly contends (as reported by Scientific American) that faulty logic of money illusion contributed to the housing bubble, and stated ‘Since people are likely to remember the price they paid for their house from many years ago but remember few other prices from then, they have the mistaken impression that home prices have gone up more than other prices, giving a mistakenly exaggerated impression of the investment potential of houses.’
This is warped thinking that flows from the fact that the SEBFL environments are not correctly engineered – engineering is entirely absent.
It is BECAUSE economies are grossly unstable that house prices do not retain their value BECAUSE all other factors of the economies do not retain stability, hence relative values are constantly changing & wildly so, because of incorrectly engineered SEBFL environments.
BUT, there will ALWAYS be a subset within societies that are in URGENT need of homes, simply because they are of the age for making families, which is a powerful necessity – at any given time the prices are REAL prices, they are NOT illusionary prices – and based upon prevailing affordability & hope (here is the illusion) of maintaining that affordability, decisions are made as to which home to buy.
It is because of the FAILURE of the Justice system, to give effect to the laws that (should) protect societies (but don’t because justice officers collude) from the corporate Organised-Crime criminals, that the SEBFL environments are unstable and hence why they crash. (Because they have undermined asset foundations – cf an aero bar without the chocolate - & saturated with oversupply of fraudulent double-accounted money. Which is why Bush, Obama, Gordon have failed with their cash rescue plans – it simply flows out of the holes in the foundations and into the burgeoning coffers of the wealthy Finance Powers = money value is undermined further).
Economists are refusing to engage with appropriate & sound engineering, similarly to physicists, which is why economies crash and why physicists have long gone off track with weird theories of warped space, 9 10 & 11 dimensions, etc.
Scientists refuse to see & understand what’s in front of them, they have no hope of understanding intangible systems – it requires appropriate & sound engineering.
oOo
Scientific American wrongly contrasts historical bubbles to the present crash crisis:
The Tulip mania (literally tulip flowers –> the real illusionary flower-power era) of 1630s
South Sea Bubble (based on trade monopoly in South Seas) of 1720
Wall Street 1929 crash leading to Great Depression (and wrongly blamed on hype of President Hoover’s election)
– there is absolutely no correlation between this current crash crisis and those of the past simply because the hordes were not players, even passively, they did not have the resources to do so because the disparity gaps were massive. Nor, were the markets so complexly & sophisticatedly structured as they are today; nor were institutional funds present in those days to the extent they are today (or were, now that it is understood that Finance Powers have fraudulently siphoned the funds off).
oOo
The key (from the perspective of criminal Finance Powers) to drawing people into scams is through networks of operators (today called financial ‘advisors’) who play on emotions.
South Africa’s Donald Gordon (see paper: Mastermind of Organised Crime) in concert with attorney Mark Weinberg in the early 1960s, who joined Gordon’s company, initiated a highly sophisticated marketing scheme designed to emotively deceive investors; and, soon later, developed psychological research to perfect the art of fraudulent deceptions designed to persuade people to part with their monies by ‘investing’ into Liberty Life.
See paper: ‘Mastermind of Organised Crime’-> outlines events & the perfecting of these deceptions & the expansion of the frauds into demutualisation over the ensuing 40 to 50 years. Also see papers ‘Organised Crime (Legal & Illegal)’, ‘UNODC Convention on Drugs & Crime’, etc.
In short, these financial institutions blossomed and created ever increasing fraudulent finance models – today, we are now so accustomed to terminology such as derivatives, futures, hedge funds that we do not recognise the fraudulent nature of these scams; societies have become desensitised and unable to detect what is right & what wrong.
Hence people with surplus monies for saving are easily misled to part with their monies. The current crash proves that they lost the bulk, if not all, of their money; and from when they handed it over to the institutions.
What Scientific American are not telling you is that the institutions are the perpetrators of the massive rise of bubbles, large & small, through repeated & unnecessary cycles (daily) of siphoning & churning of funds. It is not the hordes that have created this, they were long removed from influence under the deceptions that their chosen financial institution would look after their monies in good faith - it was premeditated bad-faith, crime.
oOo
Scientific American moves into the bizarre by discussing ‘evolution’ and quoting an early 1900s economist, Thorstein Veblen, who argued that economics should be an evolutionary science.
It is important to understand that evolution is the INVOLUNTARY change to nature that occurs every day and which affects all areas of nature & animal life, and also of man. But, man, being an intelligent species, engages in VOLUNTARY development of self & societies; admittedly, as a consequence, man’s & nature’s evolution is affected, but Causal Direction in this case stems from the VOLUNTARY development. Consequently to confuse evolution with development is entirely incorrect. But, for early 1900s thinking this was a significant development in progressive research even though it is incorrect.
(Also see SciAm Pg 21 of July 2009 for more defective thinking – or rather, don’t waste your time)
One very interesting comment that Scientific American did quote was that by Andrew Lo (professor of finance, Massachusetts Inst of Tech) – although Lo has a conflict of interests by also holding an official position at a hedge fund (not specified in article), Lo profoundly comments that:
‘Economists suffer from a deep psychological disorder that I call ‘physics envy’, we wish that 99 percent of economic behaviour could be captured by three simple laws of nature. In fact, economists have 99 laws that capture 3 percent of behaviour. ……’
What Lo has not recognised however is that the 3 percent behaviour is distorted behaviour due to the generally corrupt nature that economic science has become because of fraudulent manipulations of academic institutions by Finance Powers.
(Unfortunately Lo then makes the same error of confusing evolution & development).
oOo
Scientific American argues that ‘Credit (is) the lifeblood of capitalism’ and, coupling this with irresponsible action of lenders offering subprime loans, wrongly puts these factors as the cause of the Global Economy Meltdown.
Credit is NOT the lifeblood of capitalism – Money Flows & Supply are the lifeblood.
Credit permits, within reasonable bounds based upon affordability (which affordability is understood within a stable & structured environment, which our global economies are not), for the advancing of constructive development of essential & costly needs (a home generally being the primary one, business ventures another).
Credit became a critical component because lending had gone way beyond reasonable bounds BECAUSE Money Supply had been progressively saturated over decades by fraudulent false monies brought about by the double-accounting of pensions/investments, siphoning & churning of markets, & other frauds.
Surplus funds require active & constructive usage, but economic development has always been narrowly & destructively focussed upon artificial supply-driven demand and NOT on constructive social derived-demand. This meant that lending was restricted in the normal sense to those with reasonable jobs, to take up the surplus Money Supply (which was artificially inflated through fictitious double-accounting ‘monies’) lending requirements were progressively relaxed allowing those with (deemed) inadequate incomes access to credit (those without jobs, because of absence of constructive social growth, had no chance).
Initially, it fuelled a new spurt of growth, which was based upon illusionary money, but this was short-lived as we have seen. Money Supply has catastrophically shrunk - multiply so, because what was perceived as Money was over inflated artificial stuff, and because lending is now more difficult, and because jobs are destroyed, etc. which leads to multiplicity of downward spirals.
It is, partly, why government rescue cash packages are failing.
Scientific American coupled their defective arguments with the putting of blame onto borrowers, who naturally seek a better lifestyle (which artificial lifestyle inflation was really due to the artificial inflation of Money Supply): ‘A phenomena like money illusion prevailed: the borrowers failed to calculate what would happen if interest rates rose, …..’
This argument by Scientific American is entirely disingenuous – the true culprits for failing to recognise the effects of interest rate increases are Central Banks/Governments/Parliaments for they refused to engage with CDADD’s constructive engineering of a multi-component interest rate model after it was shown how massively destructive is the prevailing unitary model.
Alan Greenspan & Mervyn King & Jean-Claude Trichet are those criminally responsible for Gross Negligence – they had been long informed of both the gross defectiveness of the unitary interest rate model & also of the pension/investment frauds & double-accounting frauds.
Scientific American are failing to tell the truth & hence are failing to understand/analyse what is happening in the world; and into space!!!
oOo
In short, Scientific American makes the common mistake of unprofessionally & emotively grasping at all manner of theories, haphazardly pasting them together, to try and explain why the Global Economy Meltdown has come about.
Scientific American do not understand the TANGIBLE physics in front of their eyes – they have no hope (as demonstrated by their article on bubbles & bursts) of understanding the INTANGIBLE sciences that are not in front of their eyes.
This can be contrasted to Crash Investigators who apply methodical approaches, sound science coupled with sound engineering, and good investigative techniques to examining the mangled wreck of planes, trains, cars etc. to get to the truth.
Until Scientific American & scientists in general change to an honest & transparent modus operandi then governments & societies will continue to be misinformed & misled.
(see also BBC Documentary series ‘The Trap’ – viewable at freedocumentaries.org, warped views such as western developed nations ‘fighting for freedom’ whilst their very SEBFL models are based upon supplementing wealthy lifestyle through slave-labour imports; which slave labour generates the swell of violence against which the west must fight - for peace - which is achieved when the slaves are once again compliantly repressed, oppressed, depressed, suppressed!!!!!!!!!!!!!!!!!!!!!! )
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So, having discussed (just some of, there are many more of) the Unscience of this Scientific American ‘science’ article (which ‘science’ is standard poor-fare in journo rags) what then are the approaches that should be taken to build sound economies?
Very simple!
% It needs to be recognised that academic institutions & others such as Nobel Foundation have been hijacked & prostituted by Finance Powers who have distorted the directions & purposes of science.
% It needs to be recognised that as a consequence of these gross distortions that merit is not rewarded.
% It needs to be recognised that engineering is entirely absent from the science arena (both Tangible & Intangible Sciences).
% It needs to be recognised that appropriate & sound engineering is the only way to develop sound economies.
As stated before a critical change is needed with the unitary-model interest-rate economy control device; to a multi-component model. (see paper series: Interest Rates & Loans)
BUT, President Barrack Obama, Prime Minister Gordon Brown, Conservative Leader David Cameron, LibDem Leader Nick Clegg, President Jacob Zuma, President Nicolas Sarkozy, Chancellor Angela Merckel & others are locked into defective & destructive finance & economic models, and are being misled by ‘scientists’ who, behaviourally, are acting unprofessionally.
Western leaders REFUSE to engage honestly & transparently, or to reward merit or reward value presented – hence defective & destructive academic models, devoid of any engineering, prevail - hence the majority are oppressed – hence anger – hence violence.
Little wonder; as to why economies go boom/crash!
Imagine the surge of plane crashes if airline pilots were to behave in similar ways – not lame-ducks, but goosed.
Leaders fail to recognise that the world is at war – World War III (Finance Wars).
(It is highly unlikely Scientific American will publish this paper – unedited)
Chris Addington Pr.Eng.
(Under enforced exile from South Africa due to ANC government’s oppressive XDR-nazi system and oppressive economic isolation by corporate & academic world’s.)
XDR = Extreme Democracy Resistant.