Creating gold out of thin air

Money is difficult concept for alot of people to grasp. After all, having used it for so long, we have somehow forgotten than it is a medium of exchange, and have come to see it as more of a valuable thing in its own right. It does not help that money is increasingly becoming less and less "worthless" in a sense, for once upon a time, money was denominated in gold and silver, itself a precious, scarce, and pretty object. Even if you did not use the gold, and just stockpiled it, you could melt it down, and make jewellery, which are pretty stuff. Nowadays, we no longer carry bags of heavy metal around; instead we use pieces of paper. Paper, too is getting a little cumbersome and expensive, as our poor forests cannot take kind of strain. Plastics then, in the form of credit cards. And increasingly, money have shifted into something that we cannot see directly, as virtual information.

But money is a medium of exchange. You have something I want, and I have something you want. And money is to facilitate this exchange, for it is a universal exchange. Possibly, if you have something I want, then I must value it. So far so good, we are on standard economics theory. The best case scenario for me, is when I exchange my stuff, which I do not value as much, for your stuff, which I value for more. This hardly happens, since you also want to have the best case scenario. Therefore the least that can happen is that we exchange goods of equal value. That sounds strange though, for since the stuff being traded are of equal value, why trade at all? Maybe the case where I value you stuff more than my own stuff, and likewise, for some wierd reason, you value my stuff more than your stuff! It could be the case that the stuff being exchanged are equal in value, but because each of us sees the good in the other's hands as being more valuable than the one in his own hands..we might be better off exchanging.

This strange situation recalls a story I heard or read before somewhere.. Once 2 brothers fought each other over the division of their father's assets upon his death, even though in the poor father's will, he had clearly written that both sons were to get equal amount of his assets. Each son was given 1 house, 2 cars, and $10 million dollars separately(rich dad indeed). However, the worst possible case happened, for 1 brother saw that the other had been given a house bigger than his, and the other brother thought that it was unfair the the first brother was given a more car of better brand. As it was, the truth was that all the assets were equal, but in the eyes of each brother, each thought that their father had been unfair to them, giving them the smaller of the pie. They brought their case to the court. The judgement meted out was that the brothers exchange the assets that was given to them. Upon which, the brothers starting fighting all over again. Now, both brothers saw each other as using the lawsuit as a ploy to lay their hands on the other's assets!

As it is with humanity's greed, we want something that we value highly, but are unwilling exchange with something of at least equal value. Seeing each other as trying to ripoff ourselves, we have forgotten our situation is symmetrical. We keep advocating that we need higher wages, and goods of lower prices, and we have forgotten the situation is closed and symmetrical. Money is only a exchange, therefore it circulates around like charged particles in a circuit. What goes in must come out. For some weird reason, we dislike rich people, because they are seen to be extorting money from the billions of poor around. Perhaps we have forgotten that even rich people need to eat and buy pretty jewelleries, toilet paper, etc. And they use money for that. And where to the money go? To other's people's pockets. To whose? The butcher's, the grocer's, , the jewellery man, etc. Unless, the rich people hoard money and starve to death on their mountain of gold, we certainly cannot remain poor for long.

Crucially, we can perhaps observe that, some people become rich while others are poor, is because money does not flow around in an equal way. For some reason, some people are "funnelers", concentrating money into flowing towards themselves, while outflow of money becomes distributed over many people. Thats why for every rich man created, at least a few thousand people are poor. The reason that a particular person becomes a "funneler" varies, could be due to talents, luck, etc. Additionally, we observe that the more money we have now, the money we can make in the future. This property accentuates the small initial differences, until we have a rather big and discernible inequality. The economists' simple concept a money velocity in an economy is rather simplistic, implicitly assuming that the velocity must be uniform throughout the economy. This cannot be true, anymore than the assumption that all pipes must be of uniform cross-section. A pipe can split into many smaller pipes, and rejoin somewhere else, but the total amount of water flowing must be closed and conserved.

And another thing, value is something that can be created, its not something fixed. If you can somehow be persuaded that a particular object can be highly valuable to you, then value of the object would have increased tremendously. In a world of heavy advertisements, and consumerist culture, value of goods are increasingly rising. And the cost for increasing that value? Very little. A catchy tune; popularity that attract more popularity; etc. The implications? Well, money is being transacted, and reflects in a way the value of goods. If the perceived value of goods is increasing overall in an economy, then either money is flowing more rapidly around the economy, or else, the money supply must be increasing. Both results leads to inflation, and one former leads to more inequality, while the latter creates devaluation of money itself. I correct myself; in the latter case, money supply may not actually be increasing, but the effect is the same. Since value of goods in the economy overall in rising, while money supply, now being controlled by controlled by the central bank is fixed, what happens is that each dollar now buys less goods than before. What do we call this phenomena? Inflation.

Another implication is that GDP rise is not that important after all. Because value of goods can be created, its all in the mind, and therefore is not something fixed and unique. Voila, we can just create more gold out of thin air.

英雄 Heroes

“好快的剑。”

“好字。”
“好剑法。”

“这残剑的书法根本不是什么剑法，而讲的是剑术的最高境界。第一境界是人剑合一，达到境界，连寸草也可当武器。第二境界而是达到手中无剑，心中有剑。赤手空拳，百丈之外，也可伤敌。但是最后的境界是，达到手中无剑，心中也无剑，以万物为友，再也没有了杀的念头。和平。”

"It just dawned on me! This scroll of Broken Sword's isn't about sword technique but about swordsmanship's ultimate ideal. Swordsmanship's first achievement is the unity of man and sword. Once this unity is attained, even a blade of grass can be a weapon. The second achievement is when the sword exists in one's heart when absent from one's hand. One can strike an enemy at 100 paces, even with bare hands. But the ultimate ideal is when the sword disappears altogether. The warrior embraces all around him. The desire to kill no longer exists. The swordsman is at peace with the rest of the world. He vows not to kill and to bring peace to mankind." - King of Qin

Somehow, I feel this has gone beyond the mere sword, but the whole world, everything.

天下

Crackpot physics theory

Just wandering, the following can either be utter rubbish, or the most brilliant work(ehem!must be the genius or insanity in me).

We are all familiar with Coulomb's Law for static charges; inversely proportional to the square of the distance from a particular charge. However, the curious thing is that the electrostatic force becomes stronger and stronger, until it becomes infinitely strong at distance = 0. Thats wierd, doubly wierd. Firstly, if you place another charge, say 1 metre away from the orginal charge, and then u calculate the resultant force for a unit charge placed very very close to the the first charge, you still get a value close to infinity. After all, its not surprising if we recall the law of Superposition, that if you add infinity to any number, you get infinity. The above pic shows 3 negative charges placed along linearly on the x-axis; the y values represent the force you might measure for any x position.

The second wierd thing, is that you can apparently violate Heisernberg's Uncertainty Principle. Lets assume we have a infinitesimal charge that itself has such a weak field that it is negligible. We can use this infinitesimal charge and go and measure the position of a charge particle. For easy analysis, we will just pretend the whole universe is empty and that there's only one lonely positive charge in space. Ok, we cant see this positive charge, but we can feel the force that the charge exerts on our infinitesimal charge. So we move along, measuring a few values, and then, we can measure the position of our positive charge quite accurately! The pic on the left illustrates how we can found that charge particle's position at (4,0) by taking measurements at (0,0), (4,3),(4,-3), and than looking at the intersection point.


Perhaps, the idea that the electrostatic force is inversely proportional to the square of the distance is not really true, we need to correct that, so that there is a finite value for distance equals zero. The clue as to how we may adjust may be lie in the belief that Heisernberg's Uncertainty is correct, therefore the charge must be in some sort motion if you try measure it, as it jiggles about, you cant possibly measure distance = 0, simply because its moving about its mean position.


Dinner now, perhaps more to come next time.

Sands of Time

Time is intriguing, lets face it. Its one of most scarce resources, physics claim that there is no evidence of time at all at micro scales, and we all hear the tick tock tick tock of the clock, all the while knowing that there's another split second gone in the countdown to A lvls, to graduation and bye bye world.

Time, like its other cousin, space, suffers from the continuum paradox. It takes a infinitely many points to make up a line, infinitely many lines to make up a plane, and infinitely many planes to make up a space. Likewise, it takes many many instantaneuous snapshots to make up time. ...zip..and thats it, another moment gone. ...zip...zip...zip.. We have a curious one directionality orientation in time, with every instant twisting forever out of our reach into the void that we call 'history'. Curiously, there is no such directionality built into the laws of physics at all. The laws of physics describe the same thing when travelling forward in time, and for travelling backward in time. ..The arrow of time..as popular science writers put it.

Yet I'll like to believe that time is not made up of countless infinitesimal points. There is surreal-ness in time as countless snapshots. Its also a poor sort of time there if it only works in one direction. I'll like to believe that each point in time is not really a point, but a point that have some sort of fuzziness; it spreads out. After all, our concept of 'now' is not an instant, but a memory of the immediate past, and an anticipation of the immediate future. Time ultimately I believe, boils down into relative changes between objects. If there is no change in the universe, then time stands still for us. Curiously, change occurs in one direction, always towards the most stable state, where energy is distributed as chaotically as possible, where the energy for a particular state is as low as possible. It is this phenomena, that we call "entropy", that I believe, contributes to the essence of time.

It has become extremely popular in movies, especially those kung fu shows, to feature The Matrix-like animations, the slowing down of frames for the lead actor into a standstill, the instant in time being dragged out immeasurably. And then, suddenly, the frames speed up back to normal. Sigh, I wish I had to power to drag out time frames too. But then, I will need a giant black hole, and the power to control the black hole as I like...ah..I'm rambling off again. The point is that such movies show that an instant in time is not an infinitesimal point. There's a 'spreading' out, in which the lead actor, possessing information of the past and armed with the anticipation, prepares his next move.

But we are taking out the fun of living in time; too many people leave out the anticipation. Most people arent even conscious of the tick tock tick tock of time. For those people, time has ceased to be discrete; it has become yet another dull continuum for them.

The Myths of Trade Deficits.

On the global scale, there appears to be a great fear of trade deficits. Even in the standard economics notes given out to us, we are told that a persistant balance of payments deficit is no good.

Like so many economists that champion the laissez-faire market, we will attempt to slay the myths that cloud the trade deficit. First of all, lets address the problem of a trade imbalance. People always think exports good, imports bad. Not necessarily. For trade(in the traditional sense) to even occur, clearly, you must place value on foreign goods. And the foreigners must place value of your goods. The statisfaction that both of you gain from trading as a result, must therefore be greater than the satisfaction derived if both of you had not done any trading. Or else, why trade. Well, we can now insert an accounting medium between, and see that the result does not change. I value a certain foreign good, and is willing to exchange my currency for that good. The issue then, is on the production and consumption of goods. We derive satisfaction from it. Money is just a intermediary for greater convenience. We could just as easily use Maplestory's Mesos as a global currency. If you are importing more than you are exporting, or if you are buying more than you are selling, than you must be borrowing money somewhere. For a normal man-on-the-street, you can go to the bank to borrow money. You can use some of the borrowed money to produce something, or invest in production, or you can use the borrowed money on just consumption. If you borrow money and use some of it on consumption, and the rest of investment, then you are ok in the future. Because you can have the ability to pay back the bank. Same thing for a country. A country like USA that runs a trade deficit, must be borrowing money to finance this deficit. For a country, USA doesnt turn to banks, USA can sell pieces of paper, or sell capital stock. The pieces of paper are basically an IOU, with the condition of an interest rate.

Trade deficits are in no way an economic malaise. Therefore those people who try to use protectionist measures to limit imports are akin to trying to the government who says to its people, dont consume so much, produce more! Like the miser in the fairy tales that accumulate gold that he cannot eat, what is the point of accumulating a surplus of money as reserves if you are not going to spend it? The whole point about economic growth after all, is so that citizens can enjoy a higher standards of living and consume what they want. Now, if citizens are constantly living beyond their means, that is, borrowing just to fuel consumption, than that is a problem. In this case the government will have to do something to tell the citizens not to borrow so much money. It can reduce the availability of credit in the economy. But overdoing the monetary policy can result in many businesses going bankrupt. Perhaps reducing the credit card lines to the consumers. Or going to the supply-side and push out the aggregate supply. That people do not really want American goods must mean American goods are losing their competitiveness. Then Americans must really upgrade themselves. But definitely we do not try to reduce consumption of imports or even consumption, because that would only be curing the symptoms but not the root of the problem.

The Art of Science

People like to think that the Arts and Sciences are like 2 polar opposites. I prefer to think the 2 of them as 2 sides of the same coin. They are in reality the one and same. What do people really mean when they refer to something as "The Art of..", "The Science of.."? Maybe they meant that when something is an art, that something involves a great deal of creativity. And when something is a science, then that something involves the precise application of the scientific method. If that is true, then the implied meaning is that creativity is messy with no rules nor bounds, while the scientific method is precise, rigid, with well-defined bounds.

However, this is not the real way in which we do an art or a science. More often than not, for an art, we learn a certain set of rules, or methods, then we progress an improvise from there. Similarly for a science, scientists more often than not, do not even use the scientific method at all. Sometimes, their answers arrive in a stroke of inspiration.

You know, I see many people who try to do physics or chemistry or maths, and they are trying to find the answer to certain particular problem. Then they try to rigidly use a certain set of rules, or method taught to them. But sometimes, you can solve a certain problem by a easier route, or that the answer lies in a certain insight about the problem. In such cases, its much better to apply creativity and messiness to solve the problem at hand. One does not so much concentrate on the problem, than relax one's mind towards the answer. The divine stroke of inspiration that comes when one closes the eyes and just let the problem float around, the elements in the problem mixing and recombining in new ways..then the AHA! factor comes in. To say that scientists rigidly apply the scientific method is wrong..they usually work by messier routes.

The models and methods used in science in many cases are highly elegant, from a certain perpective, no different from beautiful music or dances, the beat of a different drum. We should say that science can be an art too.