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jmccauley's picturejmccauley said on 30 March 2013

- the paradigm of the homo economicus, assuming perfectly optimizing egoists with rational expectations, is an idealization, which does not match empirical observations AT ALL.

I have spoken about the Dollar crisis in 4/2007 before it occurred, wrote a paper about it in 1/2008, and have described the crisis in ch. 9 of my 2009 Dynamics of Markets. I find it remarkable that that entire work ha been ignored by the econophysics and economics community.

jmccauley's picturejmccauley said on 04 December 2012

Error above in both thermodynamics and calculus. Q and W are not functions, they're functionals depending on path! 'dQ' cannot be integrated to yield a function.

jmccauley's picturejmccauley said on 09 December 2011

You're right, I was sloppy in language. the U.S. has a $13 tr. debt due to its yearly budget deficit. In any case, the U.S. debt and deficit are not payable. The problem continues because it cannot be solved, except by withdrawal from the habit.

Running a deficit is tantamount to printing money if the debt is not paid: the money was borrowed (using bank multiplier factors), money was created by the multiplier factors. The Greeks cannot pay, the Italians cannot pay, etc. Money was created by the baks to keep them afloat, and now the EU should say to the banks, 'You encouraged the problem, you swallow the losses'. If keeping a bank alive is important, then then a gov't. can nationalize the bank, and send it on its private way later after the debt has been repaid to taxpayers. The U.S. did something similar with Chrysler ca. 1977, and got its money back.

[Blog entry]: The Euro
jmccauley's picturejmccauley said on 10 November 2011

I am far less enthusiastic about the prospects for econophysics now then I was then. In retrospect Paul Ormerod was right: too many econophysics have been seduced by the mathematics of neo-classical economics, or by the notion of cooperating with people who believe those notions. Worse, we are two years into the spectacular, unprecedented financial catastrophe that was programmed by thirty years of deregulation (Italy's collapse, which was foreseen several years ago, will make Greece look like a fluctuation) and yet there is no meaningful discussion by econophsicists of the underlying problems. We live in the era when events expose the lie that the long-reigning economic theory is, and it's as if nothing is happening. I wrote analytically and qualitatively about the causes of the disaster that emerged 9/2007-08 and it's as if I wrote nothing, that work is roundly ignored by the econophysics community. Instead, econophysicists have internal discussions that consider whether there might be some sort of equilibrium or another. There isn't, there never was, and there never will be. If we have nothing to say about current events facing the world then we have little reason to exist as a field.

jmccauley's picturejmccauley said on 11 May 2009

Correction: A date range for 'coming devaluation' is written wrongly in the text as 1971-'93. The correct range is 1971-1973.

JMC (Author)