*{New, Important}*

**Can Future Systemic Financial Risks Be Quantified? Ergodic VS Nonergodic Stochastic Processes, by Paul Davidson**

The Pragmatic Maxim___

*“Consider what effects, that might conceivably have practical bearings, we conceive the object of our conception to have. Then, our conception of these effects is the whole of our conception of the object.”*C.S. Pierce

The Triadic Maxim___Any Idea;

*“Arithmetically check all possible*Me

**effects**, against all possible**premises**, and the combined results will be the total**actions**of the idea.”“Hi Joseph, I liked very much what you said the other day about the world needing to recognize a higher conceptual level of true eclectic understanding, and from a new ontological geometric perspective...” Well thanks Robert for the compliment, but it’s really not to my entire credit, as I just happened to have studied many of the world’s greatest master-minds, for almost sixty years now. I just happen to have a photographic memory, and my grandfather taught me early-on how to think truly analytically. If it weren’t for him, I doubt my mind would have been able to protect it’s photographic potential… But first, I’d be interested in your views about the global mess we are truly in, so, what is your general view, of the several fields we’ve recently been discussing…?

“…Well Joseph, I do accept your easier concept of keeping a conversation to a minimal of three concepts at once, as any larger number becomes difficult for perception to juggle at the same time. So as you say the triadic is the simplest/complex conceptual ground to most successfully relay ideas between two discussants. As to content, law, psychology and money are perfectly satisfactory to me, to discuss the world’s complexity, as long as side issues are merely allowed for clarrifications?” Oh, that’s fine with me Robert… “First, as to law and money, I think money is ruling law, not only nationally, but internationally as well, and this in turn, effects the psychology of all of us, as American citizens, but I’m not as certain as you are about it boiling down to the prices of currencies. To me currencies are just another commodity, controlled by the “Supply and Demand” of market forces as per Adam Smith, and long term controlled by David Ricardo’s doctrine of “Comparative Advantage”. I still have a lot of faith in market forces to work out the social/psychological problems, so you’ve got further convincing to do, if I’m truly going to reach your conclusions of a strong dollar creates a weak nation, and contributed greatly to the financial mess, whether national or international, the world truly finds itself in.”

…And Robert, do you notice a possible crack in your thinking, as pertains to the word “faith…? “No, not really. What do you mean?” In my opinion, when we take information on faith, even though it may be historically accepted for centuries, is it analytically, necessarily true…? “I never thought about it that deeply, to tell you the truth, what do you really mean?” I guess I’d have to expand our agreed triad to a fourth side-issue to really capture my idea, if that’s all right with you…? “Sure, Joseph, that’s fine, as long as it doesn’t take us too far off course…?” Oh, I don’t think it will, as I’ll pertain it to the triad we agreed on. As you know, we’ve earlier agreed that triads are easier to deal with, and we’ve already discussed, days ago, the prime triad I always work with, the triangle of intuition, logic and mathematics, with math always deciding the intuition’s and logic’s validity, so I’m simply drawing from that triad and applying to the one we’re discussing today. And, by applying mathematics to faith, we can eliminate the pesky bug of “faith” in your statement, to make the statement more analytical, if you don’t mind…? “…I guess that’ed be fine with me, as long as it’s explicated enough…?”

Ok…, to me, Smith’s and Ricardo’s main ideas are both two mathematical conceptions of political economy, and both were quite true under the then gold, silver and other by-metal systems, to a high degree of market actions, but never fully true, as history’s bad actions are well witness. Yet, after WWI, when most of the world moved off these standards, the truth of the maths applied to law, psychology and money changed drastically, yet the world continued to believe, i.e., had faith in them, long after they became ineffective, thus ending with the Great Depression and WWII. Tis true these ideas both have mathematical merit, but only as pertains to the global exchange law regimes instituted and enforced, at the differing times of global actions. As we well know, the Bretton Woods system had to be invented and implemented to solve the then world problems, and that’s just then, and not now, or I should say the last forty years of these very maths becoming, once again, invalid as to law, psychology and money’s true global transactions’ histories.

Now, as to the central core of the problem in historical mathematics applied to economics, i.e., law, psychology and money, it’s according to whether true probability averages, or chance probability averages are applied to statistical mechanics. As in the case of the economic mathematical founders of the 19th century, one used the true probability averages, one used a mix of both averages and chance, and the third used straight chance probabilities. These three economic, etc., mathematicians were Jevons, Piano and Walras. The general problem was and is that most of the world, by propaganda accidents of academic acceptances, accepted the more false chance probabilities maths applied to Smith’s and Ricardo’s initial ideas. “But Joseph, how could an entire academic world have adopted the wrong standards of math?” It’s a rather long story, but I’ll simplify it as much as possible.

You see, Jevons used the real statistical averages of Huygens and the insurance company probability statistics of historical averages, then applied these real numbers to his economic writings. He also had the real help of DeMorgan updating much of the maths of his day. Also Charles Sanders Peirce, in America, was updating much of the mathematical algebra, and studied Huygens, Jevons, DeMorgan’s and Schroder's ideas thoroughly, and agreed with them against the chance probability ideas of Beyes and LaPlace, etc., which Peirce criticized heavily at the time. Peirce also worked on an economic paper for his father in the early 1880’s for a Harvard presentation. He further wrote his own ideas, which were shared with many English and European master-minds of his day, based on the insurance statistical averages, which were in line with Huygen’s statistical averages, as applied to Gibbs’ statistical mechanics. On the other hand, Piano used some of Jevons and Peirce’s mathematical ideas, yet also used some of Beyes and LaPlace’s false ideas of chance statistical averages. Oh, they may work for special case dyadic applications, but economics is a p-adic mechanical process, requiring the more sophistocated real averages. And Walras used almost entirely Beyes and LaPlace chance statistics in his “Equilibrium Analyses”, thus fostering a really faulty system into the mathematical economic lexicons. Now, as you may know, many academics are a bit lazy when it comes to complex maths, so over the years, the simpler methods of Piano and Walras were more accepted than the truer systems of Huygens, Jevons, Gibbs, Peirce, Veblen, Keynes and or whoever, because these statistical average systems are much more complex to integrate into statistical mechanics than the simple axioms of Piano and the equilibrium and ergodic(tends to equilibrium; also ergodics was Boltzmann’s baby, and he was then the most popular European physicist) formulations, than are the more complex maths of Huygens, Jevons, Gibbs, Peirce and Keynes true maths. Of course, to add insult to injury, in the 50’s, a Nobel Prize was awarded to Arrow/Debreau, for the very wrong faulty maths, based in false ergodicity(as applied to economics, yet correct when applied to physics) and false equilibrium of economics, when in fact, economics always seeks liquidity(Keynes’ LPT, liquidity preference theory), whether equal or unequal. In fact, it’s easier to make higher profits with unequal prices, thus attracting the speculators, to further pressure the laws of market functions, as has happened, as we well witness.

“Wow Joseph, that’s quite an analysis to follow. Is it historically accurate…?” Absolutely, Robert. All the facts are there for anyone to follow up. The best place to start is with William Whewell from England, and Florian Cajori from America. They both wrote in depth histories of the inductive sciences and mathematics. Further, one can trace much of the earliest probability math attempts through Juan Vives, when the Arabic to European translations and transferrences took place, from the Old World to the New. Stay away from Heijenoort and his follow on, as in my research, he seems to be a KGB plant, going back to the twinties, to infuse disinformation into American, English and European academic logic and mathematics. As a matter of fact, he was Trotsky’s secretary, in Mexico, during the thirties, plus a lifelong socialist/communist, when it truly mattered to Russia and America. So, Heijenoort’s book, “The History of Logic” is one of the major influences in mis-directing western logic and mathematical ideas, over the last 80+ years, into outright dis-information___This is very easy to see when one simply reads these three histories mentioned, and compares the quality of real references, contents and contexts. Of course, the greatest influence was academic mathematical laziness. “…This is a lot to take in all at once, but you’ve got me hooked, as I’ve never heard this history of thought before. So, what you are saying is, we’ve all been seduced by an improper probability mathematical interpretation, statistically applied to economics’ “Supply and Demand,” “Comparative Advantage,” “Equilibrium Theory,” “Ergodic Theory,” “EMT(efficient market theory),” or, as all these mathematically apply to law, psychology and money…?” Exactly, Robert…! “If that’s the case, what do you suggest…?”

First, we must establish the true problem. It’s a scientific academic problem, at the highest of intellectual levels. I full well realize, it will be no small feat to over-come. As a matter of fact it’s the highest mountain true intuition and intellect have ever been asked, by nature, to climb. By nature, I mean we are being forced by world conditions, for our very survival, to right these wrongs. I suggest first, thoroughly and scientifically, studying and

**knowing**these two maxims;

The Pragmatic Maxim___

*“Consider what effects, that might conceivably have practical bearings, we conceive the object of our conception to have. Then, our conception of these effects is the whole of our conception of the object.”*C.S. Pierce

The Triadic Maxim___Any Idea;

*“Arithmetically check all possible*Me

**effects**, against all possible**premises**, and the combined results will be the total**action**of the idea.”Only then can we begin the journey. I’ve already thought the paths necessary to travel these immense problems to solution are through linking the true ideas of history’s many master-minds, with the present world’s, nearest as possible, master-minds. To me, this would be linking the best mathematicians, philosophers, logicians of ancient, middle and modern eras, with the best mathematicians, philosopher, logicians, linguists, game theorists, psychologists, historians, whatever eras and fields... I’ve already made quite an extensive list of ancient and modern names that qualify to the standards I have in mind, but the task is daunting, no doubt. First, we must produce and gather enough pertinent material to induce these master-minds to join our work in progress, then maybe we’ve a chance of obtaining the huge goal, of re-educating a truly undereducated world. I must say, more than anything, these ideas should be centered on a complete understanding of Charles Sanders Peirce, as he’s already walked the scientific discovery path, the rest of the world must now tread…

“I know you’ve mentioned it many times befor, Joseph, but why put all your eggs in one basket, with Peirce…?” Just thoroughly consider the complete implications of the two maxims above. They are both the only true universal scientific methods of investigation ever offered to the world. All mine is, is the simpler interpretation, easier to remember, of Peirce’s original. Consider all the possible implications, and we can conquer any mountain, no matter how huge… “Evidently, I don’t see exactly what you see in them. Could you explain a bit more Joseph…?” Let me reword both, then maybe you’ll see;

The Pragmatic Maxim___

*“Consider what effects, that might conceivably have practical bearings, we conceive the object of our*C.S. Pierce

**(best possible liberty)**conception to have. Then, our conception of these effects is the whole of our conception of the**(best and highest possible)**object**(a priori arithmetic liberty)**.”The Triadic Maxim___Any Idea;

*“Arithmetically check all possible effects*Me

**(of any monetary law system)**, against all possible premises**(of any new monetary law system suggested)**, and the combined results will be the total action**(transactions and habits of the people)**of the idea.”“…Hey, I might even be catching on, but that’s a tall order, even for the world’s most capable computers and data storage systems, and what about the uncollectable numbers, from the unreporting countries…?” There’s a slight problem, but you know what Ol’Man Bechtel said; “Problems are just opportunities in workclothes.” We can use new international laws to entice many to report. The holdouts can be figured with real probability averages to the true statistical mechanics needed. Remember, it’s only the wrong math presently preventing the total number logic functions. We already have most 80% reporting(areas where needed), and may be able to achieve 90% with new laws. That’s plenty accurate to figure the total averages needed to figure the two above maxims. “…Well Joseph, I think I can accept that, but let’s discuss the main topic I wanted to address, which is your quote the other day of: “Big strong dollar, make big weak nation”, as I don’t thoroughly, even yet agree. I know it’ll take me time to synthesize what you’ve said today, but I like to go a bit deeper into the dollar issue. You mentioned its triadic function. What did you mean, exactly…?”

As you know the Pythagoreans were big into the triadic principle of the necessity of the law of “mean terms”. They also termed this mean “the continuity principle”, and it’s been the core of mathematics ever since. The internal continuum is what all serious mathematicians figure their arithmetics from. It’s really just the internal intuitive abstract space of perception/mind/cognition, whatever. It’s easy to see the continuum mechanics through Parmenides scant work… So, let’s start with something simple and known to be triadic___constitutional government of most modern nations. “Why triadic Joseph…?” Ah…, three branches of government, 1.Executive, 2.Legislative, and 3.Judicial, and most all developed nations of somewhat similar forms of freedom/liberty do have such similar structures of this triadic nature. Even Madison, when he dreamed it up, was looking at a brass model of Copernicus’ universe, in the Dean’s office, when he entered King’s College. He stated in his notes, the tri-balance of powers, thus the triadic. Now, let me explain the further interpretation of its operations as to local, national and international laws or social contracts of. Take yourself. You have a self-constitution in direct or indirect relation to the local/national constitution. Now, this self and national constitution has a further relationship with the international constitution(finance, trade and diplomacy treaties) with other nations, and they in turn have the reciprocal triadic relationship, from their side of the triad of total law structures, making the whole triad function as the political, trade and transactions system it is. So, it’s really a triple triad of law relationships. I’d say that’s quite triadic, wouldn’t you…? “Guess you’ve got me there, Joseph, but what about as to the dollar, or currencies, are you saying the same law contracts/constitutions apply…” Exactly. Just take the price of a loaf of bread, here in America, and that local price has one price relationship with the dollar, a second of the dollar to the yaun, of China say, and a third of the yaun to a loaf of bread’s price in local China. That’s the primary triadic pricing mechanism of capitalism between any two nations. Now, just multiply that by 232 nations, and that’s the 232 triadic transactions nations’ mechanical pricing processes of the total capitalist legal system, personal/local, local to international, and international to international, plus all the reciprocals. Now, do the math. See the triadic complexity…? “Oh yeah, and it’s immense. Is it over-comeable…?”

And here’s the real surprise. Yes it is. All we need do is apply the ever-existing eclectic ontological geometry of the many schools of our entire history, in entirely new ways, never before tried… “What do you mean by that, Joseph…?” As I’ve mentioned to you and in past posts at my blogs, we can use the symmetric universal formulas and laws of physics, in conjunction with the early Greek’s geometry, to prove the actions of the two maxims, I already stated. The most powerful mathematical social and political economic proofs can be supplied by either the Pythagorean Theorem, as represented by Kepler’s Triangle, or The Golden Ratio, creating The Golden Mean, representing within it the Golden Variable, or Archimedes’ Center of Mass universal formula, or his Trisection of an Angle, to achieve the social mechanics proofs necessary to convince the wisest of academic in the world, as these geometries are from the groundedness of true arithmetical grounds possible___Natural creative geometry… “Joseph, what do you actually mean by the Golden Variable…?” That’s a good question Robert,. Within the geometry of the Golden Ratio, is the area of the Golden Mean of liberty’s feasible actions, yet these truths of liberty must have a representamen. The total truths of liberty must be variable for liberty to function, so I’ve designated the Golden Variable, within the Golden Mean, created by the Golden Ratio to be the “Necessary Truth Condition” of liberty’s actions. Our personalities require the freedom to express themselves, within the respect of other’s personality freedom’s liberties... “…Ok, I guess I can accept that explanation, now as to the dollar, how does a big strong dollar produce a big weak nation…?”

Well, the answer to that question is the answer to all the world’s nation’s history of gaining and losing their empire status, through the process of perpetual economic suzerainty, or economic power passing from one empire to the next, as may be now passing from America to China, if we do not awake from the great mathematical sleep. In `44 and `45 we instituted the Bretton Woods international monetary system, which worked somewhere’s near good until the first currency crisis of `68, while America was heavily involved in the Vietnam War. Instead of repairing the currency exchanges to a proper balance, America started relinquishing gold to France and a few others. We should have overhauled the entire system to the proper function then, but we didn’t. The problems of currency imbalances continued on into the Nixon Administration, until he finally took America off the gold standard in `71, and finally ended the balancing Bretton Woods currency system in `73, thus ushering in the very unstable system of floating currencies, worldwide. Of course the false academics of the mathematical schools had been waiting in the wings for just such an opportunity to foist their disinformational mathematical economic ideas on an unsuspecting world community. Oh, there were cries from England and Europe, but the loudest voices were the Beyesian, Laplace, Smith, Ricardo, Piano, Walras mathematical probability schools. So, we’ve been under the spell of false constructed math schools of political economy, verses the true creative mathematical schools of years past.

As to the dollar gaining in strenght from the `40’s to the `70’s, the problems were really minor, due to the fact of America benefitting the most from WWII, by being the only nation most undamaged by the war, and ended rebuilding England, Europe and most of the others, which had been greatly damaged by the war. So, during this period dollar strength did not harm America, even though we became the key currency of most all international trade and finance, but from `73 to today, it’s been an entirely different story, as we’ve not had a world to rebuild, to offset the excess costs involved, especially of policing the entire world for free, thus the massive expansions of our debt to GDP ratios. Any nation can maintain an overvalued currency for a certain number of years, depending on the economy’s strength and the creativity and productivity of its people, but no nation can maintain the “Comparative Dis-Advantage” forever. We crossed this barrier somewhere in the `80’s under Reagan, and have been sliding downhill, into national debt insecurities, ever since, due to nothing but a dollar___far too strong. Yet, we have a problem to reducing its value where it’s the key world trading currency, just as every nation of the past had the same problem, at the peak of perpetual economic suzeraintic power curves. The Egyptians, Greeks, Romans, Byzantians, Dutch, Spanish, French, Germans, English, and many others already experienced the far too strong a currency histories, and now it’s our turn, but is there a way out, is the real question. As I’ve told you already, and recently posted these ideas on both my blogs, I’ll not repeat the ideas now. You know them well.

What I will do is describe how the lesser nations with weaker(lower value) currencies act through mercantilism against the hedgmonic nation, as we now are. The mechanics of the mercantilist is easily seen through America’s own early history, when Alexander Hamilton turned the nation’s trade policies against England and the Europeans. We had all the “free land and resources” to flood the then over-priced world, thus making their currencies over-priced as to the then existing gold, silver and mixed currency systems. The old nations also had “Imperial Preference” laws which we refused to respect, some years after the Revolutionary War. Hamilton, recognizing the possible dominant potential of America’s trade position instituted heavy import tariffs and no export taxes, which put the nation of mercantilist America against England’s, Europe’s etc., hedgmonic nations/empires. They possessed “real” high currency costs, internally and externally, while we possessed “real” low currency costs, thus over the course of the next 200 years, their high currency costs reduced them to far weaker empires/nations, of their former selves, while America became the dominant world player, but passing herself, from mercantilism to hedgmony in the process, against most of the rest of the world nations. So, big strong dollar make big weak nation___It’s just an obvious historical empirical observation. It only takes looking at the rising costs of labor and resources in America, and her major off-shoring efforts by the major corporations, over the last 40 odd years, and we all know the results___China the bull in the china-closet, and thoroughly as mercantilist as we were 200 years ago... I’ve also posted all about this on both my blogs, which you Robert, have read, so I need not go into it. That’s most of what I have to say for now. So, any further questions…?

“Oh yes Joseph, I have a few… I’ll take them one at a time. Why did we allow this to happen, if history was so clear..?” …Well Robert, I’ve described economic history clear to you, but the academic and political pin-heads of power have never had the clear view I’ve discussed. Remember___The academic logical and mathematical self-brainwashing…?

“…You mean to tell me that a whole nation could be so gullible…?” Yes Robert, I mean exactly that. It’s not everyone that’s blind in America, it’s just the orthodox schools of flawed math, politics and economics are and have over-ruled the heterodox schools of true math, politics and economics. Even as far back as the `60’s I read William Spalding’s truth about economics, from an international banker’s perspective, as he worked in Indian Banking, for England back in the twenties, but these type of books just gathered dust on the university library shelves. As proof, I checked out many of the world’s best realist authors from the `60’s to the present, and most of these books still had the original library jacket envelops inside, never being checked out___the tell-tale history of academic research___Researchers just seem to go with the popular consent, usually guided by professorial entrepreneurship. Yet if I checked books of less import from the same periods, they’d been often checked out. Books such as Paul Einzig’s, Gustav Cassell’s, Child’s, Hogsdon, Foa, Conent, King etc., and hundreds of others of the most important on international banking and trade markets, forward exchange, foreign exchange, speculation, hedging, short sales, capital flight etc., either were’t checked out or very rarely, so the library records are very clear proof, and this is at some of the nation’s best universities, and the Library of Congress to boot.

“…If our academic and political elites aren’t doing the deep research required to properly run a complex nation, what’s to be done? Really, I just can’t believe it…” Just go to the libraries and check it out for yourself. I’m sure it’s no different today, as it held true for me all through the `70’s to the `90’s. I just haven’t checked recently, as I didn’t want to be any more discouraged than then. Just look at the mess we’re in. It didn’t come about because we were brilliant___It came about because we weren’t brilliant, and we weren’t brilliant, because we were seduced, brainwashed and cajoled by the false academic/political/mathematical dis-information parade of the last 80+ years.

“…Seriously, what’s to be done Joseph…?” Study the real triadic facts of the laws, psychologies and monies, with the guiding eye of math over intuition and logic. Follow the pragmatic and triadic maxims of true scientific investigations… “…I’m too tired to go on any more today. Let’s call it a day…” Yeah, that’s fine with me. We’ll take it up again tomorrow if you like… “Give me a few days to digest this information…” Ok, see you later. Fly low…

Oh Robert, remember, I call this;

**“The Eclectic Ontological Geometry of Global Markets and Transactions…”**

“Ok, see you later Joseph…”

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