I parked at Macy's and walked towards the mall but the glass door was closed and crossed with yellow police tape. I turned towards the stairs but the Revlon girl stopped me.
"The mall is closed, there was a bomb threat".
Ahh, that explained the police cars at Cheesecake Factory. I assumed they were chowing down for free. So this is how it starts. Tests. Sounding out the response, disrupting the mall for two hours, displacing hundreds of people. I'd just finished playing pool with a quiet, thirty-year old handyman who suddenly launched into a rant about Obama, The Bailout and the Federal Reserve.
Peer-to-peer systems are redundant but they're also un-specialized. Our economy revolves around specialized labor, which creates a certain level of centralized points of control. Unfortunately, the Powers That Be seem unaware that centralized points of control are also centralized points of failure. It doesn't take much to gum up a complex system.
If I'm creating a complex system, I want to minimize dependencies. Debt requires identity, but gold does not. Identity translates into knowledge and control of relationships and history. This complexity and dependencies imply that the Federal Reserve is not a money system. It's a social control system masquerading as a money system.
It came to me
Suddenly
As I sat in Starbucks
For an Eternity
The hours pass...
The days go by...
But has anybody really tried
To cross that line?
To get inside?
Free markets are not free. There are costs to gather information, build context, compare choices and estimate outcomes. "Transaction costs" are the time and effort to execute a transaction. Schramm's communication model ( based on Claude Shannons' theory of communication ) exposes the mechanism of transaction costs. The Meme Theory is an empirical use of the Schramm communication model.
Jack creates a message, encodes contextual information and transmits it to Jill. Jill receives and decodes the message using her own context.
If their contexts are identical, if they possess the same vocabulary and beliefs (homogeneous), then transaction costs are low. But as their contexts diverge (heterogeneous), transaction costs rise from translation errors, miscommunication, need for synchronization of contexts. This balance of homogeneous versus heterogeneous defines architecture. How is context is synchronized and why does it diverge?
For human beings, sending and receiving information requires time and effort. Just like computer hardware or networks, human beings transmit information at a fixed rate, due to impedance in communication.
Schramm's communication model shows low-level mechanics. Coase Theory gives a strategic perspective of costs and leads us to design patterns...
"because markets are costly to use, the most efficient production process often takes place in a firm"
Organizations reduce transaction costs for a goal or product. Fewer transactions mean less human interaction; a reduction in the time and effort to assess information. Transaction costs are the foundation of division of labor in economics and the basis for design patterns, topologies which minimize transaction costs. The right pattern at the right time creates optimum efficiency and response.
Assemble four workers into a peer-to-peer topology. Each team member acts as an independent participant in a perfect free market. Here we have twelve information channels. As new members are added, channels (and transaction costs) rise exponentially and the effects are...
♥ High redundancy: workers send duplicate data to each other.
♥ High contention: duplicate data is misinterpreted or outdated.
♥ High latency: most data travels three hops.
Now assemble the same four workers into an organization (Mediator pattern), add a manager to partition and direct information to the right destination. Team size increases 25% but information channels shrink 33% to eight channels.
♥ Low redundancy: each worker has only the necessary data.
♥ Low contention: The manager is the sole source of information.
♥ Lower latency: information travels a maximum of two hops.
The hierarchical organization substantially reduces errors, conflicts, unnecessary duplication and decreases reaction time by reducing transaction costs.
1) "Noise" is an all-purpose placeholder for miscommunication in the traditional Schramm model. The Reflective Schramm model is more detailed description of miscommunication & context. A person's context knows nothing of external contexts, only the internal models it develops of externalities. Miscommunication is a mismatch between the model and the external context it models.
2) Internal models are developed over time through sets of send/receive messages. Miscommunication occurs from improper interpretation of received messages, delay of receive messages, initial development of a context model or a poor methodology of send/receive messages used to develop the model.
3) In the Recursive Schramm model a person's context contains models of itself which are derived from other people. Jack builds a context model of Jill. But Jill's context model contains its own model of Jack. An accurate model would include Jill's model of himself.
Implications: How we derive a context model is vital. Relationship determines appropriate exchange. A set of exchanges which are narrow and repetitive will produce a limited context model. If we know that future exchanges are equally narrow and repetitive, then the model might be acceptable. But more likely, the methodology of exchange is flawed and produces a flawed context model, which generates continuous miscommunication.
I'll repeat that. How we interrogate and interpret determines the accuracy of future communication. How we ask questions and interpret answers builds a foundation.
"Sure, but I thought I might be able to talk some sense into you.
And I probably would've had to paste you one getting the gun.
And I don't hurt girls." - Marv
The United States abandoned the gold standard thirty-eight years ago.
Paper money always fails because it lacks a mechanism to enforce long-term value.
A new commodity-based standard for money is coming, most likely with gold as a major component.
I) Electrical Induction - "A charged object may induce a charge in a nearby neutral object without touching it."
II) Joseph Goebbels - "If you repeat a lie often enough, it becomes the truth"
Perhaps if you repeat often enough, even the truth becomes a pervasive belief. Advertising seeks to turn predisposition to action. In a bell-curve distribution of behavior, there are usually buyers predisposed to purchase a product. Advertising seeks to convert that predisposition into a concrete effect. The graphs shows an example of memetic induction. YouTube.com comes online in early 2006. Within six months, hit counts for "you", "yours" and "yourself" are rising in tandem with YouTube's network traffic. The theory is that constant repetition of "YouTube" in people's minds induces associations with similar words like "you" and "yours".
My Diffraction Theory states that periods of memetic susceptibility can be inferred through semantic analysis and exploited.
The Induction Theory is part of my DEFCON 17 presentation. Police are well-aware of the "copy-cat" syndrome; a unique and visible crime inspires a few predisposed people to mimic the crime. Consider these recent events in terms of "Diffraction Theory", "Induction" Theory" and copycat crimes:
Australian Fire Arson - According to the latest reports, there were multiple, unrelated arsonists, i.e. copycat crimes. What if many information sources had been broadly seeded with the concept of "fire" and "arson" prior to the outbreak? I haven't previously written about the synthesis of memetic manipulation and physical action but the concept has been in my mind for the past two years.
The Mumbai Attack -. Here is a similar concept, a synthesis of tactical information, physical action and propaganda broadcast.
In Dec, 2005, I predicted that Mono for Linux was Dead On Arrival. The Monobots threw a fit, of course, cursing me long and loud but the past three years proved me right. Mono has gained almost no traction in the marketplace.
My reply to Neil McAlister's recent Mono column and the Slashdot Mono discussion returned a hitcount which implies Mono is STONE COLD DEAD, despite a small pickup in activity on Indeed.com. Nobody cares enough to even read about it.
"If true, everything interpenetrates everything else in the entire universe. The electrons in the deepest microtubules of your brain are connected to the electrons emitted by stars millions of light years away."
"The human being may be nothing more than a television receiver floating through an endless sea of frequencies that we then translate into a sense of reality that is both shared and individualized to some respect. However, all must have the same ability to share, because the whole is affected by any part."
"Paranormal experiences would also be explainable. Just like electrons can know what the other is doing across infinite distances, so too could human beings know what others are thinking or doing, because the distance is an illusion and the connection is solid and without exception. There is no translating between minds, because we share in the same pool of consciousness at some infinitely small level. It's only a different channel on the television set of mind."
A global mechanism for commonality versus differentation
And a universal transaction layer.
The United States survived wars, plagues and depressions for 233 years but it may not survive forty years of paper money. The Federal government looks increasingly like a dysfunctional system in systemic failure. I expected a resurgence of States rights but it seemed so obvious that I didn't bother with an official prediction.
It's a cycle. Tolerable debt turns intolerable, then irrational. Good intentions become white lies, then larger lies, deceit, corruption. The slide down the Slippery Slope.
We know that Lehman Brothers collapsed The Bubble. But why now? Why them? The Bubble was in motion for many years, perhaps decades according to Kondratieff Wave Theory. It appears the Treasury allowed Lehman to fail as a warning to financial speculators. But why now?
The ability to predict behavior is the ability to control behavior.
In a free market, no single actor can influence the market. But as debt grew and consolidated into fewer hands, the Financial Oligopoly grew and a positive feedback loop developed. The Lehman Brothers failure was a counter-balance to the moral hazard of previous bailouts. Conformity of behavior was the indicator of that hazard. The investment banks engaged in ever-greater leverage and risk, intending to continue until failure occurred, expecting to be bailed out. The Lehman failure was a function of conformity and consolidation, a failure from a monoculture of belief.
Differentiation creates a wide range of response to action, so it's harder to predict, harder to manipulate. A system (such as the credit rating system) which seeks or encourages conformity has decreasing stability.
In June, 2008, I called Wells Fargo as a short at $26. WFC pretended to recover, then finally collapsed to $13.74 (50% loss) in January. But I admit, I wouldn't have had the courage to stay short.
Today I pondered on how credit ratings created a "yes-man" society in the United States. As ratings grew in use and importance, more people focused on the letter of the law instead of its spirit. They took small, immediate action for their rating at the expense of long-term position. And they were ignorant of the Tragedy Of The Commons from increasing debt. Their ratings rose but not from their character or integrity, which was the intent of the original system.
This is the Observer effect - the act of measurement creates incentive to manipulate the means of measurement.
Real-time incremental risk was front-loaded into the future. The accumulation of many small risks became future systemic risk, and eventually a systemic failure as even "excellent credit" risks defaulted on credit cards, car loans, and even prime rate mortgages.
America became a "yes-man" society; a skyscraper with a rusted-out framework, waiting for collapse. The system bypassed the truly ethical and cautious, and flagged high-risk behavior as "normal" and "desirable".
No, not the musical group. My Internet pals. Well, my ex-pals. Kurt, Beck, Nate, the Three Stooges, all pretenders of one sort or another. They trail me around the net, desperate to prove something, anxious to possess things I don't care about; territory, money, position, sex... who knows what? Anxious to snap up the scraps I leave behind? I don't care to know, I purged their auras for a reason. Likewise, I don't know what she intended but she showed me The Path when my pseudo-life broke down.
What matters is what we do in The Now, in the temporal space of our consciousness.
