Monday, March 30, 2009

An Idea: Federal Reserve Random Moves

Reference historical DJIA (log scale)

Self Organized Criticality (SOC) is a model to describe the dynamics of certain kinds of systems built out of many interacting non-linear actors. The "sand pile" model" relates the frequency of avalances to their magnitude by 1/f (i.e. avalances happen with inverse frequency to their size).

It seems intuitive that economic systems should also show this "sand pile" behavior and this paper claims that stock markets do indeed show "near-self organized critical" behavior. (The exact function is not relevant to my argument.) This intuition for this comes from the fact that each economic actor relies on others in a complicated web of interactions. The value of assets in the system are subjective and are strongly biased by the perception of other actor's subjectively valued assets. Moreover, the perceived future value of those assets is a strong function of the cultural perception of the unknown future. In other words, the macroeconomic system is in a strong, multi-scale, positive feedback.

In the sandpile model, a few grains of sand will end up holding an enormous load of upstream stress and therefore their perturbation will create large avalanches. Analogously, a few economic actors (insurance companies, banks, hedge funds, etc) will end up with an enormous load of upstream dependencies that will similarly cause avalanches if they are disrupted.

In the sand pile model one can imagine a large conical basin of uphill dependencies resting on a few critical grains -- those critical bits are the ones that are "too big to be allowed to fail". Playing very loosely with the analogy, the stress on a gain from its uphill neighbors is analogous to the balance sheets of an economic actor. But not exactly. In the sand pile, all potential energy is explicitly accounted for -- there's no hiding the cumulative stresses due to the weight of each particle. This is not true in the economic analog. Real balance sheets do not account for total stresses because complicated financial transactions (like mortgages and insurance contracts) contain off-balance-sheet information that is usually one-way. For example, when a bank realizes that there is risk in a mortgage they will pass on this cost to the uphill actor but when a debtor realizes that there's more risk (for example, they might know that their financial situation is not as stable as it appears on paper) they will not pass along this information. In other words, there will tend to be even more uphill stress than is accounted for by the balance sheets of each downhill actor.

Now the point.

If you wanted to reduce the number of large scale catastrophic avalanches in the sand pile model, the method for doing so is easy: add noise. The vibration of the sand pile would ensure that potential energy in excess of the noise energy would not be allowed to build up. It's the same idea of forest management -- lots of small fires prevent larger ones. Therefore, by analogy, a good strategy for the Federal Reserve might be to similarly add noise. Conveniently, this "add noise" strategy is inherently simpler to execute than is their current strategy -- they would simply roll a die every few months and change the discount rate by some number between zero and ten percent.

Crazy? Well, as it stands now, the Federal Reserve operates under the belief that it can act as a negative-feedback regulator of the macro economic system. The idea is sound, but based on my experience attempting to control even very simple systems, I'm skeptical of the reality. To begin with the obvious, the economy is anything but simple. Furthermore, the Fed does not have, never has had, and never will have, an accurate measurement of the economy. To wit: it neglected the huge volume of CDOs built up in the last 10 years, and the S&L stress of the 80s, and the tech bubble of the 90s, etc, etc. History shows that there have always been, and will always be, bubbles and newfangled leveraging instruments so anything short of draconian regulation that stopped all financial innovation (which would be worse) will not be anything but reactive. But it gets worse. There are also large and unpredictable latencies in both the measurements and the results of the Fed's actions. Even in simple linear systems, such latencies can have destabilizing effects and since the macro economic system is highly non-linear and constantly evolving the effects are essentially unknowable apriori.

In summary, I suspect that the macroeconomic system is not directly controllable in the way that is envisioned by the creators of the Federal Reserve due to non-linearity, poor measurability, and latency. Therefore, given that the economy probably has some SOC like organization, I suspect that random Fed moves would probably be no worse than the current strategy and would probably be better.

Flagella assembly video (external link)

This is a really nice video about flagella assembly (thanks to Ken for the forward). One detail I didn't know before was that the flagella proteins are denatured for export through a ludicriously small 1 nm channel. All the stuff about the hook length measurements were particularly interesting. Very cool!

Saturday, March 28, 2009

An Idea: Internet Security Though Random Compilation

This morning an idea occurred to me -- a way to stop malware, viruses, and worms. When someone wishes to crack an internet protocol for nefarious purposes, one way to do so is to exploit bugs in buffer handling. For example, some specific implementation of the email protocol might have a bug whereby if certain characters are passed in the addess field then it causes a buffer overflow that could permit writing onto the stack. By sending the right set of characters, the overflow might be directed to upload and execute arbitrary instructions. Similar exploits have existed/still exist in many systems such as the image handlers for Microsoft Outlook and countless other programs.

As clever as it is, exploiting such a bug requires having a copy of the code locally during development so that the programmer can step through it and figure out exactly how to exploit the overflow. Thus, a way to defeat this is to ensure that every single instance of that code running on every machine is unique. Therefore the solution is simple. Write a compiler that generates random code that performs the same task but with different execution paths. Such a complier would stop all such exploits by effectively creating a local unique encryption. A random compiler would be easy to write and indeed already exists in Java as "code obfuscators" for the purposes of reducing reverse engineering. The only difficulty in deploying such a system is that the relevant software could no longer be deployed on mass-produced media such as CDs since each instance has to be different. But this is a declining issue as more and more software is delivered online where each instance could be different. Furthermore, many of the main internet protocols are open source implementations and where local compilation is already possible or, in many cases, already occuring. Therefore adding this feature to Gnu C would be a big step in the right direction.

Tuesday, March 17, 2009

Sound insulation, screens

The wallboard guys came today and added two layers of sound proofing to my bedroom wall.

Kurt finished the screen installation. You can hardly see them. Of course, after a while they'll get dirty. The section on the left is where glass will go which will hopefully abate some of the sound of the neighbor's AC unit.

Monday, March 16, 2009

Sound proofing, Screens

Looking up into the ceiling Bruce cut a hole to gain access to underneath the bathroom.

This wall and the adjacent one are going to have sound proofing board added tomorrow so bed and pictures were taken out of the room.

Bruce finished up the back of the new shop cabinets. The wall board guys will clean this up tomorrow.

Crammed my bed temporarily into the spare room.

Pulled the railings out from the back porch to insert the new screens. But the screens didn't quite fit so there's some modification to be done.

There is a bathroom immediately adjacent to my bedroom and anytime it is used at night I can hear, well, everything. This is despite the fact that the walls are filled with 3" of foam. To abate this, Bruce opened up the the ceiling and sprayed in cellulose insulation above and below the bathroom. This made a tremendous amount of dust but didn't do much to dampen the sound. Tomorrow the wallboard guys come and we're going to expand the adjoining walls with another inch of special sound-proofing board. This requires rebuilding two walls, two doors, and repainting so I've temporarily moved my bed into the spare bedroom. Meanwhile, the cabinets were framed up and an attempted mounting of the porch screens determined that there were a few mis-measurements and will require some modifications.

Sunday, March 15, 2009

Utility yard

Before (aftually after moving a palette of wood with the help of my neighbor, thanks Verner.)

Yesterday I graded and filled gravel along the sides. The brick ramps are for moving the wheel-barrow.

We moved all the bricks and wood into this pile near where the BBQ will go.

After regrading and filling with gravel. (Not shown, about 1/3 as much still to go)

Today Aaron and I did huge amount of work. I dug 3" deep channels under the fence line to improve drainage. The we regraded the area and dug drainage troughs. We moved all the junk out of the back including a half palette of bricks. I've moved piles bricks so many damned times, I've lost count; at least now they are sitting next to where the BBQ pit will be so they are within arms reach of their final resting place. Then we took down part of the fence in order to improve the grade, laid down a weed barrier, and hauled about 12 loads of gravel up the steps. I'm beat.

Friday, March 13, 2009

Pipe move

The plumber Dale came by today to reroute the pipe that was in the middle of my new cabinet space. Unfortunately I forgot to mention to him that the bottom needed to be cut out (you can see the stub at the bottom) to make way for a larger drawer so either I live with it or have him rebuild that when he comes over for the kitchenette plumbing next week.

Tuesday, March 10, 2009

Workshop demo, Kitchenette framing, fence

"Yeah, those aren't necessary", says Bruce as he cuts them out. (He's the one who put them there in the first place. :-)

After duct and electrical rearrangements, leaving only the pipe to be re-routed.

Having two excellent professional carpenters around sure boosts the productivity. We began the morning by demolishing part of the chase that is adjacent to the workshop wall where we are opening space for a new set of tool drawers and storage. This required moving around a few supports, ducts, and eletrical boxes (my job). There's a big sewage pipe in the middle of this which will be re-routed when the plumber comes on Thursday. Then Bruce and Kurt framed out the wall where the kitchette will go and we went over to a discount appliance store and purchased the microwave/vent hood, half-size dishwasher, and gas cook top which look pretty nice for a pretty reasonable price of about $1100. Then I worked for a few hours on revisions to Andy's paper and then after a 1 hour gym, I managed to get 4 of the 6 stringers up on the back fence.

Monday, March 9, 2009

Fence line, Bed spreads, Screening, Sophia Collier, and a paper for the Royal Society

Today was an oddly productive day. In the morning I dug post holes for a last bit of fence line that will separate my utility yard from my back yard. Then Bruce came over for measurement on the screening that for the upstairs porch. Then Amberlee came over and we had a little Christmas where we opened all the packages that she had ordered for me -- a new bed headboard, douvet, sheets, and pillows! For lunch I had a marvelous time meeting with Sophia Collier who was introduced to me by my attorney. Sophia and I were apparently born with the same mutant genes; we both left school (I in 11th and she in 12th) and we went off to various other endeavors (although hers have been generally more profitable than mine!) After a career in such things as soda and mutual fund management, she's now into CNC artwork. She has a CNC mill, 3D software, and a lot of fun ideas. We geeked out for hours on art and science projects of all kinds and she gave me much valuable feedback with regards to my various forthcoming enterprises. After lunch I set the fence posts and poured the footer concrete and then started on the rewrite of the paper I've been writing with Andy Ellington for the Royal Society journal Interface which came back with deservedly so-so reviews and which as a result (as seems to often be the case with peer-reviewed journals) is forcing a rewrite that will no doubt result in a better paper.

Saturday, March 7, 2009

Utility yard steps

This afternoon I built three steps along the utility yard that will be back-filled with pea-gravel forming a series of stepped terraces using the bricks my neighbors gave me.


I attached my custom tiles to the front of the planter my friend Scott Thurmon came over with dirt and plants so the front planter is now complete (except that the irrigation still needs to be connected). In a year or so the red yucca in the middle should grow up to be more proportional to the mass of the planter.

Sunday, March 1, 2009

Acid washing

Today I acid washed the back wall. What a difference the acid makes. Compare to the earlier pictures. I started playing with tiles on the front steps. I haven't made my final decision on that yet. Some of my friends hate it and others love it. Amusingly, so far it seems to break down roughly between those who have lived/traveled in Spain or Latin America and those who haven't.