Posted on 08/14/2019 5:59:02 PM PDT by fruser1
Unlike other central banks that have considered to use negative interest rates to prop up their economy, the U.S. Federal Reserve announced today that they will be using “complex numbers” as interest rates by the end of the next fiscal quarter. Jerome Powell indicated that the initial idea for the major policy shift came to him in an entirely unexpected setting.
“We were having a meeting concerning our IT budget and future technology improvements within the Reserve. Towards the end of the meeting, even though we had not officially considered it, I tossed out the question if anyone had an idea as to how the use of negative interest rates would impact our applications.”
“After a few seconds of silence, one of our IT folks said it would not be a large impact technically, and that it would likely just impact report formatting or website graphical displays, or what not. As the meeting was closing, another one of the engineers present said, ‘Why don’t you use complex numbers?’”
“I didn’t have time then to follow up, so later that day I did some preliminary research (I didn’t even know what ‘complex numbers’ were) and ultimately set up another meeting with a group of people from the electrical engineering (EE) community, as that is a group that uses complex numbers quite often in their work. By the end of that meeting, I was convinced that complex numbers were the way to go.”
Complex numbers are numbers that combine “real” and “imaginary” numbers. Real numbers are the numbers most people are familiar with and include the negative numbers in addition to the positive numbers (and zero) currently in use for interest rates. Imaginary numbers are numbers based on the square root of negative one, which in the world of real numbers, does not exist.
Imaginary numbers are notated as multiples of “j” in the EE community (mathematicians and physicists use “i”) so an example of a complex number would be 3.4 + 2.1j with 3.4 being the real component and 2.1 being the imaginary component. Complex numbers are used by EEs to make certain calculations simpler.
For example, if you remember your days in Algebra, when finding the “root” of a quadratic equation you may have 2, 1, or 0 solutions. Imaginary numbers allow you to always obtain 2 or 1 solutions. In the EE world, complex numbers first appear in circuit analysis with Alternating Currents (AC).
José Moura, President of the Institute of Electrical and Electronic Engineers (IEEE) explains: “Most people ‘get’ the idea of a resistor subject to a voltage having a current passing through it in proportion to its resistance. However, capacitors and inductors are different. In Direct Current (DC) analysis, the capacitor’s resistance is infinite and the inductor’s resistance is zero.”
“But they do have a markedly different impact on circuits when subject to AC. This is where we have developed the concept of “impedance”, which is a complex number “version” of resistance. You can think of the real part as being associated with electrical energy and the imaginary component as being associated with magnetic energy. By using complex numbers, we are able to use the same type of algebraic and analytical mathematics with equations describing the circuit. In other words, it simply makes the math easy and consistent.”
“While it may seem odd to use something “imaginary” to describe something in the real world, keep in mind that mathematics is just a model of the physical world we live in. Just because it’s called ‘imaginary” doesn’t mean that there is no real world impact. Compared to real numbers, which you can visualize as a number line, with operations such as addition and multiplication that “shift” numbers along that line, complex numbers are visualized as two-dimensional “vectors”, with operations such as addition and multiplication that “stretch” and “rotate” vectors on a plane, like the hands on a clock.”
Powell explained the new system for banking within the US, “We’ll be using this to control the M0 and M4 money supplies in the country in an attempt to steer inflation. We would like to see a “straight-line” inflation rate of 2.5% but, as you know, this is never the case with our current system using the positive real numbers and zero.”
“We’re going to start charting the M0 and M4 supplies against inflation on a continual basis, not just quarterly for example. The money supply will be mapped with M0 as a real component and M4 as the imaginary. As such, we will compare in real-time, the current state of M0 and M4 against historical inflation rates. We will then apply a complex rate so as to steer this vector to what we believe will create the target 2.5% rate.”
“What this means for the everyday person is that when you go to the bank and make a withdrawal or deposit, the result of the transaction will be the real number you chose multiplied by the complex rate of the moment. So, for example, if you go to an ATM to withdraw $100 dollars, you will likely get more or less than that, depending on current economic conditions.”
“As an extreme example, with a complex rate of 0.8 + 0.2j, the $100 withdrawal will result in you receiving $80 and $20 returning to the Fed. A deposit of $100 will result in $80 being credited to your account and $20 going to your bank. In actual practice, the rate we’ll be kicking off with would only result in about 5 cents per $100 transaction going to one of the two entities.”
“Of course, as economic conditions improve, the imaginary component will get smaller”, Powell concluded.
Asked if this new system would be too complicated for the general public to understand, Moura said the learning curve would be short. “I think the public have seen plenty of graphs and charts of economic data. Even if they don’t understand the underlying data, I believe they will get the idea of trying to “steer” a curve into the direction of another target curve. This type of visual representation is what we’ll need to focus on in explaining this to the public.”
Brian Moynihan, CEO of Bank of America, says he’s looking forward to implementing the new system. “I think the public will like it. We’ll be changing our ATM receipts to show how much the consumer is helping the economy with their transaction.”
The new rates will be going into effect on 1 October 2019.
What if Epstein swapped Powell into his cell?
OK, that was sick.
Why put that in the post at the bottom instead of the top?
I’m one of the dumb f..ks who doesn’t know a whole lot about numbers and so I kept reading.
Does it make you feel superior to have someone not as “bright” as you read a whole lot of worthless sh.t?
Only electrical engineers will understand this new system.
Yes it is but good job drawing in the EE community personas to give it a momentary lift in cred for the head scratchers.
Life on the J omega plane is fun. Scares the pants off of managers.
Will this be kinda like writing important things in cursor so only white folks can understand it?
Negative interest rates are legalized theft.
But this article is only imaginary legalized theft.
Real dollars now, paid back in imaginary dollars later.
Don’t give them any ideas...
bkmk
Gladly repaid every Tuesday.
.
LOL!
I read it too.
It was just kooky enough to be real.
The Globalist Left needs a recession.
Complex numbers sounded like a winner.
Ahhh, the old quadratic equation. If you can’t dazzle em with brilliance, baffle em with BS.
For now
Are they taking some of our money on every transaction or am I imagining that?
That I did not find the least bit amusing or clever.
Only electrical engineers will understand this new system.
You mean the use of imaginary numbers like the square root of negative one equals i?
I have been borrowing money for some time based on negative interest rates and it works very well for me. When I go to a merchant and purchase something using my Visa or Discover Card these bank companies loan me the money to pay the merchant. Not only do I get the full value of the purchased item using the card but they deposit an additional 1-3% in my account that I can then use for future purchases. I can keep this money as long as I repay the loan each month. I think they call this “cash back” or something.
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