Probably, this question will never be answered, but being only 23, I have barely began to experience the reality these authors seek to understand. I can live this reality and hopefully discover something worth telling others. Anyway, besides reading, Yoga and meditation have been my most direct experiences with the spiritual nature of the mind and universe. And just a few days ago I watched a video with Huston Smith. He makes me want to travel the world and experience other cultures. I have started reading his autobiography, Tales of Wonder: Adventures Chasing the Divine. Smith appears to be a fascinating individual and I think that I have much to learn from him. Perhaps you have read Smith? If not, I highly suggest that you do.

Quote from Edgar Mitchell:

“I realized that the molecules of my body and the molecules of the spacecraft had been manufactured in an ancient generation of stars. It wasn’t just intellectual knowledge — it was a subjective visceral experience accompanied by ecstasy — a transformational experience.

(…)

The experience in space was so powerful that when I got back to Earth I started digging into various literatures to try to understand what had happened. I found nothing in science literature but eventually discovered it in the Sanskrit of ancient India. The descriptions of samadhi, Savikalpa samadhi, were exactly what I felt: it is described as seeing things in their separateness, but experiencing them viscerally as a unity, as oneness, accompanied by ecstasy.”

The previous quote from Mitchell reminded me that what we see, hear, feel, taste, and smell originated in a stellar explosion more than five billion years ago. However, I think we can look back even further; when all matter in the universe was in a single sea of energy. We are all of such form and substance. Can we look back even further?

But tracing back our origins to the first stars suffers as a mental process. The neurons in our brain store such information and understanding as electrical impulses. Neurons acting in complex patterns inside our brain produce such visions of the past. Our emotions stimulate their acceptance and development.  In effect, these thought processes only show our continual ignorance. Me, writing about this very idea seems to be in direct opposition to what I am trying to say. There seems to be an infinitude of ignorance and a strange loop of never ending information. For it seems simple to imagine the universe as only a manifestation of these information patterns. Perhaps the only solution is to accept ignorance and live. Or maybe there is a single source of information from which all information flows which we will eventually discover. Or, as I suggest, the only answer is to read Godel, Escher, Bach over and over until your eyes are sore. But, throughout history, spiritual enlightenment has been the provider of such answers. Living through a religion in ignorance provides the simple answer to the universe. A religion allows us to stop asking questions; to stop searching for the answer. This raises the question: Can science be considered a religion?

My question is this: If market agents realize the instability and expect a crash, will the crash be avoided?

Perhaps there exists a critical proportion of agents who must expect the crash for it to be avoided. If a small number of agents expect the crash, then it will still occur. If more than the critical number of agents expect the crash, it will be avoided. But, if so many agents share the same attitude, doesn’t that make  the market even more unstable? With all this order, there will be opportunities for arbitrage. As attitudes flip-flop and cascade through the system, this arbitrage opportunity will occur again and again; faster and faster; this creates the observed log-periodic oscillations. Eventually, the crash occurs. My conclusion seems to be that a crash can not be avoided.

People say that in reality there is no arbitrage. They believe that any pattern which arises will be quickly removed. BUT, isn’t the removal of a pattern a pattern itself? Perhaps similar to Hofstadter’s Figure and Ground? Caution: some Grounds are not themselves Figures. I believe that the ideas presented by Sornette may be the pattern of pattern removal. Perhaps there can be strategies based on the removal of a pattern, which is based on the removal of a different pattern… and so forth.

The potential for crash prevention has applications in societal collapse. My intuition tells me that the two are related. If we can answer the question: Can we prevent the crash of a market? Then we will know the answer to the question: Can we prevent the collapse of a society? To me this seems deeply connected with Isaac Asimov’s Foundation Series. In this series Hari Seldon develops psychohistory (from Wikipedia):

Using the laws of mass action, it can predict the future, but only on a large scale; it is error-prone on a small scale. It works on the principle that the behaviour of a mass of people is predictable if the quantity of this mass is very large (equal to the population of the galaxy, which has a population of quadrillions of humans, inhabiting millions of star systems). The larger the number, the more predictable is the future.

It seems that Asimov is once again ahead of his time!

Convex and Concave

The Waterfall