We have found that the correlation relationships between various types of credit and inflation are variable over time. So far, the kinds of credit studied are government spending,1 consumer credit,2 and mortgage debt.3 Here, we address another category of credit spending, Nonfinancial Corporate Credit. This series studies the correlation between Nonfinancial Corporate Credit and CPI inflation.
Image by THAM YUAN YUAN from Pixabay.
The preceding post, Part 7, introduced some concepts applicable to complex system analysis. These included representations of reality and a property called ergodicity. This article delves more deeply into the challenges that arise from these sources in modeling complex systems.
NOTE: This preliminary draft has been revised and expanded. The finished article can be seen here.
The preceding post, Part 7, introduced some concepts applicable to complex system analysis. These included representations of reality and a property called ergodicity. This article delves more deeply into the challenges that arise from these sources in modeling complex systems.
The complexity of analyzing a process as simple as flipping a coin three times raises concerns about how to describe reality in modeling. In dealing with coin flips, we have a known probability for the result of each flip. Also, many modeling scenarios may have more than three elementary steps. Additionally, the probabilities associated with elementary steps may not be known. How does this complicate the modeling process? This review will address that question with specific emphasis on social science models, especially economics.
In Part 5, we found that there are 6,435 possible outcomes for the complete characterization of a process of repeating three coin flips. This arises because a 3-flip sequence must be repeated eight times to allow for the possibility of all eight equally probable sequence results occurring. In this article, we calculate the probability of obtaining any individual outcome and also the probability of obtaining an outcome of each of the 22 outcome types.
This article describes the process of identifying all possible outcomes when there are 8 trials of 3 coin flips each. Then, the outcomes are divided into types, and the number of outcomes for each type is determined.
The process of understanding the complexity of many 3-flip sequences for tossing a coin is about to become more difficult. This is because are going to enter the arcane world of permutations and combinations. As a result, this is counting on a scale far more complex than that learned in elementary school.
Note: A major addition was added to the conclusion at 1:43 a.m. EDT on October 23, 2023.
This article concludes the analysis of the correlation patterns between Mortgage Debt and Consumer Inflation (CPI). The last of the three types of inflation patterns (time periods with no significant inflation trends) is the subject of analysis here. The other two types of patterns (inflation surges1 and disinflation/deflation surges2) were analyzed previously. The conclusion discusses the correlation patterns for all time periods, looks for any common threads, and identifies important differences across time periods and types of correlation patterns.
The full data sets for the 71 years from 1952 to 2022 show no discernable association patterns (correlations) for Mortgage Debt growth and inflation changes.1 Thus, we started an analysis by looking specifically at the various regimes of inflation change during the 71-year timeline. The most recent post2 analyzed the eight time periods over 71 years with positive inflation surges. This article analyzes the five periods between 1952 and 2019 with negative inflation (disinflation/deflation) surges.
From an image by Harry Strauss from Pixabay.
The full data sets for the 71 years from 1952 to 2022 show no discernable association patterns (correlations) for mortgage debt growth and inflation changes.1 This post continues that analysis by looking specifically at the various regimes of inflation change during the 71-year timeline.
From a photo by Tierra Mallorca on Unsplash
