Today’s post is actually only a short sound bite for further conversations to be developed in the future:
The real burden of the open and free market is the fact that it does not always behave and act in the way the market participants anticipated. [In other words, the market might be open and free but not perceived as fair – a real challenge when the clearance mechanism experiences the odd bottleneck moment, because in the long run, the market should and will always clear and achieve equilibrium].
The burden the market then bears is in the form of interference and regulation…
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The Market eQuation (MeQ):
Today we are commencing our investigation and outreach to discover what we will call the Market Equation.
Basically the idea is to come up with a mathematical equation and rating or ranking system to assess the state and status of various markets.
Whether this will lead to a theory of Markets that can compete with some of the other theories in existence is open to debate.
The basic premise is this:
There should be a methodology to access the Openness and Fairness of any given market versus other comparable markets. This specific ratio or result should therefore determine the individual participant’s level of engagement and commitment to that specific market. The result should also be able to be repeatable over time in order to elicit trends and movements of particular markets relative to each other.
The basic equation can be expressed as MA2R4K2E3T3 = OF outcome (Open & Fair).
OF = (A)2 x (R)4 x (K)2 x (E)3 x (T)3
And derives from the Market Equation Table listed below:
The Market Equation Table
Objective (External) measure
MA2R4K2E3T3 = OF outcome
Therefore: OF = (A)2 x (R)4 x (K)2 x (E)3 x (T)3
Our astute readers might already seen through this equation?
By dropping the M (which will always be 1) the letters that remain result in the word raket. RA(C)KET?
With the additional C, being the complex bit, ultimately the Market Equation becomes a COMPLEX RACKET.