A Game which decides the value of currency

I got this from a forwarded mail. This clearly explains how speculation of mind determines the value of currency. This clearly explains the present subprime mortgage crisis

Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollars as there were only two pieces of 1 dollar coins circulating around.

1) There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.

2) B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar.

* The net asset of the country now = 3 dollars.

3) Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.
*A has a loan to C of 1 dollar, so his net asset is 1 dollar.
* B sold his land and got 2 dollars, so his net asset is 2 dollars.
* C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.
* Thus, the net asset of the country = 4 dollars.

4) A saw that the land he once owned has risen in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result, A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.

* B loaned 2 dollars to A. So his net asset is 2 dollars.
* C now has the 2 coins. His net asset is also 2 dollars.
* The net asset of the country = 5 dollars. A bubble is building up.

(5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.

* As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollars.
* B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.
* C loaned 2 dollars to B, so his net asset is 2 dollars.

* The net asset of the country = 6 dollars; even though, the country has only one piece of land and 2 Dollars in circulation.

(6) Everybody has made money and everybody felt happy and prosperous.

(7) One day an evil wind blew, and an evil thought came to C's mind. "Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more."

(8) A also thought the same way.

(9) Nobody wanted to buy land anymore.

* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.
* B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.
* C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.
* The net asset of the country = 3 dollars again.

(10) So, who has stolen the 3 dollars from the country? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B's net asset is still 2 dollars, his heart is palpitating.

(11) B had no choice but to declare bankruptcy. C as to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.

* A owns the 2 coins; his net asset is 2 dollars.
* B is bankrupt; his net asset is 0 dollar. (He lost everything)
* C got no choice but end up with a land worth only 1 dollar

* the net asset of the country = 3 dollars.

************ **End of the story; BUT ************ ********* ******

There is however a redistribution of wealth.
A is the winner, B is the loser, C is lucky that he is spared.
A few points worth noting -

(1) when a bubble is building up, the debt of individuals to one another in a country is also building up.
(2) This story of the island is a closed system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island's own currency. Hence, there is no net loss.
(3) An over-damped system is assumed when the bubble burst, meaning the land's value did not go down to below 1 dollar.
(4) When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the losers. The asset could shrink or in worst case, they go bankrupt.
(5) If there is another citizen D either holding a dollar or another piece of land but refrains from taking part in the game, he will neither win nor lose. But he will see the value of his money or land goes up and down like a see saw.
(6) When the bubble was in the growing phase, everybody made money.
(7) If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A) and take part in the game. But you must know when you should change everything back to cash.
(8) As in the case of land, the above phenomenon applies to stocks as well.
(9) The actual worth of land or stocks depends largely on psychology (or speculation).

My Second Try

"I got a kick out of succeeding at something I wasn't supposed to be able to do"-Feynman (Surely you're jocking Mr. Feynman)

R S E I U B

Yesterday I read about a nice way to reboot the system when xserver freezes. The reboot commands are based on magic SysRq keys. It says that holding the keys Alt+Print(key in the keyboard) and typing RSEIUB will reboot the system. You can find the actual source here. It really worked for me. Simply Alt+Print+B will reboot the system, but this RSEIUB sequence will do some additional thigs to make a clean shoutdown. Funny thing is after reading that article, people complainning that they have such a small hands to execute that comand, which means that they were trying to prss all the keys simaltaniously. lol :)

My first try

It's not a toy

The concept of angular momentum is one of the examples of non-Intuitive physics. With out sufficient mathematical knowledge and imagination power, its hard to understand gyroscopic precisions. One of the flying machine which uses this concept of angular momentum and torque is helicopter. Its a complex machine to understand. Simply attaching a rotor to a helicopter like body will not work. Angular momentum has to be compensated. Last week I bought picooz, a miniature helicopter. Its design is wonderful, it has a tiny rotor with a tiny motor in the tail to produce torque to avoid spinning. Controlling this toy, (I don't want to say its toy, its a flying machine), is not so easy. First one has to understand why it is spinning. There are two rotors spinning, so we can see nice addition of angular momentum, and the resultant. Sometimes I could see superpositions of different movements, resulting something like lissajous figures.
In the beginning it will start spinning wildly, because of the angular momentum produced by the main rotor. Then by adjusting the tail rotor rpm we can reduce the spinning and slowly it started circling. By fine tuning the rotor rpm we can increase or decrease the radius of the circle. Practically it is possible to make the radius infinity(thats the physicist way of saying that its going in straight line). Anyway its lot of fun with lot of physics.

In this video here I try to bring the helicopter in the field of view, so I made it spinning so that it stays at a place. Then I apply torque to avoid spinning then its started circling,.I try to increase the radius of the circle, but it crashed in to the wall :( . No casualties ..:)

Micro Black Hole

My last post was about a super massive black hole in the Milky way galaxy.This post is about a possibility of creating tiny little micro black hole on our Earth. There are many interesting discussions going on about the safety of LHC(Large Hadron Collider) in Geveva, world largest particle accelerator. A recent article tittled as "The end of the world at the Large Hadron Collider" gives the summery of speculation theories.
Even though physicists are NOT denying the possibility of creating micro black hole at LHC, they say its not dangerous since it will undergo self destruction immediately by emitting Hawking radiation.

I would also like to record my point of view in this regard. The main purpose of LHC is to verify several theories mostly particle physics and quantum gravity theories. Until now most theoretical models were accepted because of two facts. First they could explain the phenomena in a correct way, second there is no counter example which means its NOT disproved. The reason for the second fact is that we don't have enough experimental facilities to do controlled experiments in quantum scale in order to verify a theory. So for the first time they are going to test and verify their theories at LHC by doing some quantum mechanical experiments. We believe that our theories could better explain the nature, but the non intuitive outcome of quantum mechanical experiments always surprised the mankind several time.

As a bottom line, I would like to mention one thing " The only thing predictable in the nature(I mean in quantum world) is its UNPREDICTABILITY". Let us hope and wish safe experiments at LHC and I am looking forward to see mBH at LHC.
watch the video to get an idea

Super massive

Six years ago(2002), the word "super massive" found a right example. It was the discovery of Sagittarius A*, a super massive black hole in the center of our Milky Way Galaxy. Recently Astronomers confirmed it's existence. The numbers corresponds to this so called "super massive" black hole, will make us to think whether the word "super massive" is sufficient to describe the magnitude of it's unimaginable mass and physical properties.

It has mass of 2.6(+/-0.2) million solar mass, confined in a volume with radius no more than 17 light-hours.(Remember light hour is nothing in astronomy compared to usual distances measured in light-years).In order to show the magnitude let me calculate and express in kg. One solar mass is equal to 1.98892x10^30 kg. So 2.6 million solar mass is equal to
5171192000000000000000000000000000000 kg.

It's interesting to know how they detect the black hole, since nothing comes out(of course something is coming out called Hawking radiations) of a black hole. Its very simple, they observe the movement of stars. If they found stars mysteriously orbit around some invisible point, they suspect that there might be a black hole in the center. By calculating the mass of the orbiting stars and its period, they estimate the mass of the black hole using Kepler's Law.(Note: I am typing this article from the place where Kepler spent last part of his life :) ).

At last I would like to mention one very interesting fact, even though I don't believe in Astrology, I am now proud to say that my sun sign is Sagittarius.Have a nice day :)