Shadow Banking, out of the shadow

There’s a nice report out of the NY Federal Reserve on Shadow Banking. That’s the ability of the great sloshing global pool of money to act as a world bank, without any safety net. I wrote an apparently effective note, got a nice response from the author.


Dear NY Fed

A comment on your July 2010 report.  Shadow banking is an emergent natural system.  I’m a natural systems scientist who studies the difference between scientific theories and complex natural systems.

Equations can’t have independently learning parts, for example, but economies and other natural systems rely heavily on the adaptive processes of their parts. So, that adds to the long list of reasons for why abstract theories tend to have a short “shelf life”, you could say. Continue reading Shadow Banking, out of the shadow