CHAPTER 39Financial System Resonance and Complexity

The wonder of financial crises is how events can move straight from impossible to inevitable, without ever passing through improbable.1


Dynamical systems are a refinement of our hunter instincts. We focus on motion, and dynamical systems capture motion. In the most general setting, it is a space X equipped with a geometric structure called a topology and a function μ mapping across transformations of X called a measure. When X is of manageable size—it is compact—we can normalize μ(X) = 1, making it equivalent to a probability. Often in practical applications, μ(X) is iterated to model the passage of time.

Take, for example, a system composed of a huge number of small particles ...

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