Be Watched
Why do I feel I have read it before?
Why do I feel I have read it before?
Thursday, July 19, 2012
Wednesday, July 04, 2012
Half life of money
Every time someone makes a payment of Rs 100 using credit or debit card, depending upon his bank, the vendor will be charged somewhere between 2% to 4%. As people do transactions the amount of money available in the market decreases because part of that money is kept by the bank. The plot below shows the number of transaction it takes to reduce "public" money from Rs 100 to Rs 50 at different transaction charges or think of it as time it takes bank to make half the public money its own.
At 2% it takes about 35 transactions and at 4% it takes around 16. At 10% it only takes 6 transactions to reduce it to Rs 50. The cashless economy taxes its users and that tax is payable to the bank. Good thing is at least in India RBI has now reduced this to maximum of 1% but for online transactions only.
Making money on loans takes time, 10% over one year. But when transactions are taxed, the amount of money made by the banks is not dependent on time, it is just based on how fast the money moves around in the market. Fast moving money is probably a sign of good economy, but because of the tax, the faster it moves, faster it dries up. The half life of money could be few months to few years. I don't know the numbers, but it seems plausible that banks can make much more than 10% a year, if number of such transactions is say greater than 4 for 3% rate.
Tuesday, July 03, 2012
Communicating discounts
10% off is 9/10 of the price.
20% off is 4/5 of the price.
50% off is 1/2 of the price.
66% off is 1/3 of the price.
75% off is 1/4 of the price.
80% off is 1/5 of the price.
90% off is 1/10 of the price.
95% off is 1/20 of the price.
It makes sense to switch to 1/n mode if offering more than 50% off.
Friday, June 29, 2012
On Simplicity and Complexity
Simplicity is highly abused term. It is now synonymous with good and consequently complexity now stands for bad. Making such a statement is usually complex. It needs time, understanding of the subject. But often, it is very easy to judge simplicity and complexity. If you understood it is simple, if you don't it is complex. The relative frame becomes the "person" not the problem/solution space. What takes real thinking is judging if something is "appropriate". It comes only after you understand the problem and the solution so well that you can judge if the solution is appropriate.
What makes something simple or complex?
Lets talk physics for a while. Earth is the center of the universe and sun revolves around the earth. That is simple. Every child thinks that unless told by teachers or parents. Problem is, simplicity doesn't helps when you are sailing oceans or launching a satellite. Consider motion. Classical mechanics is simple. It is still heavily used. Relativity is a bit complex, just add the observer and how he observes to the equation. That is necessary if you are dealing with small particles, moving close to speed of light. There is nothing wrong with classical mechanics, it is simple and appropriate for lot of things.
Solutions are simple or complex, depending upon the levels of abstraction used in understanding the problems. We won't be able to build any building if we start at atomic level. Recipes at atomic level will be useless. The unified theory of everything is obviously simple in terms of its constructs but becomes very complex to deal with high level problems. So in some sense complexity arises from simplicity - simplicity of abstractions. It can come from complexity of abstractions too, but that is obvious. Take a look at nginx module architecture. It is simple. Call all modules to find if someone will handle this request and then let it handle it. Problem is writing the handler. Nginix modules need to do everything themselves and cannot uses code from other modules because the architecture encourages isolation. So we have chunked encoding implemented in basic http module, file upload module, the upstream module, etc. I guess the same needs to be done for compression, caching, etc. Simple architecture, complex modules.
The opposite is also true. Complexity also leads to simplicity. Understanding complexity needs lots of thinking. Finding out how things are working, why are things the way they are. What are the assumptions. This knowledge is at the heart of seeing simple way of doing the same things. Good needs bad to differentiate. Simplicity doesn't occurs in isolation. It needs complexity as a yard stick.
What makes something simple or complex?
Lets talk physics for a while. Earth is the center of the universe and sun revolves around the earth. That is simple. Every child thinks that unless told by teachers or parents. Problem is, simplicity doesn't helps when you are sailing oceans or launching a satellite. Consider motion. Classical mechanics is simple. It is still heavily used. Relativity is a bit complex, just add the observer and how he observes to the equation. That is necessary if you are dealing with small particles, moving close to speed of light. There is nothing wrong with classical mechanics, it is simple and appropriate for lot of things.
Solutions are simple or complex, depending upon the levels of abstraction used in understanding the problems. We won't be able to build any building if we start at atomic level. Recipes at atomic level will be useless. The unified theory of everything is obviously simple in terms of its constructs but becomes very complex to deal with high level problems. So in some sense complexity arises from simplicity - simplicity of abstractions. It can come from complexity of abstractions too, but that is obvious. Take a look at nginx module architecture. It is simple. Call all modules to find if someone will handle this request and then let it handle it. Problem is writing the handler. Nginix modules need to do everything themselves and cannot uses code from other modules because the architecture encourages isolation. So we have chunked encoding implemented in basic http module, file upload module, the upstream module, etc. I guess the same needs to be done for compression, caching, etc. Simple architecture, complex modules.
The opposite is also true. Complexity also leads to simplicity. Understanding complexity needs lots of thinking. Finding out how things are working, why are things the way they are. What are the assumptions. This knowledge is at the heart of seeing simple way of doing the same things. Good needs bad to differentiate. Simplicity doesn't occurs in isolation. It needs complexity as a yard stick.
When Einstein said "Everything should be made as simple as possible", he also added, "but not simpler". The question is not simple solution vs complex solution, but appropriate level of simplicity or appropriate level of complexity or put appropriately - finding the appropriate solution.
Wednesday, June 27, 2012
Of Money and Banks
Looking back, I seem to have too much to say about these topics.
In chronological order..
This one talks about how money is an abstraction for human interdependence and how it has properties that are different from properties of human interdependence.
http://chakpak.blogspot.in/2010/03/reinventing-money.html
It is a mixed bag about unethical banking practices like loan switching charges and floating rate of interest (as if fixed one was better) and how we should move away from loans and only allow investments.
http://chakpak.blogspot.in/2010/08/home-loan-switching-charges-floating.html
http://chakpak.blogspot.in/2010/08/interest.html
Read this one. What if money expired ? Is choice enough in capitalism?
http://chakpak.blogspot.in/2010/09/if-money-expired-people-had-choice.html
Banks should be open to failures for their own good.
http://chakpak.blogspot.in/2010/10/banks-can-only-collapse.html
In chronological order..
This one talks about how money is an abstraction for human interdependence and how it has properties that are different from properties of human interdependence.
http://chakpak.blogspot.in/2010/03/reinventing-money.html
It is a mixed bag about unethical banking practices like loan switching charges and floating rate of interest (as if fixed one was better) and how we should move away from loans and only allow investments.
http://chakpak.blogspot.in/2010/08/home-loan-switching-charges-floating.html
http://chakpak.blogspot.in/2010/08/interest.html
Read this one. What if money expired ? Is choice enough in capitalism?
http://chakpak.blogspot.in/2010/09/if-money-expired-people-had-choice.html
Banks should be open to failures for their own good.
http://chakpak.blogspot.in/2010/10/banks-can-only-collapse.html
http://chakpak.blogspot.in/2011/04/price-retailer-margin.html
If you are employed, you will love this one.
If you are employed, you will love this one.
http://chakpak.blogspot.in/2012/01/loan-or-subscription.html
More detailed analysis of frequency of choice - the missing piece in capitalism.
More detailed analysis of frequency of choice - the missing piece in capitalism.
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