Applied Philosophy

After posting in my last blog post the following graph showing the composition of the Federal Reserve’s Treasuries holdings:

The Fed's Treasury securities composition

I returned to the excellent St. Louis Fed: Economic Research website to further examine the data and produce a more concise graph. I grouped the six data series into two lines; the first (in red) shows the total face value of securities maturing from 1 year to over 10 years, so Notes and Bonds. The second (in blue) shows the total face value of securities maturing in less than a year, so Bills (maturities refer to the remaining time to maturity and not the maturity of the security at issue).

Federal Reserve treasuries holdings: short-term in blue and long-term in red.

At the start of 2007 short term securities formed the majority of the Fed’s holdings:

Federal Reserve treasuries holdings January 2007: short-term in blue, long-term in red

After almost four years, at the end of 2010, short-term Treasury debt declined to less than a tenth of the Fed’s holdings:

Federal Reserve treasuries holdings December 2010: short-term in blue, long-term in red

If you want to adapt these graphs you can use this FRED graph to get you going.

We can extract linear trends, of growth and decline, in history (see The Story of Europe) but at a closer look it seems that history moves in a non-linear line. This expression is used, these days, very widely; people say that things do not go in a straight line, but what does that mean exactly?

In this post we will be looking at a graph that represents non-linear development. This graph is not the representation of a quantity but rather a quality, this is very important to understand and some might find it difficult to comprehend but in reality we experience this duality of quantity and quality on daily basis without noticing. Let us now examine a graph of non-linear historical development:
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Here are some graphs that I find useful in visualising some philosophical points.

First are five graphs of bifurcation:
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Here are more graphs that I have been extracting from BP’s Statistical Review of World Energy 2007 (available as an MS Excel workbook on the Internet at: http://www.bp.com/statisticalreview).

Graph 10: This graph shows oil production in different parts of the world, which has experienced significant decline. It plots total US production (thousands of barrels per day-right side) and the total production of Australia, UK and Norway (thousands of barrels per day-left side) from 1965 to 2006. Read the rest of this entry »

Reading BP’s Statistical Review of World Energy 2007 (available as an MS Excel workbook on the Internet at: http://www.bp.com/statisticalreview), I was forced to convert the raw data into graphs to make any sense of them; this post contains these graphs.The graphs are presented without any conclusions or arguments, just an explanation of the data.

Graph 1: First we start with the price of oil. Two prices are plotted ($-left side) one for nominal price and the other inflation-adjusted price from 1861 to 2006.
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The so-called ‘butterfly effect’ is a very important scientific concept that the general public should be aware of, unfortunately it has been popularised using the obligatory oversimplified mental image of a butterfly causing a storm, etc.

Those kinds of oversimplifications-that has been popular since Sputnik made the headlines-are favoured by the journalists who copy them from Wikipedia without really understanding them and paste them into their articles to add some padding and give the appearance of understanding where there is none. If one does not understand the concept beforehand he will not be helped by these mental images that simplify too much and inform too little.

But the concept remains important and has to be convoyed to those who wouldn’t understand the mathematical definition, so what is the alternative to the oversimplified mental image? How about a simple image?
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