Yeah... We got New Credit Card

Thursday’s (October 17^th 2013) decision to continue taking on more debt for “economic progress” is analogous to a bankrupt family applying for a new credit card to pay its old “maxed out credit card bills”. 

Of course, a proper credit check on this family = “F-” and application being declined. In our case, Moody’s rating of the US Treasury bonds will be “”AAA+” and the world will be rushing in to give us money. POTUS’s gloating after raising the debt ceiling reminds me of an old telugu movie song. My share of the national debt as of today is $148200. Don’t worry … I have that much saved up …

Gamblers Ruin - Part 2

In my last blog " Gamblers Ruin", I mentioned about the gambling game I posed to my class. A quick recap of that:

"I have a coin toss game where I give you 2 times your bet if you win and nothing if you lose. Assume we have a fair coin, would you play the game with me and bet your money? If you will, then what is your strategy, assuming you are in it to win."

It turns out that a few in the class wanted to play the game, but did not know the best strategy to win. They were risk takers and willing to bet their money with a 50-50 chance. Much of the class was conservative and didn't want to play. It is worth mentioning that there were a handful who think gambling is bad (I guess there is some sanity still left in the universe).

There is a winning strategy in this game and if you have enough money to bet, there is a high chance that you will double your initial bet.

I start with a bet of $x. If I win in the first toss, I will take my $2x and leave. If I lose in the first toss, I will double my bet to $2x and play again. If I win, I get $4x. Since my investment was $x + $2x, I make an additional $x. You can keep doing this till you win, but the first time you win, you should stop.

The game follows a geometric distribution, with a    probability of first win on the kth try. Since winning probability is 0.5 for a fair coin, the chance of winning it in the first try is 0.5; the chance of winning it in the second try is (0.5)(0.5), the chance of winning in the third try is (0.5)(0.5)(0.5) and so on...So, you will have a high chance of winning (more than 90% chance) within the first 5 trails. Just stop playing it the first time you win..and take your money.

Now, I know, it is easy to throw numbers and show that I can win... but will I bet my bucks on it?
I can perhaps bet a $100 and win back my $100 plus an additional $100, because i can rise the bets up to a limit..

... am I willing to bet $1000 or more ??? ... 

Gamber's Ruin

I discussed random variables,discrete probability distributions and expected values in my data analysis class last week. After the mundane definitions and examples, I threw at them, a variant of the gamblers ruin idea and asked them if they would be willing to bet their money on it. The idea goes like this:
I have a coin toss game where I give you 2 times your bet if you win and nothing if you lose. Assume we have a fair coin, would you play the game with me and bet your money? If you will, then what is your strategy, assuming you are in it to win...

They have all weekend to decide. On Monday, I will discuss Bernoulli trails and Geometric Distribution. Here are some gambler's ruin ideas.

Testimonial for Perenial Ideas

Back in 2010, I attended a workshop named "medhajananam" which translates to "Ignite the Intellect". Here is my testimonial on it that also appears under the testimonials section http://medhajananam.org/?p=testimonials. Medhajananam has now grown from a small university workshop to a transcendent organization. Wishing good luck to Medhajananam and Krishna Garu.

"I first heard about “Medhajananam” when I was in a philosophical discussion with one of my friends. Between both of us, he was the better read person, so I was more focused on adding his wisdom to mine. What caught my attention were his excerpts from Medhajananam.

Later, another friend referred me to this class during our routine game of badminton in the gym. My inherent inquisitiveness in the concepts of Indian philosophy and my previous New Year resolution of productive procrastination led me into sitting through the class of Medhajananam. Here is my take on the class, instructor and the atmosphere.

The class is elegantly structured with an introduction of religion, god, mythology, rituals and concepts of universe etc. From a personal stand point, the initial few classes were a brush up of what I have come across and thought through over years. So the classes slowly progressed and fueled my thoughts.

The day I started learning about the 1000 noble laureates, I was ecstatic and felt I am now one of those few who will finally understand the numerous concepts that our ancestors have given to their future generations. Most of us will have known these concepts through various readings or practices and belief systems.

However this course is a very finely filtered form of the humongous content out there giving you not only the in-depth understanding of Indic philosophy, but also the framework to relate to the contemporary lifestyle.

I was really thrilled by the concepts of OM and Energy and Matter. These concepts fulfilled my childhood dream journey into space and time to explore the universe and its origin. To have visualized the universe at a very fine resolution and understand the conceptual framework was really amazing.

The discussions on the idea of Prakriti and Purusha were enriching. For the first time, I started appreciating the artistic and poetic beauty in it. I am sure having understood the deep sense in it men will have less complains about women and will start enjoying the dance of nature.

The concepts of colors and the four petals of life are very handy especially for people who are excited to land their feet in the real world. To have brought everything under one foundation, I was struck by awe at the research abilities of our Rishis.

Watching the epics of Mahabharata and Ramayana, I always felt the need to have a Guru from who I can gain wisdom and light similar to the Heros in the epics. After attending this class I think it is apt to call Krishna Garu a modern time Guru who can spread the light and wisdom around with panache.

The class involved a lot of discussions and debates on various topics with fellow friends. The afternoon snack and the awesome coffee usually compounded the benefits from the class especially for a group of graduate students.

In conclusion I would call Medhajananam the “FORCE” of “STAR WARS”. It is omnipresent and everyone who will attend it will harness power from it."

Taper Talk - Bernanke Put

St. Louis Fed President James Bullard hope to have a small taper in October. While it is not a surprise that the Fed officials will come out and speak in favor of "taper" to save some lost credibility, they cannot taper in October because of the government shutdown, and they cannot taper in December just before Christmas. So that puts it off the table at least till 2014. Wait, but the FED-TAPER is always conditional on the jobs numbers and inflation. Not sure on the jobs numbers yet, but hey.. we are not seeing the effects of inflation. It is a modest increase of 0.1% in August.

"By the way the espresso at the coffee machine just went up from a $1 to $1.25. That is a 25% increase in price. May be it is bad economics to include coffee prices in CPI"...