Economy – Quantitative Finance – General Finance
Scientific paper
2008-12-29
Economy
Quantitative Finance
General Finance
Latex, 24 pages
Scientific paper
In Maslov (2003), a two level model of the occurrence of financial pyramid (bubbles) has been considered. We also considered the mathematical analogy of this model to Bose condensation. In the present paper, we explain why Ponzi schemes and bubbles result in a crisis in real economics. In Maslov (2005), the law of increase of entropy in financial systems, and consequently increase of Kolmogorov complexity, is formulated. If this law is broken, the financial system makes a phase transition to a different state. In Maslov (2005) the author considered a two level model of the zeroth-order phase transition which was interpreted in Maslov (2006) as an analog of social catastrophe. In the present paper we also examine this model.
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