Macrofinancial risk


For about 2,000 years, the disciplines of geometry and algebra existed as two parallel but totally separate lines of intellectual inquiry. Sometime in the 1630s, Rene Descartes visualised plotting solutions to long-recognised algebraic relationships as sets of points on a two dimensional grid. Suddenly, these two apparently distinct patterns of thought were recognised as different views of a common fundamental reality. Something similar may be happening to financial theory and macroeconomics.