Macro Roundup

might have to retire my "entropy" quip

"...In the new story of the arrow of time, it is the loss of information through quantum entanglement, rather than a subjective lack of human knowledge, that drives a cup of coffee into equilibrium with the surrounding room. The room eventually equilibrates with the outside environment, and the environment drifts even more slowly toward equilibrium with the rest of the universe. The giants of 19th century thermodynamics viewed this process as a gradual dispersal of energy that increases the overall entropy, or disorder, of the universe. Today, Lloyd, Popescu and others in their field see the arrow of time differently. In their view, information becomes increasingly diffuse, but it never disappears completely. So, they assert, although entropy increases locally,the overall entropy of the universe stays constant at zero.“The universe as a whole is in a pure state,”Lloyd said. “But individual pieces of it, because they are entangled with the rest of the universe, are in mixtures.”..."

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“We can discuss the fact that an hour ago, our brains were in a state that was correlated with fewer things,” he said. “But our perception that time is flowing — that is a different matter altogether. Most probably, we will need a further revolution in physics that will tell us about that.”

The backdrop for the steady growth of entanglement throughout the universe is, of course, time itself. The physicists stress that despite great advances in understanding how changes in time occur, they have made no progress in uncovering the nature of time itself or why it seems different (both perceptually and in the equations of quantum mechanics) than the three dimensions of space. Popescu calls this “one of the greatest unknowns in physics.”

According to the scientists, our ability to remember the past but not the future, another historically confounding manifestation of time’s arrow, can also be understood as a buildup of correlations between interacting particles. When you read a message on a piece of paper, your brain becomes correlated with it through the photons that reach your eyes. Only from that moment on will you be capable of remembering what the message says. As Lloyd put it: “The present can be defined by the process of becoming correlated with our surroundings.”

Not to mention a bit of philosophy.

Twenty-six years after Lloyd’s big idea about time’s arrow fell flat, he is pleased to be witnessing its rise and has been applying the ideas in recent work on theblack hole information paradox. “I think now the consensus would be that there is physics in this,” he said.

Sean Carroll, a theoretical cosmologist at the California Institute of Technology, is employing the new formalism in his latest work on time’s arrow in cosmology. “I’m interested in the ultra-long-term fate of cosmological space-times,” said Carroll, author of “From Eternity to Here: The Quest for the Ultimate Theory of Time.” “That’s a situation where we don’t really know all of the relevant laws of physics, so it makes sense to think on a very abstract level, which is why I found this basic quantum-mechanical treatment useful.”

“We’ve been thinking more and more about what we can do with quantum machines,” saidPaul Skrzypczykof the Institute of Photonic Sciences in Barcelona. “Given that a system is not yet at equilibrium, we want to get work out of it. How muchuseful work can we extract? How can I intervene to do something interesting?”

Some researchers expressed doubt that this abstract approach to thermodynamics will ever be up to the task of addressing the “hard nitty-gritty of how specific observables behave,” as Lloyd put it. But the conceptual advance and new mathematical formalism is already helping researchers address theoretical questions about thermodynamics, such as the fundamental limits of quantum computers and even the ultimate fate of the universe.

Despite the recent progress in calculating equilibration time scales, the new approach has yet to make headway as a tool for parsing the thermodynamic properties of specific things, like coffee, glass or exotic states of matter. (Several traditional thermodynamicists reported being only vaguely aware of the new approach.) “The thing is to find the criteria for which things behave like window glass and which things behave like a cup of tea,” Renner said. “I would see the new papers as a step in this direction, but much more needs to be done.”

One aspect of time’s arrow remains unsolved. “There is nothing in these works to say why you started at the gate,” Popescu said, referring to the park analogy. “In other words, they don’t explain why the initial state of the universe was far from equilibrium.” He said this is a question about the nature of the Big Bang.

“The universe as a whole is in a pure state,” Lloyd said. “But individual pieces of it, because they are entangled with the rest of the universe, are in mixtures.”

In the new story of the arrow of time, it is the loss of information through quantum entanglement, rather than a subjective lack of human knowledge, that drives a cup of coffee into equilibrium with the surrounding room. The room eventually equilibrates with the outside environment, and the environment drifts even more slowly toward equilibrium with the rest of the universe. The giants of 19th century thermodynamics viewed this process as a gradual dispersal of energy that increases the overall entropy, or disorder, of the universe. Today, Lloyd, Popescu and others in their field see the arrow of time differently. In their view, information becomes increasingly diffuse, but it never disappears completely. So, they assert, although entropy increases locally, the overall entropy of the universe stays constant at zero.

Consequently, a tepid cup of coffee does not spontaneously warm up. In principle, as the pure state of the room evolves, the coffee could suddenly become unmixed from the air and enter a pure state of its own. But there are so many more mixed states than pure states available to the coffee that this practically never happens — one would have to outlive the universe to witness it. This statistical unlikelihood gives time’s arrow the appearance of irreversibility. “Essentially entanglement opens a very large space for you,” Popescu said. “It’s like you are at the park and you start next to the gate, far from equilibrium. Then you enter and you have this enormous place and you get lost in it. And you never come back to the gate.”

“When Lloyd proposed the idea in his thesis, the world was not ready,” saidRenato Renner, head of the Institute for Theoretical Physics at ETH Zurich. “No one understood it. Sometimes you have to have the idea at the right time.”

In 2009, the Bristol group’s proof resonated with quantum information theorists, opening up new uses for their techniques. It showed that as objects interact with their surroundings — as the particles in a cup of coffee collide with the air, for example — information about their properties “leaks out and becomes smeared over the entire environment,” Popescu explained. This local information loss causes the state of the coffee to stagnate even as the pure state of the entire room continues to evolve. Except for rare, random fluctuations, he said, “its state stops changing in time.”

Advances in quantum computing have since turned quantum information theory into one of the most active branches of physics. Lloyd is now a professor at the Massachusetts Institute of Technology, recognized as one of the founders of the discipline, and his overlooked idea has resurfaced in a stronger form in the hands of the Bristol physicists. The newer proofs are more general, researchers say, and hold for virtually any quantum system.

“I was darn close to driving a taxicab,” Lloyd said.

The idea, presented in his 1988 doctoral thesis, fell on deaf ears. When he submitted it to a journal, he was told that there was “no physics in this paper.” Quantum information theory “was profoundly unpopular” at the time, Lloyd said, and questions about time’s arrow “were for crackpots and Nobel laureates who have gone soft in the head.” he remembers one physicist telling him.

“What’s really going on is things are becoming more correlated with each other,” Lloyd recalls realizing. “The arrow of time is an arrow of increasing correlations.”

Using an obscure approach to quantum mechanics that treated units of information as its basic building blocks, Lloyd spent several years studying the evolution of particles in terms of shuffling 1s and 0s. He found that as the particles became increasingly entangled with one another, the information that originally described them (a “1” for clockwise spin and a “0” for counterclockwise, for example) would shift to describe the system of entangled particles as a whole. It was as though the particles gradually lost their individual autonomy and became pawns of the collective state. Eventually, the correlations contained all the information, and the individual particles contained none. At that point, Lloyd discovered, particles arrived at a state of equilibrium, and their states stopped changing, like coffee that has cooled to room temperature.

The idea that entanglement might explain the arrow of time first occurred toSeth Lloydabout 30 years ago, when he was a 23-year-old philosophy graduate student at Cambridge University with a Harvard physics degree. Lloyd realized that quantum uncertainty, and the way it spreads as particles become increasingly entangled, could replace human uncertainty in the old classical proofs as the true source of the arrow of time.

<img class="block fit-x fill-h fill-v is-loaded mxa" alt="Seth Lloyd, now an MIT professor, came up with the idea that entanglement might explain the arrow of time while he was in graduate school at Cambridge University in the 1980s." src="https://d2r55xnwy6nx47.cloudfront.net/uploads/2014/04/Seth-Lloyd2-340x520.jpg

“Entanglement is in some sense the essence of quantum mechanics,” or the laws governing interactions on the subatomic scale, Brunner said. The phenomenon underlies quantum computing, quantum cryptography and quantum teleportation.

When two particles interact, they can no longer even be described by their own, independently evolving probabilities, called “pure states.” Instead, they become entangled components of a more complicated probability distribution that describes both particles together. It might dictate, for example, that the particles spin in opposite directions. The system as a whole is in a pure state, but the state of each individual particle is “mixed” with that of its acquaintance. The two could travel light-years apart, and the spin of each would remain correlated with that of the other, a feature Albert Einstein famously described as “spooky action at a distance.”

Quantum uncertainty then gives rise to entanglement, the putative source of the arrow of time.

If the new line of research is correct, then the story of time’s arrow begins with the quantum mechanical idea that, deep down, nature is inherently uncertain. An elementary particle lacks definite physical properties and is defined only by probabilities of being in various states. For example, at a particular moment, a particle might have a 50 percent chance of spinning clockwise and a 50 percent chance of spinning counterclockwise.An experimentally tested theoremby the Northern Irish physicist John Bell says there is no “true” state of the particle; the probabilities are the only reality that can be ascribed to it.

The tendency of coffee — and everything else — to reach equilibrium is “very intuitive,” saidNicolas Brunner, a quantum physicist at the University of Geneva. “But when it comes to explaining why it happens, this is the first time it has been derived on firm grounds by considering a microscopic theory.”

“Finally, we can understand why a cup of coffee equilibrates in a room,” saidTony Short, a quantum physicist at Bristol. “Entanglement builds up between the state of the coffee cup and the state of the room.”

Popescu, Short and their colleaguesNoah LindenandAndreas Winterreported the discoveryin the journal Physical Review E in 2009, arguing that objects reach equilibrium, or a state of uniform energy distribution, within an infinite amount of time by becoming quantum mechanically entangled with their surroundings.Similar resultsbyPeter Reimannof the University of Bielefeld in Germany appeared several months earlier in Physical Review Letters. Short and a collaboratorstrengthened the argumentin 2012 by showing that entanglement causes equilibration within a finite time. And, in work that was posted on the scientific preprint site arXiv.org in February, two separate groups have taken thenextstep, calculating that most physical systems equilibrate rapidly, on time scales proportional to their size. “To show that it’s relevant to our actual physical world, the processes have to be happening on reasonable time scales,” Short said.

Now, physicists are unmasking a more fundamental source for the arrow of time: Energy disperses and objects equilibrate, they say, because of the way elementary particles become intertwined when they interact — a strange effect called “quantum entanglement.”

Surely, he said, time’s arrow is not steered by human ignorance. And yet, since the birth of thermodynamics in the 1850s, the only known approach for calculating the spread of energy was to formulate statistical distributions of the unknown trajectories of particles, and show that, over time, the ignorance smeared things out.

“In classical physics, we were struggling,” saidSandu Popescu, a professor of physics at the University of Bristol in the United Kingdom. “If I knew more, could I reverse the event, put together all the molecules of the egg that broke? Why am I relevant?”

But to the bafflement of generations of physicists, the arrow of time does not seem to follow from the underlying laws of physics, which work the same going forward in time as in reverse. By those laws, it seemed that if someone knew the paths of all the particles in the universe and flipped them around, energy would accumulate rather than disperse: Tepid coffee would spontaneously heat up, buildings would rise from their rubble and sunlight would slink back into the sun.

Coffee cools, buildings crumble, eggs break and stars fizzle out in a universe that seems destined to degrade into a state of uniform drabness known as thermal equilibrium. The astronomer-philosopher Sir Arthur Eddington in 1927 cited the gradual dispersal of energy as evidence of an irreversible “arrow of time.”

Natalie Wolchover, "Time’s Arrow Traced to Quantum Source,"Quanta Magazine, April 16, 2014, https://www.quantamagazine.org/quantum-entanglement-drives-the-arrow-of-time-scientists-say-20140416/ Time’s Arrow Traced to Quantum Source

First chart (from IMF) is great, terrific visualization how yields have been compressed

Martin Wolf, "Central banks alone cannot deliver stable finance,"Financial Times, October 24, 2017, https://www.ft.com/content/ae9097e6-b7fb-11e7-9bfb-4a9c83ffa852

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Criticising the success of our central banks in reflating our crisis-hit economies, because this created today’s financial risks, is not a valid reaction to their actions. It is, however, an extremely valid criticism of finance. It is also a valid criticism of the failure of governments to address the many frailties that still lead to financial excess. The central banks did their job. Unfortunately, almost nobody else has done theirs.

Finally, we should not conclude that central banks have to abandon the priority of stabilising the economy in favour of the possibly conflicting goal of stabilising the financial system. One reason is that monetary policy is a blunt instrument for achieving the latter. A more fundamental objection is that we cannot tell people they must remain stuck in a deflationary economy because it is the only way to stop the financial system from exploding. They will rightly respond that these priorities are wrong. Similarly, ensuring creditors get the returns they think they deserve is not the job of the central banks. If governments think creditors are so deserving, they should change taxes accordingly. Again, if they think the financial sector remains excessively unstable, they should regulate it.

Third, the generation of demand sufficient to absorb potential supply has become far too dependent on unsustainable growth in credit and debt and also on consumption (especially in high-income countries) or wasteful investment (as in China). We might break this linkage in several ways. One is to redistribute income, via the tax system, from savers to spenders. Another is to increase incentives for investment, especially by profitable businesses. Another is to remove the tax-favoured position of debt and rely more on equity financing throughout the economy. A final one is to rely more on government spending and borrowing, especially spending on public investment.

Second, it has to be possible for the financial system to cope with changes in asset prices without blowing up the world economy. This should not need saying. An essential part of achieving this is deleveraging and in other ways strengthening intermediaries, notably banks. That has indeed happened, but not, in my view, nearly enough.

First, investors must be very wary.

Such analyses bring worries into the open. This is helpful: the more worried people are, the safer the system. Yet it is also essential to tease out the implications of the fragility the fund describes so clearly. I would identify four.

Possibly most important, leverage continues to rise across the world, notably in China. In the high-income countries, the net asset position of the private sector has improved somewhat since the crisis, but the governments’ has worsened. Moreover, assets are currently valued at high, quite possibly unsustainable, levels. Debt service burdens are generally low, at current interest rates. But this would change if those rates rose sharply. Moreover, in several economies debt service burdens in the private non-financial sectors are greater than average — notably in China, but also in Australia and Canada.

One element in these risks is yield compression. Yields on investment-grade fixed income instruments have collapsed since 2007, with almost none now yielding over 4 per cent. This has also encouraged greater capital flows to — and so more borrowing by — emerging countries. Non-resident capital inflows of portfolio capital reached an estimated $205bn in the year through August 2017 and are on track to reach $300bn in 2017, more than twice the total in 2015-16. In addition, argues the fund, low yields, compressed risk spreads and abundant financing are encouraging a build-up of debt on corporate balance sheets. Reversals in these spreads could cause a jolt: to reach the average levels for 2000-04, market risk and term premiums would have to rise by about 200 basis points for investment-grade bonds. Market volatility is also highly compressed. (See charts.)

The underlying argument of the report is that “near-term risks to financial stability continue to decline”, but “medium-term vulnerabilities are rising”. The return of global economic growth, combined with comfortable monetary and financial conditions, together with sluggish inflation, strengthens investors’ reach for yield and appetite for risk. With market and credit risk premiums at decade-low levels, asset valuations are vulnerable to a “decompression” of risk premiums — in blunter words, a crash.

Favourable global economic prospects, particularly strong momentum in the euro area and in emerging markets led by China and India, continue to serve as a strong foundation for global financial stability.” This statement opened the International Monetary Fund’s April 2007 Global Financial Stability Report. Since this benign view was published on the eve of the most devastating financial crisis in nearly eight decades, it has to be viewed, in hindsight, as a spectacular misjudgment. The fund is determined not to be caught out again. The question is whether the concerns it pours forth in its latest Global Financial Stability Report are well judged or whether it is crying wolf. As important, what might be the implications, especially for policy, of its worries?

Central banks alone cannot deliver stable finance