In any process in an isolated system, the total risk and return remains the same.
—First law of thermodynamics, applied to risk/return. Morally Bankrupt
Risk can neither be created nor destroyed. It can only change forms.
—First law of thermodynamics, applied to financial risk. See also: Conservation of probability. Morally Bankrupt.
As financial innovation approaches zero, all value-extracting processes cease and the entropy of the system approaches a minimum value
—Third law of thermodynamics, applied to finance. Morally Bankrupt
Entropy: As defined in finance
dS = δQ / T
dS: change in entropy of an economic system
δQ: Let δQ be an element of the value given up by the body to any banker/financier during its own changes
T: An Absolute Return value
In a product, a process that occurs will tend to increase the total entropy of the aggregate capital.
—Second law of thermodynamics, applied to finance. Morally Bankrupt
Potential return generally cannot flow spontaneously from an instrument at lower yield to an instrument at higher yield.
—Clausius statement, applied to finance. Morally Bankrupt
It is impossible to convert capital completely into value in an economic process.
—Kelvin’s law, applied to finance. Morally Bankrupt
The increase in the return of a product is equal to the amount of return added by the underlying instrument minus the amount lost to the issuing entity.
—First law of thermodynamics, applied to finance. Morally Bankrupt
