The Physics of Wall Street: a brief History of Predicting the Unpredictable

extrema remedia.” desperate times call for desperate measures. What 
we need now, more than anything else, is a new source of economic 
ideas. this is why it is time to return to Weinstein’s proposal for a new 
large-scale interdisciplinary research initiative. We have mobilized 
the U.S. and european scientific communities before, and the result 
changed the world forever. Given the proven track record of applying 
ideas from physics in finance that I have described in this book, and 
the promising directions indicated by Weinstein and Malaney’s work, 
it is time to do the same again. this time, though, the goal wouldn’t be 
a new weapon. It would be a new set of tools for the proper function-
ing of the world’s economies.
consider that throughout the last decades, and especially during 
the 2007–2008 crisis, the U.S. government, including its major regula-
tory groups, has always been a step behind even the least sophisticated 
banks and investment firms. they’re three steps behind the real in-
novators. When, in the lead-up to the crisis, banks failed to account 

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Epilogue: Send Physics, Math, and Money! 
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225
for the risk associated with securitized loans, there was no one there 
to point out that the shadow banking system was built on a house of 
cards. It was only in the aftermath of the crash that new banking regu-
lations made their way through congress — and even then, the new 
regulations amounted to rudimentary policy changes designed to pro-
tect against yesterday’s risks.
this situation should be exactly reversed. We are perfectly happy 
to devote enormous resources to intelligence initiatives and counter-
terrorism. But the 2008 market crash did at least as much economic 
damage as 9/11. We should devote the same resources to staving off 
economic calamity as we devote to protecting ourselves from other 
risks. organizations like the federal reserve and the Securities and 
exchange commission, even the World Bank, should be the most so-
phisticated players in the game — and if these groups are not up to the 
task, we need some new research organization devoted to interdisci-
plinary economic research to help guide them. the people charged 
with running the world’s economies should be as good as renaissance. 
In fact, they should be better.

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this book has benefited from many conversations with friends and 
family over the four years since I began thinking about writing it. the 
people who stand out in my mind as having made especially substan-
tive contributions — through both their ideas and their encouragement
— are Illya Bomash, Bianca Bosker, Peter Byrne, erik curiel, david 
daniel, nic fillion, Sam fletcher, david Grand, Hans Halvorson, 
Justin Harvey, Ian Jackson, Leslie Jamison, Kent Johnson, Mary Kate 
Johnson, tor Krever, Garrett Lisi, Inna Livitz, Sarah Keller Loveday, 
Pen Maddy, John Manchak, George Musser, eoghan o’donnell, A. J. 
Packman, rick remsen, chris Search, Kyle Stanford, András tilcsik, 
Giovanni valente, elliott Wagner, Ken Waters, thomas Weatherall, 
Matt Weinstock, Scott Wells, and Amy Wuest. I am grateful to them 
all. the book owes a special debt to John conheeney, whose thoughts 
on the history of derivatives markets gave me a toehold to begin from.
I am also grateful to the people who agreed to be interviewed for 
the book, and who helped me make contact with the book’s subjects 
and their families. thank you to doyne farmer, Pia Malaney, Sally 
Mcclenaghan, Joe Murphy, Holly osborne, Peter osborne, didier 
Sornette, Lee Smolin, clay Struve, ed thorp, and eric Weinstein. Pia 
Malaney, Holly osborne, Melita osborne, Peter osborne, didier Sor-
nette, ed thorp, and eric Weinstein deserve special thanks for reading 
early drafts of the chapters to which they contributed and offering use-
ful comments for accuracy.
Acknowledgments

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