Subject: How To Make Rational Decisions

Thank you for your unbiased reporting on the auto industry. However, the interviews missed the most relevant question: "How To Make The Rational Decision On Any Project?"

The decision should be based on the sum total of all the arguments, for and against. There is only one way to consider all the arguments according to mathematical economist Gerard Debreu: Taking into consideration all the factors to infinity in time and space. And, according to him, there is only one way to consider infinity: Mathematically.

Economists have worked on the solution of value technically for the good part of last century, until John von Neuman, Kenneth Arrow, and Gerard Debreu finally defined clearly the problem of value in the book "Theory Of Value" of Debreu. But, the problem of spatial dependent of value is incorrectly solved on page 34, discussed by Arrow and me.

As you have generously allowed me to post in the past, the most important question for decision making should be: "What Is The Rate Of Return On Investment On The Project?" For example, the rate of return for Internet startups are around 50% and up, and the rate of return for housing and auto industries is around 10%.

The Federal Reserve in the past decade has discouraged the high-return Internet Industry and replaced it with the low-return housing and auto industries to sustain the economy. Now, the housing and auto industries (most likely to be debated in the future, also the infrastructure building industry; supporting mainly infrastructure building fits right into a Great Depression economy) can only survive under abnormally low interest rates, and there is no high-return industry to replace them, so far, except possibly the proven Internet industry.

The new administration must have a rational method for determining the priorities of projects. The determination has to depend on the correct solution of value, from which the rate of return can be calculated. Thus, the first question for everyone to answer, with or without a Nobel Prize, should be: "How To Make Rational Decisions?"

Sorry to trouble you again. Please keep up the good work. Thank so much. ### Hugh Ching, Post-Science Institute 11-22-2008 (To be distributed to Federal Reserve and US&NY Treasury)