The gauge theory of arbitrage was introduced by Ilinski in[arXiv:hep-th/9710148] and applied to fast money flows in[arXiv:cond-mat/9902044]. The theory of fast money flow dynamics attempts tomodel the evolution of currency exchange rates and stock prices on short, e.g.\intra-day, time scales. It has been used to explain some of the heuristictrading rules, known as technical analysis, that are used by professionaltraders in the equity and foreign exchange markets. A critique of some of theunderlying assumptions of the gauge theory of arbitrage was presented bySornette in [arXiv:cond-mat/9804045]. In this paper, we present a critique ofthe theory of fast money flow dynamics, which was not examined by Sornette. Wedemonstrate that the choice of the input parameters used in[arXiv:cond-mat/9902044] results in sinusoidal oscillations of the exchangerate, in conflict with the results presented in [arXiv:cond-mat/9902044]. Wealso find that the dynamics predicted by the theory are generally unstable inmost realistic situations, with the exchange rate tending to zero or infinityexponentially.
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