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Complex Systems, Dysfunctional Industries, and Catastrophic Collapse
My favorite line: "In a nutshell, complex systems arise spontaneously, behave unpredictably, exhaust resources and collapse catastrophically." I think this applies to everything, physical systems, like Universes, financial systems, ecosystems, life. ~ Ilene
Complex Systems, Dysfunctional Industries, and Catastrophic Collapse
Courtesy of John Rubino.
Over the holidays we tempted fate by booking a multi-stage plane trip … and ended up with cancelled flights, missed connections, and blank-faced airline employees who sincerely didn’t care if we spent a night or a week on the terminal floor.
While I wallowed in self pity over this loss of control, my wife noted that it’s not just the airlines. Big Food, Big Pharma, and the big banks, among others, are all just as customer-unfriendly. This distracted me from my rage and I spent some time thinking about how strange it is that in a time when Apple is creating Star Trek-level gadgets that streamline and simplify their users’ lives, and Amazon is making shopping almost supernaturally easy, there are huge industries that seem to go out of their way to make their customers’ lives complicated and hard.
Why do they do this when it makes so many people so mad? A pharmaceutical company CEO, for instance, probably can’t leave the house without someone accusing him of doubling the price of a crucial prescription drug while spending millions marketing erectile dysfunction pills to TV football viewers. An industrial food company exec can’t attend a cocktail party without being cornered by someone who reads labels and is appalled by trans fat, high fructose corn syrup-laden “food”. Goldman Sachs execs must cringe every time they pass a newsstand where the latest Rolling Stone is calling their company a “vampire squid”.
And airline employees, of course, must be abused non-stop by people like me who have had their vacations turned into exercises in enforced patience and asymmetrical negotiation. South Park caught the general mood perfectly with this (warning: very rude) episode:
The Entity
Get More: SOUTH
PARKmore…
Anyhow, on a different vacation this line of thought might have been nothing more than a way to occupy a pissed-off mind for an hour or so. But this time I had James Rickards’ new book Currency Wars on my Kindle (a device from customer-friendly Amazon that makes my life simpler and easier), and while waiting for a flight I came across this:
The third principal is that complex systems run on exponentially greater amounts of energy. This energy can take many forms, but the point is that when you increase the system scale by a factor of ten, you increase the energy requirements by a factor of a thousand, and so on. The fourth principal is that complex systems are prone to catastrophic collapse. The third and fourth principals are related. When the system reaches a certain scale, the energy inputs dry up because the exponential relationship between scale and inputs exhausts the available resources. In a nutshell, complex systems arise spontaneously, behave unpredictably, exhaust resources and collapse catastrophically.
That’s a pretty good framework for understanding these huge, complex, mostly dysfunctional industries. They’ve spent decades consolidating and concentrating and now have to generate sales on pretty much any terms, no matter how questionable, in order to avoid death by complexity. The customer takes a back seat to the desperate institutional need to survive and the product gets crappier and crappier until the production/delivery system breaks down.
The same dynamic is at work in the global financial system, says Rickards. In the US, a dollar of new debt produced nearly that much in new GDP in the 1960s. But today the return on new debt is negative. From here on, we can borrow as much as we want and the only result will be more debt. Wealth won’t increase at all. But we can’t stop; as with any other Ponzi scheme, the choice is more debt or instant bankruptcy.
This stage is generally followed by catastrophic failure, with the only question being what else the financial system takes down with it. As Rickards puts it:
A considerable challenge arises when one considers the interaction of human behavior and market dynamics. The complexity of human nature sits like a turbocharger on top of the complexity of markets. Human nature, markets and civilization more broadly are all complex systems nested inside one another like so many Russian matryoshka dolls….When you apply this paradigm to finance, you begin to see where the currency wars are headed.
Visit John's Dollar Collapse blog here >
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I would assume that chaos theory and its resulting definition of spontaneous order differentiate between instantaneous events and those occurring over time.
Consider also that food production and transportation have become a highly complex system.
Using "just in time" inventory and shipping, most major cities have only 3 days supply of food.
Not to mention that as time goes by, fewer and fewer people will know how to peel and cook a potato, much less grow one.
The Apple devices and Kindle are part of a highly complex system. The complexity is behind the scenes in AC power grids and network infrastructure. Once the power goes out they are useless.
When it comes to moving physical things, such as people, profit is maximized by inconveniencing people rather than the jet, the fuel, the airports.
When it comes to currency, our real problem is the unhinging from a gold standard (physical, hard to move), then away from coinage and bills, and increasingly to a database model where "money" can be flashed from one corner of the globe to the next with nothing physical having to be moved or be present.
As you mention, the Ponzi effect of seemingly endless database debt monetization pushes the leveraging ever forward towards an increasingly unstable system more and more prone to catastrophic collapse.
"The Apple devices and Kindle are part of a highly complex system. The complexity is behind the scenes in AC power grids and network infrastructure. Once the power goes out they are useless."
A good argument for decentralized power generation. Have you installed your solar panels yet? Cell towers (and most critical infrastructure) have back-up power for short term outages, but catostrophic national power loss would be...well...catastrophic to our modern lifestyle.
Like a kite let loose in Aug 71 by the anti-christ Nixon....what are you going to base it off of? The kite will go up forever in the wind....
I do agree with cutting off the 5k and 10k bills!!! Assfuck Nixon did it to cut off the drug trade and who needs a 5k bill anyone? But cutting off the gold standard...BUT HE DIDNT CARE....HE WASNT GOING TO BE AROUND....
WHY IN THE HELL DO WE AS PEOPLE ELECT THE PEOPLE WHO FUCK THINGS UP THE MOST??? HOW IS IT POSSIBLE? HOW? AND HERE WE GO AGAIN!
NO MATTER WHAT STUPID PARTY YOU ARE IN....THE RACE TO DESTROY THE US IS AT LIGHT SPEED....
FUCK IT ...IM GOING DRINKIN
RESET!
yes, ever more true as the stress on numerous but essential supply chains increases.
"When the system reaches a certain scale, the energy inputs dry up because the exponential relationship between scale and inputs exhausts the available resources."
Sounds like the diminishing return you get with each new version of QEx.
... what returns, i hear you ask lol