2019: Fragmented, Unevenly Distributed, Asymmetric, Opaque

Add up Fragmented, Unevenly Distributed, Asymmetric and Opaque and you get a world spinning out of centralized control.

Here are the key dynamics of 2019: fragmented, unevenly distributed, asymmetric, opaque. Want to know what's happening with inflation, deflation, recession, populism, etc.?

It depends on what you own, when you own it, where you own it and its relative scarcity and stability--assuming you have trustworthy information on its scarcity and stability.

By ownership, I mean all forms of capital: cash, tools, skills, social capital, trust in institutions, etc. Whatever forms of capital you own, the returns on that capital and its relative stability depend on the specifics of context and timing.

Will there be deflation or inflation? The right question is: Will there be deflation or inflation in my household?. In a rapidly fragmenting economy and society characterized by opacity, asymmetric information, and unevenly distributed results, generalizations are intrinsically misleading/false. The only possible answers arise in a carefully limited context: my household, my neighborhood, my industry, my company, etc.

Here's an example I've mentioned in the past: healthcare costs. If you're one of the lucky households with heavily subsidized healthcare costs (for example, a government employee with limited deductibles, low per-visit costs, and modest co-pays), your healthcare inflation is likely negligible.

But if your household doesn't qualify for subsidies and has to pay market rates, you're very likely to suffer double-digit healthcare inflation.

2019 is the year that central banks and states lose control of the narratives, the economy and the social contract, all of which are dynamic complex systems which excel in producing banquets of unintended consequences.

Control of the narrative requires harvesting "the right data" and spinning an interpretation that supports the status quo. How can anyone outside the central state/organs of propaganda know if the "raw data" has been massaged into the "right data"? The process is opaque, invisible to outsiders, and insiders are threatened with ruin should they make what is purposefully opaque visible to all.

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Disclosures: None.

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