Washington’s Latest Match Made In Hell

One of the more enticing things about financial markets is not that they’re predictable. Or that they’re not predictable. It’s that they’re almost predictable…or at least they seem they should be.

The economy, like financial markets, ebb and flow in rhythmic cycles; though, they never quite repeat with perfection. A shortage of wheat one year should compel production and an abundant harvest the next year. You can darn near count on it, so long as there’s not a late season frost, a mite infestation, or some other act of God that wipes out the crop yield.

Indeed, the economy’s dynamic. It expands. It contracts. But it does more than that. For it’s more biotic than abiotic. It changes. It evolves. It continuously reshapes and readjusts to the countless and ever changing inputs, innovations, and interactions of the people and resources that compose it.

The economy also adjusts to government intervention and the conceit of central planners. An economy with a soft government touch is lively, energetic, and innovative. Conversely, a heavy handed government calibrates an economy to be slow moving, lethargic, and predictable.

In addition to government, the economy mirrors the veracity of the money and the range of credit that flows through it. An economy with sound money and tight credit is industrious, thrifty, and honest.  Whereas an economy with fake money and cheap credit is slothful, gluttonous, and deceitful.

Preparing for an Alien Invasion

Over time attitudes towards government and credit change too. One generation borrows money and spends it, while voting in an endless array of social welfare programs. The next saves and pays down debt, and is suspicious of the snake oil promises of politicians.

No graphical curve can precisely predict what way people’s behaviors and attitudes will swing from one period to the next. Nor can it predict the implications of a new technological advancement or other unforeseen developments that transform the world.

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