Mike Verge

‘Trump’s Chaos Theory’

Hello Taiwan!  Keep the drone! Build a wall! Repeal Obamacare! To the casual observer these statements  may appear to be ‘un-presidented’.  But they are all part of Trump’s larger strategy. In fact, there is a whole division of mathematics devoted to this strategy. It is called Chaos Theory.

The Butterfly Effect

Chaos theory is a branch of mathematics focused on the behavior of systems that are highly sensitive to initial conditions. Very small differences in the starting point yield widely diverging outcomes.  This renders long-term prediction of their behavior impossible. This behavior is often referred to as ‘Chaos” and the outcome is sometimes referred to as ‘The Butterfly effect. (The wind caused by a butterfly over Mount Fuji in Japan can be the cause of a hurricane in Washington.) Chaotic behavior exists in many natural systems like weather and climate. And although chaotic systems do not tend to follow a predictable plan like traditional mathematics, they are the creators of some of the most beautiful chaotic features of our world, like ferns and snowflakes. Why should we all try to become more familiar with chaos theory.? Because it will be at the foundation of  Trump’s New World Order!

Global Deflation:  a “Zero-Sum Game”

Around the world a lot of emphasis has been placed on traditional economic theory. However most of those theories were developed over a century of mostly continuous growth. All the economies of the world were able to grow together with each country getting an ever bigger piece of a growing global economic pie. Everyone was relatively happy. However, over the past decade things have changed dramatically. Global growth has slowed to almost zero and we are even seeing pockets of negative growth and deflation. Now, since the global economy is not expanding, if a country wants to grow, it must take a piece of the pie from another country. Now, instead of global leaders working together to make the pie larger, they will be constantly at odds as they try to out maneuver each other. …..This new world  is a ‘zero-sum’ game.

Donald Trump: Where Chaos Theory Meets Game Theory

Traditional economic theory works well when the economy is expanding and there are thousands or millions of data points to consider. However, in our new deflationary world, the major factors of economic success could be determined by a just a handful of world leaders. In situations where a relatively small number of people can have a dramatic impact on large outcomes, it is sometimes more helpful to think in terms of Game Theory. It can be quite useful if you just think of the key five to ten global leaders sitting around a table playing a game, like poker. In this hypothetical game there will be only one winner, so it is very important to know your competitors.  What are each other’s goals? What will be their strategy. How will they retaliate to a move? Will they learn from prior moves? Are they faking or bluffing ? To win at game theory, it is imperative to know your competitor, his tendencies and how he responds to different stimulus. Most importantly, you need to know his starting position. This is where Trump has the advantage.

All the leaders of the world have a long and well established track record. They are known by everybody. Trump, on the other hand, is almost a complete unknown and seemingly unpredictable. The key for Trump is to keep it that way. He should blend Chaos Theory and Game Theory into his new world strategy. His starting point is unknown, so his ending point is completely unpredictable. He should stay unpredictable and keep moving. His Tweeting is a complete new way of communicating and he should keep it up. His Tweets can even be interpreted in many different ways and will keep global leaders a bit off balance.  (I am sure the Chinese did not expect him to express his complete international strategy for the South China Sea in a Tweet, and I am sure they did not expect him to say. “Keep the drone”.)  That type of response, although unorthodox, is exactly what is required. In the long run, Trump will need to articulate his strategies in many different areas. But in the short term the best strategy is to keep everyone off balance.

If the best way to win at the global economic poker game is to keep your competition guessing, Trump is off to an amazing start. Like the world’s greatest boxer Mohammed Ali  used to say, the key to success is to  “Float like a butterfly!”     ……   Donald Trump is already flying high!

Mike Verge is President and CEO of “Verge and Associates” Strategic Consultants

He is author of:  “Global Deflation” (available on Amazon)

He can be reached for comment at : verge.mike@gmail.com