Tuesday, December 06, 2011

Fancy Economy Fall Down go "boom"

Nassim Taleb of Black Swan Fame explaining why our economy is in the toilet.  We spend decades trying to paper over the pain and volatility that is natural in the economy.  All we ended up doing was saving up all of the pain for one (we hope) really big boom.


Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks. In fact, they tend to be too calm and exhibit minimal variability as silent risks accumulate beneath the surface. Although the stated intention of political leaders and economic policymakers is to stabilize the system by inhibiting fluctuations, the result tends to be the opposite.

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