One of the first things I did when I studied Economics, was to really understand the cause of the 2007 Subprime Mortgage Crisis, and the subsequent Global Financial Crisis.
Over the course of my research I came across an applied physics paper (long lost over the passage of time) which used mathematical models and computer science to simulate landslides- namely the scale and the scope of the landslide. The mathematics within the paper was a little complicated for the average Economist to understand but the findings were quite significant.
Essentially the finding of the paper was this: The more frequent the number of landslides on the slope, the less the general magnitude of the average landslide. This seems trivial- frequent minor landslides reduce the severity of the landslides overall. If you build a retaining wall, you might have a landslide once every 100 or 150 years, but the severity of the landslide could be enormous in comparative terms.
What have landslides got to do with anything?
Well, if you understand the nature of the Keynesian Monetary System; or at least, how it has been hijacked to suit society’s purposes today, you understand that we have, in fact built a tremendous “financial retaining wall” in the post crisis years.
Whether the wall fails in 150 years, or the next decade, is anyone’s guess but as time continues (to infinity) the probability of this occurring will limit towards 1.
So perhaps next time rather than trying to hijack the monetary system to fight against market forces, we should financially educate people in a more efficient and decisive way, to better cope with the increased short term volatility brought about by economic shocks and the business cycle. That way we’ll see more resilience in society as a whole, and less of a probability of a financial doomsday scenario. Humanity should probably stop playing with lit matches while standing waist deep in a lake of gasoline on that front.