C R I S I S

Crisis, as the Chinese say, is a composition of characters that represent both danger and opportunity - a combination of the elements of risk and reward.  These elements will play themselves out differently in every crisis depending on each individuals financial position, expectations and point-of-view.

From a philosophical stand point, every crisis should be interpreted as an opportunity for change, for re-evaluation and re-assessment, for  improvement and evolution...

How can there be change without friction,without stimulation?

When there is no friction, there is no need to improve, leading to idleness and sloth.  Friction shows us that there is always a space for new ideas, new forces that can continually nourish society by maintaining it in its original state of a constant creative disequilibrium.  Evolution necessitates a certain trial and error.  Without the tension of a constant disequilibrium, the game becomes fixed and there is no real growth.  Only when the social and economical fabric is disorganized, one can efficiently question it and uncover ever more subtle possibilities of new ways to act.  Friction will eventually makes society grow vigorous and resilient. 

The current "modus operandi" of the developed world in the conduction of economic policy has been to smooth out the edges of every downturn.  The process, of providing a constant and ever-lasting backstop to every economic cycle, not only limits the trough, but also substantially caps the peak.

Psychologically, this action only serves to: punish the prudent instead of the reckless by promoting moral-hazard; to socialize the losses and privatize the gains;  to reinforce political hubris and short-termism; to stimulate investor complacency and laziness; to confuse business sentiment, confidence and investment considerations - simply because economies kept on life support (ultra low interest rates for extended periods of time) send the wrong signals. 

By focusing solely on "the danger" character of a crisis policy makers end up killing the entrepreneurial spirit of the society.  This spirit is the one responsible for every paradigm shift in our social, economic and political development.  It will automatically and permanently eliminate all of the much needed creativeness/creativity that comes out of every destruction, by obfuscating the need to fight for our survival...

Today, the ideas at the center of all macroeconomic thought, were written over 70 years ago by John Maynard Keynes.  Policy makers in major developed economies are clinging desperately to this acceptable macroeconomic theory.

Note that I purposely left acceptable and theory in italics.  Acceptable because it is the theory that most eloquently maintains the "status quo".  As Yogi Berra once said, "in theory, there is no difference between theory and practice.  In practice, there is."








At the highest levels of intellectual thought and discussion, there will always be equally convincing arguments pro and against...