Investment

2020 Was a Snack, 2021 Is the Main Course – Investment Watch

by Charles Hugh-Smith

One of many dishes on the banquet of penalties that can shock an ideal many revelers is the systemic failure of the Federal Reserve’s one-size-fits-all “resolution” to each spot of hassle: print one other trillion {dollars} and provides it to rapacious financiers and firms.



Although 2020 is extensively perceived as “the worst 12 months ever,” it was solely a snack. The true banquet of penalties might be served in 2021. The explanation 2020 was solely a snack is that techniques didn’t break down in 2020. The explanation 2021 is the principle course is that techniques will break down, and as soon as damaged, they can’t be restored.

I made the chart beneath to elucidate how techniques fail and why they can’t be restored. Programs have quite a few sources of potential fragility:

1. Programs might be tightly sure to different fragile techniques, organising the potential for a domino-like cascading collapse that begins with one system failure that then brings down each linked, interdependent system.

2. Programs might be hollowed out by self-interested insiders who mistakenly imagine the system can survive infinite looting.

3. Programs might be weakened by perverse incentives that present sturdy incentives to under-invest in core capabilities and divert revenues to profiteering and extraction (inventory buybacks, bonuses to managers, and so on.)



4. Programs can seem strong to informal observers as a result of insiders cloak the decay of operate, accountability and transparency.

5. The decline of performance / outcomes might be hidden by bureaucratic obscurity (accounting statements during which all of the necessary info is buried in footnotes beginning on web page 217, and so on.) and by complexity thickets that scale back accountability to near-zero: nobody is answerable for the decay of operate, accountability and transparency.

6. Course of replaces outcomes because the Prime Directive of the system. Devoting assets to following processes reasonably than to getting outcomes generates an phantasm of performance at the same time as the flexibility to evolve and adapt is misplaced.

7. Buffers that enabled efficient responses to disaster are stripped to the bone as redundancy and resilience are discounted as “hurting income” or “unnecessary bills.”

8. Insiders and the general public / clients wrongly assume cash can resolve all of those systemic frailties. However cash can not purchase belief, competence, institutional depth, productive incentives or anything that’s important to strong, anti-fragile techniques.

People are unprepared for the collapse of core techniques. The secular religion holds that company possession of core techniques, centralized state management and the relentless pursuit of infinite greed will magically manifest the most effective of all doable worlds as a result of self-enrichment by any means out there is what perfects techniques.

Sadly for America, this religion has it precisely backwards: self-enrichment by any means out there is what hollows out and fatally weakens techniques. The relentless pursuit of infinite greed (“investing” in inventory buybacks, legalized looting, and so on.) has destroyed the ethical basis of society and the financial system: there isn’t a civic advantage or public good left. These empty phrases can not disguise that America is an ethical cesspool so corrupted by greed and self-interest that the nation can now not even acknowledge its personal ethical dissolution.



The second graphic I ready a decade in the past depicts the lifecycle of paperwork which might be both private-sector or public: the preliminary goal of the group that impressed the innovators and preliminary managers is slowly changed by self-interest, and those that had been prepared to sacrifice to serve this goal give up in disgust or are marginalized as “threats” to self-serving insiders.

The competent go away or are pressured out, leaving these of supreme incompetence in energy, managers who’ve been chosen for loyalty to the Prime Directive, defending insider looting from exterior interference through a mastery of public relations (“managing the narrative”) and obfuscation.

The core operate of the group turns into masking dysfunction, ossification, sclerosis and the looting of insiders. The lack of operate, accountability and transparency are hidden from prying eyes, and whistleblowers–probably the most harmful threats to self-serving insiders–are hunted down and destroyed.

It’s not coincidence that America’s “progress sectors” are corruption and public relations (“managing the narrative”) as a result of one of the simplest ways to cloak corruption and systemic failure is to handle the narrative by suppressing dissent and eradicating whistleblowers.

Unbeknownst to most People, many core techniques are already within the first phases of collapse. No company sector does a greater job of masking dysfunction and profiteering than healthcare, and so the collapse of healthcare techniques will shock everybody who swallowed the sector’s shiny PR.

The whole monetary system is hopelessly compromised, corrupt, self-serving and obsessive about maximizing private positive aspects by any means out there. One of many dishes on the banquet of penalties that can shock an ideal many revelers is the systemic failure of the Federal Reserve’s one-size-fits-all “resolution” to each spot of hassle: print one other trillion {dollars} and provides it to rapacious financiers and firms.

I counsel eating frivolously on the feast of penalties as a result of the programs of systemic failure will proceed being served your entire 12 months. So avoid wasting urge for food for the actually massive systemic collapses which are solely now being slid into the oven.



systems collapse5 20

lifecycle bureaucracy



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