Black Swans and White
By Dr. Jeffrey Lewis
The introduction of noise into a system can
amplify the movement or efficiency of that system. Sometimes a little agitation
helps to broaden a signal; this phenomenon of stochastic resonance has helped in
understanding many nonlinear and complex systems - from medicine to diet.
The current financial system is a poster child
for the non linear. Many nodes, endless connections. No way to parse all of the
nodes and the connections. It hums along, based on confidence and dependent on
an artificial type of intervention.
A system held together by fraying strands, a
woeful lack of redundancy in the form of payments systems and credit flow
mechanisms. And then noise is introduced. An event. A surprise. Or a new
It may not be detectable. Eventually, it
amplifies the direction…
To the point where part breaks.
The agitation can come from many things. From
‘known knowns’, like subprime or student loan defaults - to the unimaginable or
trivial, like some upper air disturbance or a media driven accident that turns
And the system spirals out of control. It
collapses. Nature abhors a vacuum. Commentary abhors the truth. We all want to
believe that this time will be different. We want to believe that the same
forces of equilibrium exist in the products of civilization.
There are physical laws but human behavior
does not correspond well to those laws. Behavior is irrational and
unpredictable and capable of moving fast.
There are trends and propaganda. But they
don't. Civilizations are not held consistent to any deep law or set of
principles. Civilization is a product, a fluctuating pattern long disconnected
from the physical processes that give rise to organisms - biological systems.
You may be able to hide the connections — but
they are not some mysterious force. Or they work in a realm with its own set of
laws. Failure and breakdown feed back directly to the physical environment…the
lives of real people.
The closer you get to this reality, the more
complex, and the more people want to run away from it. It’s far easier to
worship the price and fantasize about its meaning. The fantasy fuels the modern
professional trade complex where would-be physicists, mathematicians, and
engineers are lured by the pied piper.
We either bribe our brightest into years of
debt servitude or we bombard the brightest with visions of affluence, wealth,
societies, and cultural - popular ideas.
Who can blame them? The music lures them into
the poverty. In essence, they give up their souls.
Stuck in a poverty of affluence.
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