The League of Entropy

Yesterday I described 3 Pillars of Exorbitant Privilege that paid for the American lifestyle over the last several decades.

A cost that also required more and more centralization of power.

Political power, informational power, and economic power have all increased as you approach the centers of politics, finance, defense, energy, pharma, or big data.

And that costs money.

Consider the trillions spent on a 20-year war in Afghanistan, wars in Iraq, Libya, Syria – I’ve lost count – to maintain U.S. hegemony in the Middle East. Add to that Ukraine and the saber rattling between the U.S. and China over Taiwan.

Consider the multi-trillion-dollar price tags of bailing out the U.S. economy from the Great Financial Crisis through the COVID-19 pandemic and now the smoldering banking crisis.

And consider the impossible position global central banks around the world find themselves in as they must tighten money supply to fight inflation but also have to ease money supply to keep recession at bay and banks from failing.

But the exorbitant privilege that maintained order under the centralized status quo, like everything else in the universe, has succumbed to entropy.

Now, entropy is a term usually reserved for thermodynamics discussions or information theory. But, as a general concept, entropy describes the amount of disorder in a system.

The more disorderly a system, the more entropy it demonstrates.

And when I look at society and the world around us, I see it demonstrating a great deal of entropy.

A unipolar U.S. centric political status quo giving way to multi-polar alignments centering around China, Russia, and India.

Populist pressure in Europe is threatening to break up the European Union, with the U.K. being the first.

A U.S. dollar undermined through various unilateral agreements to settle trade in competing currencies.

And Bitcoin.

All around the world people are affiliating with smaller and smaller groups of like-minded people.

Just as thermal entropy dissipates heat, “social” entropy dissipates political and economic power.

And the more the centralized status-quo resorts to debt, debasement, and force to hold on to power, the more disorder it creates.

Take What the Markets Give You.