Stability Breeds Weakness

by | May 26, 2022

Days like today remind you the world is more than one big market. 

The Uvalde shooting hit me hard — harder than usual. And that I can qualify a “usual” for this sort of thing could have a lot to do with my emotional state. 

How an individual can develop a world view that drives him to such evil is beyond reckoning. And the reporting of events surrounding the situation only serves to salt the already tragic with a sense of the surreal. 

Now, I’m not going to burden you with my interpretation of cause and effect because here we are in any case. And I’m sure we’d all agree that “here” looks a lot different than it did 20 years ago. 

And the here that we have requires a completely different method of making decisions. 

Decisions Now Matter 

Let’s face it. Most decisions don’t really matter. 

At least not in a “life or death” sort of way. 

Where to shop. What to eat. What to watch. Where to work. We rarely encounter a decision that will meaningfully impact the course of our lives. Because, at the end of the day, our past decisions have gained so much momentum that we usually just let them dictate our next one. 

And that heuristic, going with what worked, well…worked — at least in the world in which most Americans have grown up. 

Since 1980, America has experienced an exceptional upward trajectory in prosperity alongside a large side helping of stability. Free markets won the 20th century fight over the economy’s Commanding Heights in the 80s. And the momentum of that success reduced the consequences of decisions. It made success easier. 

But such a long period of stability didn’t come for free. The entirety of government policy since basically the internet bubble burst has been to minimize the impact of shocks to markets and the economy. What was an $800 billion Federal Reserve balance sheet going into 2007 recently crossed the $9 trillion mark. And we can no longer afford the price of artificially imposed stability. 

Our system is fragile because of that heavily guarded stability. 

Which puts us in a tight spot. 

Not only are we entering a period characterized by more frequent and severe shocks. Our fragile systems must weather those shocks without a government sponsored crutch. 

The higher volatility that results means every decision bears more weight. The past is no longer a useful guide. And the power structures that got us here have lost trust. 

It’s a different world now. Days that hit hard may become more frequent. And the last thing you want to do is let the momentum of yesterday’s success drive into bad decisions tomorrow. 

Think Free. Be Free.

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