Asymmetries, Distortions and Denial

When bubbles pop, it's natural selection at its most unforgiving: "adapt or die," and those who ignore or discount consequential asymmetries will have a very difficult time navigating the triage.

After years of relative stability, it seems asymmetries, distortions and denial are playing out in unexpectedly destabilizing ways. These complex and often opaque dynamics are interacting with each other and reinforcing each other in difficult to predict ways.

No wonder instability is the new stability.

Asymmetry comes in many forms. Advantages and disadvantages, weaknesses and strengths--these terms describe asymmetry in terms of adaptive / selective pluses or minuses and in relative superiority or inferiority.

Asymmetric dominance is not always an adaptive advantage, as it nurtures a very dangerous over-confidence and hubris. Thus the many accounts of dominant tech companies being overtaken and consumed by small rivals whose asymmetric advantages were discounted or not recognized by the over-confident major power.

This is the core concept in asymmetric warfare: turn the opponent's dominance into a liability, and expose them to unexpected asymmetries they are unprepared to counter.

Then there are the stories of entities with asymmetric advantages which they fail to exploit, squandering opportunities to further or secure their dominance.

There are also many accounts of apparent dominance resting on asymmetries of vulnerability in metrics such as training, pilot replacement, supply chains and various "glass jaws" which shatter on contact despite apparent superiority in quantity and quality.

Distortions generate asymmetries of fragility as the pendulum eventually reaches a point where distorting forces can no longer advance or contain the inevitable snap-back as extremes revert to the mean and the pendulum swings to the other extreme: scarcities become gluts, etc.

Denial plays a key role in furthering distortions and overplaying asymmetries. A common form of denying the risks of distortion is "this time it's different," but that doesn't exhaust the human ingenuity invested in other forms of denial. Another common form is to remain confident that past dominance predicts the permanence of future dominance, when history suggests the opposite: hubris and passive over-confidence breed failure and collapse.

Consider these dynamics in light of the global housing bubble. As the chart below shows, central banks suppressed interest rates (and thus mortgage rates) for decades as a distortion designed to foster growth. What it fostered were credit-asset bubbles and wealth/income inequality. Now the global housing bubble is popping as interest rates as distortions are never permanent.

As the second chart illustrates, the global housing bubble has numerous asymmetries, many of which are not yet recognized as being consequential. This chart displays the asymmetric dearth of mortgages in the U.S. that will adjust higher as rates rise and the consequentially larger share of mortgages in Australia, New Zealand, the U.K. and Canada that will adjust higher as rates rise.

The inevitability of the bubble popping was set aside (denial), while the financial distortions that inflated the bubble were deemed permanent. Beneath the confidence and faith in the permanence of distortions, asymmetries piled up, unrecognized or discounted.

Now that the bubble is popping, those asymmetries will loom ever larger. The selective advantages of some asymmetries and the catastrophic fragilities created by others will play out in the years ahead. Some housing markets will deflate, others will crash. Some with stabilize and recover, some will cascade down to a new low and not recover. When bubbles pop, global capital flows tend to ignore ideologies, distortions and denial in favor of transparency, liquidity and stability.

These global capital flows will fuel a new set of asymmetries that will reinforce the strengths of the most adaptable and the weaknesses of the least adaptable--the opaque, corrupt, sclerotic, illiquid. These asymmetries will become increasingly consequential, and only those who recognize the asymmetries for what they are will grasp the opportunities to escape doomed markets and situations and secure stakes in the most adaptable markets and situations.

When bubbles pop, it's natural selection at its most unforgiving: adapt or die, and those who ignore or discount consequential asymmetries will have a very difficult time navigating the triage.





My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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I Used To Be Disgusted, Now I'm Disabused

It's certainly possible to be disgusted, but being disabused of the fantasy that the system is self-correcting is the healthier perspective.

I used to be disgusted, now I'm disabused: beneath all the self-serving narratives, fad-memes and over-simplifications regurgitated as serious analysis, these are the core dynamics I see:

1. Imperial corruption of democracy and open markets. I described this in Regardless of Who's Elected, Imperial Corruption Rules the Nation: the dynamic adaptive churn of unfettered representative democracy and open markets are anathema to insiders, vested interests and elites, each of which has gained asymmetric power by subverting democracy and markets to serve their private interests rather than the public interest / common good--phrases that are meaningless to insiders, vested interests and elites except as simulacra used for PR.

2. The Deep State, the unelected and unaccountable Administrative State. I've been discussing the Deep State before it entered common use--for example:

Going to War with the Political Elite You Have (May 14, 2007)

The Dollar and the Deep State (February 24, 2014)

Is the Deep State Fracturing into Disunity? (March 14, 2014)

The Administrative State has existed in some form in every nation-state / empire, but the U.S. Deep State only gained its vast global powers in World War II and the Cold War, where the lesson learned was the public may choose unwisely (for example, choosing appeasement over preparation) and so the really important decisions needed to preserve the nation cannot be left to parochial politicos in elected office--those decisions must be in the hands of those who know what has to be done.

Democracy is the rubber stamp for doing what's necessary. Beyond that, it's a potentially fatal hindrance. That's the mindset of the Deep State, and if you and I were in upper-echelon positions in the Administrative State, we'd agree with this mindset when things get serious.

This mindset is a self-reinforcing group-think feedback loop: those who believe the public should set policy are weeded out, either by self-selection or via being sent to bureaucratic Siberia.

We're protecting you. That's all you need to know.

This opens the door to functionaries who came to do good but stayed to do well, i.e. those with the right credentials and connections to enter the Power Circle to "serve the public" but soon become insiders maximizing their own private gains. That's the problem with the Administrative State: it's ultimately unaccountable, not just to the public or elected officials but to itself.

3. Vested interests block adaptions that threaten their share of the spoils. Any advance that increases efficiency and productivity and furthers the public good is squelched, suppressed or co-opted by vested interests who rightly fear their share of the spoils might be diminished by advances that obsolete their particular cartel, monopoly or other embedded skim, scam, fraud, embezzlement or simply unproductive dead weight.

The status quo is thus locked into a death spiral as gatekeepers, insiders, vested interests and sold to the highest bidder politicos will protect vested interests even as the engines flood and the ship begins its long descent into the void.

How do otherwise smart people become so blind to what's going on? They believe the status quo is so wealthy, so powerful, so clever, etc., that it will overcome any obstacles or crises because it's always done so in the past, and so it is permanent, immutable, forever, and our supping at the trough of free money couldn't possibly weaken such an enduring Leviathan.

This is the fatal fantasy of every empire. We're too successful to fail and collapse. But oddly enough, faith in the permanence of success leads to the very collapse that's deemed "impossible."

4. Concentrations of wealth, power, capital and production fatally distort the economy and the social order. When "competition" has been reduced to two telecoms, two healthcare insurers, two pork processors, etc., the system has been stripped of adaptability and resilience.

When 10,000 small farmers each have 100 chickens, the stock of 1 million chickens is spread over a wide geography and entrepreneurial network of suppliers, wholesalers, etc. Bird flu may spread widely but it's far more difficult to wipe out 10,000 small farms' poultry compared to the ease of bird flu spreading in one giant factory that concentrates 1 million chickens in one facility. Supply chains stripped of network resilience are equally fragile and prone to disruption and collapse.

Concentrating any form of capital, production and power renders the system vulnerable to collapse due to the inherent weaknesses generated by replacing complex networks with vertical-integration under the control of a few cartels, monopolies, autocrats, gatekeepers or regulators--the latter two being easily influenced by political pressure and/or private gain.

It's certainly possible to be disgusted, but being disabused of the fantasy that the system is self-correcting is the healthier perspective. Everything is forever until systemic weaknesses reveal themselves, typically at the most inopportune junctures.



My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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Regardless of Who's Elected, Imperial Corruption Rules the Nation

But in the meantime, enjoy the political theatrics down on the sand-strewn floor of the Coliseum.

While the much-touted differences between America's political parties get obsessive, hysterical attention, the sameness of Imperial corruption, waste and squalor regardless of who's in power gets little notice. Scrape away the differences--mostly in domestic issues--and we see the dead hand of Imperial Corruption is on the tiller.

The core of Imperial Corruption is the disconnect between the nation's ideals of representational democracy and open markets and the sordid reality: elites serve their interests by corrupting both democracy and open markets.

Unfettered democracy and markets cannot be controlled by a tiny, self-serving elite. Stripped of corruption, democracy and markets are free-for-alls that are constantly evolving, as highly adaptive islands of coherence coalesce that influence the quasi-chaos, competing with other islands of coherence but never gaining dominance due to the open-ended dynamism of collaboration-competition that is the beating heart of both democracy and open markets.

The only way to control democracy and markets to serve the interests of the few at the expense of the many is to corrupt them completely by destroying the dynamism of collaboration-competition. Democracy is replaced by an auction of political power to the highest bidder that rewards cronies and devotes all its resources not to solving the nation's problems but to whipping up conflagrations of divisiveness and partisan hysteria that wash away the middle ground where problems can actually be addressed.

This crippling of the nation's ability to actually solve difficult problems serves the interests of self-serving elites whose sole interest is accumulating personal wealth and power. Their proclaimed interest in solving the nations' real-world problems are fraudulent tissues designed to hide the putrid reality that all their so-called "solutions" distill down to sluicing huge sums of state money to cronies and campaign contributors under the guise of "solving problems."

The only "problem" America's elites know how to solve is the "problem" of how to get personally richer while tightening their control of the nation-state's vast flood of (taxed / borrowed) money. Cronies and contributors get tax breaks hidden in 1,000-page legislation and overflowing rivers of money (here's looking at you, Big Pharma, Big Defense, Higher Education, Sickcare, et al.).

America's elites are masters at misdirection and distraction: it's always the other side's fault that the nation is sliding down the wrong side of the S-Curve. The elites don't really care which side is in power, as they control them both to serve their own interests.

But something funny happens on the way to gaining control of complex emerging systems: that control destroys the system's self-correcting mechanisms and adaptability. Rigging the system to serve one's own interests destroys the system's ability to adapt to changing circumstances and selective pressures/

Once a system has been crippled to serve the interest of an elite, when forced to adapt or die, it can only die as its mechanisms of adaptation were destroyed by the power-grab of eleites. An economy dominated by a handful of cartels and quasi-monopolies is an economy that is doomed to slide into the dustbin of history, as cartels and monopolies "win" by crushing competition and competing islands of coherence, as competition threatens their profits and control of markets and governance, a.k.a. "democracy."

Any system that serves the interests of the few by choking off adaptability and the dynamisms of a free-for-all churn lacks the tools needed to avoid systemic collapse. By enabling elites to organize the nation to serve their personal interests, America has been stripped of the dynamics needed to adapt. Without these dynamics, collapse is the only possible outcome.

But in the meantime, enjoy the political theatrics down on the sand-strewn floor of the Coliseum. While Imperial Corruption undermines what's left of the nation's ability to adapt fast enough and successfully enough to survive what lies ahead, we can cheer the "winners" of the bloodsport and ignore the winds of disorder sweeping the land.



My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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The Unintended Consequences of Unintended Consequences

Decades of central bank distortions and regulatory / market-share capture by cartels and monopolies have completely gutted "markets," destroying their self-correcting dynamics.

Unintended consequences introduce unexpected problems that may not have easy solutions. An entirely different set of problems are unleashed as unintended consequences have their own unintended consequences. This is the problem with complex emergent systems such as economies, societies and global supply chains: the system's feedback, leverage points and phase-change thresholds are not necessarily visible or predictable, yet these dynamics have the potential to cascade small failures into systemic collapse.

The unintended consequences of unintended consequences are called second-order effects: consequences have their own consequences.

So for example, you juice your economy with massive stimulus after a lockdown that upended consumers and global supply chains, crushing both demand and supply, and suddenly you have rip-roaring inflation as demand comes back while supply chains remain tangled.

Shifting critical industrial production to frenemies so corporations could maximize profits while reducing the quality of goods and services seemed like a good idea until the potential costs of that dependence on frenemies become apparent.

Assuming oil and natural gas would always be in abundance made sense when they were abundant, but geopolitical forces kicked that assumption into the gutter. All the reassuring economic stories we told ourselves--energy is only 3.5% of the economy and the household spending budget, so cost really doesn't matter--fall off the cliff when availability and supply become the paramount issues setting price.

That 3.5% loses meaning when there's not enough to supply demand and somebody loses the game of musical chairs.

Then there's the fantasy that monetary policy imposed by central banks control inflation. The inconvenient reality is central bank monetary policy is akin to building sand castles on the beach: when the tide is ebbing, the castles look magnificent. When the tide is rising, the sand castles are quickly washed away.

Inflation is actually a consequence of much larger forces that central banks don't control: demographics (labor supply), social changes (quiet quitting, laying flat, let it rot), supply of essential minerals/materials, flows of private-sector capital, and most profoundly, the real-world productivity of capital, labor and state policies.

The tide of inflation has reversed and is now rising. This tide is gradual and will temporarily be reversed by the gluts of supply that inevitably follow artificial scarcities and the deflationary impact of credit-asset bubbles popping. But these reversals will be temporary and misleading: inflation has reversed for structural reasons unrelated to credit-asset bubbles and temporary gluts.

Another fantasy is that "markets are self-correcting" and will sort themselves out. The inconvenient reality is sometimes markets sort themselves out by crashing, as a good cleaning is the only cure for decades of distortion, manipulation, fraud, embezzlement and the dead hand of cartels and monopolies, whose sole reason to exit is to strangle market forces to enable unfettered profiteering and control of what's passed off as "markets."

Decades of central bank distortions and regulatory / market-share capture by cartels and monopolies have completely gutted "markets," destroying their self-correcting dynamics. This is why Crash Is King.

This is the ultimate irony of the Unintended Consequences of Unintended Consequences: the more insiders and elites attempt to "fix" the cascade of second-order Unintended Consequences, the more Unintended Consequences they unleash.

Tweaking existing distortions and profiteering won't work. Clearing the mess requires a collapse of all the distortions and profiteering skims / scams of cartels and monopolies, which is why I say Crash Is King.



My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


Become a $1/month patron of my work via patreon.com.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Glen B. ($5/month), for your marvelouslyy generous pledge to this site -- I am greatly honored by your support and readership.

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The Era of All-Powerful Central Banks Is Over

Central bank gaming of Finance is the source of instability.

The era of all-powerful central banks is over for a simple reason: they failed: they failed their citizens, their nations, and they failed the world. Their policies have pushed wealth and income inequality to extremes that have destabilized the planet's social, political, economic and environmental spheres.

As I have endeavored to explain for many years, this is the only possible outcome of central bank dominance. Once Finance becomes the primary mover of everything else, then it distorts everything into a skimming machine that benefits the few with access to central bank funding at the expense of everyone else.

Once finance dominates, then both the "market" and government become servants of finance. I say "markets" because once markets have been financialized, they serve the interests of cartels and monopolies and cease to be markets at all.

Government, regardless of the advertised "brand", becomes an auction where the highest bidder gains control of governance and regulation, which are bent to serve the interests of the few with access to central bank largesse.

As the charts below illustrate, this is the top 0.1%, with a substantial "trickle down" to the top 1% and top 10%. The bottom 90% have lost ground not just economically but also politically and socially.

The way central banks create and distribute credit/money results in the dominance of Finance and this dominance has led to the distortion and ruination of the economy and society. Vast inequality is the norm everywhere, because the central bank system is everywhere.

Central banks are the source of destabilizing inequality; they can't fix inequality. As long as Finance dominates "markets" and governments, they won't be able to fix inequality, either.

Central bankers and government authorities are aware that the system is unraveling due to the extremes of inequality they've created. They are attempting to to reconcile this contradiction-- Finance turns the entire world into a skimming machine that can only exacerbate inequality--with, yes, what else? Finance.

So central banks are preparing to deposit new "money" directly into checking accounts and governments are pondering windfall taxes, wealth taxes, etc. to claw back some of the wealth that accumulated in the top tier to fund social programs designed to keep the masses compliant.

Central bank gaming of Finance is the source of instability. Reining in central banks' free money for financiers and cronies is the necessary first step to unseating Finance as the dominant force in markets, governance and the planetary skimming machine Finance has created.

Either power is taken from central banks or the vast inequality that is the result of central bank dominance will unravel the entire system. Take your pick, but the distortions are accelerating, and time is running short.







My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


Become a $1/month patron of my work via patreon.com.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Glen B. ($5/month), for your marvelouslyy generous pledge to this site -- I am greatly honored by your support and readership.

Thank you, Judy W. ($50), for your splendidly generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Read more...