Keep an eye on the system’s buffers. They look fine until they suddenly collapse.
The doom-and-gloomers among us who have been predicting the unraveling of an inherently unstable financial system appear to have been disproved by the reflation of yet another credit-asset bubble. But inherently unstable / imbalanced systems can stumble onward for years or even decades, making fools of all who warn of an eventual reset.
Destabilizing systems can cling on for decades, as the inevitable crisis doesn’t necessarily resolve the instability. History shows that when systems had enough inherent wealth to draw upon, they could survive for centuries, thinning their resources, adaptability and buffers until their reservoirs were finally drained. Until then, they simply did more of what’s failed to maintain the sclerotic, self-serving elites at the top of the Imperial food chain.
If we want to trace back the systemic instabilities and imbalances that culminated in China’s revolution in 1949, we can start in 1900 with the Boxer Rebellion, which was itself a reaction to the Opium Wars of the 1840s that established Western influence and control in China.
But is this far enough back in time to understand the Communist Revolution in the 1940s? If we want a comprehensive understanding, we must go back to 1644 and the demise of the Ming Empire, and perhaps even farther back to the Mongol victory over the Song dynasties in the late 1200s.
In the same fashion, we can trace the current crisis of global-finance Capitalism back to the expansion of globalization, affordable fossil fuels and credit in the early 1900s. Affordable fossil fuels enabled rapid industrialization and the growth of transportation and communication networks. Add the expansionary effects of globalization and credit, and the consumer-finance economy took off like a rocket until the inevitable consequences of providing leverage and credit to marginal producers, buyers and speculators led to the Great Depression.
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