{"id":64059,"date":"2022-11-08T14:11:09","date_gmt":"2022-11-08T19:11:09","guid":{"rendered":"https:\/\/olduvai.ca\/?p=64059"},"modified":"2022-11-08T14:11:23","modified_gmt":"2022-11-08T19:11:23","slug":"64059","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=64059","title":{"rendered":"The Unintended Consequences of Unintended Consequences"},"content":{"rendered":"

The Unintended Consequences of Unintended Consequences<\/a><\/h3>\n
\n

Decades of central bank distortions and regulatory \/ market-share capture by cartels and monopolies have completely gutted “markets,” destroying their self-correcting dynamics.<\/i><\/p>\n

Unintended consequences<\/i>\u00a0introduce unexpected problems that may not have easy solutions. An entirely different set of problems are unleashed as\u00a0unintended consequences<\/i>\u00a0have their own\u00a0unintended consequences<\/i>.<\/b>\u00a0This is the problem with\u00a0complex emergent systems<\/i>\u00a0such 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.<\/p>\n

The\u00a0unintended consequences<\/i>\u00a0of\u00a0unintended consequences<\/i>\u00a0are called\u00a0second-order effects<\/i><\/b>: consequences have their own consequences.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

That 3.5% loses meaning when there’s not enough to supply demand and somebody loses the game of musical chairs.<\/p>\n

Then there’s the fantasy that monetary policy imposed by central banks control inflation.<\/b>\u00a0The 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.<\/p>\n

\u2026click on the above link to read the rest\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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\u00a0introduce unexpected problems that may not have easy solutions. An entirely different set of problems are unleashed as\u00a0unintended consequences\u00a0have their own\u00a0unintended consequences.\u00a0This is the problem with\u00a0complex […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,24078,534,587,13351,3067],"class_list":["post-64059","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-charles-hugh-smith-2","tag-monetary-policy","tag-of-two-minds","tag-price-inflation","tag-unintended-consequences"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/64059","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=64059"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/64059\/revisions"}],"predecessor-version":[{"id":64061,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/64059\/revisions\/64061"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=64059"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=64059"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=64059"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}