More than ever it seems economic “experts” can’t agree on anything. As I discussed in my last blog entry The "Supper Bubble", some feel the worst is over in the US and we are on a path to recovery and economic growth. Others fear another deflationary spiral like in 2008-2009. And there are some that think a hyperinflation event and the destruction of the dollar is imminent. Others just don’t know what to think. The reality is that the only thing that seems certain is that there is a lot of uncertainty.
There is an urgent need to recognize that financial markets, far from trending towards equilibrium, are inherently unstable.” —George Soros
Looking at history this shouldn’t be a shocking revelation, but the last 50 years of economic stability in the US has skewed our thinking a little. We are the same humans that created the financial systems that have succeeded and failed over the last eight centuries of financial folly. As humans with short term thinking we have a tendency to build very fragile systems without thinking of the longer term implications. Another element is the “new era thinking” that Robert Shiller referred to Irrational Exuberance that is a fundamental ingredient in creating bubbles.
If you have accepted, as I have, that 1) economies are inherently unstable and unpredictable and 2) the foreseeable future is unlikely to be as stable as the recent past - then what is the best way to navigate it?
In my quest to answer that very question I came along the works of Nassim Nicholas Taleb (Fooled by Randomness, The Black-Swan, The Bed of Procrustes, and his next book Anti-fragility). While Anti-Fragility hasn't yet been published and may not for awhile, Taleb has released a summary. Highly recommend all of it.
His answer to the question above: become robust to it. So my goal with this blog, along with an outlet for my ideas on global economic trends, will be to create a discussion around becoming personally more robust, and less fragile, to an inherently unstable economic world.
