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2020 Was a Snack, 2021 Is the Main Course

Charles Hugh Smith
January 5th, 2021
Of Two Minds Blog
Comments (6)

This article was originally published by Charles Hugh Smith at Of Two Minds Blog.

One of the dishes at the banquet of consequences that will surprise a great many revelers is the systemic failure of the Federal Reserve’s one-size-fits-all “solution” to every spot of bother: print another trillion dollars and give it to rapacious financiers and corporations.

Though 2020 is widely perceived as “the worst year ever,” it was only a snack. The real banquet of consequences will be served in 2021. The reason 2020 was only a snack is that systems didn’t break down in 2020. The reason 2021 is the main course is that systems will break down, and once broken, they cannot be restored.

I made the chart below to explain how systems fail and why they cannot be restored. Systems have numerous sources of potential fragility:

1. Systems can be tightly bound to other fragile systems, setting up the potential for a domino-like cascading collapse that starts with one system failure that then brings down every connected, interdependent system.

2. Systems can be hollowed out by self-interested insiders who mistakenly believe the system can survive endless looting.

3. Systems can be weakened by perverse incentives that provide strong incentives to under-invest in core functions and divert revenues to profiteering and extraction (stock buybacks, bonuses to managers, etc.)

4. Systems can appear robust to casual observers because insiders cloak the decay of function, accountability, and transparency.

5. The decline of functionality/results can be hidden by bureaucratic obscurity (accounting statements in which all the important information is buried in footnotes starting on page 217, etc.) and by complexity thickets that reduce accountability to near-zero: no one is responsible for the decay of function, accountability, and transparency.

6. Process replaces results as the Prime Directive of the system. Devoting resources to following processes rather than to getting results generates an illusion of functionality even as the ability to evolve and adapt is lost.

7. Buffers that enabled effective responses to crisis are stripped to the bone as redundancy and resilience are discounted as “hurting profits” or “needless expenses.”

8. Insiders and the public/customers wrongly assume money can solve all of these systemic frailties. But money cannot buy trust, competence, institutional depth, productive incentives, or anything else that is essential to robust, anti-fragile systems.

Americans are unprepared for the collapse of core systems. The secular faith holds that corporate ownership of core systems, centralized state control, and the relentless pursuit of infinite greed will magically manifest the best of all possible worlds because self-enrichment by any means available is what perfects systems.

Unfortunately for America, this faith has it exactly backward: self-enrichment by any means available is what hollows out and fatally weakens systems. The relentless pursuit of infinite greed (“investing” in stock buybacks, legalized looting, etc.) has destroyed the moral foundation of society and the economy: there is no civic virtue or public good left. These empty phrases cannot hide that America is a moral cesspool so corrupted by greed and self-interest that the nation can no longer even recognize its own moral dissolution.

The second graphic I prepared a decade ago depicts the lifecycle of bureaucracy which can be either private-sector or public: the initial purpose of the organization that inspired the innovators and initial managers is slowly replaced by self-interest, and those who were willing to sacrifice to serve this purpose quit in disgust or are marginalized as “threats” to self-serving insiders.

The competent leave or are forced out, leaving those of supreme incompetence in power, managers who’ve been selected for loyalty to the Prime Directive, protecting insider looting from outside interference via a mastery of public relations (“managing the narrative”) and obfuscation.

The core function of the organization becomes masking dysfunction, ossification, sclerosis, and the looting of insiders. The loss of function, accountability, and transparency are hidden from prying eyes, and whistleblowers–the most dangerous threats to self-serving insiders–are hunted down and destroyed.

It is not a coincidence that America’s “growth sectors” are corruption and public relations (“managing the narrative”) because the best way to cloak corruption and systemic failure is to manage the narrative by suppressing dissent and eradicating whistleblowers.

Unbeknownst to most Americans, many core systems are already in the first stages of collapse. No corporate sector does a better job of masking dysfunction and profiteering than healthcare, and so the collapse of healthcare systems will surprise everyone who swallowed the sector’s glossy PR.

The entire financial system is hopelessly compromised, corrupt, self-serving, and obsessed with maximizing personal gains by any means available. One of the dishes at the banquet of consequences that will surprise a great many revelers is the systemic failure of the Federal Reserve’s one-size-fits-all “solution” to every spot of bother: print another trillion dollars and give it to rapacious financiers and corporations.

I suggest dining lightly on the feast of consequences because the courses of systemic failure will continue being served the entire year. So save some appetite for the really big systemic collapses that are only now being slid into the oven.

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    Author: Charles Hugh Smith
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    Date: January 5th, 2021
    Website: https://www.oftwominds.com/blog.html

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    6 Comments...

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    1. Great article
      Well presented
      Very factual
      Trajectory unstoppable
      Bend over and kiss you arse goodbye

    2. cranerigger says:

      Mr. Smith, great article. I share your concerns about endless printing of Monopoly (the board game) money. The insane justification for endless currency printing, (MMT) Modern Monetery Theory reminds me of the Demonrat justification for POWER acquisition, anything goes.

      It is amazing to see how few people study history and understand that bad-consequences-for-poor-decisions follows humans throughout the ages.

    3. Onward says:

      2020 WAS A SNACK,2021 IS THE MAIN COURSE Yeah,all I really know is 2020 left a nasty aftertaste in my mouth WORST .YEAR. EVER.

    4. Darth Skippy says:

      Short of some richly deserved comet crashing on us and throwing our collective checker pieces, all over…

      All you individuals had to do is take notes, to recoup your losses, on the personal level. Mistakes have been made. Learn from them.

      Corporately speaking, all the above problems are design features of the system. Make peace with this. You may live to be one of the exploiters and not the exploited.

    5. Anonymous says:

      We have to understand that governments do NOT exist for the benefit of the governed.
      Governments may (or may not) start out with beneficent, altruistic ideals and motives, but eventually ALL governments morph into something deceptive, ugly, controlling, and destructive.
      The vast majority of those who enter government “service” are there to enrich themselves and to gain power.
      We are merely the sheep who are to be deceived, controlled, used, fleeced, and eventually culled.

    6. Frank Thoughts says:

      In the 1970s we used to worry about the spread of the Africanised Bee. Today, we have the spread of Africanised economics and ‘folks’. And, surprise, surprise, the system is going down as a result. It is not possible to exponentially increase the dependency class and at the same time sabotage all productive, wealth creating activity.

      Go to Paris and you will see what I mean. Homeless in tents everywhere because the government can’t or won’t control the borders and refuses to arrest these individuals and deport them. That is corruption and I am sure some politicians somewhere is collecting the kickbacks for letting this carry on.

      Once the system collapses we will have only two options: 1) to accept third world status and decay and live like most third world countries do (think Africa), or, to go the Asia/China model: strip everything down to the basics and use a strict formula of education, hard work and saving to create a new productive economy again.

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