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Thursday, August 07, 2014

How Economies Collapse: Systemic Friction And Debt Are Self-Liquidating

Paying for unproductive friction with borrowed money has generated the illusion that free to me is actually free - it isn't.

We all understand how friction slows our progress: flatten the tires on a bicycle and it becomes much harder to maintain speed. If a brake pad is rubbing against one wheel, it gets even harder.

If we pile on additional sources of friction, eventually forward motion stops. In systemic terms, the system freezes up and collapses.

Here are some examples of systemic friction in the U.S. economy:

1. College degrees that cost four times as much but yield diminishing value in the job market.

1 comment:

  1. I have often considered example #1 and wondered when I would read something about it. One has to wonder about the cost/result ratio in today's employment environment.

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