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how diminishing returns triggers investor flight & collapse

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Phil Henshaw-2

how diminishing returns triggers investor flight & collapse

Thought this diagram might help. http://www.synapse9.com/issues/ResourceNet.pdf

How markets equalize investment returns for physical resources throughout a whole system also accelerates the “flight to safety” and collapse of the whole system too, when physical returns (ROI’s) are diminishing below the financial expectations guaranteed by central banks... :-(

Best,

Phil Henshaw ¸¸¸¸.·´ ¯ `·.¸¸¸¸

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"it's not finding what people say interesting, but finding the interest in what they say"

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Douglas Roberts-2

Re: how diminishing returns triggers investor flight & collapse

Ok, I'll bite.

How does yet another "everything is connected to everything" diagram help anything?

While we're on he subject, does that paragraph to the left of the Everything-Everything diagram say anything more prosaic than, "People invest to make money, and when the stock market is melting down people aren't making money on their investments"?

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Doug Roberts, RTI International
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On Tue, Oct 28, 2008 at 12:59 PM, Phil Henshaw <[hidden email]> wrote:

Thought this diagram might help.   http://www.synapse9.com/issues/ResourceNet.pdf

How markets equalize investment returns for physical resources throughout a whole system also accelerates the "flight to safety" and collapse of the whole system too, when physical returns (ROI's) are diminishing below the financial expectations guaranteed by central banks...      :-(

Best,

Phil Henshaw                                                                 ¸¸¸¸.·´ ¯ `·.¸¸¸¸

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
212-795-4844 680 Ft.Washington Ave NY NY 10040 [hidden email]

"it's not finding what people say interesting, but finding the interest in what they say"

============================================================
FRIAM Applied Complexity Group listserv
Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org

Phil Henshaw-2

Re: how diminishing returns triggers investor flight & collapse

Great questions…!

1) As a complex systems naturalist I’ve found a number of particular kinds of ‘constant’ relationships that are unusually strong predictors of change. Growth is one, whole system diminishing returns is another. I’m trying to help people watch their world at IT’s work.
I had two ways in mind. The diagram points to the main categories of resources for growth, the means by which their investments are connected, and by that how the system balances it’s strains in relation to the discovered profitability of the earth. The reason the system behaves as a whole is important for understanding both how increasing resource uses run into natural limits at the same time, and why no one notices. It also shows why those connections get disconnected.

2)            When the stock market is collapsing it’s ‘like’ a house burning down.   There’s a cascade process. That gives you an indicator connecting its particular parts.    Connecting the parts lets you better see how it all works and ask how and when it began.    When the banks and others began learning they had made bad bets they tried to sell their bad bets to someone else.   A lot of people noticed the ‘rush to the door’ and that precipitated the collapse of trust.
      Where that began was with both the process that built the false expectations in the first place and the process of small local failures of expectation precipitating the collapse. The ‘whole event’ involves understanding both the pump that inflated the bubble (which nearly everyone celebrated at the time) and the sudden appearance of the wide variety of ‘pin pricks’ of failed expectations all over that directly precipitated it.    So far I seem to be the only person who’s noticed that the inflation of the bubble was certain to create points of failure that could not be responded to, and so be the first and final cause its own collapse.
      One thing you see at the moment is that central banks providing a safe haven for money are themselves causing a major movement of investment to the central banks and disinvestment in the physical economy.   That is actively dismantling the physical economy, the core problem causing the market to slide.   This whole scenario of events is actually a natural direct consequence of our standard practice of planning on continuous growth from naturally diminishing assets, one of those seemingly ‘unchanging’ general conditions that foretell enormous change.

Does that help?

Phil Henshaw

From: Douglas Roberts [mailto:[hidden email]]
Sent: Tuesday, October 28, 2008 3:09 PM
To: [hidden email]; The Friday Morning Applied Complexity Coffee Group
Subject: Re: [FRIAM] how diminishing returns triggers investor flight & collapse