By Michael Lewitt
Excerpted from The Credit Strategist
February 1, 2017
" The fundamental ontological error has been to model the economy as a relatively simple machine, whose properties can thus be known and controlled by its policy operator. In reality, it is an evolving system, too complex to be either well understood or closely controlled. Moreover, it is a system in which stocks and 'imbalances' build up over time in response to monetary stimulus. This really makes future prospects totally path dependent, and we are on a bad path."
William White*
Complex systems are also self-adaptive, which means they are capable of adjusting to changing conditions. But these adjustments are often sudden and violent and systems don't return to their previous state, leaving those trying to manage them with a new reality for which old models and modes of thinking are inadequate.
