The Keys To Understanding the Collapse of the Status Quo: Credibility and Expectations [oftwominds]
When expectations are raised to impossible heights based on the promise of exponential financialization, the credibility of the Status Quo is doomed.
Data is important, but not all trends can be quantified. Longtime readers know that I value data and often use charts to explain the forces of transition/collapse. But there are profound dynamics that are not easily quantified, instances in which quantification may obscure our understanding.
Credibility and expectations are two such dynamics. Both credibility and expectations are very real forces, despite their status as inner states immune to direct measurement.
Beneath the surface of financial statistics, the real bedrock of any political and financial Status Quo is its credibility in the minds of its subjects.
Once the people lose faith in the system, it will collapse under its own weight, a process I described inWhen Belief in the System Fades
(March 12, 2008).
The corollary to this structural need for highly motivated, dedicated people to work the gears is that if their belief in the machine fades, then the machine grinds to a halt.
The loss of credibility in the European Union, China, Japan and the U.S. is now in full swing. Credibility is like a sand castle; every false promise, every half-truth, every simulacra “solution,” every secret deal, every surrender to vested interests, every politically expedient but ultimately disastrous “fix” removes a handful of sand from beneath the sand castle.
When enough sand has been removed, the castle collapses under its own weight.