socrateazz

The Problem with Free Markets? Look in the Mirror

The problem is not so much a blind spot per se. People see what the imediate effect of certain decisions are and assume the same decisions will produce the same result and thus value those similar future decisions the same. The thing is most first decisions which are effective actually move supply or demand toward a greater balance. The subsequent decisions make further movement toward balance until later overshooting balance. If not stopped soon a serious opposite imbalance will occur. The random walk graphs often illustrate those cycles. If you had serious problems in the near past them a quick reversal is probable. If the past imbalances have been minor as with the recent economy then a serious imbalance could hit hard. People do not react to reality until reality has become obvious. Until the US let Leman sink, there were not any adverse reactions. A little reality allowed to escape and serious things happened.