Complexity and Chaos:

There were several ideas presented on TV the other night that really held my attention. The first was chaos theory as applied to the current financial crisis. The point of view being that the system may have become so complex that its reaction to an input has become unpredictable. I am not a first rate theoretical mathematician but it seems to me that if this is true we might have to treat market disturbances in a statistical manner. That is to say that cause and effect are not clearly linked in all cases.

Using statistics to relate inputs to system responses is exactly what one does in quantum physics. Where things become truly worrisome is when one realizes that the financial system may have become an example of a chaotic system. In a chaotic system all of the relationships between inputs and outputs are not known. To say that another way it is impossible to predict with any certainty the outcome of a given stimulus. The best example of this is attempts to predict the weather. Prediction further out in time than 3 days become simply a guess or a wish.

I think everyone would agree that one wants to have a fairly tight control over what happens to financial systems on a national level. When a government looses control of its financial destiny then that government normally falls or becomes a vassal state to which ever government is controlling its financial destiny. Today one can argue that America has become a vassal state to the producers of petroleum. If you do not understand this concept somehow you have slumbered through events of the past 35 years. In fact you have been encouraged to slumber. Those that would deprive you of your wealth and free agency did not slumber however.

Today America is in the throws of a financial crisis that was brought on principally because we were not paying attention to world events. Nor were we taking steps to curb our own American greed. Frankly we consumed more than what we were entitled to. Only a very few saved for a rainy day. Folks it is raining and most people don’t have an umbrella. Many more have found their umbrella is in tatters.

The wealth of a nation is best gauged in the 21st century by that nation’s independence in energy generation. To me that should be the guiding law and principle of governance for America for the next 30 years. Until and unless America can satisfy her energy requirements domestically or with a financially balanced series of trade agreements coupled with domestic energy production America will be doomed to second class nationhood.