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Image | Welcome to the Era of ‘Ugly’ Inflation
Welcome to the Era of ‘Ugly’ Inflation

A year ago, in the wake of then-announced additional monetary easing measures by the Federal Reserve (which since sent stock prices on a rocket ride for the next nine months), many of our readers feared a major decline in the dollar was imminent. To add some balance to our site content, we asked Peak Prosperity contributing editor Charles Hugh Smith to argue the case for a strengthening dollar. He graciously accepted, and in the year since writing Heresy and the US Dollar, America's currency has strengthened notably vs. its fiat counterparts. Now, after the Fed's announcement of QE3 (plus), many of us are girding once again for dollar weakness. So we've invited Charles to once again play devil's advocate.

The Siren Song of 'Beautiful Deleveraging'

In a world of rising sovereign debts and an overleveraged, over-indebted private sector, history suggests there are only three possible ways out: gradual deleveraging, defaulting on the debt, or printing enough money to inflate away the debt.

Welcome to the Era of ‘Ugly’ Inflation

A year ago, in the wake of then-announced additional monetary easing measures by the Federal Reserve (which since sent stock prices on a rocket ride for the next nine months), many of our readers feared a major decline in the dollar was imminent. To add some balance to our site content, we asked Peak Prosperity contributing editor Charles Hugh Smith to argue the case for a strengthening dollar. He graciously accepted, and in the year since writing Heresy and the US Dollar, America's currency has strengthened notably vs. its fiat counterparts. Now, after the Fed's announcement of QE3 (plus), many of us are girding once again for dollar weakness. So we've invited Charles to once again play devil's advocate.

The Siren Song of 'Beautiful Deleveraging'

In a world of rising sovereign debts and an overleveraged, over-indebted private sector, history suggests there are only three possible ways out: gradual deleveraging, defaulting on the debt, or printing enough money to inflate away the debt.

Image | Why the U.S. Dollar, Counterintuitively, May Strengthen from Here
Why the U.S. Dollar, Counterintuitively, May Strengthen from Here
 PREVIEW

Executive Summary

  • Why to expect household income will continue to decline (in real terms)
  • The ceiling that the price of oil may place on central bankers' ability to print money
  • Why money printing does not always result in inflation
  • The argument for a stable and/or strengthening U.S. dollar

A year ago, in the wake of the then-announced additional monetary easing measures by the Federal Reserve (which since sent stock prices on a rocket ride for the next nine months), many of our readers feared a major decline in the dollar was imminent. To add some balance to our site content, we asked Peak Prosperity contributing editor Charles Hugh Smith to argue the case for a strengthening dollar. He graciously accepted, and in the year since writing Heresy and the US Dollar, America's currency did indeed strengthen notably vs. its fiat counterparts. Now, after the Fed's announcement of QE3 (plus), many of us are girding once again for dollar weakness. So we've invited Charles to once again play devil's advocate.

If you have not yet read Part I: Welcome to the Era of 'Ugly' Inflation, available free to all readers, please click here to read it first.

In Part I, we covered “beautiful deleveraging,” the goal of which is to systemically distribute the financial pain so the Status Quo is left intact, and the threat to this strategy posed by “ugly inflation.”  The critical difference between “beautiful” and “ugly” inflation is that incomes keep pace with the rising cost of goods and services in the former and are stagnant in the latter.  In ugly inflation, households’ discretionary income declines, reducing consumption, slowing investment, and crippling future borrowing.  Defaults rise; consumption, tax revenues, and lending decline; and the economy enters a self-reinforcing feedback loop of contraction.

This is the position the U.S. economy is in, as real household income has declined 8% since 2007 and inflation officially bubbles along at 2-3% (and at a higher rate for many essentials).

The Status Quo attempt to painlessly inflate our way out of over-leveraged indebtedness has run up against limits that are not apparent in a strictly financial model like Ray Dalio’s “beautiful deleveraging.” If we understand these other forces and tipping points, we will understand why central-bank deleveraging will fail.

Why the U.S. Dollar, Counterintuitively, May Strengthen from Here
 PREVIEW

Executive Summary

  • Why to expect household income will continue to decline (in real terms)
  • The ceiling that the price of oil may place on central bankers' ability to print money
  • Why money printing does not always result in inflation
  • The argument for a stable and/or strengthening U.S. dollar

A year ago, in the wake of the then-announced additional monetary easing measures by the Federal Reserve (which since sent stock prices on a rocket ride for the next nine months), many of our readers feared a major decline in the dollar was imminent. To add some balance to our site content, we asked Peak Prosperity contributing editor Charles Hugh Smith to argue the case for a strengthening dollar. He graciously accepted, and in the year since writing Heresy and the US Dollar, America's currency did indeed strengthen notably vs. its fiat counterparts. Now, after the Fed's announcement of QE3 (plus), many of us are girding once again for dollar weakness. So we've invited Charles to once again play devil's advocate.

If you have not yet read Part I: Welcome to the Era of 'Ugly' Inflation, available free to all readers, please click here to read it first.

In Part I, we covered “beautiful deleveraging,” the goal of which is to systemically distribute the financial pain so the Status Quo is left intact, and the threat to this strategy posed by “ugly inflation.”  The critical difference between “beautiful” and “ugly” inflation is that incomes keep pace with the rising cost of goods and services in the former and are stagnant in the latter.  In ugly inflation, households’ discretionary income declines, reducing consumption, slowing investment, and crippling future borrowing.  Defaults rise; consumption, tax revenues, and lending decline; and the economy enters a self-reinforcing feedback loop of contraction.

This is the position the U.S. economy is in, as real household income has declined 8% since 2007 and inflation officially bubbles along at 2-3% (and at a higher rate for many essentials).

The Status Quo attempt to painlessly inflate our way out of over-leveraged indebtedness has run up against limits that are not apparent in a strictly financial model like Ray Dalio’s “beautiful deleveraging.” If we understand these other forces and tipping points, we will understand why central-bank deleveraging will fail.

Image | Why Local Control is the Best Way to Preserve Wealth
Why Local Control is the Best Way to Preserve Wealth
 PREVIEW

Executive Summary

  • Why most paper assets today have substantial "phantom" value that will evaporate when another "credit event" occurs
  • Why the future of investing is Local Control (and what that means)
  • Where to look today for undervalued assets most likely to appreciate when the next downturn arrives

If you have not yet read Part I: The New Endangered Species: Liquidity and Reliable Income Streams, available free to all readers, please click here to read it first.

We began our reappraisal of scarcity, demand, opportunity cost, technology, and behavioral choice with an analysis of commodity demand in an era of declining income for labor and the decline of the ownership model of resource-intensive assets such as vehicles and homes.  This led to the thesis that reliable income and liquidity (the ability to sell assets quickly and safely for cash) will become scarce in the era ahead.

Let’s start by exploring the scarcity of reliable income streams in a recessionary, risk-averse, deleveraging environment.  In Part I, we noted the structural decline in earned income from labor, but thanks to the global financial repression of yield (that is, central banks lowering the interest rate to near zero), unearned income (i.e., interest income) has also plummeted.

The search for reliable unearned income has led investors and money managers to pile into dividend-paying stocks. This demand has pushed up valuations and price-to-earnings (P/E) ratios to levels where they are vulnerable to earnings disappointments and margin-compression; in other words, falling stock prices that drop P/E ratios.

Meanwhile, Web 2.0 stock market darlings such as Facebook, Groupon, and Zynga have been savagely revalued as the market recognizes that they lack reliable income streams.

Investors account for roughly one-third of all home sales in once-speculative real estate markets, another manifestation of the search for yield in a low-yield climate. But owning rental property is not risk-free, as I have discussed here earlier this year in some detail, and it carries the additional risks of being illiquid during a “credit event”-type crisis.  Since real estate isn't mobile like other forms of capital, the investor-owners are also at risk of becoming “tax donkeys” as local authorities raise taxes on the one class of investors who can’t easily move their capital elsewhere to escape ever-higher taxation burdens.

The potentially devastating dangers of illiquidity have driven global capital into the “safe haven” of highly liquid bonds, such as U.S. Treasury notes and Bank of Japan bonds.  So important is liquidity to professional money managers that they accept near-zero yields as the tradeoff for maximum liquidity and safety in size.  In other words, tens of billions of dollars can be moved around without distorting the market for these highly liquid financial instruments.

Others have accepted the promise of safety offered by municipal bonds, as the promise is based on the “guarantee” that irrevocable income streams will back up the bond payments.  But very little is guaranteed when crisis erupts.  Rules are changed, bankruptcy courts void claims, voters rebel, and so on.  The risk of local government promises being amended in the future may be much higher than is conventionally accepted right now.

Let’s review the risks created by central bank financial repression pushing yields to near 0% (or factoring in loss of purchasing power, negative real returns).  The policy’s explicit intention is to drive capital out of safe havens into risk-on assets such as stocks and to encourage new borrowing and speculation, with the goal being a reflation of asset valuations.

The net result of this policy is that investors are now exposed to potentially catastrophic levels of risk in terms of capital loss and declining income streams…

Why Local Control is the Best Way to Preserve Wealth
 PREVIEW

Executive Summary

  • Why most paper assets today have substantial "phantom" value that will evaporate when another "credit event" occurs
  • Why the future of investing is Local Control (and what that means)
  • Where to look today for undervalued assets most likely to appreciate when the next downturn arrives

If you have not yet read Part I: The New Endangered Species: Liquidity and Reliable Income Streams, available free to all readers, please click here to read it first.

We began our reappraisal of scarcity, demand, opportunity cost, technology, and behavioral choice with an analysis of commodity demand in an era of declining income for labor and the decline of the ownership model of resource-intensive assets such as vehicles and homes.  This led to the thesis that reliable income and liquidity (the ability to sell assets quickly and safely for cash) will become scarce in the era ahead.

Let’s start by exploring the scarcity of reliable income streams in a recessionary, risk-averse, deleveraging environment.  In Part I, we noted the structural decline in earned income from labor, but thanks to the global financial repression of yield (that is, central banks lowering the interest rate to near zero), unearned income (i.e., interest income) has also plummeted.

The search for reliable unearned income has led investors and money managers to pile into dividend-paying stocks. This demand has pushed up valuations and price-to-earnings (P/E) ratios to levels where they are vulnerable to earnings disappointments and margin-compression; in other words, falling stock prices that drop P/E ratios.

Meanwhile, Web 2.0 stock market darlings such as Facebook, Groupon, and Zynga have been savagely revalued as the market recognizes that they lack reliable income streams.

Investors account for roughly one-third of all home sales in once-speculative real estate markets, another manifestation of the search for yield in a low-yield climate. But owning rental property is not risk-free, as I have discussed here earlier this year in some detail, and it carries the additional risks of being illiquid during a “credit event”-type crisis.  Since real estate isn't mobile like other forms of capital, the investor-owners are also at risk of becoming “tax donkeys” as local authorities raise taxes on the one class of investors who can’t easily move their capital elsewhere to escape ever-higher taxation burdens.

The potentially devastating dangers of illiquidity have driven global capital into the “safe haven” of highly liquid bonds, such as U.S. Treasury notes and Bank of Japan bonds.  So important is liquidity to professional money managers that they accept near-zero yields as the tradeoff for maximum liquidity and safety in size.  In other words, tens of billions of dollars can be moved around without distorting the market for these highly liquid financial instruments.

Others have accepted the promise of safety offered by municipal bonds, as the promise is based on the “guarantee” that irrevocable income streams will back up the bond payments.  But very little is guaranteed when crisis erupts.  Rules are changed, bankruptcy courts void claims, voters rebel, and so on.  The risk of local government promises being amended in the future may be much higher than is conventionally accepted right now.

Let’s review the risks created by central bank financial repression pushing yields to near 0% (or factoring in loss of purchasing power, negative real returns).  The policy’s explicit intention is to drive capital out of safe havens into risk-on assets such as stocks and to encourage new borrowing and speculation, with the goal being a reflation of asset valuations.

The net result of this policy is that investors are now exposed to potentially catastrophic levels of risk in terms of capital loss and declining income streams…

Image | The New Endangered Species: Liquidity & Reliable Income Streams
The New Endangered Species: Liquidity & Reliable Income Streams

The causal relationship between scarcity, demand, and price is intuitive.  Whatever is scarce and in demand will rise in price to its cost basis; whatever is abundant and in low demand will decline in price.

The corollary is somewhat less intuitive, but still solidly sensible: the cure for high prices is high prices, meaning that as the price of a commodity or service reaches a threshold of affordability/pain, suppliers and consumers will seek out alternatives or modify their behaviors to lower consumption.
The New Endangered Species: Liquidity & Reliable Income Streams

The causal relationship between scarcity, demand, and price is intuitive.  Whatever is scarce and in demand will rise in price to its cost basis; whatever is abundant and in low demand will decline in price.

The corollary is somewhat less intuitive, but still solidly sensible: the cure for high prices is high prices, meaning that as the price of a commodity or service reaches a threshold of affordability/pain, suppliers and consumers will seek out alternatives or modify their behaviors to lower consumption.
Image | Middle Class? Here’s What’s Destroying Your Future
Middle Class? Here’s What’s Destroying Your Future

According to the conventional account, the Great American Middle Class has been eroded by rising energy costs, globalization, and the declining purchasing power of the U.S. dollar in the four decades since 1973. While these trends have certainly undermined middle-class wealth and income, there are five other less politically acceptable dynamics at work:

  1. The divergence of State/private vested interests and the interests of the middle class
  2. The emergence of financialization as the key driver of profits and political power
  3. The neofeudal “colonization” of the “home market” by ascendant financial Elites
  4. The increasing burden of indirect “taxes” as productive enterprises and people involuntarily subsidize unproductive, parasitic, corrupt, but politically dominant vested interests
  5. The emergence of crony capitalism as the lowest-risk, highest-profit business model in the U.S. economy
Middle Class? Here’s What’s Destroying Your Future

According to the conventional account, the Great American Middle Class has been eroded by rising energy costs, globalization, and the declining purchasing power of the U.S. dollar in the four decades since 1973. While these trends have certainly undermined middle-class wealth and income, there are five other less politically acceptable dynamics at work:

  1. The divergence of State/private vested interests and the interests of the middle class
  2. The emergence of financialization as the key driver of profits and political power
  3. The neofeudal “colonization” of the “home market” by ascendant financial Elites
  4. The increasing burden of indirect “taxes” as productive enterprises and people involuntarily subsidize unproductive, parasitic, corrupt, but politically dominant vested interests
  5. The emergence of crony capitalism as the lowest-risk, highest-profit business model in the U.S. economy
Image | The Middle-Class Survival Guide
The Middle-Class Survival Guide
 PREVIEW

Executive Summary

  • Recognize the signs of serfdom
  • Calculate your income's vulnerability to the system
  • Don't count on high inflation to inflate away your debt obligations
  • 10 strategies you can start implementing right now to defend against the forces trying to sap your quality of life

If you have not yet read Part I: Middle Class? Here's What's Destroying Your Future, available free to all readers, please click here to read it first.

In Part I, we surveyed the key dynamics that have eroded middle-class wealth and income over the past 30 years.  Some of these were conventional (higher energy costs) and some were unconventional/politically unacceptable (financialization; neofeudalism).

Regardless of what you identify as the primary cause, that the middle class (and labor in general) has lost ground since the early 1980s is undeniable, as is the ultimate failure of debt-dependent “growth.”

What can we do about it? It seems to me there are two responses:

  1. Avoid becoming a serf in the new financialized feudalism
  2. Avoid becoming dependent on the Status Quo and avoid collaborating/supporting those elements of the Status Quo that subsidize and protect the parasitic, inefficient, and unproductive sectors of the economy.

Getting Real About Serfdom

I am going to cut to the chase here, and I expect many of you to disagree. Debt is serfdom, period.

I often illustrate this point by asking two simple questions…

The Middle-Class Survival Guide
 PREVIEW

Executive Summary

  • Recognize the signs of serfdom
  • Calculate your income's vulnerability to the system
  • Don't count on high inflation to inflate away your debt obligations
  • 10 strategies you can start implementing right now to defend against the forces trying to sap your quality of life

If you have not yet read Part I: Middle Class? Here's What's Destroying Your Future, available free to all readers, please click here to read it first.

In Part I, we surveyed the key dynamics that have eroded middle-class wealth and income over the past 30 years.  Some of these were conventional (higher energy costs) and some were unconventional/politically unacceptable (financialization; neofeudalism).

Regardless of what you identify as the primary cause, that the middle class (and labor in general) has lost ground since the early 1980s is undeniable, as is the ultimate failure of debt-dependent “growth.”

What can we do about it? It seems to me there are two responses:

  1. Avoid becoming a serf in the new financialized feudalism
  2. Avoid becoming dependent on the Status Quo and avoid collaborating/supporting those elements of the Status Quo that subsidize and protect the parasitic, inefficient, and unproductive sectors of the economy.

Getting Real About Serfdom

I am going to cut to the chase here, and I expect many of you to disagree. Debt is serfdom, period.

I often illustrate this point by asking two simple questions…

Image | When Will Reality Intrude?
When Will Reality Intrude?

If we pursue the line of inquiry established by Chris Martenson’s recent call to Buckle Up — Market Breakdown in Progress, we come to these basic questions: When will the market reflect the fundamental weakness of the global economy? And when will the market finally hit bottom?

When Will Reality Intrude?

If we pursue the line of inquiry established by Chris Martenson’s recent call to Buckle Up — Market Breakdown in Progress, we come to these basic questions: When will the market reflect the fundamental weakness of the global economy? And when will the market finally hit bottom?

Image | Predicting the ‘When?’ & ‘How Far?’ of the Next Market Decline
Predicting the ‘When?’ & ‘How Far?’ of the Next Market Decline
 PREVIEW

Executive Summary

  • Technical analysis offers methods for identifying long-term trend changes
  • Introducing the Coppock Curve
  • Why the Coppock Curve indicates a coming decline in the equities markets
  • If correct, it may take 8-15 months to hit the bottom of the decline before a recovery begins
  • Global markets are likely to all go down together, making finding "safe havens" more challenging

If you have not yet read Part I: When Will Reality Intrude and the Stock Market Hit Bottom?, available free to all readers, please click here to read it first.

In Part I, we explored the correlation between the stock market and the real economy (tenuous in times of massive intervention) and the probability that the economy’s next trough lies between 10 and 30 weeks in the future.  We then looked to Japan’s Nikkei stock market index as a guide to equities’ performance in eras dominated by debt and deleveraging, and found that the Nikkei’s history suggests a bottom in U.S. stocks could be as far as a year away, in mid-2013.  This aligns with the possibility that the real economy hits a recessionary bottom in late 2012 and the stock market finally reflects that weakness six months later in mid-2013.

As we look at other evidence supporting a significant decline in stocks, we must keep Part I’s caveats firmly in mind:

  1. It’s possible that equities could rise to previous highs or even reach new highs in the near term, despite the recessionary stagnation of real incomes and growth, as stocks tend to be “lagging indicators” of recession.
  2. Massive monetary easing and fiscal stimulus could push “risk-on” assets (such as stocks) higher, even as the real economy weakens.
  3. Global Corporate America could continue generating profits that would support stock market valuations even as the bottom 80% of U.S. households sees further deterioration in their real incomes and balance sheets.

These three factors could support a decoupling of the stock market from the “main street” economy as measured by real (inflation adjusted) incomes and household balance sheets.

Predicting the ‘When?’ & ‘How Far?’ of the Next Market Decline
 PREVIEW

Executive Summary

  • Technical analysis offers methods for identifying long-term trend changes
  • Introducing the Coppock Curve
  • Why the Coppock Curve indicates a coming decline in the equities markets
  • If correct, it may take 8-15 months to hit the bottom of the decline before a recovery begins
  • Global markets are likely to all go down together, making finding "safe havens" more challenging

If you have not yet read Part I: When Will Reality Intrude and the Stock Market Hit Bottom?, available free to all readers, please click here to read it first.

In Part I, we explored the correlation between the stock market and the real economy (tenuous in times of massive intervention) and the probability that the economy’s next trough lies between 10 and 30 weeks in the future.  We then looked to Japan’s Nikkei stock market index as a guide to equities’ performance in eras dominated by debt and deleveraging, and found that the Nikkei’s history suggests a bottom in U.S. stocks could be as far as a year away, in mid-2013.  This aligns with the possibility that the real economy hits a recessionary bottom in late 2012 and the stock market finally reflects that weakness six months later in mid-2013.

As we look at other evidence supporting a significant decline in stocks, we must keep Part I’s caveats firmly in mind:

  1. It’s possible that equities could rise to previous highs or even reach new highs in the near term, despite the recessionary stagnation of real incomes and growth, as stocks tend to be “lagging indicators” of recession.
  2. Massive monetary easing and fiscal stimulus could push “risk-on” assets (such as stocks) higher, even as the real economy weakens.
  3. Global Corporate America could continue generating profits that would support stock market valuations even as the bottom 80% of U.S. households sees further deterioration in their real incomes and balance sheets.

These three factors could support a decoupling of the stock market from the “main street” economy as measured by real (inflation adjusted) incomes and household balance sheets.

When Will Reality Intrude and the Stock Market Hit Bottom? Part 1

If we pursue the line of inquiry established by Chris Martenson’s recent call to “Buckle Up–Market Breakdown in Progress,” we come to these basic questions: when will the market reflect the fundamental weakness of the global economy, and when will the market finally hit bottom?
When Will Reality Intrude and the Stock Market Hit Bottom? Part 1

If we pursue the line of inquiry established by Chris Martenson’s recent call to “Buckle Up–Market Breakdown in Progress,” we come to these basic questions: when will the market reflect the fundamental weakness of the global economy, and when will the market finally hit bottom?
Image | The Deleveraging Pain Is Just Beginning
The Deleveraging Pain Is Just Beginning
 PREVIEW

Executive Summary

  • How much have households, corporations, and the government combined deleveraged since 2008? (Barely at all.)
  • Have our national debt-to-income ratios improved since 2008? (No, they've gotten worse.)
  • Increasingly, unlevered assets will be sold to maintain the phantom value of levered assets.
  • Ultimately, levered losses will need to be taken. Cash and cash equivalents will be in high demand as this happens.

Part I: The Pernicious Dynamics of Debt, Deleveraging, and Deflation

If you have not yet read Part I, available free to all readers, please click here to read it first.

Part II: The Deleveraging Pain Is Just Beginning

In Part I, we sought an understanding of the causal linkages between debt, deleveraging, and deflation. In Part II, we analyze the key data and charts to get a better understanding of how far deleveraging has to go.

The basic idea in deleveraging is that debt exceeds the value of the underlying asset—for example, a mortgage exceeds the value of the home. The difference must be made up with savings from income or from the sale of other assets, or the asset must be sold and the loss booked.

In the case of consumer and government debt, the underlying assets are, in effect, future income and future tax revenues. The student has no assets to sell to pay off a student loan; the loan was leveraged off future income. The same is true of government bonds.  Though consumers often maintain that the goods they bought on credit have retained value, in many cases the market value of items bought on credit is far below the debt still to be paid.

The situation is thus dire for loans without underlying assets that can be sold. Cash to service these loans must be raised by selling other assets or by diverting income.

I see the forces of debt, deleveraging, deflation, and inflation (money-printing) as positive (self-reinforcing) and negative (countervailing) feedback loops; the interactions are complex and can oscillate in dynamic equilibrium until a crisis pushes the system firmly into disequilibrium.

The Deleveraging Pain Is Just Beginning
 PREVIEW

Executive Summary

  • How much have households, corporations, and the government combined deleveraged since 2008? (Barely at all.)
  • Have our national debt-to-income ratios improved since 2008? (No, they've gotten worse.)
  • Increasingly, unlevered assets will be sold to maintain the phantom value of levered assets.
  • Ultimately, levered losses will need to be taken. Cash and cash equivalents will be in high demand as this happens.

Part I: The Pernicious Dynamics of Debt, Deleveraging, and Deflation

If you have not yet read Part I, available free to all readers, please click here to read it first.

Part II: The Deleveraging Pain Is Just Beginning

In Part I, we sought an understanding of the causal linkages between debt, deleveraging, and deflation. In Part II, we analyze the key data and charts to get a better understanding of how far deleveraging has to go.

The basic idea in deleveraging is that debt exceeds the value of the underlying asset—for example, a mortgage exceeds the value of the home. The difference must be made up with savings from income or from the sale of other assets, or the asset must be sold and the loss booked.

In the case of consumer and government debt, the underlying assets are, in effect, future income and future tax revenues. The student has no assets to sell to pay off a student loan; the loan was leveraged off future income. The same is true of government bonds.  Though consumers often maintain that the goods they bought on credit have retained value, in many cases the market value of items bought on credit is far below the debt still to be paid.

The situation is thus dire for loans without underlying assets that can be sold. Cash to service these loans must be raised by selling other assets or by diverting income.

I see the forces of debt, deleveraging, deflation, and inflation (money-printing) as positive (self-reinforcing) and negative (countervailing) feedback loops; the interactions are complex and can oscillate in dynamic equilibrium until a crisis pushes the system firmly into disequilibrium.

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 "It's About Control": An Interview with David Icke
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