Handling Crisis

I originally wrote this in Summer 2009 thinking about the Financial Crisis back then. After re-posting it in Fall 2020 due to the Covid-19 situation this content is still as applicable today as it was back then.

How can we do it next time?

We tried state-based economy (socialism). It didn’t work. We tried free markets. It ultimately also failed. So should we try $X or $Y or $Z (insert any new suggestion you can think of here)?

How about a different idea? If the markets are an ergodic system, it is impossible to avoid financial bubbles and crisis.

If that assumption is correct, what should we do about it? Instead of wasting time and effort on preventing systematic problems we should rather try something else: Accept the fact that financial crisis, bubbles, and depressions can and will happen. And that instead of fixing symptoms or finding causes we need to focus on dealing with them.

Integrate the possibility of crisis and uncertainty into our lives. Ultimately, it can lead to better preparation and thus to more stability and certainty. Which ultimately is a better way.