Friday, January 8, 2010

Exponential Force

The purpose of policy is to change the economy

The economy changes in response to policy. The economy changes, but policy doesn't.

The economy changes, and after a while policy starts to fail because policy has not changed. We don't change policy, because we think our policy is the right solution to the economic problems.

When policymakers realize their solutions are failing, they don't change them. They strengthen them. As time goes by, strengthened policies reinforce the economic changes, changes created by policy. The strengthening makes things worse.

We think we know what must be done to fix the economy. We think that if we make our policy strong enough, we can make things better. But it turns out we must strengthen policy again every few years.

It becomes a trend. Policy grows stronger as time goes by. The strengthening of policy in this manner is a driving force that can create exponential trends in economic data.

The exponential growth of debt is a consequence of economic policy.

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