Charles Hugh Smith
March 16, 2022
All this decay is so incremental that nobody thinks it possible that it could ever accumulate into a risk that threatens the entire system.
The funny thing about risk is the risk that everyone sees isn’t the risk that blows up the system. The mere fact that everyone is paying attention to the risk tends to defang it as everyone rushes to hedge or reduce the risk.
It’s the risk that accumulates under everyone’s radar that takes down the system.There are several dynamics driving this paradox but for now let’s look at the paradox of optimization.