The Insanity Model

I am going to entertain myself with an analogy between our current market system, and a quote from Einstein. The quote will come at the end.

Our current financial system was born about 100 years ago. Since then, we have had recession after recession after recession, now commonly known as the boom and bust cycle. Averaging about one every four years or so. After each one of these recessions, the response is almost always the same; That is the government introduces new legislation to try and stop this disaster from happening again, and the central bank pumps new credit into the system*, only for the same thing to happen within a few years time.

Albert Einstein once defined insanity as "Doing the same thing over and over again and expecting different results".

Does it not seem that the free market system which for good or bad has been exported to almost every corner of the globe, is insane? There is another interesting trend in that each recession is usually more severe than the last, so the problem keeps getting worse, and thus the legislation drafted is usually more draconian and the amount of credit pumped into the system has increased exponentially. Quite clearly, these actions have not slowed down recessions, nor have they have made recessions milder to bare for the general public.

Why on Earth are we still in a free market globalized system? Why on Earth are we still using a centuries old socioeconomic policy that could be improved upon today with real world science. Why on Earth don't enough people care?


* The Great Depression is the exception to this, in that the central bank of the USA restricted credit at the time, prolonging the recession.