[jerf]

If the underlying thing is unstable, a market sitting on top of it will be unstable. If you try to force the market sitting on top to be stable by fancy jiggery-pokery, you've forcibly created a market that is no longer connected to what is below it, which now has all sorts of those arbitrage opportunities for the connected that people love to hate, and also dangerously hides further instability where you can't see it, because in a way it's conserved whether you like it or not.

You may want stability. You may even need stability. But neither of those two things means you get to have it. The universe and the world is fundamentally unstable.

You can look at what is happening in China right now in that way. They've forcibly created stability and reliability. Awesome, right? This worked great, until the absolutely and utterly inevitable black swan event occurred (to the point I have a hard time even calling it a black swan, since it was so predictable) because the conserved instability, instead of getting expressed in little ways on a day by day basis, is getting expressed as one big event.

Just because you fully dammed the river doesn't mean you've stopped the river from flowing, and it's time to build a dance platform in the middle of the old river bed and invite everyone to party all night long. It means you better run away from the entire river bed and everything even remotely near it before the dam catastrophically bursts and destroys everything.

You're looking not at a demonstration of why it's important to artificially stabilize markets... you're looking right at the consequences of doing so.

(In fact, the way that people then interpret the destruction of everything as a consequence of the dam just not being strong enough and we need to put politicians into power that will create an even BIGGER dam is an important element of understanding the ratchet of tyranny, and how what happened to the Soviet Union and Venezuela happened. It wasn't bad luck... it was misinterpreting overcontrol as too little control, and "correcting" in exactly the wrong direction. The failure of today becomes the excuse to grab yet more power, stomping on anyone in the way who objects, and grabbing centralized control even harder, which creates an even bigger disaster which requires even more centralized control... repeat until the society is too weak to even maintain a government anymore. And remember, if your comfortable Western-raised brain is objecting that this can't happen, it has happened, in this decade, to real countries that you can find on a globe. It is not a thing of myth and it is not even a thing of the past. It is a path we humans seem congenitally prone to.)

[ild]

Underlying markets _are never stable_. The main stabilizing force in the world are institutions of power and violence, such as army (especially American), police, jails etc. Markets already rely heavily on governments for their existence. You got Black Swan completely wrong, if you think that Taleb is advocating for laissez-faire, he is actually big fan of slow and dull, tightly controlled systems ("antifragile").

[miscellaneous]

> He [Nassim] is actually big fan of slow and dull, tightly controlled systems ("antifragile")

Please watch the first 5 mins of this interview (or all of it) with him: https://www.youtube.com/watch?v=ehXxoUH1AlM

"Antifragile systems like volatility"

He is literally advocating the opposite of what you said. Governments are centralized and fragile (don't like volatility) hence their propensity to regulate volatility. He directly blames (large) government for the GFC - see 4:40 in the video.

[ild]

> (don't like volatility)

Antifragility is not liking volatility; it is dislike but acceptance of it.

This is what he said:

“(4) Build in redundancy and overcompensation

“Redundancy in systems is a key to antifragility. As Taleb suggests, nature loves to over-insure itself, whether in the case of providing each of us with two kidneys or excess capacity in our neural system or arterial apparatus. Overcompensation is a form of redundancy and it can help systems to opportunistically respond to unanticipated events. What seems like inefficiency or wasted resources like extra cash in the bank or stockpiles of food can actually prove to be enormously helpful, not just to survive unexpected stress, but to provide the resources required to address windows of opportunity that often arise in times of turmoil. This perspective helps to put into context the praise of inefficiency in Bill Janeway’s important new book, Doing Capitalism in the Innovation Economy."

Well, to build in redundancy you need market manipulation (FDIC for example), otherwise markets will tend to overfitness. If you are claiming that "antifragility" = laissez-faire you are completely wrong; who will enforce the redundancy?

[miscellaneous]

> who will enforce the redundancy?

Who enforced the redundancy of humans possessing two kidneys? If you are a creationist, then I guess we have different starting assumptions.

Assuming that you aren't, then you would understand that redundancy in humans literally evolved from randomness and volatility. Evolution is a hill climbing algorithm - the organisms that survive the best reproduce more and become more prevalent. For me, nature is perfectly laissez-faire, there are no circuit breakers in nature, there is no enforced stability.

[makomk]

Except that this crash saw ETFs - which are basically just a way of holding a basket of different investments - plummet spectacularly even though the underlying assets they were created to hold barely moved. The underlying thing was stable, the problem was the market on top of it.

[lrm242]

The underlying assets were stable. Are you sure about that? Go check some intraday prices. Have a gander at AAPL or GE or COST.