Why a Chernobyl-like Financial Disaster is Inescapable

In the early morning hours of April 26, 1986 – roughly 33 years ago – things went horribly wrong in the town of Pripyat, in northern Soviet Ukraine.  Reactor No. 4 at the V. I. Lenin Nuclear Power Plant, also known as the Chernobyl Nuclear Power Plant, was overwhelmed by an uncontrolled reaction.  There was no stopping it.

 

Chernobyl after the explosion (left) and today (right), encased in a steel sarcophagus. [PT]

 

Two initial explosions blew the top off the reactor.  Once exposed, plumes of fission matter were wafted into the atmosphere by an open-air graphite fire.  Before long, this radioactive material precipitated onto Western Europe and the Western USSR.

Nine days later the fire was finally contained.  But not before an estimated 400 times more radioactive material was released than from the atomic bombing of Hiroshima and Nagasaki.  Twenty-eight firemen and operators died from acute radiation syndrome in the following days and months.

 

A discovery channel documentary on the Chernobyl disaster [PT]

 

What exactly caused the Chernobyl disaster is still a matter of disagreement.  The first official explanation of the accident was later acknowledged to be erroneous.  But there is agreement on the fact that the nuclear disaster would not have happened when it did if the workers had played hooky and gone fishing.

Instead, an ill-planned late-night safety test to simulate a power-failure set in motion the very chain reaction that led to the disaster.  During the experiment, the emergency safety and power-regulating systems were both intentionally turned off.  Then the operators attempted to boost the reactor output; a violation of the approved test procedure.  Soon after, all control was lost…

 

A Moment of Silence

Most accounts we’ve come across assign equal blame to human error and reactor design flaws.  The shortsighted engineers failed to idiot proof the nuclear power plant for the operators.  The operators succeeded at being idiots.  Should we expect anything different?

Here at the Economic Prism we’re zealot aficionados of disaster – especially the human induced variety.  Hence, on the anniversary of the Chernobyl disaster, we take a moment of silence for disasters past, present, and future.  We also scratch for an inkling of tutelage that we can squirrel away like a silver eagle for a time in need.

Murphy’s Law, for example, states: “Anything that can go wrong will go wrong.”  Certainly, Murphy’s Law will always prevail over pant wearing human animals endeavoring to manage a complex system.  The Chernobyl disaster validated Murphy’s Law in spades.

Another point clarified by the Chernobyl disaster is that humans are fallible.  They’re prone to making big mistakes.  Some of these mistakes are attributable to sloppiness.  But many result from conceit and misperception of the limits of human control.

The Chernobyl operators thought they had a novel idea for how to boost reactor output.  Yet to test their idea, they had to turn off the emergency safety and power regulating systems.  They also had to attempt to operate the reactor in ways inconsistent with its design criteria.

Without question, they should’ve known better.  But, remember, these are humans we’re talking about.  Even the most judicious among us will go mad from time to time… always with the best of intentions.

 

There is a certain road that is well-known to be paved with good intentions… [PT]

 

Why a Chernobyl-like Financial Disaster is Inescapable

The main take-away from the Chernobyl disaster is that people frequently think they are better, smarter, and more capable than they are.  Moreover, they often charge forward with little more than misplaced beliefs in unfounded theories and ideas.  These adventures in madness nearly always end in disaster.

Indeed, a nuclear power plant is a complex system.  Still, an economy is infinitely more complex. Actions and reactions throughout an economy take place in varying and unpredictable ways. They are subject to spontaneous moods and social phenomena, which change over time – often without rhyme or reason.

An economy cannot be designed and constructed like a nuclear power plant, or other physical systems.  So, too, an economy is much too large and multifaceted to be planned and improved upon like a wedding planner arranging a large reception.  But that doesn’t stop central planners from attempting to control and operate the economy and financial system like Chernobyl operators in the early morning hours of April 26, 1986.

The 2008-09 financial crisis and great recession were man-made failures.  What’s more, the solutions that have been executed over the last decade have been guided by guesses derived from flimsy theories and wishful ideas. In other words, monetary policies, like the ill-fated Chernobyl test, have been a wild ass central banker experiment.

Ben Bernanke, the chief architect of it all, is a complete lunatic – what readers from our home state of California would call a 5150.  His insane QE, ZIRP, Operation Twist, and NIRP, have taken us past the point of no return.  QT and a neutral federal funds rate are unattainable.  Similarly, fiscal policies have taken debts and deficits to a place of sheer insanity, where they can never honestly be paid off.

 

US broad true money supply: up ~USD 8.15 trillion or 155% since early 2008´- the largest money supply inflation of the post WW2 era. This isn’t going to end well. [PT]

 

Yet unlike a nuclear reactor meltdown, the feedback loops from these monetary and fiscal experiments are indirect, can appear dormant for many years, and are impossible to fully understand and account for.  What is clear, however, is that the only way out of this predicament is a Chernobyl-like financial disaster; an economic meltdown and vaporization of the existing financial order.

An uncontrolled reaction has been set in motion.  There is no stopping it.

 

Chart by: acting-man.com, data source: St. Louis Fed

 

Chart and image captions by PT

 

MN Gordon is President and Founder of Direct Expressions LLC, an independent publishing company. He is the Editorial Director and Publisher of the Economic Prism – an E-Newsletter that tries to bring clarity to the muddy waters of economic policy and discusses interesting investment opportunities.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

2 Responses to “Why a Chernobyl-like Financial Disaster is Inescapable”

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • How Beijing Uses Fake Money to Cannibalize the U.S. Transit Market
      A Distorted Landscape One of the more remarkable achievements of fake money creation is that it distorts and disfigures the world in odd and uncanny ways.  Dow (not quite) 27,000.  Million dollar shacks.  Over $13 trillion in subzero-yielding debt. You name it.  Any and every disfiguration is possible with enough fake money.   The global stock of outstanding government bonds with negative yields-to-maturity reaches a new record high of more than $13 trillion – this is...
  • Gold, the Safe Haven - Precious Metals Supply and Demand
      Investments vs. Money Last week the price of gold went up another $11, but the price of silver dropped 4 cents. The gold-silver ratio hit another new high, up another point, though down from Tuesday’s high water mark. This obviously was not the week that wage-earners increased their money holdings or that institutions expressed a preference for the bargain of silver.   Prosperity is just around the corner... and so is the trade deal. [PT]   This coming week...
  • Independence Day in America Circa 2019
      Freedom and Apple Pie The days are long and hot in the Northern Hemisphere when real American patriots raise the stars and stripes. Today the free and brave, with duty and self-sacrifice, begrudgingly accept federal holiday pay to stand tall upon their own two feet. Rugged individualism and uncompromising independence are essential to their character.   Independence day festivities...   With purpose and intent, they assemble as merry mobs along the shoreline to...
  • The Strange Behavior of the US Dollar in the Wake of Fed Rate Cuts
      A Change in Interest Rate Expectations In the last issue of Seasonal Insights I discussed the typical pattern of stock prices when the Federal Reserve cuts interest rates.  As one would expect, the stock market tends to stabilize after cuts in the federal funds rate. The issue is topical, as many investors and analysts expect rate cuts to be implemented soon given that signs of an economic slowdown are beginning to proliferate.   Market expectations about the direction of...
  • The Four Dimensions of the Fake Money Order
      A Good Story with Minor Imperfections “If you don’t know where you are going, any road will get you there,” is a quote that’s oft misattributed to Lewis Carrol. The fact that there is ambiguity about who is behind this quote on ambiguity seems fitting. For our purposes today, the spirit of the quote is what we are after. We think it may help elucidate the strange and confusing world of fake money in which we all travel.   Consumer price index, y/y rate of change...
  • Wall of Worry M.I.A. -  Precious Metals Supply and Demand
      Too Much Excitement? The prices of the metals fell last week, with that of gold -$9 and silver -$0.32. Of course, it was a week of stock market exuberance. Why would anyone want to own money, or seek safety when the Fed can seemingly push interest down / assets up indefinitely? As the old TV ad for Lotto proclaimed “you gotta be in it, to win it!”   “Stablecoin” Tether is used as a dollar stand-in on cryptocurrency exchanges that offer no fiat currency pairs. There has...
  • Resistance Created by Long-Suffering “Hodlers” - Precious Metals Supply and Demand
      Gold vs Other Assets The prices of the metals went up +$15 and +$0.23. We will be brief this week, as Keith just got off a 17-hour flight from Perth to London. Stocks continue their march upwards. And hence the gold price seems stalled—or is it? It may seem like gold goes up, when stocks go down and vice versa. That’s been the recent pattern. Why should people own money without return, when stocks are where the action is?   Gold-SPX ratio: in long-term gold bull markets,...

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!