Quote of the Day
The dynamic that leads to collapse is as invisible as the extremes. Once the organization–household, institution, corporation or nation-state, the dynamic is scale-invariant–has hardened into a brittle state of stasis, it’s impossible to shrink the budget without collapsing the entire structure.
I call this the Rising Wedge Model of Breakdown: as expenses, self-interest and debt all expand, it becomes increasingly difficult to slash expenses without triggering the implosion of the organization.
Under the guise of cutting the fat to save the muscle, what actually happens is the muscle is cut to save the fat. This is a complex process, but in summary, the most competent realize the organization is dysfunctional and cannot be salvaged in its current bloated state of denial, and so they immediately jump ship.
The naive who believe they can turn the situation around give it their best effort but the resistance to any meaningful sacrifices is so tenacious that they burn out and quit.
That leaves the delusionally incompetent who reckon they’re finally getting the power they long deserved. This leads to the substitution of PR and artifice for actually reducing the organization to a sustainable level, for what’s required is not just a revised spreadsheet but an entirely new culture and value system.
…
The story of the next decade is the playing out of the Rising Wedge Model of Breakdown / The Ratchet Effect throughout the entire status quo: households, institutions, corporations and nation-states will all hasten to cut muscle to save the fat and then wonder why everything is imploding under the weight of delusion and denial.
As noted previously, what’s required is not just a revised spreadsheet but an entirely new culture and value system. Without that, we get zip, zero, nada in meaningful adaptation to new realities.
charles hugh smith
June 5, 2025
oftwominds-Charles Hugh Smith: The Ratchet Effect: Easy to Spend More, Spending Less Triggers Collapse
The key takeaway is that spending less triggers collapse.
Prepare appropriately.



