ohomen171's Journey Through Life

Friday, April 4, 2025

Tariffs: The Genie Has Been Let Out Of The Magic Lantern: No One Can Predict What Happens Next

Yesterday and early this morning, the new tariffs were front and center. Everyone was transfixed as things developed. I have a very original and thought-provoking analysis for you. It all starts in the 1980s when the great author Michael Crichton published the book "Jurassic Park." To make a long story short, dinosaur DNA was brought back to life to create dinosaurs that were then left to run wild in some deserted area in Central America. (In reality, these huge animals lived in a time when there was much more oxygen in the earth's atmosphere. They could not survive in the lower oxygen atmosphere that we live in today.) A mathematical concept called "Chaos Theory" was introduced to the readers. Elena heard this theory and had a blank look on her face. In very simple English, it says that when you let a genie out of a magic lantern, you cannot predict what will happen next. For those curious, here is an in-depth discussion of this theory: Search Labs | AI Overview Learn more Chaos theory, a branch of mathematics and interdisciplinary science, studies seemingly random or unpredictable behavior in systems governed by deterministic laws, highlighting the concept of "sensitive dependence on initial conditions" (the "butterfly effect"). Here's a more detailed explanation: Key Concepts: • Deterministic Systems: Chaos theory explores systems where the future state is entirely determined by the present state and a set of rules, meaning there's no inherent randomness in the system itself. • Sensitivity to Initial Conditions: Even tiny differences in the starting conditions of a chaotic system can lead to dramatically different outcomes over time, making long-term prediction extremely difficult. • The Butterfly Effect: This metaphor illustrates the idea that a small change in one part of a chaotic system (like a butterfly flapping its wings) can have large, unpredictable consequences elsewhere (like a tornado in another location). • Non-linearity: Chaos often arises in systems with non-linear interactions, where the effect of a change is not proportional to the change itself. • Strange Attractors: Chaotic systems often exhibit behavior that appears to be random, but is actually confined to certain regions of the state space, known as strange attractors. • Fractals: Fractals, with their self-similar patterns across different scales, can be used to visualize and understand the complex structures of chaotic systems. • Examples: Chaos theory has applications in various fields, including weather forecasting, economics, population dynamics, and even the behavior of seemingly random processes like stock markets. Examples of Chaos Theory in Action: • Weather: Weather patterns are highly sensitive to initial conditions, making long-term weather forecasting inherently difficult. • Stock Market: The stock market is a complex system with many interacting factors, and its behavior can appear chaotic due to the sensitivity to news, investor sentiment, and other factors. • Population Dynamics: The growth and decline of populations can exhibit chaotic patterns, influenced by factors like resource availability and competition. • Double Pendulum: A simple system like a double pendulum can exhibit chaotic behavior due to the non-linear interactions between the two pendulums. In essence, chaos theory reveals that even in seemingly random systems, there can be underlying patterns and deterministic laws that govern their behavior, although these patterns can be difficult to predict due to their sensitivity to initial conditions. Dra. Claudia Sheinbaum is the president of Mexico. Before she was a politician, she was a well-respected scientist who worked for 4 years at the Lawrence Livermore Laboratory here in California. When tariffs were being discussed, she wrote a very thoughtful and well-researched piece to President Trump. She warned him that up to 400,000 US workers would lose their jobs if he implemented the tariffs. This morning, the first US layoffs resulting from the tariffs have taken place. Stellantis is a US auto company that produces Jeeps and Chrysler cars. They furloughed 900 workers at plants in Michigan and Indiana that assemble cars from parts made in Mexico. Half a world away in China, the Fitch credit rating agency downgraded China's debt credit rating from A+ to A due to concern about tariffs: Fitch Downgrades China to 'A'; Outlook Stable. Fitch Ratings - Hong Kong - 03 Apr 2025: Fitch Ratings has downgraded China's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'A' from 'A+'. The Outlook is Stable. The stock market took a hard crash yesterday. It does not look better today. We are about to go through a very painful time.