The costs of maintaining a sclerotic, cartel-state Status Quo infected with incurable diminishing returns eventually exceed the carrying capacity of the real economy and the Status Quo collapses in a heap.
by Charles Hugh Smith, Of Two Minds:
On the surface, the Status Quo appears stable, if not quite healthy. This stability is illusory, however, for the Status Quo has a fatal disease: diminishing return.
The basic idea of diminishing return is closely related to marginal utility and marginal return: the more capital, energy and labor committed to a project, the lower the return/yield/output.
Diminishing return works in two ways:
1. Output (yield) remains stable, but it requires an ever-increasing input of capital, energy and labor to maintain that output.
2. Input remains stable but output (yield) constantly declines.
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