Group: Lean Thinking

"First, the current crisis did not start with the burst housing
bubble. It started with the excessive credit that led to the
housing bubble. That excess credit resulted from the Federal
Reserve holding down interest rates to less than the inflation rate
in housing. This negative real interest rate (bank interest minus
inflation in the housing assets) produced a powerful incentive for
investment and speculation in housing. And the action of the
Federal Reserve, with the increase in risk taking by banks, were a
result of pressure from Congress and the public who were all
enjoying the short-term rise in housing prices.

We see here one of the characteristics of a complex social system in
which a policy that is good in the short run is almost always bad in
the long run. Feeding the bubble with easy credit was popular in
the short run but now we have the consequent day of reckoning with
the collapse of the financial system.

There are a number of papers on this matter in the "System Dynamics
Group Literature Collection" DVD available at:
http://systemdynamics.org/MITCollectionDVDinfo.htm

Look for the papers on the National Model. The model itself is not
there, it has not yet been released, but there are many interesting
discussions and computer runs on the economic long wave (also known
as the Kondatrieff Wave), which I believe explain the Great
Depression of the 1930s and the economic turmoil at the present
time. Given the extreme degree of government financing that is now
in process, the outcome may this time be different from the 1930s."

Posted by Jay Forrester <jforestr@MIT.EDU>
posting date Wed, 15 Oct 2008 19:09:42 -0400
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... nicht unbedingt weil es zutrifft, sondern weil es so schoen passt:

Ralf Lippold schrieb:
...
time. Given the extreme degree of government financing that is now
in process, the outcome may this time be different from the 1930s."
The four most expensive words in the English language are "this time it’s different."

John Marks Templeton 29 November 1912 - 8 July 2008

Posted by Jay Forrester <jforestr@MIT.EDU>
posting date Wed, 15 Oct 2008 19:09:42 -0400
_______________________________________________

Hi Gerold,

Thanks for the short comment (really lean;-)).

The events are different (that's for sure;-) and the behavior that leads to it the seen data in forms of events will be the same as the structure (underlying the system).

What holds us back to question the structure in order to understand the root causes?

Best

Ralf

PS.: Sometimes I have the strong feeling that strong events trigger merely focusing on the tools without thoroughly getting to understand what really is going on - which we as LEAN THINKER are focused on all the time we sense and see strange events/data:-) (despite what the boss is telling you!)