We've all seen the YouTube videos: You take a couple of the chewy Dutch candies and drop them into a bottle of Diet Coke or other soft drink -- and instead of a small splash or a slight fizzing, you end up with a towering fountain of foam that blasts most of the contents of the bottle a dozen feet in the air. The WOW factor in this pseudo-science experiment is the amazingly disproportionate response to what seems like a minor event.
What scientists tell us is happening is that because the soft drink is carbonated it is perpetually in a state of high surface tension -- which is why your drink blows its top when you smack the side of the bottle. At the same time, the Mentos candy has numerous microscopic dents on its hard surface, which are the perfect sites for "nucleation," in which the carbonation rapidly forms into bubbles. Put the two forces together and all hell breaks loose.
I can't imagine a more perfect analogy for the current U.S. (and world) economy. Thanks to the digital and communications revolutions, we live in a culture of tremendous, and unprecedented, volatility. A new idea, fad, urban legend, piece of fake news, virus or meme can pop up almost anywhere and within minutes circle the planet.
This is the perpetual fizz that often makes daily life these days seem so overwhelming, frenzied and just plain crazy. In the course of an hour we can find ourselves up in arms about some piece of "news," read a dozen entries by angry bloggers who share our views, sign online petitions and post comments on a dozen news sites … and find out a few minutes later that the story wasn't true after all. By then, another story has erupted.
Add to this the fact that the United States (and again, much of the rest of the world) is becoming increasingly entrepreneurial, a nation of free agents. Now, for every one of this new fads or opportunities there is a small army of entrepreneurs chasing it. And chasing them are investors, shareholders, financial institutions and vendors, distributors and retailers. Meanwhile, thanks to the Web and large databases, it's possible now to jump all of the requisite hurdles (applications, credit checks, etc.) to get investment capital, incorporate and start buying and selling in a matter of minutes or hours, instead of weeks or months.
The result is an economy saturated with individuals and institutions ready to coalesce, almost instantly, around any perceived financial or emotional opportunity.
Now, throw into this pressurized, explosive brew some little kernel of that opportunity, especially one that offers millions of people the chance to quickly and easily attach themselves to it … like easy mortgages for traditionally unqualified homebuyers, or easy venture money for anyone wanting to start an e-commerce company … and BOOM!
Please note that none of these underlying factors is going to go away. On the contrary, everything is only going to get faster, smarter, more entrepreneurial and more volatile. That may mean that some big crash is waiting for us out there someday in the future -- or more likely, it suggests that we are entering into an era of perpetual bubbles; which, like their Mentos-in-Coke counterparts, will typically produce enough short-term pay-off to counter the mess and clean-up afterwards.