When and how do we restructure?

When the economies of scale at the production networks cause wide variation in queue sizes and due to coherence many reach zero bound in their supply networks simultaneously.

Our QM construction gives us a guide on how to interpret a technology shock and how it forces a restructuring as Schrumpeter predicts. Consider the current restructuring. I can describe the process under the assumption the the shock we suffer is on-line shopping. We leave it to professional economist to prove or disprove the thesis, but the thesis, real or imagined, is a good discussion point.

On-line shopping reduced the number of steps in key distriution networks from N to N-1., and left us with an eigen value mismatch, not all distribution networks are operating with the same eigen function set. The result is that the money queue adapts to the avergae, become more accurate and demands much more accurate management of queues from non affected networks. They often attempt refined economies of scale only to see their queues reach "zero" bound, resulting in price spikes. The zero bound queues result in bankruptcies, and reabsorbtion into the banks, which now hold assets. The assets sold at auction are purchased by the more efficient distribution networks which adapt them to the new technology and restore the natural eigenfunction set.

Explosive recombination of many sectors occurs when inventory bulges back up the distribution chains at points of convergence. In the 2008 Mini-Depression, the efficiencies of scale for on-line sales transmitted inventory bulges in other sectors up to the commonality of the energy distribution network. These inefficienct sectors began to share scarce energy resources with each other, and with the more efficient sector. The more efficient sector maintains its oil inventory above zero bound, and the others reach zero bound more or less simultaneously due to coherence.