A linchpin is a fastener used to prevent a wheel from sliding off the axle when riding. It can also mean the most important part of a complex system. Seth Godin has used this term as a person in the organisation that has become indispensable for it's functioning. The linchpin theory says that there could exist an event that can trigger a series of unpredictable and non-repeating incidents. This can lead to a domino effect leading to events of catastrophic magnitudes. Forecasting such events is close to impossible. However, knowing that there can be larger implications to otherwise an insignificant event can help explain some aspects of the complex system. This theory encourages a thought model where the global economy is a large system of highly inter-related sub-systems balanced quasi-statically, mediated and maintained by a flow of money, debt and goods.
Examples of this in the past
Outbreak of WWII
The assassination of Archduke Ferdinand –>Austria declares war on Serbia –> Germany declares war on France –>Germany invades Belgium leading Britain to war –> Austria invades Russia
2008 Financial Crisis
Fall of Northern Rock, Iceland -> Fallout of Bear Sterns –> Lehman Brothers –> JP Morgan Chase –>Morgan Stanley –> Merrill Lynch –> American and global economy
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