Narrative decline is what happens when a person, company, or country has the same capabilities as before, but experiences a sudden shift in the stories we tell ourselves. Those stories are the main driver of our ability to use the abilities we have at our disposal. Narrative shifts determine whether we ignore, utilize, or leverage the assets we have, even when there’s no real change to those assets.

Narrative shifts dominate the economy. They’re incredibly powerful, and change the world. But when the economy surges and then tanks, we should remember what’s happening: not a shift in our ability or capacity. Just a shift in what we believe. And what we believe will be different in the future than it is today. The story’s always changing.

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Author: Morgan Housel