Unstoppable: The Greatest Depression and the Reverse Wealth Effect
We are entering The Greatest Depression because there is no exit.
I’ve endeavored to explain why The Greatest Depression is unstoppable in recent posts:
The Covid-19 Dominoes Fall: The World Is Insolvent March 16, 2020
Pandemic Pandemonium: The Tides of Globalization and Financialization Reverse March 31, 2020
Here’s Why the Economy Won’t Recover–and No, It’s Not Covid-19 or the Lockdown April 23, 2020
What’s Collapsing Can’t Be Saved: Our Fraudulent Economy April 22, 2020
Why Assets Will Crash May 4, 2020
Our Inevitable Collapse: We Can’t Save a Fragile Economy With Bailouts That Increase Fragility May 1, 2020
Globalization and Financialization Are Dead, and so Is Everything That Depended on Them May 15, 2020
Our Fate Is Sealed, Vaccines Won’t Matter: Four Long Cycles Align May 19, 2020
Consumer Spending Will Not Rebound–Here’s Why May 18, 2020
This Is How Systems Collapse May 30, 2020
I’ll try to summarize all this as simply as possible:
1. The global economy’s cost structure has been fatally distorted by central bank policies of inflating asset bubbles and reducing interest rates to near-zero.
2. Earnings from labor have stagnated or eroded since the era of globalization / financialization took off around 2000.
3. Everything costs too much, i.e. is no longer affordable from earnings alone, so the only way to maintain the current costly lifestyle is to borrow money and use it to pay current expenses. This is true for every sector: household, corporate and government.
4. As a result, everyone now needs every dollar of income just to pay their expenses, including interest and principal on their rising debts. There is no slack (buffers) in the system at all.
5. This can be visualized as a row of dominoes. Once the first domino falls, every domino will be toppled.
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