Pandemic, Economic Collapse, Full Societal Breakdown

“And the will of Zeus was moving towards its end.” – Homer

Symbiotic Disharmony

The recline and flail of western civilization beats on.  Pandemic, economic collapse, full societal breakdown.  The sequence grooves from one to the next with the symbiotic disharmony of a minor pentatonic scale.

Peaceful protests devolved to rioting, looting, and structure fires in our own lowly hamlet last Sunday.  The Long Beach police couldn’t stop the vandals.  So the National Guard was summoned to quell the ransacking.  Some Guardsmen even stuck around to help out with the cleanup effort the following day.

The refrain – pandemic, economic collapse, full societal breakdown – has been repeated in many cities across the country.  For each: The time is now.  The place is here.

The progression from government pandemic lockdown orders to government curfew orders has been as natural as day to night and back again.  The difference between the two is subtle; like the difference between ketchup and catsup.  The main variance is the local authorities, in what must be an act of public service, now spam our mobile phone each afternoon with warnings to not venture out past curfew.

The events of the last weeks and months have been well covered.  We’ll leave the ongoing documentation tasks to those better qualified.  Instead, we’ll take a step back and look around.  Our aim today is to better understand what’s going on…so we may better anticipate – and plan for – what’s next.

Where to begin?

Human Stampedes

The mass impulse of a cattle stampede can be triggered by something as innocuous as a blowing tumbleweed.  A sudden startle, or a perceived threat, is all it takes to setoff this mass uncontrolled running.  Once the herd collectively begins charging in one direction it’ll eliminate everything in its path.

The only chance a rancher has is to fire off a pistol with the hope it turns the herd into itself.  If the rancher is successful, they’ll stampede in a giant circle.  If the rancher isn’t, they’ll run off a cliff.

Modern man, like Bos taurus, is also predisposed to herd behavior.  What’s more, the human animal will take just about anything and everything to the extreme.

Religious pilgrimages, sporting events, music concerts, New Year’s Eve celebrations, political rallies, and peaceful protests gone bad have all triggered deadly human stampedes.  In 2015, for instance, over 2,400 people were trampled to death during the Hajj Stampede in Saudi Arabia.

Financial markets also open countless avenues for mobs to stampede down.  The fear and greed prospects of scarcity and abundance offer remarkable opportunities for extreme human folly.  Manias, panics, and crashes come to pass with shocking regularity.

After an abundance of speculations have piled up on one side of a trade, they must eventually reverse course and charge elsewhere.  The precise moment and duration are never clear.  But, when the time comes, those standing in harm’s way get trampled.

Pandemic, Economic Collapse, Full Societal Breakdown

Social moods and mass collective movements cycle over and under in ways that are only really predictable in hindsight.  Though, if you keep an ear to the ground you may hear whispers of what’s coming.

The solution to high prices, of course, is high prices.  Yet the lessons of the past are often the wrong instructions for the future.

For example, the key lessons from the 1930s were that one should have no debt and keep a large stash of cash outside the banking system.  Other lessons were to plant a vegetable garden,  and to hoard scraps of aluminum and bags of flour and sugar.

Yet those that heeded the lessons of the 1930s and held cash through the 1970s were rewarded with a significant loss of purchasing power.  Their industry and thrift were covertly subtracted from their bank accounts.  The landscape had shifted.

Because the key lessons from the 1970s were that one should borrow large amounts of money; and, one should not hold a stash of cash.  This was especially true if the borrowed money was used to buy a house.  The debt burden was quickly cut in half and house prices ballooned up.

The median unadjusted house value in 1960 was $11,900.  By 1990, it was $79,100.  Over the course of a 30-year loan, monthly payments on a house bought in 1960 were reduced to pocket change.  And by 1990, it took $4.42 to purchase what $1 could buy in1960.  House prices increased at a rate near double consumer prices.

The result is that one generation shuns credit like the black plague of death.  The next laps it up like pigs eating slop.  What are the lessons from yesterday to be applied to tomorrow?

The lesson from the Great Recession is that the Fed can flood financial markets with unlimited credit that’s created out of thin air without consumer price inflation.  Naturally, we’re suspicious of this lesson.

You see, the Fed’s cheap credit flowed into stocks, bonds, and real estate.  The upper crust, which own financial assets, benefited from this rising tide of liquidity.  Working class and middle class wage earners barely treaded water.

Now, as the economy’s buckled, the Fed’s up to its antics again.  But this time rather than just bailouts for big business and financial markets, the people demand bailouts too.  And the modern monetary theory (MMT) crowd can point to the lesson of the past decade, and the lack of price inflation, as justification for printing money.

This, alas, will prove to be the wrong lesson entirely.  As economic output slumps and unemployment spikes the free money will not solve the wealth disparity problem.  Rather, it’ll exasperate it…along with social discord, discontent, and dissonance.

By now you know the tune: Pandemic, economic collapse, full societal breakdown.

Sing it loud, sing it proud!

Sincerely,

MN Gordon
for Economic Prism

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  20. Hans says:

    Despite, The Donald, Conservative forces are still in full retreat.
    Constitutional units are weak, disorganized and in complete flight;
    and would have been overrun without strong read guard action.

    The systematic demonstrations, rioting and looting have been
    extremely well organized and funded. The Left have been preparing
    for this event for the past two decades, particularly with the lose of
    the Beige House. They are no longer interested with yesterday’s political
    convention, but racial changes which will preclude, if necessary, the abolition
    of life, liberty and property. This is all the culmination of long range, extremist
    planning, all the while Conservatives and their allies transgressed upon their
    moral and civic obligation.

    The Culture Revolutionists, see victory at hand, with only the back end of
    their impotent opposition in view. This toxic vector has infiltrated every last
    corner and fiber of America. The last rail of Maoism was laid over sixty years
    ago; their predecessors prepared the bedrock some 120 years ago, with each
    and every decade, more and more liberties were lost.

    Unless the Free Lunch Party is reduced to political insignificance or the
    Conservatives surrender no peace shall be at hand. My dear friends,
    The Tree of Liberty must be watered with the blood of patriots and despots.

    And whom would have guessed that the vanguard of oppression would come
    from the welfare class and educated baccalaureates and one and half million
    professorships.

    Man, is his own worst enemy.

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