Descent Into Chaos

The Fourth Turning And “The Dark Years” As The World Prepares To Descend Into Total Chaos

Egon von Greyerz

In July 2009 I wrote an article called The Dark Years Are Here. It was reprinted again in September 2018.

Here is an extract from my original article:

“The Dark Years will be extremely severe for most countries both financially and socially. In many countries in the Western world there will be a severe depression and it will be the end of the welfare state. Most private and state pension schemes are also likely to collapse. It will be a worldwide depression but some countries may only have a deep recession. There will be famine, homelessness and misery resulting in social as well as political unrest. Different type of government leaders and regimes are likely to result from this.

How long will the Dark Years last? There is a book called ”The Fourth Turning” written by Neil Howe. He has identified a pattern that repeats itself every 80 years. The pattern has been extremely accurate in the Anglophile world. We have recently entered the Fourth Turning which is the final 20 years of the cycle. According to Howe we are in the early stages of a 20 year period of economic and institutional upheaval. This is a period of Crisis when the fabric of society will change dramatically. Previous Fourth Turnings have been the American Revolution, Great Depression and World War II. According to Howe the Crisis will be substantially worse before it is over and it will last for another circa 20 years.

All of this is not good news and we hope that we and Howe are wrong regarding the severity and length of this crisis. But we fear that we are both right. We must stress again that never previously has the whole world entered a downturn simultaneously in such a fragile state both financially and economically which is why the Dark Years are likely to be so devastating and long lasting.”

THE INEVITABLE FALL OF SOCIETY
Neil Howe’s book The Fourth Turning had just been published when I wrote the article and it has since attained great fame. We are now in the final 8 years of his 20 year cycle and the most dramatic part of the cycle has just started which is the Fourth Turning. 

In my 2009 article, I thought that the downturn was more imminent. But although I was slightly out on the timing, it doesn’t change the inevitable fall of the whole fabric of society in the next few years, be it commercial, financial or social. 

Since 2009, global debt has doubled to $280 trillion and risk has increased exponentially. The final stage of the collapse started in August of 2019 with the central banks panicking and embarking on a massive money printing spree due to major problems in the financial system. 

CORONAVIRUS – A CATALYST
As I have stated previously, Coronavirus which started in early 2020, is not the reason for the current downturn in the world economy. It was just a catalyst. For some reason, when cycles are about to accelerate hard down, the trigger seems to be the worst possible. Although I have often talked about disease as one potential catalyst, I did not expect it to come now and cause a total lockdown of parts of the economy and society in so many countries. 

When you are approaching the end of a financial era or cycle, it is very difficult to predict exactly how it will all end. Very few people understand that we are now living on borrowed time. But there is absolutely no doubt that we are now at the end of the end and of a major cycle, whether that takes 8 years as Howe predicts or it all happens much faster, is totally irrelevant.

The risk is here now and if you don’t prepare for this you are not just likely to lose whatever wealth you have but also your job, pension or social security depending on your circumstances. And if you live in a city, you are also likely to be affected by social unrest and crime plus a breakdown of services like medical care, schooling, law and order, etc. 

Many people today are trying to get out of the cities as a result of Coronavirus and the shut down of offices and shops as well as increased crime rates. For the wealthy minority,  this is not a big problem but for normal people, it is not self-evident to just move out. But it is very clear that home working will become much more prevalent and many cities will become ghost towns. Tax revenue will decline dramatically and the authorities will not be able to keep up even simple services such as water, sanitation or cleaning. Also, many retail outlets and restaurants as well as offices in cities will close due to lack of customers, crime and out of town or online shopping. This trend has of course already stated in many cities. In the City in London (Financial District), there are now very few people working. Only some shops or restaurants are open and the ones that are, are haemorrhaging financially…

Coming back to Howe’s 8 remaining years of the Fourth Turning, it is of course an approximate number and not absolute. The way I see it is that it will take up to 8 years and maybe less for the artificial edifice that the world has created to collapse. But it could also happen a lot quicker. 

What I mean by artificial edifice is firstly all the fake assets that have been created due to central banks deliberate profligacy. Since the creation of the Fed in 1913, the bankers have taken total control of the money system. From 1971, when Nixon closed the gold window, it became a total free-for-all for the (central) bankers. They could create unlimited amounts of money for their own benefit. Standing nearest the printing press is a major advantage when you print money. President Mugabe in Zimbabwe discovered this. By using the money from the printing press first, he could spend it quickly or buy dollars before the value of the printed money collapsed. 

In the US, since the latest crisis started in August 2019, the Fed has printed $3.3 trillion, and most of it since March 2020. Very little of this money has reached ordinary people. If it had, it would have meant a contribution of $25,000 to every one of the 130 million households in the US. Although the printed is basically worthless, it might have had some short term beneficial effect on the broad economy. 

But no, money printing is not for ordinary people. It is for the bankers and the wealthy and adds more fuel or liquidity to already massively overvalued asset markets rather than reaching the people who really need it. This has caused the Nasdaq to go up by 62% since late March and the Dow by 52%.

Let’s face it, the US is bankrupt. No country, company or individual could lose money every year for 90 years and still be standing. (See my article). Normally the currency of such a country should have faded into oblivion. Well the dollar almost has since it is down 98% in real terms or gold since 1971 and down 85% since 2000. The only reason the dollar hasn’t disappeared totally yet is due to the Petrodollar. A major part of dollar assets are kept outside of the US due to the dollar liquidity created by the Petrodollar. 

But the combination of a rapidly deteriorating US financial position and countries like China, Russia and Iran gradually trading in their own currencies, will soon precipitate the dollar’s demise. 

Comparing currencies to each other is really a futile exercise since they are all going to ZERO. There is no prize for getting to the bottom first. Still in this exercise of relativity, it looks like the dollar will reach the bottom before the others. Having already lost 98% of its value in the last 50 years, the final 2% will not take that long. But remember that this 2% fall means a 100% loss of the dollar’s value from here. 

Many people are very negative about the Euro due to the major problems in the EU. It is totally correct that the Euro is also a very weak and artificial currency. The Euro is virtually worth the same in dollars as on its launch on January 1st, 1999. But right now, the Euro, in spite of its problems, technically looks stronger than the dollar.

So a crashing dollar over the next few years is virtually guaranteed and will act as a detonator which will blow up the US economy. 

Also in the next 2-3 years we will see collapsing debt markets in the US and globally. Most debt in the world consists of printed money with no underlying real asset backing. Massively overvalued assets are backed by debt, which will become totally worthless since it is only based on manufactured money issued by a printing press or a computer. When $10s of trillions are created with no labour, goods or service having been produced, that money clearly has ZERO value. 

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