Let's start with an historical analogy most reject: the Great Depression of 1929 to 1942. The conventional account claims that the Depression was the result of a "Federal Reserve policy error": the Fed tightened credit when it should have loosened it.
This is nonsense. What actually happened was credit expanded rapidly in the Roaring 1920s, which is why they were Roaring. Farmers could borrow money to buy prairie land to put under the plow, speculators could borrow $9 on margin to play the stock market with $1 in cash, and so on.
In other words, what happened was a gigantic credit bubble inflated that pushed stocks and other assets to unsustainable heights of over-valuation, valuations based on the Roaring 20s expansion of credit and consumption continuing forever.
But all bubbles pop, and so the weather changed for the worse and newly plowed prairie turned into a Dust Bowl, wiping out heavily leveraged farmers. Since there was no federal bank deposit guarantee (no FDIC), the bankruptcies of overleveraged borrowers wiped out thousands of small banks, wiping out the savings of prudent depositors.
The real policy error was protecting the wealthy who owned the debt from a debt-clearing write-down. The wealthy own debt, the non-wealthy owe debt. When the debt is defaulted on, the lender / owner of the debt has to absorb the loss. The debtor is freed of the burden. In a debt-clearing event driven by defaults, insolvencies and bankruptcies, the wealthy are the losers and the debtors are freed of the burden of debt.
Various programs were implemented to stave off the consequences of default, as if pushing losses into the future would somehow enable the credit bubble to reinflate. That's not how it works: the financial system is like a forest, and if the dead wood of bad debt piles up and isn't allowed to burn, then the forest cannot foster new growth.
Economies that refuse to accept the wealth destruction that results from credit bubbles popping stagnate. This is the story of Japan from 1990 to the present: the status quo in Japan refused to accept the losses, hiding bad debt (i.e. non-performing loans) behind artifices such as new loans that covered the interest due, listing the non-performing loans in "zombie" categories, i.e. as assets that were still on the books at full value even though they were essentially worthless, and so on.
Now the US has inflated another "debt super-cycle" credit bubble that has pushed assets into over-valuation. Once again the goal is to avoid handing the wealthy owners of all this debt the enormous losses that must be accepted to clear the dead wood of bad debt, money lent to borrowers and projects that were not creditworthy except in a bubble.
The lesson the status quo took from the Great Depression is to cover up private-sector over-valuations and bad debts with vast expansions of credit via the Federal Reserve and the federal government. Please look at these charts below:
The big difference between the Great Depression of the 1930s and the Depression we're entering is the world still had enormous reserves of resources to tap and a (by today's standards) modest population in the resource-consuming developed nations.
Recall that a developed-world consumer uses up to 100 times more energy and resources than a poor person in a rural undeveloped nation. Recycling a few bottles doesn't change this.
This means the planet's "savings account" of abundant, cheap-to-access resources has been depleted. Yes, there is still oil and copper, etc., but it's of far lower quality and much harder to get now. The rich ores have been mined and the shallow super-giant oil fields have all been tapped long ago. Now the Saudis must pump stupendous quantities of seawater into their oil wells to maintain production. All these technologies consume vast quantities of energy.
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