In light of the recent resurgence of inflation on top of dwindling employments stats, declining manufacturing and stagnant wages I think it’s important to revisit a fundamental question: What does an economic collapse look like?
As I have said for years, an economic collapse is NOT an event, it’s a process.
When people think of a historic crisis they imagine something like the stock market crash of 1929 at the beginning of the Great Depression. However, there were numerous indicators and warning signs leading up to that crash that should have tipped people off. There were even a handful of economists that voiced concerns about impending chaos, yet, they were ignored.
Then, after the crash occurred, numerous establishment economists denied that the system was in any real danger. They continually claimed that recovery was “right around the corner”, but the recovery never materialized. Instead, the crash spiraled onward for over a decade until world war erupted, largely because the Federal Reserve raised interest rates into economic weakness (a policy they are instituting right now).
The point is, the mainstream “experts” are almost always wrong.
The skeptics of collapse either ignore the evidence or they don’t comprehend the implications of events. They don’t want to believe that the economy is broken and that consequences are possible. They operate from the limited view of their own personal experience. For most of their lives the system has functioned without catastrophe, so that must mean catastrophe is impossible.
Our present day predicament has not reached Great Depression levels yet. We are currently in a stagflationary phase similar to what happened in the 1970s.
For those that think we have it bad now, the 70s were actually far worse.
House prices nearly tripled from 1970 to 1980 (the median house price was $17,000 in 1970 compared to almost $50,000 in 1980). Annual inflation on most goods and services was in the double digits and the minimum wage was only $1.45 an hour. Unemployment was high and interest rates were eventually hiked to nearly 20% by 1981.
Gen Z has no clue how bad things can really get, but they’ll find out in due course.
The point is that these breakdowns in financial structures happen slowly, and then all at once. Much like the buildup of an avalanche.
For those that know history the signs are easy to see. For those that don’t, they’ll assume that all is well even when the house is burning down around them.
Another factor that makes people oblivious to the danger is the moving of goalposts; they get used to poor economic conditions and the decline is entrenched as the “new normal.” The instability and uncertainty people refused to accept ten years ago is now simply what many have come to expect. Nothing gets better, the situation only ever gets worse, but since it happens over the course of many years (the process of collapse) the public largely accepts it and will even accuse those of us sounding the alarm of “doom mongering.”
As with any collapse there eventually comes a point of popular intolerance – That moment where people finally realize that the “doom mongers” were right all along and that the weight of the implosion is too much to refute. I believe we’re approaching that moment very quickly. In the meantime. Here are the five stages of denial that people go through before they admit that a fiscal calamity is upon them…
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