To absolutely no one’s surprise, the recession is here. Yes, that one, the one that all the predictive powers in the world kept on predicting until the point that they sounded like a chorus of broken records. Why then are we pretending this is new? Well that... that question, is the one we must attempt to answer for ourselves.
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At this point most of the opinions on the dynamics, the mechanics, the catalyst and the blatant bubble are pretty much in the public domain, but let’s attempt for the sake of argument to talk about them in plain English for once.
Economies are kind of Fake
Everyday citizens transact in little pieces of paper that are valuable only because we deem them to be. There is dozens of documented cases of countries collapsing due to war and otherwise, where the paper literally becomes useless and yet life finds a way to continue.
It seems that money is akin to a lubricant that influences social transactions. People simple trade things of value, and they converge in the notion that the paper allows them to acquire other products and services later. IOU’s if you will.
This all seems fine and dandy, but why does it make it fake, you may ask? Well, if the paper itself is nothing but some printed paper without anything backing it up, then the fact that the paper is printed literally at the whims of “experts” should fill out the rest of the picture.
You see, the central banks all around the world use different economical knobs to nudge the economy in the right direction. Cutting interest rates and printing more money is the default move when things are going south, but they pretend there’s a thousand layers of complexity involved to keep us, the populace, at ease.
Eventually, the feedback loop, the system, collapses under it’s own weight and the BUST cycle, the recession begins.
It this Trump’s fault?
Not per say, or at least, not exclusively. You see, the poor administration of this country’s resources is the only consistent element of all administrations. You could say some do worse than others, and that is fair, but the point is that none are prime examples of “the right way of running the ship”
We tend to focus too much in the now, in the hyperactive news cycle, to actually take note of the whole picture. The previous administration although managed to lower the bubble, did not in fact fix anything per say. We may have patched some flats, but changing the tire was never even considered. Hence why the massive expenditures on wars that do nothing for the common folk, but line the pockets of people in the biz was never slowed down, regardless of any economic reality.
All that being said, it seems fair to point out that because the expenses went up massively under the current administration, we were ill prepared for dry season. Which is to say, that the bubble was literally being maintained by a very fragile illusion at this point.
The consistent boasting about the strength of the economy followed by this utter disaster may make a few nihilists smile, but these chaotic times are going to affect the majority of the population and that is nothing any of us should be celebrating at all.
The Virus
Maybe it’s not necessary to say, but I might as well share my thoughts some more. Especially because you’ve read this far into this diatribe.
Here’s the truth: Pandemics happen all the time, they are cyclical, they will always exist, and all governments know these cycles all too well.
This is precisely why a government has institutions in place to deal with these specific threats in the best way possible. Of course no government response is perfect, but the mitigation of the effects of the pandemic is the goal after all.
We have to ask ourselves why then, Why did the Trump administration cut the budget to deal with this very thing? The answer is simple, pathetic, but simple: The bubble needed more air. The way the US government has been spending money in the past three years is out of control, and the FED refused to cut rates more, and print more fake money to inflate it further.
You see, the FED knew full well, that the economy was ready to pop. That the good times were as fake as a three dollar bill, but they had to play along as much as possible. The magical power of debt is just an illusion that we all partake in, not real value measured.
To this foul smelling soup the final ingredient was added, one that no amount of rate cutting or money printing could fix: Panic and distrust.
To put it simply: All the bubble needed to burst was a gentle push that would trigger the wave of economical panic necessary for investors to begin the bleeding out. SELL, SELL, SELL! That’s it, it’s over, the country is going to the can, every man for himself!!!
This, my friends, is precisely where we are. The very reason why assets are down and why those percentages are so red and so ugly, is because panic has arrived, and it’s not at the disco. If people believe the economy is going to tank, well, it will.
But, the virus!
Of course it’s a serious matter, and nobody in the right mind would say otherwise. But, the panic and the irrational behaviors we sapiens are displaying is adding a lot of fuel to the fire.
There are grocery stores full of empty shelves, not even the cheapest of toilet papers has been spared, and one has to wonder how having enough paper to clean our asses fits into the picture of surviving the apocalypse. I’m being hyperbolic and I hope that is clear, but this is beyond ridiculous at this point.
Once we hit the peak and begin the emotional decent into rationality, we will effectively see how stupid we’ve acted thus far.
I would also say this. It’s fine to read about the theories out there, the outrageous ones, and the ones who seem a little more grounded, but it’s good advice to be very skeptical of everything written on the net these days. Remember that people are fighting for clicks, and that clicks mean money before you subscribe to the idea of the Illuminati trying to control the world’s population again. Or then again… don’t listen to me, who knows.
On a side note, there’s a great sale on crypto today, and it might even get better.
MenO
The corona virus was catalyst in the scenario. This was going to happen anyway but the virus was the trigger to crash em all at an earlier time.
Good read, thanks!
Ironically, in the midst of this firestorm (drum roll) I have landed a job for myself... Part time, but the pay is rather good with room for advancement.
Being forced to freelance for a decade, I've always jested that my finding substantial work would be a sign of an impending apocalypse. Hope I'm wrong tho! :)
The shelves were empty while shopping today... it was surreal! Long lines too... very crowded with some dingbats coughing (probably intentionally so others would clear the way).
its a good way to get out of a ticket (coughing)
Nothing new here, nothing to see. But we got ourselves an unexpected catalyst to shine a bright light on hat already is. Perhaps what we're really witnessing is that more and more people are realizing that the proverbial "emperor" is actually wearing no clothes.
One of my favorite quotes, from Warren Buffett: "When the tide goes out, you discover who's been swimming naked..."
Having an interesting discussion with a friend the other day... about how the current scenario — including the fact that half the world is now going to be staying home — may also far more substantially push us towards this "attention economy" which previously has been more conceptual than reality. Now the naysayers and traditionalists will almost be forced to interact virtually... how will that change the landscape?
Fascinating times, to be sure! Here, have a favorite image:
I'm stealing this image, its perfect.