Guest Post by Doug Casey via International Man
You’ve heard the axiom “History repeats itself.” It does, but never in exactly the same way. To apply the lessons of the past, we must understand the differences of the present.
During the American Revolution, the British came prepared to fight a successful war—but against a European army. Their formations, which gave them devastating firepower, and their red coats, which emphasized their numbers, proved the exact opposite of the tactics needed to fight a guerrilla war.
Before World War I, generals still saw the cavalry as the flower of their armies. Of course, the horse soldiers proved worse than useless in the trenches.
Before World War II, in anticipation of a German attack, the French built the “impenetrable” Maginot Line. History repeated itself and the attack came, but not in the way they expected. Their preparations were useless because the Germans didn’t attempt to penetrate it; they simply went around it, and France was defeated.
The generals don’t prepare for the last war out of perversity or stupidity, but rather because past experience is all they have to go by. Most of them simply don’t know how to interpret that experience. They are correct in preparing for another war but wrong in relying upon what worked in the last one.
Investors, unfortunately, seem to make the same mistakes in marshaling their resources as do the generals. If the last 30 years have been prosperous, they base their actions on more prosperity. Talk of a depression isn’t real to them because things are, in fact, so different from the 1930s. To most people, a depression means ’30s-style conditions, and since they don’t see that, they can’t imagine a depression. That’s because they know what the last depression was like, but they don’t know what one is. It’s hard to visualize something you don’t understand.
Some of them who are a bit more clever might see an end to prosperity and the start of a depression but—although they’re going to be a lot better off than most—they’re probably looking for this depression to be like the last one.
Although nobody can predict with absolute certainty what this depression will be like, you can be fairly well-assured it won’t be an instant replay of the last one. But just because things will be different doesn’t mean you have to be taken by surprise.
To define the likely differences between this depression and the last one, it’s helpful to compare the situation today to that in the early 1930s. The results aren’t very reassuring.
CORPORATE BANKRUPTCY
1930s
Banks, insurance companies, and big corporations went under on a major scale. Institutions suffered the consequences of past mistakes, and there was no financial safety net to catch them as they fell. Mistakes were liquidated and only the prepared and efficient survived.
Today
The world’s financial institutions are in even worse shape than the last time, but now business ethics have changed and everyone expects the government to “step in.” Laws are already in place that not only allow but require government intervention in many instances. This time, mistakes will be compounded, and the strong, productive, and efficient will be forced to subsidize the weak, unproductive, and inefficient. It’s ironic that businesses were bankrupted in the last depression because the prices of their products fell too low; this time, it’ll be because they went too high.
UNEMPLOYMENT
1930s
If a man lost his job, he had to find another one as quickly as possible simply to keep from going hungry. A lot of other men in the same position competed desperately for what work was available, and an employer could hire those same men for much lower wages and expect them to work harder than what was the case before the depression. As a result, the men could get jobs and the employer could stay in business.
Today
The average man first has months of unemployment insurance; after that, he can go on welfare if he can’t find “suitable work.” Instead of taking whatever work is available, especially if it means that a white collar worker has to get his hands dirty, many will go on welfare. This will decrease the production of new wealth and delay the recovery. The worker no longer has to worry about some entrepreneur exploiting (i.e., employing) him at what he considers an unfair wage because the minimum wage laws, among others, precludes that possibility today. As a result, men stay unemployed and employers will go out of business.
WELFARE
1930s
If hard times really put a man down and out, he had little recourse but to rely on his family, friends, or local social and church group. There was quite a bit of opprobrium attached to that, and it was only a last resort. The breadlines set up by various government bodies were largely cosmetic measures to soothe the more terror-prone among the voting populace. People made do because they had to, and that meant radically reducing their standards of living and taking any job available at any wage. There were very, very few people on welfare during the last depression.
Today
It’s hard to say how those who are still working are going to support those who aren’t in this depression. Even in the U.S., 50% of the country is already on some form of welfare. But food stamps, aid to families with dependent children, Social Security, and local programs are already collapsing in prosperous times. And when the tidal wave hits, they’ll be totally overwhelmed. There aren’t going to be any breadlines because people who would be standing in them are going to be shopping in local supermarkets just like people who earned their money. Perhaps the most dangerous aspect of it is that people in general have come to think that these programs can just magically make wealth appear, and they expect them to be there, while a whole class of people have grown up never learning to survive without them. It’s ironic, yet predictable, that the programs that were supposed to help those who “need” them will serve to devastate those very people.
REGULATIONS
1930s
Most economies have been fairly heavily regulated since the early 1900s, and those regulations caused distortions that added to the severity of the last depression. Rather than allow the economy to liquidate, in the case of the U.S., the Roosevelt regime added many, many more regulations—fixing prices, wages, and the manner of doing business in a static form. It was largely because of these regulations that the depression lingered on until the end of World War II, which “saved” the economy only through its massive reinflation of the currency. Had the government abolished most controls then in existence, instead of creating new ones, the depression would have been less severe and much shorter.
Today
The scores of new agencies set up since the last depression have created far more severe distortions in the ways people relate than those of 90 years ago; the potential adjustment needed is proportionately greater. Unless government restrictions and controls on wages, working conditions, energy consumption, safety, and such are removed, a dramatic economic turnaround during the Greater Depression will be impossible.
TAXES
1930s
The income tax was new to the U.S. in 1913, and by 1929, although it took a maximum 23.1% bite, that was only at the $1 million level. The average family’s income then was $2,335, and that put average families in the 1/10th of 1 percent bracket. And there was still no Social Security tax, no state income tax, no sales tax, and no estate tax. Furthermore, most people in the country didn’t even pay the income tax because they earned less than the legal minimum or they didn’t bother filing. The government, therefore, had immense untapped sources of revenue to draw upon to fund its schemes to “cure” the depression. Roosevelt was able to raise the average income tax from 1.35% to 16.56% during his tenure—an increase of 1,100%.
Today
Everyone now pays an income tax in addition to all the other taxes. In most Western countries, the total of direct and indirect taxes is over 50%. For that reason, it seems unlikely that direct taxes will go much higher. But inflation is constantly driving everyone into higher brackets and will have the same effect. A person has had to increase his or her income faster than inflation to compensate for taxes. Whatever taxes a man does pay will reduce his standard of living by just that much, and it’s reasonable to expect tax evasion and the underground economy to boom in response. That will cushion the severity of the depression somewhat while it serves to help change the philosophical orientation of society.
PRICES
1930s
Prices dropped radically because billions of dollars of inflationary currency were wiped out through the stock market crash, bond defaults, and bank failures. The government, however, somehow equated the high prices of the inflationary ’20s with prosperity and attempted to prevent a fall in prices by such things as slaughtering livestock, dumping milk in the gutter, and enacting price supports. Since the collapse wiped out money faster than it could be created, the government felt the destruction of real wealth was a more effective way to raise prices. In other words, if you can’t increase the supply of money, decrease the supply of goods.
Nonetheless, the 1930s depression was a deflationary collapse, a time when currency became worth more and prices dropped. This is probably the most confusing thing to most Americans since they assume—as a result of that experience—that “depression” means “deflation.” It’s also perhaps the biggest single difference between this depression and the last one.
Today
Prices could drop, as they did the last time, but the amount of power the government now has over the economy is far greater than what was the case 90 years ago. Instead of letting the economy cleanse itself by allowing the financial markets to collapse, governments will probably bail out insolvent banks, create mortgages wholesale to prop up real estate, and central banks will buy bonds to keep their prices from plummeting. All of these actions mean that the total money supply will grow enormously. Trillions will be created to avoid deflation. If you find men selling apples on street corners, it won’t be for 5 cents apiece, but $5 apiece. But there won’t be a lot of apple sellers because of welfare, nor will there be a lot of apples because of price controls.
Consumer prices will probably skyrocket as a result, and the country will have an inflationary depression. Unlike the 1930s, when people who held dollars were king, by the end of the Greater Depression, people with dollars will be wiped out.
THE SOCIETY
1930s
The world was largely rural or small-town. Communications were slow, but people tended to trust the media. The government exercised considerable moral suasion, and people tended to support it. The business of the country was business, as Calvin Coolidge said, and men who created wealth were esteemed. All told, if you were going to have a depression, it was a rather stable environment for it; despite that, however, there were still plenty of riots, marches, and general disorder.
Today
The country is now urban and suburban, and although communications are rapid, there’s little interpersonal contact. The media are suspect. The government is seen more as an adversary or an imperial ruler than an arbitrator accepted by a consensus of concerned citizens. Businessmen are viewed as unscrupulous predators who take advantage of anyone weak enough to be exploited.
A major financial smashup in today’s atmosphere could do a lot more than wipe out a few naives in the stock market and unemploy some workers, as occurred in the ’30s; some sectors of society are now time bombs. It’s hard to say, for instance, what third- and fourth-generation welfare recipients are going to do when the going gets really tough.
THE WAY PEOPLE WORK
1930s
Relatively slow transportation and communication localized economic conditions. The U.S. itself was somewhat insulated from the rest of the world, and parts of the U.S. were fairly self-contained. Workers were mostly involved in basic agriculture and industry, creating widgets and other tangible items. There wasn’t a great deal of specialization, and that made it easier for someone to move laterally from one occupation into the next, without extensive retraining, since people were more able to produce the basics of life on their own. Most women never joined the workforce, and the wife in a marriage acted as a “backup” system should the husband lose his job.
Today
The whole world is interdependent, and a war in the Middle East or a revolution in Africa can have a direct and immediate effect on a barber in Chicago or Krakow. Since the whole economy is centrally controlled from Washington, a mistake there can be a national disaster. People generally aren’t in a position to roll with the punches as more than half the people in the country belong to what is known as the “service economy.” That means, in most cases, they’re better equipped to shuffle papers than make widgets. Even “necessary” services are often terminated when times get hard. Specialization is part of what an advanced industrial economy is all about, but if the economic order changes radically, it can prove a liability.
THE FINANCIAL MARKETS
1930s
The last depression is identified with the collapse of the stock market, which lost over 90% of its value from 1929 to 1933. A secure bond was the best possible investment as interest rates dropped radically. Commodities plummeted, reducing millions of farmers to near subsistence levels. Since most real estate was owned outright and taxes were low, a drop in price didn’t make a lot of difference unless you had to sell. Land prices plummeted, but since people bought it to use, not unload to a greater fool, they didn’t usually have to sell.
Today
This time, stocks—and especially commodities—are likely to explode on the upside as people panic into them to get out of depreciating dollars in general and bonds in particular. Real estate will be—next to bonds—the most devastated single area of the economy because no one will lend money long term. And real estate is built on the mortgage market, which will vanish.
Everybody who invests in this depression thinking that it will turn out like the last one will be very unhappy with the results. Being aware of the differences between the last depression and this one makes it a lot easier to position yourself to minimize losses and maximize profits.
So much for the differences. The crucial, obvious, and most important similarity, however, is that most people’s standard of living will fall dramatically.
The Greater Depression has started. Most people don’t know it because they can neither confront the thought nor understand the differences between this one and the last.
As a climax approaches, many of the things that you’ve built your life around in the past are going to change and change radically. The ability to adjust to new conditions is the sign of a psychologically healthy person.
Look for the opportunity side of the crisis. The Chinese symbol for “crisis” is a combination of two other symbols—one for danger and one for opportunity.
The dangers that society will face in the years ahead are regrettable, but there’s no point in allowing anxiety, frustration, or apathy to overcome you. Face the future with courage, curiosity, and optimism rather than fear. You can be a winner, and if you plan carefully, you will be. The great period of change will give you a chance to regain control of your destiny. And that in itself is the single most important thing in life. This depression can give you that opportunity; it’s one of the many ways the Greater Depression can be a very good thing for both you as an individual and society as a whole.
Editor’s Note: Unfortunately, most people have no idea what really happens when a government goes out of control, let alone how to prepare…
How will you protect yourself in the event of an economic crisis?
New York Times best-selling author Doug Casey and his team just released Surviving and Thriving During an Economic Collapse a guide that will show you exactly how. Click here to download the PDF now.
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Terms are what changes, only human behavior is static.
And the following line is pure globalist horseshit-
“The whole world is interdependent, and a war in the Middle East or a revolution in Africa can have a direct and immediate effect on a barber in Chicago or Krakow.”
The words “direct and immediate” are certainly not accurate. That something on the other side of the world could have global consequences to those whose livelihood depends on available disposable income of others….is probably not inaccurate…especially depending on what happens. War has never stopped in the Middle East, and neither have revolutions in Africa. Planned release of a “virus” in China, when all actions that follow have been scripted and followed, most certainly can.
Kinda surprised you believe such. Very little of interstate commerce is insulated from supranational corporate supply lines. There is a local cattle producer that has a retail outlet at the ranch, and I’ve seen their product at our local corporate grocery store. We have at least occasionally bough from our local resource believing it would help us should ‘things’ go very bad. We visited their storefront and learned from the clerk that their beef is processed some 200 miles away in Augusta, Ga. A national emergency gov’t could and likely would expropriate that cattle to feed the Amerikan Urban Utopia to our South; Atlanta. Although my story doesn’t directly address your declaration, I still am surprised you don’t believe the interdependence of us on the rest of the world. Tyson Chicken??
I don’t disagree that there exist interconnections and specific areas of dependence on global exchanges, but it is only prevalent in the globalist centers- specifically urban areas of the West and East- and it certainly isn’t “the whole world”. The two biggest factors promoting this globalist web fantasy is the ubiquity of the dollar and the dependence on oil, otherwise it could all end tomorrow and within a month most of the missing pieces would be filled in at the local level.
And I daresay a revolution in Africa would never have any effect whatsoever on a barbershop in Krakow, that’s hyperbole of the 10th magnitude.
Without oil, the world would within six months revert to 1800 population levels. Right? Africa might best weather such a calamity.
More hyperbole.
How would there be no oil? And even if there were “no oil” how would the death of 7.5 billion people take place? At least offer some kind of scenario where you describe either of those events taking place.
And food production and distribution for billions without petroleum is accomplished how?
How many people can be fed by your farm output regardless of the season?
No fertilizer, no powered engines intricately tied to foodstuff/meat production. No power for distribution or preservation of food stuffs. Meat has a very short expiration date. Grain storage using traditional methods can serve billions? Pleeze… You’re playing me obviously.
What are you talking about, farming or industrial agriculture?
We produce our own fertilizer as well as soil, Industrial Ag produces neither.
We produce a surplus of power, meat can be preserved in a multitude of ways- I could do this for hours because it’s my passion, but that would be unfair to you.
You are grossly misinformed if you believe what you have written.
The problem isn’t in how you produce food, the problem is in human beings believing that they have no obligation to provide their own sustenance, to remain infants their entire lives with someone else providing the titty to suck whenever they get hungry. You’re relying on a system that depletes soil, pollutes water, eliminates diversity of species, reduces your choices, costs far more than it should, wastes tremendous amounts of energy to transport, ignores the need for fresh and seasonal food intake for healthy lives, destroys communities and promotes a childlike dependency on someone else to give you one of the most basic things in life whenever you want it. It’s like hiring someone to raise your children, it’s easier, sure, but it’s wrong.
I’m a novice at this 12 years into it and we produce an unbelievable amount of sustenance on our very limited arable land in a very inhospitable climate using extremely primitive methods with almost no previous life experience and our lives are immeasurably better than they were when we were living the American dream. If you don’t want to take my word for it, go look up the Rodale Institute or read a couple of issues of Acres USA where people far smarter and with much deeper experience working at this for over half a century demonstrate clearly that regenerative agriculture (organic farming) produces more than we could ever need without all the associated costs and destructive practices of Industrial Agriculture.
I don’t come here to steer people wrong, I’m trying to help them prepare for a very different world that we are all going to be living in by giving them the confidence to do the kinds of things that will improve their quality of life like we did for ourselves. You want to come see for yourself, the gate is always open.
And you really question whether you make a difference or not. Tish tish, HSF. I’ll be seeing you in July.
HSF any books you recommend that teaches along these lines? Basic, beginner, elementary level. Something that helps with skills acquisition.
5 Acres and Independence by M G Kaines and the Good Life by Scott & Helen Nearing.
You can feed you and yours on a small scale but not downstate with 20 million plus expecting three meals day. Misinformed about What? Are you asserting that small scale organic farming/ranching will feed 7.5 billion? Starvation or at least subsistence eating was endemic throughout history with far less population.
We garden without chemical fertilizer, have raised beds, within a deer/critter resistant plot, and a tent to extend the growing season, chickens, but that is most insufficient to feed ourselves year round. We’re are novices at best and have learned just how precarious our existence is should things go very bad. Weather has ruined our potato crop three years straight, yeah I wasn’t thinking oh well I’ll buy some at WalMart, I was contemplating what if.
Without petroleum in massive quantities, life as we know it would disappear and that was my original point in response to one of you comments. Amazing that you would dispute such an assertion. Your lifestyle is from a period unrecognizable to almost anyone alive in the West. I’m not criticizing you in the least, we are trying to at least dabble in what you are and have been accomplishing for years. We’re in our 60’s so it’s problematic looking forward.
Life as we know it deserves to disappear. You simply cannot have a population of 8 billion babies sitting on their asses waiting for some other unseen humans to feed them three squares a day, it’s imbecilic to think otherwise, that’s the point.
Can we feed 8 billion using regenerative agriculture?- absolutely. Can we do it while 99% of the population remains uninvolved except for the eating part of the bargain? Hell no, that’s what I’ve been trying to communicate for over a decade. It’s the expectations that are screwed up, not the methods. The idea that we all should be eating fresh raspberries in the middle of the Winter just because we can is not reason, it’s a level of immaturity that is inconceivable if you consider it seriously for even a moment. Global systems have always been a thing that bring luxuries, not necessities and it was grossly irresponsible to allow such a system to ever take root and now it’s going to come apart when people are most vulnerable.
i think the other guy was pointing out that there are very few who are set up, both in personal terms like knowledge, experience, fitness, mentality, relationships, etc, as well as in physical terms like location, property, improvements, tools, water, fuel, security, etc… to be able to make it through such times. hell, a lot of people who have been wise to what’s going on for a long time have still been stuck working a day job trying to pay for a patch of land and some improvements and preps, and will be caught somewhere in the middle of the process in varying degrees of unreadiness. probably most of us reading something like this are in this category, and it will be up to improvisation and a zillion micro variables, how we manage through it all. but 7.5 billion people are not going to make it through such times.
to think, the globalist demons understand this fully, but are determined to try to pull off a controlled demolition to kill off those people and things they dont feel are important for perpetuating their own ruling class status, rather than letting the cards fall where they may and entropy drives a chaotic collapse where whoever manages to make it, makes it. it’ll eventually get to entropy having the last word, but every day that the elites progress on their controlled demolition buys them time and cuts everyone else a bit more short.
Here it is, simply…..if the lights go out, generally speaking, who on your block can boil water outside?
You seem to be living in the world that James Kunstler has predicted is coming for the rest of us,
The same way it’s been done since the advent of agriculture.
Yes of course HSF, but the population of the world was exponentially smaller. Before railroads became a infrastructural leg of a continental power/economy (1870s/80s), meat was still very localized and again population was much smaller sans a few cities mostly on the East Coast. Africa’s population just since 1950 has soared from 225 million to 1.2 billion. Population growth is tied directly to energy sources to run machinery. First coal then petroleum.
I understand that, what you’re not understanding is that the problem begins at the eater level, not the producer level.
Human beings have a primary obligation to their own survival, placing your entire food consumption part of your existence in the hands of just in time delivery, three day grocery store stocking, and industrial agriculture is akin to taking drugs, drinking liquor, then dancing blindfolded on the edge of a cliff. It’s not only incredibly poor judgement, it can only end in tragedy.
There is no light between our positions based on your post. Billions of people cannot feed themselves and must rely on industrial scaled systems. I did note that when the USSR collapsed, what remained of their functioning government impressed upon the populous that they better grow their own in order to ensure their survival. Americans used to do that as a cultural value. I see that value somewhat here in rural Western NC, and we participate in attempting to gain some measure of food security on our own efforts.
I am in agreement with your sentiments. Yet here we are on the verge of a tragedy. A hungry man with no options will eventually take what he needs and eliminate anyone who tries to stop him. It will not take long for the roving bands of armed men to eat up the work of millions and then leave nothing even for themselves.
You broached the topic of oil dependence. Medicines, synthetics…the list is literally endless and tied to petroleum.
Is there no petroleum in North America?
Billions and billions of barrels. Have you noticed that fossil fuels are being targeted for elimination? The power of government directly employed to snuff it out. The governor of California is able to ban sales of gas powered conveyances and local gov’t in Cali banning the distribution of nat gas to new residential customers.
There will be none if the infrastructure is destroyed. Watching the insanity of the whu who flu does not give me any confidence that mankind will survive his own insanity.
C’mon man, you know the butterfly affect..
..a butterfly’s wing moves enough air that it absolutely has a direct and immediate affect on the monsoon 8,000 miles away. It killed people. Are you a science denier? Huh huh?
Good summary of the differences. I have always tried to point this out to folks, especially when it comes to things like employment freedom, minimum wages, lack of folks living on farms, massive welfare dependency, etc.
So in summary:
30s – we still had a chance
2020s – we’re fucked
Now that’s wording I can understand.
Have faith though…..Your only gonna be fucked.If you left yourself in position to be fucked.
Back then with a more agrarian based population, food wasn’t the biggest issue like it is going to be this time. Add on to that our new Commie Overlords and their predisposition to using food as a weapon anyway and now we are talking problems.
They weaponize EVERYTHING
Should these issues play out as described, obviously the government will pay the military even better, along with the rest of the alphabet security apparatus to ensure ‘domestic peace and tranquility.’ As long as the top 10% of the economic pyramid remains faithful to TPTB, the Establishment will believe it can all be managed. This isn’t very prophetic, history is my guide.
As you no doubt are aware, historically just feeding your military keeps them on the plantation as it were, when everyone else is starving.
Forgot the obvious:
1930’s: Rat, Commie, Bastard in the White House
2020″s: Rat, Commie, Bastard in the White House
Don’t forget the one from Texas…1963-68
I live in a very Red area and a lot of folks checked out their scopes this weekend. The Democrat’s dreams of eating the American Conservatives like the Socialist did to Venezuela, Cuba, Zimbabwe etc ain’t going to happen here. The best outcome would be Secession of the Red states; the worst would be continued ramping up of Leftist tyranny that resulted in a Civil War that anniallated the Blue states.
If you’re going to control everything than you are to blame for everything.
Got to tell ya, I haven’t heard that prediction.
China is busy buying up all American food production they can get their hands on.
“Chinese companies, at the urging of their government, have launched a global buying spree, a new phase in their unprecedented economic experiment. And they’re targeting a resource that climate scientists, economists, the U.S. government, even Wall Street, all forecast will become dangerously sca Food is poised to become the oil of the 21st century, with scarcity and demand creating a situation ripe for wars, riots and uprisings.
“We have a situation in the world food economy today where the growth in demand is exceeding the supply,” said Lester Brown, a food economist and founder of the Earth Policy Institute.
Food – namely crops such as soy, wheat and corn from which most other food products, such as pasta, bread and livestock meat, are derived – is in dwindling abundance as the world’s population grows ever larger, adding 220,000 mouths to feed every day. At the same time, global warming is destroying up to 2 percent of the world’s crop production every decade, according to the United Nations.
“It is part of the transition from an age of surplus to one of scarcity,” Brown said.”
Be aware China is experiencing a massive food shortage so my bet on how this will play out is when the Chinese have bought all of American food supply they can get, they’ll ship half of it to China and sell the other half to the American market at double the price; they’ll feed their own country and the cost will be borne by the American consumer.
Same as of today.
And….the biggest difference…
Peoole back then were God fearing moralistic patriots that knew how to be self sufficient vs today people reject God, hate their fellow,man, have no clue how to boil water. This will end with society killing fields based on the massive division govt has caused. Black, white, rich, poor, religion, political bias, fat vs skinny, etc. We are so divided it will be every man for them selves. Er, i mean wo, WOman-man, man argh i just do not know how to be politicly correct nor virtue signal.