Is a major recession or an unspeakable depression akin to 1929 possible in our modern age? Central banks stand ready, modern banking systems with derivative assets locked and loaded, fiat currencies ready to print and the cost of money digitally available to be distributed to anyone and anywhere in seconds.
Our modern economy is global, international, interconnected, robust and seemingly indestructible. The largest corporations today dominate across numerous industries, span across geographies, time zones and rake in billions in profits. They employ thousands of people and their GDP rivals G20 nations.
Central Banks have powers unknown just 50 years ago. They have the ability to expand the money supply with mere keystrokes, provide liquidity to failing banks, financial institutions and sovereign states if so required to stabilize a global economy and resurrect confidence to the weak in faith.
For those who lean cynical, the sheer magnificence and resilience of the economy must appear mind blowing, as it does to me. Like a zombie that cannot be killed, we’ve thrown every silly thing at this global economic system. We’ve been irresponsible to the Nth degree, played games with modern finance, spit at the wind of free capitalism and literally printed trillions of dollars of fiat currency that should have been a death stake at the heart of any stable global economy, but this monster continues to breathe, strive, bounce, jump and slug forward like a beast.
It’s nothing short of amazing how our modern interconnected economy has remained resilient, strong and hungry for more growth. With all the silly government spending policies, Modern Monetary buffoonery, taxing disincentives, regional hot wars, petty trade wars and Marxist policies for good measures, our economic system has remained breathing, alive and indomitable.
Technology continues to advance, our corporations thrive and the life of the average worker has arguably improved. This is nothing short of mind numbing, especially to all the PhD economists who have called this completely wrong, predicting doom and gloom and the next global depression.
What has become very clear is that our global economy is stalwart, resilient, complex and complicated. Nobody has a firm grasp of exactly how it’s remained tenacious and indefatigable in an environment that should be punishing, crushing and toxic.
From a big picture view, we have two opposing powers. Forces that push technology forward, promote free trade, globalization of commerce, interconnectedness of human labor, the free exchange of ideas, science, capital, finance and investments.
The opposing energy sucks the life out of growth, bleeding the host like a parasite through government weight, sovereign force, laws that restrict, laws which prohibit the free flow of information, labor and capital. Through irresponsible fiat printing, the growth of sovereign debt, social disorder, restriction of trade, regional wars and the thumbing down of law and order to promote chaos, all cancerous growths which should be eating away at the very constructive forces which promote growth and prosperity.
What is becoming clear is that the forces for good is clearly winning. Regardless of the destructive energy being hurled, it’s still no match for human innovation, human energy and the connected forces that bind us together to create value for Mankind.
The parasitic agents are still no match for the power of the host. The host remains alive and thriving. Thankfully, the parasite has not outgrown its host, at least not yet. The innovative power of the free market continues to outpace the monsters pushing against it.
On the face of it, it’s shockingly unbelievable. Given the complete buffoonery and irresponsible nature of individuals, groups, sovereign governments, central banks, politicians and government leaders, any reasonable person would presume that a global economic collapse would be upon us. But no, the host continues to live, and flourish.
This is beautiful to behold and one could only imagine how much further we’d be ahead if not for the very parasitic forces that persist. How much further humanity could have moved forward without the massive headwinds we’ve created for ourselves.
Our infrastructure and systems, established over millennia, are delivering exponential returns and value far exceeding our wildest expectations. Humanity continues to expand and prosper.
What could possibly take us down, even temporarily?
A serious and meaningful trade war with a top 5 trading partner. A destructive regional hot war requiring forced conscription. Nationwide civic unrest bordering on a civil war.
Black swan exogenous events that devastate a region or major economic center such as an earthquake, volcanic eruption, tsunami, or hurricane.
Man made devastation, such as the hacking of our power grids, financial system, or communication network.
Self inflicted destruction could occur if and when a major sovereign government over prints fiat and the debt load crushes the nation. When a major international bank is allowed to default, destabilizing counter parties and sending shockwaves across the globe.
A gradual generational decline in global population, even within a major G10 nation, could trigger significant social and economic instability. Unless technological innovations effectively counter this trend, it could pose a material risk in the next 30 years.
These could set us back temporarily, but as long as the human spirit and our capital system endures, we’d rise up from the ashes.
The End
