In the late 2010's, several economic trends that I had been watching, one for nearly 30 years, seemed to be converging. One long term cycle said the U.S. should have a great depression, or at least a really bad recession, starting in 2020, or soon after. Another theory, the late futurist Alvin Toffler's The Third Wave, said that the Industrial Age was still dying off, and we were creating a new kind of society, an Information Age, to replace it. That would lead to more old industries and businesses dying off, and new ones emerging. In addition, Rich Dad, Poor Dad author, Robert Kiyosaki, had been saying for years that we should have a big economic downturn around 2017, because that's the year the first Baby Boomers hit retirement age, and they had to start pulling their money out of the stock markets. In addition, we were getting to the end of the normal business cycle, which ends with a recession. The normal 4 to 7 year business cycle has now been stretched out to 15 years, through all kinds of manipulation. We haven't had a full recession in the U.S. since 2009.
I had a whole bunch of interconnected ideas, based on theories I'd read and heard, and my own observation of economic trends, for about 30 years. Everything was telling me that the coming decade, the 2020's, were going to be one really crazy decade. So I began to write and work these ideas out. I decided to self-publish them as a book/blog. I built the empty blog on December 21st, 2019, and began writing the first chapter that day. I called this big project Welcome to Dystopia: The Future is Now- Book 1. at the time, I thought there would be a "Book 2" at some point. In paragraph 8 of Chapter 1, I wrote:
"The word "recession" is basically meaningless in today's ultra-manipulated economic world. I'm calling this coming decade " The Phoenix Great Depression." Whatever the numbers and economists' statistics wind up being, this decade will feel like a full blown great depression to most people. Yes, no one wants to hear that, but that's where we're headed. But the tough initial blows economically are setting the stage for tremendous opportunity, like the mythical phoenix being reborn from the ashes."
I wrote that on December 21st or 22nd of 2019. At the time the business media was saying we might have a minor recession in late 2020. But the Repo Market Crisis had already happened in September of 2019, and The Fed was quietly putting billions of dollars a week into the banking system to keep it functioning. "Liquidity," they called it. Everything I had read and seen told me a big recession was coming pretty soon.
Then Covid-19 began to spread out of China, it hit U.S. shores, and the stock market collapsed in early 2020. Soon came the mask rules and the mandatory lockdowns, with millions and millions of people stuck inside their homes for months. That threw us into a deep depression. Yes, depression. The second quarter of 2020, the GDP dropped by over 32%, and a 10% drop qualifies as a depression, by definition.
On March 1st 2020, I was writing chapter 17 of Dystopia, about "The Phoenix Great Depression," what I believed would be 5 to 7 years of severe economic turbulence, in the 2020's. At that point, we were halfway down in the stock crash of early 2020. Nobody had any idea just how big a deal the pandemic would become. I wrote the remining three chapters of Dystopia over the next three months, as the pandemic set in. The major economic downturn that all the long term trends pointed to was actually happening, much as I had anticipated. I did not expect a pandemic to spark the recession, but I expected a serious recession to begin in 2020.
Then something really crazy happened. The Fed and the U.S. government started a series of stimulus measures. I expected a bailout, much like in 2008-2009, that would lessen the effects of the recession. But I did not expect that they would ultimately create $6 trillion, and throw that money at not only big business and banks, but local and state governments, and everyday Americans. Between the stimulus checks, the Cares Act, PUA, PPP, ERC, ARPA, and other programs, The Fed (Federal Reserve) and the U.S. Treasury, increased the U.S. money supply by close to 25%, roughly $6 trillion. That stopped the 2020 depression dead in its tracks, and nearly everyone suddenly became Hood Rich. Wealthy people bought assets. Big businesses bought stock shares back. Everyday Americans, the world's greatest consumers, bought all kinds of stupid shit, like putting down payments on $90,000 trucks and SUV's they couldn't afford, then not paying the payments, or buying meme stocks with their new Robinhood accounts, and other nonsense like that. Suddenly, in late 2020 and through 2021 there was all kinds of money in the U.S. economy, and life felt good for many people, except for the lockdowns. Recession? What recession?
So the great depression level economic crisis I wrote was coming started in February of 2020, and then got put on pause by this huge deluge of money throughout the U.S., and other major countries as well. Then, as we began to emerge from the pandemic, all that new money that had been created sparked really high inflation. Because that's what happens when you create huge amounts of a fiat currency, the value of the currency goes down, and prices go up, usually about 12 to 18 months after the money is created.
Then The Fed raised interest rates faster than ever before, "to fight inflation," inflation that they and the U.S. treasury, caused. We went from near zero interest rates, to more historically normal levels, 5.25% on the Fed Funds rate, and 7% 30 year mortgages, which no one was used to anymore. The economic system just got more and more out of whack as one crazy event after another happened. The rapid rise in interest rates caused all kinds of different problems, including for banks, who had loaded up on .75% and 1% return T-bills, which suddenly dropped in value because T-bills started paying 4% or 5% interest.
As interest rates rose, the economy, now running on trillions of dollars of "helicopter money," began to slow down. But there was still so much new money sloshing around the system, that it took a really long time for the economy to really slow down. Finally the Employee Retention Credit system, which was being scammed left and right in 2022 and 2023, was dialed back in late 2023. The economy began to slow down, as inflation also dropped back down to lower levels. The Fed wants to get CPI inflation back to 2% per year. According to Truflation, which tracks inflation in real time (not with a lag, like The Fed's data), U.S. inflation right now (Feb. 15, 2024) is 1.42%. The official government CPI number is 3.4%. So prices are still going up, but much slower than they were in 2021 and 2022.
Most of the main economic indicators now show that the U.S. is either in a recession, or heading towards one in early 2024. Yes, there is a strong narrative in mainstream and business media, that we will have a soft landing, and there will be no recession in 2024. But if you dig into the people studying the actual economic data, the economies of most major countries appear to be slowing down. Personally, I think we went into a recession around October or November of 2023. When the National Bureau of Economic Research (NBER) officially names a recession (a year or two after one ends), that's when I expect them to put the beginning around October 2023. But two things have been keeping most people from believing we're in a recession. The stock market indices are hitting new, all time highs recently, and the unemployment rate is still really low. These are two things average people look to as "signs of the economy." But, in reality, stocks usually don't drop dramatically, until well into a recession, and the unemployment rate usually rises well into a recession, as well. Both of these are lagging indicators. In the Great Recession of 2007-2009, the big stock drop was in September of 2008. But the actual recession officially started in December of 2007, nine months earlier. The unemployment level didn't really take off until May of 2008, five months after the recession started. We were several months into that recession before the recession became obvious to average working people.
I think we are at the time now, where I can safely call the return of The Phoenix Great Depression. It started in February of 2020, but was put on hold by all the stimulus programs, but late summer of 2020. I believe we are in a recession now, and this second recession of the 2020's will be deep, it will be long, and it will involve most of the industrialized world.
Germany's manufacturing has been struggling for several months, although they aren't quite officially in a recession, but much of the Euro Zone already is. Across the Pacific, China's gigantic, $62 trillion real estate market is collapsing. They reportedly have over 100 cities full of condos that no one will ever live in. They actually built at least 65 to 80 million homes and condos that no one will every live in. There may be even more unused condos, in fact. They just kept building condo towers to keep their growth economic growth going, but the Ponzi scheme structure of their real estate industry is imploding now. Giant Chinese real estate developer Evergrande has just gone bankrupt, and is being liquidated, which is spooking Chinese workers away from investing in new homes, one of the few things Chinese people can invest in. In addition, as I was writing this today, a report came out that Japan is now in recession, and has dropped from the 3rd largest economy to the 4th, behind struggling Germany.
There's no strong growth anywhere in the world to help pull China, the European Union, and the U.S. out of our slowing economies. If The Fed and U.S. treasury try to bail everyone out again, they will quickly spark up more inflation, which is exactly what they don't want to do. The biggest power players in the world of economics basically have to just let the chaos play out at this point, around the world. There will be limited bailouts of banks, and maybe some big businesses, but each one must be weighed now against the risk of causing more inflation. American consumers are struggling to make their regular bill payments, and can't afford even higher prices.
So what does all this mean? It means the serious recession, that the trends I follow predicted, is settling into most major countries, China, Japan, Germany and the European Union, and here in the U.S.A.. In tomorrow's blog post, I'll go into some of the trends I think will play out as we head into a deep global recession, one that will probably feel like a great depression, by the time it's finally over.
I've been writing a lot lately, on a platform called Substack, designed specifically for writers, check it out:
Steve Emig The White Bear's Substack
