What is different now?

We have a history of economic depressions and periods when the value of the currency declines.

We have always had angry, young people.

We have always had immigrants trickling into the country.

Why is it different now?

Let's compare out current situation to some historic examples.

Weimar Republic Hyper-inflation

Impacted Hungary, Austria and Germany in the early 1920s. The winners of WWII spearheaded by France demanded reparations for World War One even though most historians consider both sides mutually aggressive in escalating the conflict.

The crippling outflows of hard-currency and gold hollowed out the local currency and crippled local industries. The social contract was destroyed. Pensions became worthless.

Germans elected a charismatic Hitler because he promised that he would punish internal traitors and return Germany to greatness.

Compared to today:

Due to the US Dollar's status as the world's reserve currency, vast numbers of dollars are floating around the globe lubricating the wheels if international trade. Unlike the Hungary, Austria and Germany, the United States received goods for those dollars...Pink Tee-shirts, Air Jordans, smart-phones and other manufactured goods.

However, if/when the US Dollar loses reserve-status, many of those dollars will return to the US and the people holding them will bid-up the prices of commodities produced in the US like oil, natural gas, food, real-estate.

A difference between Weimar and today is that individually, the countries impacted in the 1920s were socially more homogeneous than the US is today. They were also more agrarian and the social connections were more local. Most people who lived in urban areas knew somebody or had a family member who knew a farmer or somebody who worked in the forests.

The Great Depression:

In 1929 loss in confidence in the banking system resulted in "runs" on the banks. Most of the money was not immediately available because it had been loaned out.

The Depression was marked by collapsing values (in monetary terms) of commodities and property which is the opposite of inflation. Banks were unable to seize and resell assets to recover their loans because they would get pennies-on-the-dollar.

The Great Depression lasted approximately 10 years.

Compared to today:

The Great Depression was marked by DEFLATION while today is characterized by INFLATION of the currency. One way of characterizing the Depression is to say the the US produced too much food and steel and oil and coal.

During the Great Depression, the country was gripped by a long-duration weather crisis of high temperatures and low rainfall which displaced farmers and reduced production.

One of the government's responses to the deflation was to "sink" labor and other resources into building durable infrastructure like roads and dams.

In general, the people in the United States were socially more homogeneous than today. In the 1930s we knew our neighbors as individuals and we knew their skills and their moral shortcoming. They were also more agrarian and the social connections were more local. Most people who lived in urban areas knew somebody or had a family member who knew a farmer or somebody who worked in the forests.

Oil crisis of 1970s

Vassal states in oil-rich countries like Libya and the Gulf States nationalized their oil production and formed OPEC to coordinate oil production rates and to stabilize oil prices.

The US economy went into spasms as our infrastructure was configured on the assumption that fossil fuels would always get cheaper.

Concurrent with the first oil crisis, American youth demonstrated against "the establishment" and some refused to fight in foreign wars over access to resources.

Compared to today:

The 1970s is our best "picture" of inflation from the United States. It peaked during the second oil crisis with an effective inflation rate in the high-teens (as a percentage) but the duration was on the order of a year. The current bout of high inflation is still climbing and has been ripping along for four years. Instead of inflation being 17% for a year, we are looking at 20%-to-30% per year for four years (and counting) for basic necessities. 

For the record, the price of an item doubles every three years at 26% inflation. A package of six, pocketed tee-shirts that cost $11 in early 2021 now costs $22. And, if inflation is not dealt with, they will cost $44 in 2027.

Demographically, we were a much, much younger country having just exited the Baby Boom years. Another factor skewing the age demographics was that heart disease and cancer were considered mostly untreatable and a one-way ticket to the cemetery. Men dropped like flies starting at age 55.

The US economy was still thing-and-manufacturing oriented while now it is more "knowledge" oriented.

The US was still relatively homogeneous. Pictures of Woodstock don't look very diverse. Italian food was considered exotic. The camel's nose was under the tent-flap, though as the Great Society started crystalizing.

Financial crises of 1987, 2000 and 2008/2009

The financial crisis of 1987 was a "flash crisis" when the stock-market lost 23% in one day. In two weeks, the crisis had virtually disappeared. Various "circuit breakers" were implemented with the intention of stopping trading so buy-orders would have time to flow in to absorb panicked sell orders. The changes pretty much ended this kind of trading mis-match.

The financial crises of 2000 was created by the government flooding the economy with liquidity (money) in anticipation of economic disruptions due to Y2K cyber dysfunctions. The liquidity flowed into the stock-market and it inflated, especially in the computer/digital tech sectors. The dysfunctions due to Y2K were minor. The stock-market peaked on March 14, 2000, tipped over and plummeted. For a frame-of-reference, if you held $10,000 of shares in Fidelity Aggressive Growth mutual fund (which was very heavily loaded with "tech" stocks) on March 13, 2000 it was worth only $1400 on December 31, 2000.

For most of the economy, the financial crisis of 2000 was a yawner. The pain was restricted to a very narrow slice of the US economy.

The financial crisis of 2008/2009 was much broader than the crisis of 2000 because the credit markets "locked up" and impacted every home-owner and every business that relied on borrowed money or 30-days-net payment.

The foundational cause of the 2008/9 crisis was due to restructuring of the financial industry where entities writing loans were able to off-load the risk thereby removing the incentive to exercise due diligence. The restructuring was nominally motivated by the perception that some groups were unfairly discriminated against due to "unfounded" assumptions about their ability to repay those same loans.

Compared to today:

1987's economy was still the economy of real things made from concrete, steel, copper and lumber. People would have laughed at you if you said "Financial INDUSTRY".  "Financial" was not an "industry", it was a support service like custodians and roofers.

2000 marked a turning point in several ways. "Knowledge" was on the cusp of passing the "Tangible" economy. China was starting to become a manufacturing colossus. 2000 also marks a convenient time to discuss the extreme stratification between different age groups. The crisis, however, was very narrow in its scope. Even Wall Street dismissed it as "Pigs get fat and hogs get slaughtered" which had been a saying on Wall Street since forever.

2000 is also when the oldest Baby-Boomers hit 65 54 and most people could get effective treatments for heart-disease and cancer. My perception is that our population got older AND many of our older people were kept alive by extraordinary means. That created an overhanging fragility, for example, people with artificial joints needed to take antibiotics before visiting the dentist.

2008/9 is when severe cracks in the foundation were wallpapered over. Risk and reward were further decoupled with hogs were rescued with enormous cash injections from the Federal authorities. Systemic causes were not addressed. In some cases the systemic causes were amplified. Classic kicking-the-can-down-the-road.

Covid Crisis

Anything I write about Covid will elicit angry responses because we are still in the rain-shadow of that crisis.

Most of my readers are likely to agree that the Covid crisis is similar to the 2000 Financial crisis because most of the harm was caused by over-reaction by the government rather than the proximal cause of the crisis.

In 2020 Communist entities forcibly took over the cities of Seattle, Washington, Portland, Oregon and Minneapolis/St Paul, Minnesota. They also occupied and disrupted scores of other major cities for shorter periods of time.

In 2020 the career bureaucrats in the government conducted a soft-coup of the Federal and many State government structures.

A minority of my readers are likely to contend that "They did what was necessary". While I have some sympathy with that claim, information rapidly became available from places like Sweden, South Dakota and Africa that the total hijacking of the economy and private lives was not necessary and even harmful.

Since the soft-coup, border security ceased to exist. As a group, legacy Americans have become poorer, fatter, more dependent and more stupid and more suspicious of people not-like-us for reasons of age, skin color, the colors of our hair or where we worship. As a people, we are fragmented.

During the soft-coup, politicians and bureaucrats demonstrated that they don't care if you have undiagnosed cancer or want to take control of your own food supply. Frankly, they don't give a shit about you if you work at Amazon or Walmart or in healthcare  Somehow, being "essential" makes you immune to Covid. Nor do they care if you are an elementary school child or forced to work from home while and have a child of that age.

One of the casualties of the soft-coup was "trust in government". Many people do not believe government statistics nor do they trust the government has the governed people's best interests as a prime motivator.

The US still has some pockets of excellence but they are under assault. Consider the US military. Recruiting is in the septic tank. Efforts to encourage more "under-represented peoples" diluted one of the hallmarks of the military "We are Americans. We are a Unit". It is only going to get worse. The three soldiers who were recently killed in Iraq had their pictures splashed across the screens of every news-service in the US for the better part of a week. All three of those deceased soldiers were very clearly African-American. Three-for-three. It seems unlikely that the publicity will motivate more African-Americans and other Peoples-of-Color to join the military.

Prescription

As rapidly as possible, get to know your neighbors. Talk to them face-to-face. Start trading small favors...mowing grass, mending clothing, feeding their pet when they are traveling.

Start eating more local foods and foods that are less prepared so you gut will not be your enemy if things change suddenly.

Armor your house starting with your doors and windows. Make sure you have screens for your windows, AC might be a luxury in the future.

Get "square" with your spouse and family. Risk is a 1/D^2 function where D is distance. The people closest to you can hurt you the worst.

Take an inventory

Inventory your tools. If you have several drill motors but not enough bits, invest in the bits. If you need batteries, buy batteries. If you need better lights to help you see, invest in the tools you need to improve your precision in using those tools. Ditto for knives and food processing tools.

Do you have a supply of paper and notebooks and pencils? Unlike pens, there is no ink in a pencil. It cannot dry out or leak.

If you have a woodstove in your workshop, make a few measurements and figure out what kind of pipe, thimbles and adapaters you might need to reinstall it in your house should the need arise. 

Do you have a viable plan for potable water?

Do you have a plan to dispose of trash if the garbage service taps-out? If you are going to burn it, do you have an abundant supply of strike-anywhere matches? Fly and rodent borne diseases are a top-five cause of mortality in SHTF scenarios.

Inventory the inputs you need for productive hobbies like gardening. Inventory seeds (and check expiration dates). Inventory fertilizer. Inventory pesticides and check secondary uses like lice, flea and fly control.

Inventory your relationships, including your relationship with God. We may be entering a time when moral ambivalence will be your enemy.

Inventory your physical, printed-on-paper books. Do you have any important ones in digital-only format?

Inventory your meds. There are some meds that either have over-the-counter equivalents OR the OTC med has "side effects" that have therapeutic value. An example of the first is aspirin which is a very effective anticoagulant (anti-clotting) drug. Aspirin has a cost of $0.0025 per day if you buy adult strength and split them and can be bought-in-bulk without a prescription. An example of the second is Diphenhydramine (Benadryl) is a first-generation antihistamine which has sedative and anti-anxiety "side effects". Diphenhydramine is available over-the-counter and since it is an "old" drug it is dirt cheap.

Please note that I am not "prescribing" aspirin or diphenhydramine for any conditions. This is an entertainment blog. I am sharing this information to entertain you.

I would love to be able to say that most unpleasantness is likely to be self-extinguishing but Portland, Seattle, Minneapolis, Baltimore, etc are still no-go zones and the USSR lasted for 70 years while Com-China is still a totalitarian government after 70 years.