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Ashes, Ashes, We All Fall Down
Notes from the Midst of Catastrophic Economic Collapse
“A single man is hard enough to support in idleness, a household is harder still, an army hardest of all. There are more mouths to be filled, less wealth to start with, and greater waste; therefore an army should never be unemployed.” - Xenophon [Cyropaedia, I.6.17]
Yesterday, I paid $1.55 for a can of crappy store-brand tomato soup. I also paid $5.22 for a gallon of regular gas to put in my lawnmower. Everyone knows that everything is getting expensive faster than the still eye-popping 8.6% year-over-year inflation the government/media class admit to. You can see it every week going to the grocery store. I’ve been hesitant to write about the economy since I brought up our “Trifecta of Misery” a few months ago [note that neither of the other problems I brought up have gotten better either, besides that the public is growing relatively more concerned about the economy and nuclear war than the fate of Ukraine.] However, I may as well write about the thing which is so distracting me from my writing: we are in the midst of catastrophic economic collapse, and are all already feeling the pain. I expect widespread price riots by the end of summer, especially as electrical grids inevitably fail in the heat because, you know, this country is falling apart, especially the cities.
It is outside of the scope of this article to explain the longer history of how we got here, but if you had the sense to follow people like Ron Paul and the Mises Institute over the past decade-plus you would understand the plot: to fund its corruption and boondoggles, the government prints money and artificially lowers interest rates so the country can live on phony prosperity that inevitably crashes. As bad as “The Great Recession”, they still did everything possible to minimize it and kick the can down the road by continuing extremely inflationary policies and preposterously low interest rates; they printed their way “out” of it. That is to say, everything was primed for another severe crash before the events of the last few years.
And then, the evil lunatics who govern us decided to make our lives as miserable as possible and shut down huge swathes of the economy. Anyone could have seen see that a country with massive national debt cannot just pay the population to not work. When Xenophon wrote the introductory quote I used, he surely never imagined that someone would forcefully idle the general public for a long period of time, especially over a cold. All of the “emergency spending” was simply “printed” [in reality, the “money” is digital, they don’t even have to make cash.] Any idiot should be able to see if you reduce production while massively increasing the monetary supply that dollars will buy far less. It is fewer goods and services and more dollars chasing them.
But it wasn’t just idling sectors of the economy. There was an enormous amount of “malproduction”, in the sense that the government encouraged, incentivized, or outright forced the production of unnecessary things at the expense of the useful goods that would usually be produced. No example is more notorious than Trump invoking the “Defense Production Act” to force car manufacturers to make ventilators, which were actively harmful to Covid patients, by the way [notice what we don’t have enough of now are cars; they say its because of a chip shortage, but the chip shortage was caused by the precipitous drop in chip orders during lockdowns]. With that came mandates to make masks [also useless], mass production of sanitizer, tests, vaccines, etc., all at an opportunity cost of making their normal goods. Beyond which, insane hygiene, testing, and isolation protocols greatly reduced productivity and the production of useful goods and incurred enormous costs to the economy. I said from the initial famous toilet paper shortages that they would be chasing production shortages until it all collapsed. And once they started mobilizing the National Guard as general labor- people who already have other jobs- it was extremely clear the direction this was going. Jeffrey Tucker did a better job discussing this in his recent article “The Economic Meltdown has Roots in Lockdown” than I have time to do here.
And then, with all these problems, Russia invaded Ukraine. The West, of course, responded by insane sanctions on goods they themselves need. Further, in essence, they ceded their own economic interests in Russia to Russia voluntarily. As I covered previously, the Biden administration’s plan to “turn the ruble to rubble” spectacularly backfired and now the currency hit a five-year high last week.
Now these sanctions are devastating European economies. As ever, our ruling class is like the bicycle spokes meme writ large. And Biden is actually saying his equivalent of “Why would Putin do this?”: “Putin’s Price Hike.” No serious person could possibly believe this is all caused by Putin, as inflation was already spiraling before the invasion and Putin was pretty clearly happy to keep doing business throughout the war. None of the trade disruption was necessary and Putin also wasn’t the one who chose to send massive amounts of our money into the black hole that is Ukraine. What is curious about this- and we all know that Democrats are terrible at politics and headed for a wipeout- is that all of their messaging is exclusively targeted at the people who will believe anything they say and vote for them no matter what. “Putin’s price hike” Is an extreme example of preaching to the choir, though to the rest of is it seems as if they’re pissing on us and telling us its raining.
These results were all utterly predictable, but of course you weren’t supposed to say it:
Though Russia is always criticized by the neo-liberals for their “resource-based economy”, that actually translates into “they produce things civilization genuinely needs”, as opposed to centering their economy around financial services. Look at Russia’s top exports. Society cannot function with these things, and amidst soaring food prices we’re facing a fertilizer shortage, a key product beyond oil for which the West is heavily dependent on Russia. I don’t want to get into a whole thing about agriculture [which I actually know a great deal about] but suffice to say the West’s entire industrial food system is based on using chemical fertilizers instead of improving soil fertility.
These energy prices alone will bankrupt us, since left wing hostility to fossil fuels notwithstanding, our entire civilization is based on this form of energy. There is no major aspect of your economic life which is not wholly dependent on fossil fuels from the raw materials being extracted and delivered to the factory, to the worker commuting to work, to the product getting to the store which you probably drive to in a fossil fuel powered car that was manufactured using energy from fossil fuels by people who drove a fossil fuel car to work. The current gas prices are catastrophic, and there is no reason to believe this will get better.
Pretty soon they will have to remove “Fact Checks” on Trump’s infamous “you'll be paying 7, 8, 9 dollars” comment [well, they won’t because they have no integrity.] Tucker covered what this all means and the Biden administration’s unusual degree of responsibility for gas prices with his characteristic incisiveness:
There’s no chance we will stop chasing shortages until this all wholly collapses. The baby formula shortage is incredible. Because we’re living in Atlas Shrugged, the largest plant was shut down by the government over spurious health concerns for months. For some reason, despite there being abundant baby formula in Mexico, and NAFTA existing, it cannot just be put on trucks and shipped here. [This really is becoming like one of those dystopia shows where the problems don’t exist in Mexico.] Perhaps some miserable bigots wouldn’t trust the Mexicans to make something as precious as baby formula, but they manufacture all sorts of products the safety of which we rely on every day, and further can easily manufacture things to specifications. Beyond which, if Mexican baby formula was unsafe we would know about it because Mexican babies would be dying. The only conceivable issue is labeling, and that’s just a matter of stamping on English instructions. Instead of just reducing whatever barrier prevents the importation of Mexican formula, they used the National Guard to fly in baby formula from Switzerland, which is definitely totally normal. They called it “Operation Fly Formula”, because I guess the guy who names things was on the john. They would be much better off not acting as of they’re proud of themselves for it coming to this. When your once prosperous, industrial nation, famous for its full shelves is using the National Guard to fly in baby formula in peace time you are in the midst of catastrophic civilizational collapse. It would be one thing if they were making moves to correct course, but once again this is Atlas Shrugged and they are constantly making everything worse.
On that note, as ever, Biden is blaming shortages and shipping prices on greediness and price gouging. Their solution, instead of perhaps encouraging oil production or repealing the dreadful Jones Navigation Act, is to pass some shipping reform bill that appears to do little but ban fining companies for failing to deliver products in a timely fashion. That’s right, their solution to supply chain breakdown is to criminalize punishing the failure to deliver products on time. That is the real problem, is all the fines companies pay on products they can’t deliver because of all of the other economic problems.
And now, the stock markets are also collapsing. The S&P 500 hit bear territory this week, posting its worst week since March 2020, you know that time they shut down the economy. The NASDAQ is down a whopping 31% year-to-date. The Dow, the best, or least bad performing, is down 17.75 % this year and one bad day away from becoming a bear market.
Joe Biden’s “most robust recovery in modern history” is clearly as much of a joke as his “transitory inflation.” Their .75% rate hike is the relatively more responsible thing to do, but it will hardly staunch the bleeding of inflation and depression. There is no shelter from this storm besides precious metals, and even so the cost of other goods is rising far faster so even gold and silver are losing purchasing power. Cryptocurrency, a supposed hedge against inflation and economic collapse is the least of a haven of all:
Bitcoin, the leading crypto, has lost over 50% of its value this year. I don’t know if its big collapse is coming, but the fact that it is following the rest of the market more or less invalidates one of the main promises of crypto as an investment. At least in 2022, you’ve been better off keeping rapidly inflating cash in a bank.
So here we are, seemingly drowning and on fire at the same time. The government chasing after problems by creating new ones in a truly Randian fashion. You know every week when you go to the grocery store something will cost more, a lot more. Yet, there are still some good sales because idling the population messed up this country’s advanced economic infrastructure which was developed over hundreds of years and designed for constant availability with minimized waste. There is still overproduction of the wrong things. And of course their new trick is to put something on sale then jack up the regular price that it will revert to after the sale. A small bag of Kettle [Brand] Chips is up to $5. Eggs went up 45% in one week and I had been expecting it for weeks because the store I was shopping at was the last store to not raise egg prices. Cigarettes are climbing precipitously. Cheap beer has gone up over 10%. On sale name brand beans have gone up 25%. Those are just my personal observations as a person who does the family shopping. The average household’s cost of living has gone up $460 per month in the last year. That is devastating to the many people, myself included, who were already struggling to get into less, not more debt. It’s hard to even want to try, with no clear path forward and a lack of hope. The median house price in May in my rural county is just over $400k, up $79k from a year before and up $23k from April [this is a strange one, because in 2008 there was a mass delusion about house prices going up forever, now everyone expects them to crash yet people are still paying above asking price for houses.] This is completely unsustainable and there’s no reason to believe it’s going to get better but every reason to believe it will get much worse: this is still the beginning of the crash.
The Democrats being destroyed in November will be personally satisfying, but the Republicans don’t actually have the ability to fix our problems, simply to be relatively less annoying and out of touch as we die slowly or quickly. Presumably the next spark will cause widespread price riots, assuming the public can afford to drive to the location.
I collected some anecdotes from my various friends about the economic experience of our time [all quotes unedited]:
“I was saving for a car and nearly pulled trigger a year and a half ago. That same car is nearly double now. I make 95k and can't afford a damn car, let alone a house. On the plus side my '72 is worth over 40k and my '81 is about 30k. So I'm stuck with either selling my two favorite possessions in the world, or getting 8 miles per gallon. Luckily I'm only 8 miles from work.”
This is interesting, as to me that seems like a whole lot of money to make, but a recently study showed a shocking 48% of Americans making over $100k live paycheck to paycheck, and that was relatively earlier in the economy falling to oblivion. Presumably some aspect of that is a lack of personal responsibility, but the cost of living in areas with the most high paying jobs is absolutely out of control.
“All home renovation plans that involved liquidating a few stocks here and there have come to a halt for obvious reasons. What would have been money that was put back into the economy is now being hoarded.”
I firstly need to correct my friend [who has no particular interest in economics] to say that money in the stock market by definition isn’t being “hoarded” as it is used to fund the means of production. Also, I priced exterior paint recently and I believe it ran from $250-500 for a 5 gallon bucket, so relative value of stocks compared to home improvement supplies has truly collapsed. I was considering painting my house to save money on insurance, but the savings would be quite far down the road, at that price.
“This summer will be our first family vacation. The plan was to drive to yellowstone. Real classic USA shit. Now yellowstone is closed and gas is 7$”
Obviously flooding is the economy’s fault, but I am in a similar position. My wife and I had an incredible short vacation with my mother to Polson, Montana on Flathead Lake last year, and she gave us a $300 gift card to Holiday Inn for Christmas with the aim of going again. Hotel rooms that were $170 or perhaps cheaper last year were $300 when I went to book the trip. We had to cancel our vacation, between that and the unknown of how much gas would be by August and our rapidly deteroriating financial situation.
“Had about a thousand in change extra per month, Dec/Jan starting spending more money without any new bills or change in spending habits. Figured out it's due to inflation and only job fields at this time that's keeping up, it fast food and trucking. So signed up for trucking class.”
Just the “average” $460, which presumably includes single people, would have cut almost halfway into this guy’s monthly savings and he was clearly living comfortably. He at least has the spirit of rolling with the times.
“I bought a big rig for 45k, its now worth over 90k so imma sell and come up. Also weed prices back east went up. So basically covid is making me richer.”
Spiraling prices are temporarily good if you’re on the right side of them. But think about what this represents in terms of discouraging entrepreneurship and productive economic activity. I also have an old rig I want to sell that it appears may be worth twice what I ever imagined. My house could probably sell in cash for well over twice what I paid for it, but where would I live? [Perhaps I could rent for a year and then buy a foreclosure, but that’s a big gambit and I love my house.] I also feel bad for the East Coasters, paying more for weed in this economy, because as the Fabulous Furry Freak Brothers famously said, “Dope will get you through times of no money better than money will get you through times of no dope.”
“The whole situation can be summed up in three words: “Putin Price Hike” ”
That one was intended facetiously, but I couldn’t resist sharing, as it looks so ridiculous compared to the real problems Americans are facing which are caused solely by our own government [though of course the Democrats messaging is to blame the general public for everything wrong with this country.]
Of course the economy didn’t come “roaring back to life,” because economies are not engines which can be turned off and on. Of course idling the general public and paying them in borrowed money to do nothing would never be affordable. You don’t have to be some sort of economist to figure this out. Everyone should have known it, but our incredibly irresponsible oligarchical ruling class was able to fool the dupes and bankrupt us for great gain. But I think they went too far and ate their golden goose. We will be dealing with the consequences of their lunacy for the rest of our lives if we can’t massively correct course in a positive way, and hopefully at least some of the consequences meaningfully reach the oligarchs.
Good luck out there, and enjoy what is good about these times while it lasts, because its about to be Venezuela up in this bitch. Hopefully, Americans are more prone to snatch back their freedom and prosperity.
[Please share your own experiences with the collapse in the comments.]
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