This is one of the biggest questions I get, and today I’m going to address this in detail. The West is collapsing — but what does that mean? What will happen, and when will it happen?

Before we get into the specifics of what may or may not happen, we need to cover the basics.

1. Don’t engage in “doomsday porn.”

Too many of you are doing this. We’re not going to experience some kind of Mad Max end-of-the-world scenario. I do not anticipate the kind of collapse that will see us stockpiling weapons and scavenging in caves. That’ s 2% Rule shit which means it’s not going to happen.

It’s also not going to happen tomorrow. We’ll talk about time frames in a minute, but I don’t anticipate a collapse this year or next year or anything like that. It will happen within our lifetime though, and that’s why we’re talking about it.

2. Don’t be naive or biased.

Don’t be one of those people who insists that everything will be probably fine. More left-wing men are often tempted to do this, as are non-Western men who have recently moved to the West to seek a better life. Regardless of your emotions or political views on this matter, the likelihood is overwhelming that United States and Canada will collapse within our lifetimes, and Europe is collapsing right this minute. It’s not a 100% certainty (nothing in life is), but the odds are overwhelming. To just blow this off and say everything will be fine forever is silly.

That brings us to our final basic point.

3. No one can precisely predict the future. Not me, not you, and not your favorite pundit.

Let me be clear about this — there is no way to accurately predict what will happen or when. Anyone who says (or even implies) they can exactly predict what will happen and/or when it will happen is either a psycho or is trying to sell you something.

I’m going to give you five possible scenarios detailing the way in which the Western world could collapse. I’m confident that one of the five will occur in our lifetime. I don’t know which it will be; I also don’t know exactly when it’ll happen because I can’t predict the future.

But what we can do is make educated guesses about the future. My educated guess — and I’m pretty sure I’m right — is included in one of these five scenarios.

Here these scenarios are, listed in no particular order of likelihood or severity.

Scenario One: Secession

This one is bad, but it’s probably the least bad, so because of that, I’m kind of hoping this is the one that happens. Secession is when smaller states or provinces start breaking away from their host-parasite relationships with their host countries or conglomerates, such as the United States or the European Union.

One example in the U.S. would be if the less left-wing states broke away from the rest of the country as the U.S. continues its decline. We’re talking about states like New Hampshire, Texas, and Alaska. They may break away and form their own countries. (I love it when Texas threatens to do that because it actually was its own country a long time ago.)

I don’t think this is very likely; I don’t think the states these days have the balls to detach themselves from the financial teat of the United States Federal Government or take on the U.S. military.

Outside the U.S., you might see places like Quebec secede from Canada. In Europe, you might see Catalonia secede from Spain. A few years ago, Scotland famously threatened to leave the UK, but they were full of shit and didn’t leave. Again, it’s really hard to say no to free money from a distant government, even if you hate it.

What we’ve seen when the Soviet Union collapsed is that some of those former satellite countries are doing really well, and some of them are not. Likewise, if the U.S. and Canada broke apart into a bunch of little countries, some of them would suck, and some would do pretty well.

Again, I don’t think this will happen, but it’s the least bad one, and it’s the one I’m hoping for.

Scenario Two: A Slow Decline

Four hundred years ago, Portugal basically ran the entire world. People don’t know that. Portugal was the naval superpower that everyone in the world was scared of. Eventually, it collapsed. Now, does that mean it’s gone? No, it’s still there. It’s this little flyspeck of a country on Europe’s ass that’s drowning in debt and the IMF has to keep bailing them out. They have no money, they run nothing, and nobody gives a shit about them anymore.

In 100 years or less, that could be the United States. The U.S. could wind up being this tiny country the size of Connecticut surrounded by Mexican or Chinese countries (many of which would be bankrupt too). The same thing happened to Britain; they used to run the world about 200 years ago, but they don’t anymore, do they?

So, it wouldn’t be a sudden collapse. It might just be a slow, constant decline that never rebounds, but doesn’t just crash one day. I don’t necessarily think this is the one that will happen (just look at what happening now to America in 2020), but it could, and it’s more likely than secession. The advantage with this scenario is that you have more time to get the fuck out.

Scenario Three: Currency Crisis

I think this is probably the most likely scenario to occur. Unfortunately, it also happens to be the scariest.

A currency crisis is when there’s a massive problem with the American dollar (and concurrently with the Canadian dollar and/or the Euro) in which the value of the dollar either skyrockets, which would be a deflationary crash, or the value collapses, which would be a hyperinflationary collapse.

One example of hyperinflation currency collapse is when China, Russia, India, and other countries stop using the U.S. dollar (which isn’t something they can do anytime soon). When they stop using the dollar, trillions of dollars start flooding back into the U.S., the value of the dollar collapses, and prices skyrocket. A loaf of bread at the store is now $300, and all the money you have in your 401k is worthless (unless you own gold or silver). Your real estate and other assets are also worthless — it’s a really bad situation.

Deflation is the opposite of inflation, and it happens when the value of your currency skyrockets instead of going to zero. In that scenario, there is some kind of huge crisis somewhere in the world (a war in Europe, a limited nuclear exchange between India and Pakistan, etc.), and the entire world floods to the U.S. dollar. The stock market bubble finally bursts, all the elite monetary organizations across the world run out of ways to fudge numbers, and the stock market crashes. The Dow might go from 25,000 to 5,000 (or even less). Stocks and commodities collapse; banks call in every loan they have and no one can pay them. These things would produce a crisis like the Savings & Loan collapse of the 1980s, but a hundred times worse. Everyone loses their homes and all the real estate they own. What remains of the manufacturing sector collapses and is gone for good. You get the idea — very bad.

Again, I think this is the most likely of the five, but it’s hard to predict.

Scenario Four: Totalitarianism

This is when you get some kind of evil, charismatic Hitler-type figure who assumes power in the U.S., Canada, or Europe through some type of coup. They shut down the borders, cut out most international travel, expel immigrants, civil liberties virtually disappear, and they even institute martial law in places.

I don’t think this is going to happen; most people are too beta for this kind of thing and the military is unlikely to support a Hitler-like maniac in most Western countries, even today. But, it’s possible, so I put it on the list just to be complete.

Scenario Five: War

This could be one of several different things.

First, let’s cover what it isn’t. There will not be a civil war in the United States. I want to be clear about this; people don’t understand the difference between civil war and civil unrest. In the U.S., which is in a state of collapse, you’re going to have a regular, constant state of civil unrest in cities all over the country, starting now (as I’ve talked about before). It’s just something Americans are going to have to get used to now. Europe too, and it will happen in Canada eventually as well, but it will probably happen there last.

That’s not civil war. Civil war means there are two military bodies (armies) armed with heavy artillery going to war against each other. That is not going to happen in the U.S. I can’t speak for Europe; that’s a little different.

What could happen — I would say most likely in Europe, but it could happen here — is that a country goes crazy and starts going to war against other countries. Putin might finally snap and start invading countries. The U.S. could overreact to some big issue overseas and counter in a way that’s disproportionate.

You could also have a conflict outside the Western world. Tensions are getting bad between India and China; tensions are always high between India and Pakistan; there are a lot of possible powder keg-type situations that could blow up. I don’t predict a nuclear war or another world war, however. Too many elites all over the world would lose too much, and they all know each other; I don’t see it happening. Instead, there are tiny proxy wars going on all over the world, and one of those could expand into something more significant. But again, I don’t think it’s super likely.

 

These are the five possibilities. A currency crisis is probably the most likely (probably inflationary), the second most likely is probably slow decline, secession is third, war is fourth, and totalitarianism is last.

It is your job as the Alpha Male 2.0 to prepare for any one of these scenarios. I am prepared for all of these. In fact, I would profit from a number of them. (I already have; have you seen the price of gold and silver lately? Fuck yes!!! Keep collapsing, America!!! Daddy wants a new house!)

I’ve said this a million times: The United States is going to collapse sometime during our lifetime and you can’t stop it. But if you’re smart, you can benefit from it. I know that feels weird; I am a proud American (in terms of what America used to be), and I love the people there, but I can acknowledge it is in decline. Europe will probably collapse even faster.

As always, the best course of action you can take is to move out of the Western world, though I realize most of you are not going to do that. Otherwise, set up your location independent international Alpha 2.0 business. That way, you’re very mobile and your income is not dependent on the Western world.

I don’t know when it’s going to happen; it won’t happen tomorrow or next year. Could it happen in five years? Maybe, but I doubt it. Ten years? Yes, it could. The COVID-19 crisis has probably taken 10 years off the lifespan of the United States.

If it happens in 20 years, you’ll start feeling the effects much sooner than that. Everything’s not going to be great and suddenly go to shit 20 years from now. We’re already feeling it now, aren’t we? It won’t be a long time off; it will be what I call “historically soon.”

So… prepare! Get ready!

128 Comments on “How Will The West Collapse?

  1. You have stated earlier that you don’t consider Scandinavia when you talk about “Europe”. What do you think will happen to Scandinavia?

     

  2. because the West is collapsing

    are there guidelines for the alpha male to buy property in the collapsing west?

  3. Have any ideas for an investment strategy that is a simultaneous “best compromise”  hedge for all scenarios? The best I can think of is Harry Browne’s Permenant Portfolio strategy. 25% in real estate/reit, cash/us paper, gold/silver, and blue chip stock

  4. https://www.davidmurrin.co.uk/blog-entry/the-trump-reset-part-ii-america-on-the-empire-curve-and-how-it-will-shape-trumps-policies

    The empire curve graph presented in the link above gives a pretty accurate estimation of when the United States will turn into a total shithole (circa 2050-2060 where it will hit its lowest point) with major warning signs appearing around 2020-2030. The curve also falls inline with a lot of the things you’ve said about the relative power of the
    United States historically (hitting its peak in the 1960s, collapse began around 1990 with the Gulf War but truly activated around 2001 with 9/11 being the marker of activation). Of course, the graph could be off by 1-2 decades but based on what we’ve seen so far the curve appears reasonably accurate. That should give everyone reading this blog plenty of time to hedge off their some of their savings into gold, silver, cryptocurrencies, and Asian stocks and get a second passport if they have the means to do so. Based on the curve, I personally can see the United States being an okay place to get basic needs (food, water, shelter, pussy) met for another 20 years but after that I’m not so sure.

     

    When they stop using the dollar, trillions of dollars start flooding back into the U.S., the value of the dollar collapses, and prices skyrocket. A loaf of bread at the store is now $300, and all the money you have in your 401k is worthless (unless you own gold or silver). Your real estate and other assets are also worthless — it’s a really bad situation.

    I’m a little confused as to how gold and silver are the only two things that are excluded from being worthless. If the USD hyperinflates, wouldn’t things like cryptocurrencies also skyrocket in value/desirability because their value isn’t tied to the US Dollar and they could possibly seen as an alternative currencies if the USD collapses in value and are much more convenient to perform transactions with compared to gold/silver? I can understand things like 401ks, US based real estate and stocks since their value is way too entrenched in the US financial system and USD. Also, how would international stocks (like Chinese stocks) factor into a USD hyperinflation scenario?

  5. You have stated earlier that you don’t consider Scandinavia when you talk about “Europe”.

    Incorrect. I said I don’t consider Georgia, Azerbaijan, and Armenia part of “Europe.” (One could make a similar argument for Turkey.)

    Scandinavia is most definitely part of Europe.

    What do you think will happen to Scandinavia?

    It will collapse. Your leaders and voters have lost their minds and you’re running out of oil in the North Sea. Get out.

    are there guidelines for the alpha male to buy property in the collapsing west?

    Only purchase real estate when it’s undervalued and you can put at least 50% down.

    Have any ideas for an investment strategy that is a simultaneous “best compromise” hedge for all scenarios?

    That is literally impossible. (How can one portfolio really cash in hard on both a deflationary and inflationary collapse, for example?)

    The best I can think of is Harry Browne’s Permenant Portfolio strategy. 25% in real estate/reit, cash/us paper, gold/silver, and blue chip stock.

    Yes, that is the closest you can get for the typical non-savvy investor.

    The empire curve graph presented in the link above gives a pretty accurate estimation

    Eh. I take those curve graphs with a grain of salt. I prefer hard economic data.

    of when the United States will turn into a total shithole (circa 2050-2060 where it will hit its lowest point)

    I think it will happen much sooner than 2050. But of course I could be wrong.

    United States historically (hitting its peak in the 1960s, collapse began around 1990 with the Gulf War but truly activated around 2001 with 9/11 being the marker of activation).

    Agree. USA peaked in the early 1960s, planted the seeds of its downfall in the 1990s, and the collapse officially began in the early 2000s during the GW Bush administration when he put US government growth on steroids (a policy continued by both Pussy Barack and Tantrum Trump). Yup. I’ve been saying exactly that for about 15 years and I’m confident future historians will agree with that assessment.

    I’m a little confused as to how gold and silver are the only two things that are excluded from being worthless.

    They won’t. I was just giving a quick summary, not a detailed economic analysis.

    If the USD hyperinflates, wouldn’t things like cryptocurrencies also skyrocket in value/desirability because their value isn’t tied to the US Dollar

    Yes, it’s possible and I’m pretty sure I said that in the video. I own a lot of crypto.

  6. What do you think will happen to Scandinavia?

    Unless there is a sudden 180degree reversal in all policies and without some serious foreign interference either a brutal and very bloody civil war or Scandinavia native population will get completely wiped out over the course of 20-30 years.

    it doesnt look like a policy reversal will happen so only thing that could possible remotely save you is invasion by foreing power like Russia.

    outside of Scandinavia the most severe are England part of UK, France and Belgium.

  7. Incorrect. I said I don’t consider Georgia, Azerbaijan, and Armenia part of “Europe.” (One could make a similar argument for Turkey.)

    My bad, I was referring to when you said you don’t consider East-Europe and Scandinavia when you talk about Western Europe.

    It will collapse. Your leaders and voters have lost their minds and you’re running out of oil in the North Sea. Get out.

     
    Even Norway (which is where I live) with the government fund valued at 10 trillion NOK?

  8. I’m a little confused as to how gold and silver are the only two things that are excluded from being worthless.

    real estate is never worthless especially if you live there and if you avoid countries that might have unrest or wars, agricultural land in stable countries and certain types of commodities are also good

    Also, how would international stocks (like Chinese stocks) factor into a USD hyperinflation scenario?

    China will likely have serious economic crisis its too connected to the west and too relient on it and their economy is a house of cards anyway. As for other countries its kinda like a cassino chosing the stocks. Id avoid stocks completely at this point i think.

    . That should give everyone reading this blog plenty of time to hedge off their some of their savings into gold, silver, cryptocurrencies, and Asian stocks and get a second passport if they have the means to do so. Based on the curve, I personally can see the United States being an okay place to get basic needs (food, water, shelter, pussy) met for another 20 years but after that I’m not so sure

    your definition of ok may not be other peoples ok. It may also be much harder to get out later on, with fewer places welcoming you or even your own government not wanting you to leave.

  9. Even Norway (which is where I live)

    Norway: A) Massive potential for civil unrest in the future as more immigrants pour in to take more welfare dollars and blue collar jobs, B) running out of oil soon, meaning your party is coming to an end, C) 2nd highest rate of drug overdose deaths in all of Europe (and getting worse… what does that indicate?), D) alcoholism rates very high and on the rise, and so on. Norway is going to collapse. Get the hell out of there or at least start your location independent Alpha 2.0 business with international income.

    your definition of ok may not be other peoples ok.

    That is one of the biggest challenges when discussing these topics. Some men are perfectly happy living in a shitty studio apartment with no car and no ability to travel as long as the local crime rates are reasonable and the internet is decent. These men won’t mind the collapse nearly as much as the other men who would hate to live like that.

  10. Get the hell out of there or at least start your location independent Alpha 2.0 business with international income.

    Noted. Thank you.

  11. I think that secession/partition is more likely than you think it is. The US has undergone the largest mass migration in history. Americans today have nothing in common; America is an unprecedentedly huge mess of opposing values and incompatible cultures. Historically, severely multicultural societies exist only while they’re held together by massive wealth; when the wealth goes, the empire breaks up. I don’t see how the US could avoid the same fate; it would be like if you held a flame to a bowl of gasoline and it didn’t burn.

    People get confused about this because the US isn’t a group of former countries held together in an empire like the USSR or the Roman Empire; rather, it’s a formerly ethnically homogeneous land mass where a bunch of foreign nations moved in. That doesn’t make it categorically different than Rome, though. The main difference is that the foreign nations are more geographically spread and mixed; but I think that will just make the partition more violent, not stop it from happening.

     

  12. BD, when you’re talking about collapse, what’s the overall point? Don’t live in the West? Don’t do too much business with the West?

    I don’t really get what such a collapse could entail for a specific Alpha 2.0 male. Some of your scenarios, such as totalitarianism and war, are local in nature. The man caught in this will have to flee and lose whatever business he had with people in the affected territory. For someone following the Alpha 2.0 principles, this is not a catastrophic event, and its probability is quite low.

    A slow decline, in my mind, doesn’t matter. Portugal is still an OK place to live for someone whose income comes from elsewhere. If it takes 400 years for the US to become what Portugal is now, then fleeing the country is not a pressing issue.

    Secession doesn’t really change much in itself, despite lots of people getting very vocal about it. Barcelona and Montreal are not going to become Hong Kong overnight.

    A currency crisis, on the other hand, is not a collapse of the West, it’s a worldwide crisis. There’s no scenario where bad things happen to the dollar and any country that’s currently on the rise does not stumble. The Asian growth is all due to their governments stimulating exports, if the West stops buying things they’re going to feel it.

    What decisions are you making based on your predictions that you would not have made in a world where you don’t expect the West to go down (but you’re still doing sensible Alpha 2.0 things)?

  13. I have no idea if the West will collapse in our lifetimes, but you reversed the burden of proof in your video. A person who’s skeptical of your predictions doesn’t have to provide evidence that the West will not collapse, you are the one who should back his claim. Which doesn’t mean it won’t, but reversing the onus is disingenuous.

  14. “I don’t predict a nuclear war or another world war, however. Too many elites all over the world would lose too much, and they all know each other;”

    That didn’t stop World War I from happening. Everyone on every side was sure they would be going home by Christmas. The elites are not immune to fucking up royally.

  15. BD, when you’re talking about collapse, what’s the overall point?

    Either move out of the West (which most people reading this won’t do) or if you choose to stay in the West for the rest of your life (yikes), make sure you have location-independent international income as well as currency-safe investments so that when the West collapses you’ll be more or less okay, instead of being fucked like everyone else.

    I have a follow-up video coming on exactly what the Alpha Male 2.0 needs to do if you choose to never move out of the West.

    What decisions are you making based on your predictions that you would not have made in a world where you don’t expect the West to go down (but you’re still doing sensible Alpha 2.0 things)?

    Mostly A) my investments and B) the regions of the world where my businesses are focusing on for future growth. (I would still move out of the USA even if it wasn’t collapsing, since my primary reason for doing so is taxes and cultural insanity, not collapse.)

    you are the one who should back his claim

    I already have, over at my other blog via numerous articles and links. Go through the archive there and read all about it. Compare this to men who say the West won’t collapse and then when I ask them for the same type of data I have shown for 10 years, they run away and don’t provide anything. What do you think that indicates?

    “I don’t predict a nuclear war or another world war, however. Too many elites all over the world would lose too much, and they all know each other;”

    That didn’t stop World War I from happening.

    The world was much different back in 1913. No internet, no heavy international banking like we have today, no globalization, very little outsourced manufacturing, no WTO, very few multinationals, countries didn’t own trillions of dollars of other countries’ government bonds, etc, etc, etc.

    A true-blue world war was “easy” 100 years ago. Today it would be extremely unlikely.

  16. I think that secession/partition is more likely than you think it is.

    That’s possible and hopefully you’re right. I’m just making educated guesses as to the percentage odds of that scenario.

    The US has undergone the largest mass migration in history. Americans today have nothing in common; America is an unprecedentedly huge mess of opposing values and incompatible cultures. Historically, severely multicultural societies exist only while they’re held together by massive wealth; when the wealth goes, the empire breaks up. I don’t see how the US could avoid the same fate; it would be like if you held a flame to a bowl of gasoline and it didn’t burn.

    Agree 100% with everything you just said, but you’re just describing why the USA is going to collapse soon, which it probably will. That doesn’t demonstrate why states will suddenly get the balls to secede. I maintain the contention that modern-day Americans are too lazy, beta, drug addicted, and left-wing (even many Trump supporters think “free” government health care and UBI are great ideas) to actually get the balls to break away from Mommy Federal Government. And of course I could be wrong.

    Of course once America collapses, then you will probably see pieces break away, yes, but the secession scenario I outlined above is when states start doing this before this happens. Probably unlikely (though it would be very cool).

  17. “When they stop using the dollar, trillions of dollars start flooding back into the U.S., the value of the dollar collapses, and prices skyrocket. A loaf of bread at the store is now $300, and all the money you have in your 401k is worthless (unless you own gold or silver). Your real estate and other assets are also worthless — it’s a really bad situation.”

    We don’t have to speculate about this.  For 3 decades gov’t/fed has printed trillions.  It’s almost all gone into investments.  That’s the only place it CAN go.  If you have extra billions in your account, you don’t go out buying bread and ipods.

    Research the history of the euro, conceived in the 60s and born around 2000.  Countries have been divesting from the dollar.  They bought shiploads of copper, aluminum, oil, gold, etc…  Consumer goods get bid up a little because some gov’t spending goes to it’s employees and welfare people.

    But I think we will have a great tell when danger is coming.  As you have said, europe/UK and japan are in far worse shape.  One or more of them will collapse first.  When they do, there will be a flood of scared money into dollars.  That will strengthen the dollar for a decade or more.  Giving us plenty of time to sell our investments and move out.   Sophisticated investors will press a button and turn their dollars into what ever currency is safer at the time.

  18. Sadly scenario 4 is where Victoria Australia is.

    In Melbourne atleast, can’t leave your house after 8pm or you get a $5000 fine. Can go out to exercise for an hour a day, can’t go further than 5km (3.1 miles) from your house or you get a $5000 fine, second time a $20,000 fine.

    If you’re going out for work you need a special ‘work permit’ to show if you get stopped by police.

    People have a protest and cops arrest old women for holding a sign and go overboard, even Avi Yemini, a reporter gets arrested violently as he’s one of the ones who actually tells the truth unlike other news channels. Some people simply post about organizing a protest on facebook and police come to their houses and arrest them, a pregnant woman, and another guy whos door they smash down and tackle him.

    That’s only a few of the things going on.

    And a few days ago Dan Jong Il our communist dictator was so kind to offer an extension of ‘you can go out until 9pm now and exercise for 9 hours’ like he’s giving a great fucking gift and somehow so many people are still supporting him and telling him he’s doing a great job!

    Anyone thinking of coming to Australia, avoid. Any potential it might have had on a list of places to move for freedom it’s gone way, way down.

    Still trying to work on my own stuff, but it’s challenging when I alternate between being motivated and “what’s the point if i’m not able to go out and do most of the things I was able to before”. 

  19. Sadly scenario 4 is where Victoria Australia is.

    No, you’re describing a temporary condition because of Covid. If all of these lockdown measures are still in place well after Covid, then you can say you’ve hit scenario 4.

    (By the way, I find it amusing to hear all of you Australians complain about how bad Australia has become when just a few years ago at my blogs and email Australians were telling me how great it was over there and how I was an “idiot” and a “stupid American” for pointing out all of Australia’s left-wing negatives.)

    Still trying to work on my own stuff, but it’s challenging when I alternate between being motivated and “what’s the point if i’m not able to go out and do most of the things I was able to before”.

    Because if you move out of Australia to a less unfree country you won’t have this problem the next time we have an emergency like this. (Pink Firefly and I keep enviously watching the social media of people in Arizona which is wide open right now; they’re even seeing movies in the movie theaters.) The sooner you get to work on this shit the sooner you can reap the benefits.

  20. So if I understand correctly, you think living in Vietnam, Cambodia or Colombia is better than living in NYC, LA, London or Paris. Am I correct?

    Also, are you going to renounce your citizenship to avoid paying taxes to the US?

  21. “Of course once America collapses, then you will probably see pieces break away, yes, but the secession scenario I outlined above is when states start doing this before this happens. Probably unlikely (though it would be very cool).”

    Yes, then I’m fully in agreement with you.

     

  22. So if I understand correctly, you think living in Vietnam, Cambodia or Colombia is better than living in NYC, LA, London or Paris. Am I correct?

    If by “better” you mean “not in an overpriced high-tax nation that is going to collapse in your lifetime,” yes. The problem is that everyone has a different definition for the word “better.”

    Also, are you going to renounce your citizenship to avoid paying taxes to the US?

    I’m not actively planning on it but I’m setting things up so that I at least have the option of doing so later if I need to (meaning I’m getting several other passports).

  23. if west collaspe is true , what sex will look like  in that scenario…..?

    are hot young women will submit to the rich -good looking alpha?  and these type of guy will get multiple mistress during hyperinflation socialism destruction .

  24. are hot young women will submit to the rich -good looking alpha?  and these type of guy will get multiple mistress during hyperinflation socialism destruction .

    its already starting to look that way a bit, most women I spoke to have at least one female friend who does or did sugar dating, and thats across different countries, age and social groups, though its mostly younger ones

    its def quite far from mainstream but its becoming normal, of course not every girl can get that because if yes it would mean all the guys are rich which is of course not gonna be the case

     

    instead you will see reduction in womens demands i think and going back to more classical old school dating. That fits with the getting the rich guy for money because that has always been the case for hundreds of years. I think sex wise women might become way less picky and seek more long term security (but also demand it way more) rather than attention and having the latest model like they do now.

    id say there wont be any easy quick lays unless youre rich (then youll be getting laid left and right and threshold for being rich might even be low) but the women will stay and be more submissive. Thats what i expect.

  25. Hey Caleb I just wanted to know if its better to wait for the newer version of the online dating guide or the one you have now still work in 2020? Thx you Amazing article!!

  26. if west collaspe is true , what sex will look like in that scenario…..?

    are hot young women will submit to the rich -good looking alpha?

    Remove good-looking from what you said and yes. In some from or fashion, younger women will start to gravitate more towards Alpha Males (with or without money) and men with more money (who will be in much shorter supply). Looks won’t play any more of a factor than they do now; perhaps even less. As someone else has said, this has already started to happen; older-man / younger-woman game is much easier now than it was 11 years ago when I started doing it.

    Being a beta male is really bad already, but those men who choose to remain betas in the Collapsing Future are going to be really hurting. Not smart.

    As I’ve said many times, FOR THE ALPHA MALE 2.0, THIS IS OUR TIME! Take advantage of it!

    Hey Caleb I just wanted to know if its better to wait for the newer version of the online dating guide or the one you have now still work in 2020?

    The new manual wont be done for a few more months (working on it now) so I would get the current version now and get started now unless you’re starving for cash. If you get the current one now you’ll get a big discount when the new book comes out too.

  27. Fascinating post, and I agree with most of it.

    I would add that the different modes of Great Society collapse are not necessarily exclusive of each other.  Historically,  one form of collapse has often lead to another; for example, the monetary collapse of the  late 1920s / early 1930s (including things such as hyperinflation in the Weimar Republic) greatly contributed to the rise of fascism in Europe and set the stage for World War 2.

    In my lifetime, I personally was grateful that the collapse of the USSR at the end of the Cold War was by fragmentation rather than by war; had the Secretary General of the USSR been someone other than Gorbachev and the first head of post-USSR Russia been someone other than Yeltsin, things could have turned out very differently.

  28.  the monetary collapse of the  late 1920s / early 1930s (including things such as hyperinflation in the Weimar Republic) greatly contributed to the rise of fascism in Europe and set the stage for World War 2.

    That’s not right.  The Weimar hyperinflation was ended in late 1923 with the introduction of a new mark.  Nazis came to power 10 years later after a decade of stable currency.  The driver there was deflation/depression/austerity …. just the opposite of inflation.

  29. Is there any western country that could actually improve from the overall collapse?

    For example, when sea dominant Portugal collapsed, Spain and UK picked up the slack and became powerhouse themselves.

  30. Is there any western country that could actually improve from the overall collapse?

    Western country, no. All Western countries are doing the same wrong things. Non-Western country, sure, but which ones would be hard to predict. (Vietnam? Colombia? Hard to say.)

  31. BD, Don’t underestimate the rise of totalitarianism. This time it wont be the rise of a Hitler. It will have a different flavor like the EU with unaccountable heads in Brussels or in the US with head of tech companies, billionaire “philanthropists, in bed with ‘deep state.

    It will nazi like: totalitarian, full big brother surveillance, restrictions on movement for “health and public safety reasons-hygiene”, forced medical treatments etc, but run by an unelected cabal who either makes themselves known or stays in the background.

  32. “That’s not right.  The Weimar hyperinflation was ended in late 1923 with the introduction of a new mark.  Nazis came to power 10 years later after a decade of stable currency.  The driver there was deflation/depression/austerity …. just the opposite of inflation.“

    You are correct on your timeline and I should have been more clear on this.  Having said that, I would remind you that the National Socialist movement was born in the 1920s in the context of the chaos in Germany that ensued after the armistice.  Few would argue that the economic policy failures of the Weimar Republic, such as the period of hyperinflation in the early 1920s, had nothing to do with appeal and eventual rise to power of the Nazi party.   After all, the Beer Hall Putsch, for which Hitler went to jail, happened in November 1923, the worst year of the hyperinflation period.

  33. It will have a different flavor like the EU with unaccountable heads in Brussels or in the US with head of tech companies, billionaire “philanthropists, in bed with ‘deep state.

    It will nazi like: totalitarian, full big brother surveillance, restrictions on movement for “health and public safety reasons-hygiene”, forced medical treatments etc, but run by an unelected cabal who either makes themselves known or stays in the background.

    We already have all that right now. And I agree it’s really bad. But it’s still not anything near North Korea.

  34. I would remind you that the National Socialist movement was born in the 1920s in the context of the chaos in Germany that ensued after the armistice.

    Unquestionably.  Turbulent political times because there was an armistice, rather than a total surrender of Germany, which allowed the militarists to claim they were not really defeated but rather “stabbed in the back” (similar to what modern American militarists like to say about the Vietnam War).  Also the combination of the Versailles treaty reparations and the French seizure of the Ruhr Valley resulted in a massive supply side shock which was the root cause of the hyperinflation.  But even after all of that, Weimar was relatively prosperous after 1923 until the great depression hit worldwide.  That’s the thing that allowed a radical right wing cult party to become the government.  The closest present day analogy to my mind would be to imagine it’s Jan 20, 2025 and we just swore in a president who embraced QAnon.

  35. Of course there’s an investment strategy that is a better hedge than most.

    No, it’s probably not real estate, and that is hyper-local and most at risk of the whims of a local warlord, hurricane, whatever.

    Is actually SKILLS. Learning skills that are applicable to producing wealth or value in a wide variety of societies. This is how you will generate money, or possibly even survive in a post-apocalyptic society.
    Having high-value, easy to transport stuff that always has decent value regardless of surrounding society. High-shelf booze, cigars, guns, gold. These won’t increase in value – they are a hedge I suppose.
    As for the majority of your wealth, well, you can’t really hedge against every scenario other than diversification. US currency, foreign currency, stocks, possibly real estate.

  36. “But even after all of that, Weimar was relatively prosperous after 1923 until the great depression hit worldwide.  That’s the thing that allowed a radical right wing cult party to become the government.”

    Agreed.  One does wonder, however, if the proliferation and appeal of fringe parties in Germany in the early 1920s would have happened if the economy had been booming rather than suffocating. After all, even extremists have to believe that they have garnered just enough popular support (or at least, acquiescence) to succeed in a coup d’etat such as the Beer Hall Putsch of 1923.

    It’s also interesting that, once the rot took hold, the relative economic stability post-1923 but pre-depression wasn’t  enough to extinguish it altogether.   Hitler, after all, didn’t just disappear after he got out of jail.  It may be that, once people have started to buy into extremist ideologies, they find it hard to completely let go of them.

  37. It may be that, once people have started to buy into extremist ideologies, they find it hard to completely let go of them.

    Right, you’ll never stamp those ideologies out completely.  Best you can do is avoid giving them red meat.

  38. “The closest present day analogy to my mind would be to imagine it’s Jan 20, 2025 and we just swore in a president who embraced QAnon.“

    …..who, perhaps, campaigned on a platform centered around saving the country from the threat of the radical left?

    It may not be as far-fetched as one might think.  In my observation, both the left and the right have become increasingly polarized since the end of the Clinton presidency and decidedly more so since the financial crisis of 2007-2008.  On the left, even the Sanders crowd admits that ideas that seemed far-fetched a few years ago have become mainstream.  On the right, we actually have some Republicans who don’t actually think QAnon is complete horse poop.  And on both sides of the aisle there is an abdication of fiscal responsibility; it’s no longer a question of deficit spending and further growth of the Federal government, it’s a question of how much and how fast.  It can only end in tears.

  39. For those of you don’t know California is a circus just like Florida, just if different ways. I’m sure the competition for who can virtue signal more with New York will get kicked up a notch soon.

    We are most def going to have some big changes here. Gavin Newsom recall effort is getting really big. So who knows!

    What I’m afraid of is if any Republicans get in charge now we have this QAnon bullshit to worry about.

    1. I can see our homeless population becoming a lot bigger.

    Our taxes are gonna go wayyy up and they’ll invent new taxes too. 
     More Climate Change shit which will taxes and cause more inconvenience (I was already pissed about the straws and bags)
    More so called Anti-Racist shit and all the stuff that comes with that. So Buckle Up
    A ton of Anti-Cop stuff with this whole De-Fund the Police thing they poppin off with at the exact same time they let out lots of prisoners and have mass unemployment

    What is your take Caleb? I seriously do think California may be the canary in the mine for the USA to decline 1st.. They may get their act together by seeing it?

    BUT YES Caleb you are right. I have finally seen the light on this. Everyone talks about how they want to move out of California because it sucks, but then complain that so many people are that it is turning States Purple. Which is probably a combination of California migrants and an ever increasing Progressive culture in the USA. SO YES if I decide to leave California I will just leave the USA because you can’t out run this Decline. EVERYONE in my State bitches about California, but doesn’t get it.

    Although I could see Texas before any other State leaving the Union. So they may survive all this. For the USA there are a number of possibilities… we can see a split like the Roman Empire did with the East and Western divisions or maybe an extreme culture shift which does not decline, but can make the USA unrecognizable.

  40. In my observation, both the left and the right have become increasingly polarized since the end of the Clinton presidency and decidedly more so since the financial crisis of 2007-2008. On the left, even the Sanders crowd admits that ideas that seemed far-fetched a few years ago have become mainstream. On the right, we actually have some Republicans who don’t actually think QAnon is complete horse poop. And on both sides of the aisle there is an abdication of fiscal responsibility; it’s no longer a question of deficit spending and further growth of the Federal government, it’s a question of how much and how fast.

    Correct and 100% accurate. More and more Americans on both sides have embraced irrationality and lost their minds. Reason #27 the USA is collapsing: Americans have become so irrational that they have lost the basic ability to solve societal problems.

    It can only end in tears.

    It will.

    More than people realize.

    What is your take Caleb?

    I’ve already said it several times and I haven’t changed my mind: California is one of the worst places in the world for the Alpha Male 2.0 to live. And I’ve been saying this for several years; for some reason people are only now waking up to this. Not sure why it took them so long.

    I seriously do think California may be the canary in the mine for the USA to decline 1st.. They may get their act together by seeing it?

    America is never again “getting its act together.” If/when California goes down most Americans will just blame Trump or something. And the economic destruction will continue.

    Everyone talks about how they want to move out of California because it sucks, but then complain that so many people are that it is turning States Purple.

    Red states will continue to turn purple no matter what ex-Californians do. Just watch. Remember, even today’s Republicans are left-wing.

    SO YES if I decide to leave California I will just leave the USA because you can’t out run this Decline.

    Good.

    Although I could see Texas before any other State leaving the Union. So they may survive all this.

    The only way Texas is going to survive is if they secede pre-collapse, which as I said above is very unlikely. Therefore it is not likely Texas will survive.

  41. it’s no longer a question of deficit spending and further growth of the Federal government, it’s a question of how much and how fast.  It can only end in tears.

    Well, as someone who was dragged kicking and screaming to MMT about 10 years ago, eventually accepting it as correct, I can’t agree with you there. Deficit spending is not a problem at all.

  42. “Well, as someone who was dragged kicking and screaming to MMT about 10 years ago, eventually accepting it as correct, I can’t agree with you there. Deficit spending is not a problem at all.“

    Really?  There’s no upper limit to deficit spending as a % of GDP in the long haul?  There’s no point at which the cost of servicing debt starts crowding out other economic activities?  How do you figure?

    I guess we’ll find out, won’t we.

    I do agree that deficit spending would probably be less of a problem if it didn’t go hand in hand with the large, long-term reallocation of resources from the private to the public sector due to unconstrained growth of government that we see in the United States.  But you can’t separate the two in practice, at least not here.

     

  43. Really?  There’s no upper limit to deficit spending as a % of GDP in the long haul?  There’s no point at which the cost of servicing debt starts crowding out other economic activities?  How do you figure?

    As a percent of GDP, no.  That is not really a relevant metric for a gov’t that is sovereign in its own currency (eurozone countries are not sovereign in that way, so different story there).   That’s why Japan can carry “debt” at 250 percent of GDP and it’s no problem at all …. nobody’s panicking about the Yen.

    The relevant limit to deficit spending is the amount of slack resources available to absorb that spending, nothing else.  Not percent of GDP.  Once you approach that limit demand-pull inflation can become an issue, but that’s something we haven’t seen in a long long time.

    As for crowding out …. you’ll have to define how you’re using that term exactly, but if you mean the notion that gov’t deficits drive up interest rates and thus discourage private investment … this has never actually been observed in a country with free floating fiat currency.  I can explain why if you want more depth.  Or if you meant something else let me know.

     

  44. “Paul, I just typed out a reply but I guess it was too long and got swallowed by the filters.  We’ll have to see if someone eventually releases it from comment purgatory.”

    I look forward to your reply.  You’re obviously a thoughtful, well-informed guy.

    Off topic…..Damn, Caleb, it’s a relief to find a site frequented by men who still think and act like men.  We may not agree on everything but at least we can respect each others’ opinions and express our own without triggering beta-spasms in our audience. (You know, the “oh my God how can you say that in 2020!  How insensitive to the (insert victim group du jour here)!”). If nothing else, being Alpha 2.0 at least means not being a perpetual victim of circumstance.

  45. I look forward to your reply.

    Allrighty, it’s there now, just above …. let me know if you want me to clarify or expand on anything further.

  46. That being said Caleb.. you were ONE HUNDRED percent right in the Decline predictions for years.

    I was skeptical at first..

    So major props to you.

     

     

  47. The relevant limit to deficit spending is the amount of slack resources available to absorb that spending, nothing else.  Not percent of GDP.  Once you approach that limit demand-pull inflation can become an issue, but that’s something we haven’t seen in a long long time.

    That’s a fairly bold statement, don’t you think?  It ignores the role that the people buying these debt instruments play  in the system.  At some point, investors start to lose confidence in government’s ability to repay.  I will grant you that there is no magic % of GDP at which it happens and that there is an enormous reserve of confidence in the US government and the dollar, but at the same time, why would you believe that the capacity to issue more debt is essentially infinite?

    As for crowding out …. you’ll have to define how you’re using that term exactly, but if you mean the notion that gov’t deficits drive up interest rates and thus discourage private investment … this has never actually been observed in a country with free floating fiat currency.  I can explain why if you want more depth.  Or if you meant something else let me know.

    That is in fact what I meant, but I would caveat your statement.  It has never *yet* been observed in a country with free flowing currency.   All that tells me is, we are entering unexplored territory without a road map to guide us.  We don’t know what the tipping point will be or if there’s one at all, but do we really want to find out the hard way?

    Not that it matters….MMT theory is being put to the test, since there is no willpower in Washington to reduce deficit spending, let alone balance the budget. I hope you are right.  But I fear that the point at which MMT breaks down will be a federal debt  so large that the process of righting the ship will be painful beyond anything we’ve ever experienced before.

  48. Hey Ken, I’ve tried replying twice but my replies don’t post.

     

    I hear what you are saying and much of your argument is persuasive.  However, we are entering uncharted fiscal waters and all that the MMT argument tells me is, if there’s a point at which US federal deficit spending and debt drag the economy into the toilet, it’s at numbers much greater than previously thought.  I will grant you there is no magic % of GDP at which it would happen but surely that number is not infinite….even for the United States.

  49. I hear what you are saying and much of your argument is persuasive.  However, we are entering uncharted fiscal waters and all that the MMT argument tells me is, if there’s a point at which US federal deficit spending and debt drag the economy into the toilet, it’s at numbers much greater than previously thought.  I will grant you there is no magic % of GDP at which it would happen but surely that number is not infinite….even for the United States.

    For those of you who dont understand the problem with MMT or are sceptival of Calebs arguments I suggest to look up International Man from Dough Cesey, to me the justiffications they give in their articles are completely clear and logical and it explains a lot of stuff that is happening and also with why in quite some detail.

  50. For those of you who dont understand the problem with MMT or are sceptival of Calebs arguments I suggest to look up International Man from Dough Cesey, to me the justiffications they give in their articles are completely clear and logical and it explains a lot of stuff that is happening and also with why in quite some detail.

    Good suggestion, thanks.

    To me, the most persuasive evidence that elements of MMT may have some truth to them is the observation that the stimulus packages the Fed put into place in the wake of the 2007-2008 crisis did not trigger a major inflationary cycle.  So far, neither has the stimulus package enacted this year in the context of COVID.  Granted, both of those crises had strong deflationary pressures in play but even so, helicopter Ben’s Fed did not in fact trigger a major inflationary cycle.  And I’ll grant that much of MMT has visceral appeal, especially  because it tells the Ocasio-Cortezes of the world and the defense spending hawks that they can continue to run up federal deficits and debts to unprecedented levels and that, as long as we remain below full employment, this fiscal approach won’t trigger inflation.

    The biggest problem I see with MMT lies in the assumptions.  One big one that I find implausible is that the holders of sovereign debt will simply sit back quietly  and not start demanding risk premiums on government-issued debt while government continues to rack up debts to unprecedented highs,.  I will grant that it hasn’t happened yet and that there’s no magic percentage of GDP at which we can predict it would happen, and that the number is probably much higher than previously believed, but I don’t think it’s infinitely high.  Investors simply aren’t that coldly rational.

    Likewise, MMT proponents are notoriously evasive about what happens if a supply-push inflationary event occurs (say, a sudden large drop in the oil supply caused by a political event).  One answer is that the government could simply raise taxes to reduce the money supply and curb inflation.  I am deeply skeptical the US Congress would be willing to do this in the middle of an economic crisis.   They’d be voted out of office at the next election..

    Let’s carry this to a logical extreme:  If MMT is true, then the government could, in theory, reduce marginal tax rates to zero and print all the money it needs to run, and as long as we are below full employment, this somehow wouldn’t trigger a major inflationary cycle, a loss in confidence in US Treasuries, or a run on the dollar.  I find that implausible.

    However, I’m willing to be persuaded otherwise and I’m curious as to how Ken would address these critiques.    Ken?

  51. but surely that number is not infinite

    It is not, and no serious MMT economist has ever claimed that it is.

    One big one that I find implausible is that the holders of sovereign debt will simply sit back quietly  and not start demanding risk premiums on government-issued debt while government continues to rack up debts to unprecedented highs,

    Well, for one thing, there is no actual need to issue gov’t securities at all.  Certainly not $ for $ with deficit spending.  The fact that we still do so is a holdover from the Bretton Woods era and the gold exchange standard.  In actuality, those securities are a benefit to their holders and their most important function is to serve as a safe place to park large amounts of money.  Like a savings account without the FDIC insurance limit.  That’s why they get snapped up even at negative real interest rates.  Look at Japan … 250 percent “debt” to gdp and Japanese Gov’t Bonds still get sold as fast as they can print them.

     

  52. Likewise, MMT proponents are notoriously evasive about what happens if a supply-push inflationary event occurs (say, a sudden large drop in the oil supply caused by a political event).

    They talk about this sort of thing all of the time.  Here’s a random example from Billy Mitchell from some years back …. scroll about half way down where he starts a section on supply side issues.

    http://bilbo.economicoutlook.net/blog/?p=13035

    One answer is that the government could simply raise taxes to reduce the money supply and curb inflation.

    That actually wouldn’t be the right move in that case.  If the price of oil gets jacked up, that’s really a relative value story as opposed to an inflation story, even though it will show up as inflation in the cpi.  The real answer there is that we have to accept that oil and oil derived products are more scare and thus more expensive and proceed from there.

  53. That being said Caleb.. you were ONE HUNDRED percent right in the Decline predictions for years.

    I know.

    I was skeptical at first..

    Most people are and that’s normal. It’s too emotionally painful for people to admit. It also conflicts with a lot of strongly held political beliefs. (If you’re a conservative, how can you declare that doing X will save your country when you’re country is already fucked no matter what you do? Your brain just can’t do that. If you’re a left-winger, how you say the country is going to collapse while saying at the same time we can spend all the money we want and everything will be fine? Again, your brain just can’t do that. The reality of Western collapse is incompatible with many strongly-held political convictions.)

  54.  If MMT is true, then the government could, in theory, reduce marginal tax rates to zero and print all the money it needs to run

    No, there would have to be enough of a tax liability in society, denominated in US dollars, to support the value of the currency.  That’s ultimately what drives a fiat currency … the fact that the gov’t demands it, and nothing else, back in payment of taxes.  You can’t pay your taxes in gold, bitcoin, whatever … you need the $$.

    Furthermore, as you stated, the policy space isn’t infinite.  Once all real resources are employed the only way for the gov’t to spend more without just driving up prices is to create that policy space by taxing away some of that spending power from the private sector.

  55. That is in fact what I meant, but I would caveat your statement.  It has never *yet* been observed in a country with free flowing currency.   All that tells me is, we are entering unexplored territory without a road map to guide us.

    This “crowding out” thesis is a consequence of neo-classical economics. The reason that we don’t actually observe this is that, according to MMT, gov’t spending spending comes first, and then bond issuance come after.  So the gov’t spends essentially by creating money (aggregating the Treasury and the Fed together as “the government” for the moment … we could unpack that but it’s a more complicated discussion), and then taxing some of it back, and trading some of it for bonds, notes, and bills.  So in the end, the money to pay for these gov’t securities actually *comes from the government*. It’s a wash, and doesn’t compete with private funding.

  56. BD, your ideas are interesting and worth looking into, but with online misinformation being so rampant, my inclination is to be skeptical.

    I trust your advice on women, self improvement, and goal setting because I’ve seen definite proof of your theories working in my life.

    However, when it comes to big, theoretical political scenarios, why should I trust you? I’m not saying that you’re wrong about any of this stuff, but everywhere you look these days there’s a guy claiming that he knows the answers, and frankly, you don’t have the formal education or expertise required to set you apart from any other con man hawking an e book. Your points make sense intuitively, but these issues are complex, and just because an idea feels right doesn’t mean its reflective of reality.

    Can you recommend any academic works or research supporting your claims? Even if this is real, I don’t think a short online article is enough to educate me on the underlying principles at play here.

  57. However, when it comes to big, theoretical political scenarios, why should I trust you?

    You don’t have to. Regarding Western collapse I’m not here to convince you. As I’ve said many times, if the data you’re seeing shows that he West will be just fine over the next several decades (muffled laughter), then great, ignore my content and carry on.

    Can you recommend any academic works or research supporting your claims? Even if this is real, I don’t think a short online article is enough to educate me on the underlying principles at play here.

    Go here for scores of articles, stats, data, and links I’ve already written over the past 10 years. And again, I’m not here to convince you. Make up your own mind.

  58. The reality of Western collapse is incompatible with many strongly-held political convictions.

    Well, this is trivially true, given that strongly held political convictions are of the form “I am a proud member of the Magenta Tribe, our tribe can do no wrong” and “Death to all Teal infidels”.

    “The current crisis is best addressed by such and such policy changes” is not a political conviction.

    However, when it comes to big, theoretical political scenarios, why should I trust you?

    Personally, I think Caleb is overblowing it somewhat, including the word “collapse”. But the advice he gives, make your business location-independent, diversify the hell out of everything, is solid regardless of whether a collapse is impending. “Make sure you have location-independent international income as well as currency-safe investments so that when the West collapses you’ll be more or less okay” he says. You don’t even have to trust him specifically, because unlike relationship management, business advice is not taboo and is easy to come by from multiple reputable sources. And if the question you’re pondering is whether to move from a Western country to some other place, then a major factor would be that most Western countries are stagnating now and some non-Western places are growing rapidly now, which is quite uncontroversial.

  59. Well, Ken, you certainly present powerful arguments and you’ve persuaded me that there are elements of MMT that are likely correct.  Certainly the US economy can tolerate much larger federal debt and deficits than was previously thought to be the case.  What the limits of MMT theory are, meaning, whether there is a debt/deficit level at which its predictions break down (short of full employment) remains to be seen. Our brief experience with high deficits/near full employment before COVID hit would seem to support MMT but the duration of the experience was relatively short and as you pointed out, we are nowhere near the debt-to-GDP ratio of, say, Japan.

    Regardless, we as a nation are embarked on a test of the theory.  If it is correct, great, but if it’s wrong – and I’m not alone in my skepticism of MMT – and the holders of US debt decide to bail at some point, the results would likely be rather painful, especially if the breakdown occurs in the form of a panic and not simply a progressive imposition of a risk premium on Treasuries over time.

    Bubbles are great until they burst.  Let’s hope that MMT predictions are correct and that prosperity under eternal federal deficit spending isn’t just a bubble.  I fear that it is.

  60. and the holders of US debt decide to bail at some point, the results would likely be rather painful, especially if the breakdown occurs in the form of a panic and not simply a progressive imposition of a risk premium on Treasuries over time.

    I think a paradigm shift is required here.  Funding the US deficit is not dependent on any bond market.  As I said, there’s really no operational requirement to issue bonds at all (in practice, just having the Fed snap up the bonds would amount to the same thing as not issuing them, since the Fed remits all of its interest profits back to Treasury).  The gov’t doesn’t depend on bond investors …. it is the other way around … these investors depend on the gov’t to issue these safe assets and even pay interest on them.  They also love to use these assets to serve as collateral for repo deals and such.  The gov’t bonds are a form of welfare for people who already have money.  They don’t actually need to be issued.

  61. in practice, just having the Fed snap up the bonds would amount to the same thing as not issuing them, since the Fed remits all of its interest profits back to Treasury).  The gov’t doesn’t depend on bond investors …. it is the other way around … these investors depend on the gov’t to issue these safe assets and even pay interest on them.

    What you are describing sounds like Quantitative Easing on steroids….. Plus growth hormone….  With a shot or two of Adrenalin added just for good measure.  How is that not inflationary?

    More importantly, I can’t imagine a political scenario in which the government announces that it’s going  to stop issuing debt instruments to individual investors and actually succeeds in doing so.  Such an extreme paradigm shift would be fought politically  from every conceivable direction, including foreign governments.

  62. More importantly, I can’t imagine a political scenario in which the government announces that it’s going  to stop issuing debt instruments to individual investors and actually succeeds in doing so.

    You’re right, but it doesn’t really matter.  I didn’t mention this because I thought that was actually going to happen …. I was just illustrating the direction that the dependency arrow points.  It’s the private sector that has built all of its financial practices around these assets and depends on them.  In practice I think we’ll probably continue this corporate welfare program for the foreseeable future.

     

  63. How is that not inflationary?

    Because it’s just an asset swap .. it doesn’t really add money to the economy.  US Gov’t bonds are really just like giant savings accounts (ok, really a negotiable CD) … anyone holding them will find it easy to sell them anytime they want and buy stuff with or without the fed.  But they don’t, because these are savers and not spenders.

    Swapping bonds for cash balances is effectively the same as moving money from savings to checking.  So what?  Doesn’t automatically result in inflation.

    Or in other words, the bonds are in a real sense already “money” … but in savings, not checking account.

    And this is exactly why you don’t see inflation from QE.

  64. I might as well make one more point here …. for the same reason the QE doesn’t cause inflation as described above, it doesn’t do much of anything to stimulate the economy either.  It’s really just ineffective but it makes it look like the Fed is “doing something”.  It’s the only tool in their belt but it’s mostly useless.

    QE is, in fact, slightly *deflationary*.  It is not stimulative, but it does remove a stream of interest payments from the gov’t to the private sector because all of the payments are remitted by the Fed back to Treasury.  So it functions more or less like a tax and actually removes money from the real economy.

  65. QE is, in fact, slightly *deflationary*.  It is not stimulative, but it does remove a stream of interest payments from the gov’t to the private sector because all of the payments are remitted by the Fed back to Treasury.  So it functions more or less like a tax and actually removes money from the real economy.

    Ok, I can see that, provided the QE is limited to federal debt instruments and does not involve the purchase of private bank debt instruments by the central bank.

  66. Ok, I can see that, provided the QE is limited to federal debt instruments and does not involve the purchase of private bank debt instruments by the central bank.

    Yes, that particular point would apply only to those assets … you are right.  And I’m impressed that we got to this somewhat advanced concept …. usually these discussions devolve into insanity before I make it that far 😉

    On edit … I take that back. If the Fed acquires any interest bearing asset from the private sector, those interest payments will flow to Treasury, again removing that income stream from the economy.

  67. So Ken, even though you are extremely persuasive, I’m still left with important objections –

     If we agree that the US cannot politically rid itself of individual investors in Treasuries, then the confidence of those investors in the system does matter and the psychological effects of running high deficits and debts do come into play, no matter what MMT may say.
    Similarly, in the long run, the kind of deficit spending we are engaged in risks undermining international confidence in the value of the dollar.  A substantial decline in the value of the dollar, were it to happen slowly, might not be too dismal, as it would probably result in the return of low-skilled jobs to the U.S. and assuming that we can raise productivity to a degree that softens the fall (and I think this likely), we’d probably be OK or even prosper.   At the other extreme, a run on the dollar would be catastrophic, and we’d probably drag down the rest of the world economy with us.  I’m not confident that rational self-interest alone would prevent major holders of US currency from dumping it if they saw its value rapidly falling…which is why these kind of events are called “panics.”

  68.  If we agree that the US cannot politically rid itself of individual investors in Treasuries, then the confidence of those investors in the system does matter and the psychological effects of running high deficits and debts do come into play, no matter what MMT may say.

    Well, say if the Bank of China decided it didn’t want to hold treasuries anymore, and stopped rolling them over, then the Fed would simply credit the BOC’s reserve (checking) account and debit the BOC’s treasury (savings) account.  So far no big deal.  Now your move China …. what are you going to do …. buy stuff from us?  The horror 😉 Really, it comes back to my point that these instruments are a gift to their holders because of the benefits the confer.  If they someday decide to shun that gift … shrug.  The Fed can just buy them up.  Easy Peasy.

     

  69. At the other extreme, a run on the dollar would be catastrophic, and we’d probably drag down the rest of the world economy with us.  I’m not confident that rational self-interest alone would prevent major holders of US currency from dumping it if they saw its value rapidly falling…which is why these kind of events are called “panics.”

    For one thing, the rich investors who hold those instruments know perfectly well what the deal is even if they don’t call it “MMT”.  When you’re holding that much money it tends to focus your mind on what is real as opposed to ideology.  They know the USG always has the monetary capacity to pay them. Ask Warren Mosler (and he actually will respond to you on twitter btw) … that’s the world he came from.

    Now if everyone in the world does go nuts and decides they suddenly don’t like their dollar denominated deposits anymore, sure that would drive down the exchange rate and make imports more expensive.  It would also disrupt the supply chains of companies like Apple and force them to rejigger things.  So there would be a short term disruption but ultimately the United States is both food and energy sovereign and the foreign sector is only about 20 percent of our GDP.  So we’d embark on a strategy of import substitution which is exactly the we used to recommend to developing countries that faced such issues (before the Washington Consensus took over all the policy wonks).  Ultimately we’d be fine.  But that’s just a thought experiment … it isn’t going to happen.

  70. Paul, ultimately you haven’t completely made the paradigm shift I alluded to earlier (and I know it isn’t easy) … you’re still coming from the mindset that the financial well being of the USG depends on these financial people and keeping their confidence.  Whereas the reality is just the opposite … The USG is perfectly capable of being self financing and doesn’t need to issue bonds at all if it didn’t want to.  We could even repatriate all of the ones already in existence and thus erase the so-called “national debt” and it would be just fine.  These instruments are a *gift* to the financial class …. there’s no such thing as a perfectly safe asset in the non-gov’t world that pays a positive rate of interest.  And they can’t get enough of them.  One of the reason that the financial industry invented complicated multi-tranch products like CDOs was in an attempt to generate something at least close to the quality of a gov’t bond …. because believe it or not, there were not enough of those to go around compared to the demand for them.

  71. Hi Ken,

    My point is, the effects of a drop in the value of the dollar would depend materially on how fast it happens and under what circumstances.  I agree, a slow decline is no big deal and may actually be healthy.  A large sudden drop, as in a panic…not so much.

    As for saying that a run on the dollar could never happen….While we can’t predict when panics / busts will happen, we do know a thing or two about the circumstances that set the stage for them.  I would argue that, psychologically, running up the national debt stratospherically through deficit spending is one such circumstance.  Maybe not now, with federal debt “only“ at about 105% of GDP, but what about 10 years from now on the current trajectory?  20?  If for no other reason, it’s doubtful (to me, at least) that a government addicted to currying favor with the electorate through deficit spending will suddenly decide to quit when full employment, which even staunch MMT advocates say should be the endpoint of money supply expansion, is achieved.

    As an aside….when you talk about disrupting “only” 20% of the economy, you’re talking about $4 Trillion 2019 US dollars.  That’s more than the entire sum of the US healthcare sector and hardly what I would call  chicken feed.   And that’s only counting direct effects; the effects of a sudden loss of value of the dollar on supply chains would reverberate system-wide.

    MMT-based policy has truth to it and it sounds great until you look at its failure modes and their consequences.  Then things can get rather terrifying.

  72. As for saying that a run on the dollar could never happen….

    Actually, what I said is that it *won’t* happen, which is different from “could never”.  Maybe a good place to invoke Caleb’s 2 percent rule 😉

    Maybe not now, with federal debt “only“ at about 105% of GDP, but what about 10 years from now on the current trajectory?  20?

    There is no upper limit on this “debt”, because all the so called gov’t debt is is the savings of the private sector and the rest of the world.  If at some point, the private sector no longer wants to “save” and to start spending instead, then the gov’t would want to reverse its stance and start running surpluses instead of deficits.  That discussion is part of MMT.

    There is an upper limit on the annual deficit … that is, current spending … and that limit is the inflation constraint.

  73. As an aside….when you talk about disrupting “only” 20% of the economy, you’re talking about $4 Trillion 2019 US dollars.  That’s more than the entire sum of the US healthcare sector and hardly what I would call  chicken feed.

    Right, in my thought experiment that would bring about a significant disruption for a while, but it wouldn’t kill us.  We could recover from that (again it won’t happen … lol) Anyway, the foreign sector wouldn’t actually drop to zero … just some fraction of that 4T.

  74. Caleb, thanks for providing a forum where men can discuss things like this.  It’s probably the only place on the internet that doesn’t devolve instantly into crazy rants, insults and conspiracy theories.  BTW, I enjoy a good conspiracy theory once in a while, but they depend on mind reading rather than rational thought.

    I think most of us agree there won’t be a currency crisis worth worrying about.  Secession doesn’t matter because the states that would secede are becoming socialist just like the rest.  War and totalitarianism are less than 2% likely.  That leaves slow decline.

    Lately, I’ve been so bored I’ve been streaming an old TV show “The West Wing”.  It’s about liberal politicians back in the early 2000s.  I’m not recommending the show.  It sucks.  But it’s interesting to be reminded that 20 years ago our liberal democrats would be considered more conservative than republicans today.  They were concerned with balanced budgets, respect for the police and military, listening to both sides of an argument, respecting religion without necessarily agreeing with it, etc…

    The social decline is very jarring with a historical yardstick like this for comparison.  I’ve never seen a time when friends and even family members can’t sit down and talk without losing their shit and hating each other.  It’s like most people are reverting to childhood and having temper tantrums when mom says no more candy today.

  75. Paul wrote:  At the other extreme, a run on the dollar would be catastrophic, and we’d probably drag down the rest of the world economy with us. I’m not confident that rational self-interest alone would prevent major holders of US currency from dumping it if they saw its value rapidly falling…which is why these kind of events are called “panics.”

    Economic theory keeps wrongly predicting currency/debt crashes because it doesn’t consider human psychology.  Most european and japanese debt has been bid to negative yields because investors cannot get enough of them.  Debt to GDP is not a concern to these investors.  They are willing to take a guaranteed loss just to get most of their money back later.  They are flocking to treasuries because at least it pays something, rather than nothing.

    If you are worried about this, ask yourself what will they panic to instead of dollars, yen and euros?  The China yuan?  Very unlikely while they’re still a dictatorship.

     

  76. Economic theory keeps wrongly predicting currency/debt crashes because it doesn’t consider human psychology.

    Yes, that’s because mainstream economic theory … which is basically neoclassical synthesis, sucks and is bad at predicting anything.

  77. If you are worried about this, ask yourself what will they panic to instead of dollars, yen and euros?  The China yuan?  Very unlikely while they’re still a dictatorship.

    Don’t get me wrong, I’m not predicting an outright run on the dollar and I agree that it falls under the 2% rule and furthermore that a run on the dollar would be extremely irrational behavior.

    Of course, that’s precisely why these type of Black Swan events are called “panics.”: Fear and irrationality become the order of the day, and they are hard if not impossible to model, since most economic theories fundamentally rest on the idea that behavior *on average* can be modeled by assumptions of  rational, enlightened self-interest…including MMT.

    What I *am* saying is that unconstrained deficit spending sets the stage for a whole host of potentially bad outcomes, of which a run on the dollar, though unlikely (and probably fairly far into the future We’re it yo happen) is one.  The more likely bad outcome, in my view, is that once the government buys into the idea that deficits don’t matter at all, they will continue running them well past the end-point that even MMT advocates say should be the stopping point (I.e., accelerating inflation in the context of full employment).  Once you abandon the idea of fiscal discipline, you have opened Pandora’s box, and the pleadings of economists – even MMT advocates – to rein in spending will carry very little weight as compared to the pleas and demands of voters not to cut back on their benefits and entitlements.

  78. The more likely bad outcome, in my view, is that once the government buys into the idea that deficits don’t matter at all, they will continue running them well past the end-point that even MMT advocates say should be the stopping point (I.e., accelerating inflation in the context of full employment).  Once you abandon the idea of fiscal discipline, you have opened Pandora’s box, and the pleadings of economists – even MMT advocates – to rein in spending will carry very little weight as compared to the pleas and demands of voters not to cut back on their benefits and entitlements

    I notice that this “fiscal discipline” only comes into play when social programs are at stake …. when it comes time for war or to bail out the airlines or whatever …. it’s no holds barred.

    Also, MMT does not hold that “deficits don’t matter at all”.  They can be too large as well as too small, and in some cases, fiscal surplus is actually called for.  What MMT does say is that deficits should be the right size to balance the economy, not the budget.  That’s because the gov’t as currency issuer has a different set of prerogatives and responsibilities than everyone else, who are currency users.

  79. Caleb, thanks for providing a forum where men can discuss things like this. It’s probably the only place on the internet that doesn’t devolve instantly into crazy rants, insults and conspiracy theories.

    You’re very welcome.

    I think most of us agree there won’t be a currency crisis worth worrying about.

    Huh? Who is “most of us?” You mean Ken? i.e. one guy in this entire thread?

    Secession doesn’t matter because the states that would secede are becoming socialist just like the rest.

    Incorrect. Your statement would be correct if instead you said, “Secession is unlikely because the states that would secede are becoming socialist just like the rest. ” If a state actually seceded pre-collapse it would mean it was not socialist, since a socialist state would never secede in the first place.

    War and totalitarianism are less than 2% likely.

    Completely incorrect, particularly war. Even totalitarianism, which I consider unlikely, I wouldn’t put at less than 2%, or else I would not have mentioned it.

    That leaves slow decline.

    Pre-Covid I would have said that perhaps slow decline was the most likely. But now? After the government has pumped an additional five trillion dollars into the economy just in the last few months while almost a third of renters in America can’t pay their rent and mass amounts of small companies are going to be permanently be put out of business? No, I don’t think so (but again, none of us can tell the future so I could be wrong).

    The social decline is very jarring with a historical yardstick like this for comparison. I’ve never seen a time when friends and even family members can’t sit down and talk without losing their shit and hating each other. It’s like most people are reverting to childhood and having temper tantrums when mom says no more candy today.

    And yet you think slow decline is the most likely collapse scenario…

    I think you’re making my point for me.

    If you are worried about this, ask yourself what will they panic to instead of dollars, yen and euros?

    Many of them will panic into gold (and similar instruments). Hint hint.

  80. I notice that this “fiscal discipline” only comes into play when social programs are at stake …. when it comes time for war or to bail out the airlines or whatever …. it’s no holds barred.

    Unfortunately you are correct; that is also how I see it playing out in Washington and the devil’s compromise has been for the Democrats not to mess too much with defense spending and for the Republicans not to mess too much with discretionary social spending.  And of course, no one really wants to mess with entitlements.  The result is enormous and vastly inefficient expenditures on the part of the federal government on programs (both military and social) that no longer serve their original purposes or missions.  I suspect one place where you and I both agree is that the public sector’s use of economic resources is, on the whole, less efficient than the private sector’s and that, accordingly, the sheer size of the public sector in the West is more problematic than the magnitude of the deficits it runs.

    What MMT does say is that deficits should be the right size to balance the economy, not the budget.

    Another point where you and I are essentially in agreement, though that’s not how I’m seeing it play out in practice.  I think I’m simply more pessimistic than you are about the US government’s ability to calibrate fiscal policy to match the needs of the economy.

    And that brings us back to BD’s original point, which is, the United States truly seems to have lost the ability to calibrate its collective social actions to meet its needs and challenges.  MMT says that we may have more time than we think before the day of reckoning and that it might not come in the way mainstream economists think, but it doesn’t say that we have a free pass to make bad choices indefinitely.  And unfortunately, our ability to make good ones definitely seems to be below where it needs to be.

  81.  I suspect one place where you and I both agree is that the public sector’s use of economic resources is, on the whole, less efficient than the private sector’s and that, accordingly, the sheer size of the public sector in the West is more problematic than the magnitude of the deficits it runs.

    I don’t completely agree with that … in some areas it’s true and in others not.  There’s a lot to unpack there, and that would be another whole discussion.

    I think I’m simply more pessimistic than you are about the US government’s ability to calibrate fiscal policy to match the needs of the economy.

    You would be right if that calibration had to be done in real time via legislation.  It would be impossible.  That’s why most MMT economists recommend a Federal Job Guarantee as a macro stabilizer.  This idea, which we can unpack further if you want, would work to automatically “right-size” the deficit at any given time to avoid the need for such manual calibration.

  82. but it doesn’t say that we have a free pass to make bad choices indefinitely

    Ok, but MMT is a description of how the system that we have actually works. Widespread understanding of that system by legislators, officials, and policy wonks is more likely to lead to good choices than ignorance, right? Not that there are any guarantees 😉

  83. I don’t completely agree with that … in some areas it’s true and in others not.  There’s a lot to unpack there, and that would be another whole discussion.

    OK, I’ll bite.  Give me an example (or two) of an area were you think the Federal Government should grow further.  I have my own list, I wonder if they overlap.

    You would be right if that calibration had to be done in real time via legislation.  It would be impossible.  That’s why most MMT economists recommend a Federal Job Guarantee as a macro stabilizer.  This idea, which we can unpack further if you want, would work to automatically “right-size” the deficit at any given time to avoid the need for such manual calibration.

    Right, so, the government would have a Federal Job Guarantee that could, in theory at least, expand or contract as economic conditions demanded.  Except, that’s not how it would actually work in the U.S.  Once implemented, it would become politically impossible to scale it back and all it would ever do is grow.  For God’s sake, we’re talking about a government that was still stockpiling helium decades after the military was no longer planning to build fleets of airships for offensive operations.  Also, there would be no incentives to maintain the productivity of this Federally Guaranteed Workforce at anything remotely close to what would be demanded in the private sector.  And let’s not even get started on the loss of political freedom such a program would create.

    Again, MMT sounds great on paper and there’s enough truth to it to take it seriously.  Unfortunately, it doesn’t look quite so wonderful once reality rears its ugly head.

  84.  That’s why most MMT economists recommend a Federal Job Guarantee as a macro stabilizer.  This idea, which we can unpack further if you want, would work to automatically “right-size” the deficit at any given time to avoid the need for such manual calibration.

    Except, once implemented, the pressure would be on for it NEVER to contract and even if the political will could be mustered to do so, deciding whose job would be first in line to be cut would become a political spectacle of the first order.   Plus, there would be no incentive for FJGs to be anywhere near as economically productive as they would be in a job that didn’t have a federal guarantee behind it.

  85.  

    Huh? Who is “most of us?” You mean Ken? i.e. one guy in this entire thread?

    People who say stuff like that or who say that this stuff is a conspiracy theory…  I just wonder, what evidence they have that is not going to all collapse? Show us some evidence and data that its all going really well.

    War and totalitarianism are less than 2% likely.

    Again, based on what data or evidence? The increasingly violent and angry mobs, the increasingly divided countries with extremely polarized views that dont respect each other, the fact that we in many cases dont have countries anymore but multicultural empires which by definition can be kept without fighting only by huge prosperity or totalitarianism? And this keeps getting exponentially worse every year? Seriously where do you get these ideas? Have you watched any news over the past 5-10 years?

     

    I don’t have time to read all those posts disussing MMT but are you guys seriously even implying that that its something that is working instead of something that will cause the collapse of everything (which I think is obvious to the rest of us)?

  86. I don’t have time to read all those posts disussing MMT but are you guys seriously even implying that that its something that is working instead of something that will cause the collapse of everything

    Yes

  87. AlphaOmega wrote:  Show us some evidence and data

    Easy.  The fed just printed trillions and nothing bad happened.  In 08-09 same thing.  Every market hiccup since Greenspan.  Same.  The gold selling sites said we would be Zimbabwe if they did that.  Nope, dozens of times.  But do they ever change their tune?  Doesn’t seem so.

    Look at interest rates.  Never this low in centuries.  That means investors are buying up bonds.  The exact opposite of what scare mongers write daily.  We should be in hyperinflation according to them.

    The increasingly violent and angry mobs, the increasingly divided countries…

    Again, easy.  War is armies fighting each other.  Which of these mobs have an army?  People hitting each other with beer bottles doesn’t fit the definition.  Now you show evidence.  Who is even raising an army?  If some mob is buying up fighter jets and tanks I might start to worry.

    I know the TV news people are saying Trump will declare himself dictator any day now.  How would they know that?  Are they mind readers?

    Congress impeached Trump, and a simple vote of the senate could have removed him from office.  If he was going to make himself king, wouldn’t that have been the time to do it?  Every day news people call him a Russian traitor.  Have you thought about what a dictator would do?  If you went to China and said that about the communist party you would disappear.  Not that I have any love for Trump, but name some of his enemies that have disappeared.

  88. The fed just printed trillions and nothing bad happened.

    Because they just did it a few months ago. These things take time to measure. At my other blog I’ve said many times that printing trillions whenever there’s a problem does help in the short-term. I’m always discussing long-term ramifications. I don’t give a shit about the short-term.

    In 08-09 same thing.

    Incorrect. All kinds of bad things happened after they printed that money. Nominal wages took a nosedive (and if your answer is “what about inflation?”, the MMT argument is that there has been no inflation, so you can’t have it both ways). Nominal wage gaps increased. Workers percentage of corporate earnings tanked and has never really recovered. Government welfare spending as % of GDP spiked and is still much higher. And on and on. A few charts here but there’s a lot more data than that.

    I’m sorry, but all kinds of bad things eventually happen when you brazenly print trillions of dollars out of thin air every time there’s a problem. Not immediately, but eventually.

    The gold selling sites said we would be Zimbabwe if they did that.

    That is correct and I’ve pointed this out at my blogs myself many times. Unfortunately there are many libertarians, economic Austrians, and gold bugs who have been making very stupid, hysterical predictions about this since the 1980s. They’re correct on some of the basics but on the specifics they are wrong and will continue to be wrong. This is why I’m not for a gold standard but rather think some money printing should be allowed as hard formula with some basic limits. As usual, extremists on both sides of the issue are wrong.

    But none of that means printing and pumping trillions of dollars into an already collapsing economy whenever the fuck you think you need it is “perfectly fine” and “nothing bad will ever happen.” That’s factually incorrect and hilarious. It’s still a very bad idea in the long-term.

    Look at interest rates. Never this low in centuries.

    Artificially low due to government mandate, not free market flow. And how do you think people with lots of money in savings that they need for retirement feel about these artificially microscopic interest rates when they used to be getting 8% and now they’re getting 1%?

  89. All kinds of bad things happened after they printed that money.

    Post Hoc fallacy.

    Nominal wages took a nosedive

    No they didn’t … look at the graphs you linked again.  They increased at a rate below a target metric based on previous recoveries. MMT economists are well aware of the metrics that you linked, but have a more convincing explanation for them.

    but rather think some money printing should be allowed as hard formula with some basic limits

    That was what Milton Friedman advocated.  The Fed experimented with something like this in 1981 in response to his ideas  …. it didn’t work out too well and they had to back off.

    It’s still a very bad idea in the long-term.

    In the long run we’re all dead.

    Artificially low due to government mandate, not free market flow

    Fed generally targets one key rate …. the overnight interbank lending rate.  And lets auction markets sort out the term structure of rates from there based on time and risk.  MMT would argue that this essentially risk free rate really ought to be zero or close to it, and that anything higher than is “artificial”.

    And how do you think people with lots of money in savings that they need for retirement feel about these artificially microscopic interest rates when they used to be getting 8% and now they’re getting 1%?

    They’d rather get the 8 percent, duh.  Because everyone likes free stuff.  And that’s what an 8 percent rate on a risk free asset, like an FDIC insured bank is ….. free money flowing to people who already have money.  If they want the 8 percent now, they have to risk their capital by investing in something else.  Isn’t that how things should work in a market economy?  Reward based on risk?

     

     

  90. Isn’t that how things should work in a market economy? Reward based on risk?

    Fuck yes. Which is the direct opposite of the system you’re advocating for.

  91. Fuck yes. Which is the direct opposite of the system you’re advocating for.

    ?  I’m advocating no free money to people just because they already have money.  If they want to grow their stash they need to accept market risk. Which is why I believe that the risk free natural rate of interest is, in fact, zero.

  92. Incorrect. All kinds of bad things happened after they printed that money.

    Thank you for correcting my imprecise language.  Your article was about specific collapse scenarios.  I thought we were discussing the currency collapse scenario.  I meant that despite trillions in printing there has been no currency collapse.   We have long term data on this.  If I am reading you right we seem to agree on that.

    You are correct in stating that the recent printing may be too recent for us to know the outcome.  I don’t want to make this too long.  There are other bloggers who are pointing out that the fed balance sheet has not grown for a couple of months.  If that is true, then the bond market is a good indicator of demand for treasuries.  I could be wrong, because this is a complicated issue and it would be foolish to think we really have any clue what elite bankers are doing everywhere.

    I was not arguing MMT, either for or against.  I have no opinion on that.  I think that would be a good subject for another article.

  93. I meant that despite trillions in printing there has been no currency collapse. We have long term data on this. If I am reading you right we seem to agree on that.

    Correct, I agree. I have never said nor even implied that America’s collapse would occur before 2020. Indeed I’ve said the opposite many times, that America will likely be “okay” for quite a while (before it collapses).

    I was not arguing MMT, either for or against. I have no opinion on that. I think that would be a good subject for another article.

    Cool, but not here. As I stated several weeks ago I’m not doing articles on politics anymore. America is fucked and most people on the left or former right don’t really seem to care, thus aren’t interested in changing their opinions nor political strategies. Let the MMT guys vote for Biden (ha!) and let the anti-MMT guys vote for Trump (ha!) and I’ll be far away laughing my balls off at the madhouse dumpster fire my former country has become.

  94. You are correct in stating that the recent printing may be too recent for us to know the outcome.

    I don’t agree … I think if we injected too much the effects would be obvious by now.  In reality the demand side collapse due to the virus has been enormous and I think what we’ll find is that even more is required to fill the hole. As well as the backstop defaults on rents, mortgages, etc.

  95.  Let the MMT guys vote for Biden (ha!) and let the anti-MMT guys vote for Trump

    Funny I think that Trump may have better instincts regarding MMT than Biden.  Not that he actually knows the theory, but being a money/real estate guy there are certain things he probably intuitively grasps that Biden doesn’t. (Disclaimer: I hate Trump).

  96. ?  I’m advocating no free money to people just because they already have money.  If they want to grow their stash they need to accept market risk. Which is why I believe that the risk free natural rate of interest is, in fact, zero.

    I assume you mean zero real interest rate, not zero nominal?    Or do you think that risk-free investments should carry a negative real interest rate?

    As for advocating “no free money to people just because they already have money.”  Capital is a commodity, with value in its own right.  If someone wants to use it, that’s great, but they rightfully should have to pay for the privilege.  That is true even if the borrower is government.  The same thing holds for power tools – if you happen to need a brick cutter to build your patio, you can go to Home Depot and rent one, but Home Depot is under no moral obligation to loan it to you for free just because they happen to have one (quite the contrary, they in turn owe it to their shareholders not to loan it to you for free because they are tying up shareholder capital on the form of the value of the brick cutter itself).  The only people I know of who argue otherwise are way on the deep end of the Marxist pool, and we know how that economic theory plays out in practice.

  97. I assume you mean zero real interest rate, not zero nominal?    Or do you think that risk-free investments should carry a negative real interest rate?

    Zero nominal.  Although Treasury does offer a product (TIPS) that will protect you from inflation …. I won’t complain about that for people who want to take advantage of it.

    As for advocating “no free money to people just because they already have money.”  Capital is a commodity, with value in its own right.  If someone wants to use it, that’s great, but they rightfully should have to pay for the privilege.  That is true even if the borrower is government.

    Sure, I get that framework.  Time value of money and loanable funds theory and so forth.  It is an integral part of the neoclassical view.  MMT takes issue with this view. Because that isn’t really how it works in the modern banking and payment system (something which MMT has quite a good deal to say about and would itself be the subject of another deep dive). When you put your money in a savings account, you’re not really tying it up and you can get it out pretty much any time (maybe some restrictions, but not significant).  Similarly, the Treasury market is so liquid that you can cash out any time even though the securities have a nominal duration.  So really what these instruments are giving you is a safe place to park your funds.  Adding in an interest payment on top of that is just welfare.

    Ok, I’ll admit it’s a little more complicated than that. There is a duration risk on long bonds and some rate of interest to compensate for that is ok … that’s why we have a term structure of rates. The Fed lets the market determine those rates. But surely the rate on very short term securities or the FFR should be zero.

  98.  The only people I know of who argue otherwise are way on the deep end of the Marxist pool,

    Most Marxists hate MMT.  For example Doug Henwood.  The pushback from them tends to be more fierce than the pushback from libertarians.

  99. I meant that despite trillions in printing there has been no currency collapse. We have long term data on this. If I am reading you right we seem to agree on that.

    What you dont realize is that the dollar has already collapsed. Just check the real value of dollar 50 and 100 years ago. That is a collapsed currency. It also directly correlates with the much worse economic situation for the average guy now compared to say the 60s.

  100. But surely the rate on very short term securities or the FFR should be zero.

    “Surely”?  Why do you believe that?  Even for a minimal risk, short-term investment, there’s still opportunity cost for the investor as well as transaction costs.  At zero nominal (negative real), you are asking the investor to pay the government for the privilege of using the money.  The fact that the instrument is liquid is irrelevant since liquidity of government debt instruments is a function of what other investors are willing to do.

    My view is that market forces, not a priori theoretical constructs, should be the prime determinant of bond interest rates.

  101. “Surely”?  Why do you believe that?

    What makes you think he believes that? I would say the opposite. My experience is people who start a sentence with “surely” arent sure at all.

    You all are also failing to address the social aspects of a collapse. Just look at the dissolution of family structures and attitudes of women and dating in general. Compare that to say 60s and you will see we already have a collapse. I pointed out something similar before and BD’s response was that people dont realize they cant stop the collapse because its already collapsed.

  102. At zero nominal (negative real), you are asking the investor to pay the government for the privilege of using the money

    Paradigm shift required here it that the gov’t doesn’t actually need the investor’s money, and the gov’t is not actually “using” their money. If it chose to, gov’t could actually fund its deficits through overt monetary issuance and not create any bonds at all.  What the gov’t is actually doing is providing the convenience of safe storage.  Money sitting in treasuries is really the base case for analysis …. there is no “opportunity cost” involved.  This is the money sitting on the sidelines of the economy, waiting for opportunities that the investor believes will be sufficiently profitable and worthy of the risk involved.

    In the neoclassical paradigm, you would be right, because in that model money never actually sits on the sidelines and is always being used by somebody somewhere.  But neoclassical economics doesn’t turn out to be very good at describing the real world.

  103. Just check the real value of dollar 50 and 100 years ago. That is a collapsed currency.

    I’m not living in the 50 or 100 years ago, I’m living in the here and now, and the dollar functions for me just fine as a currency. I don’t really care what one dollar would have bought me in 1920 …. I care what all of my dollars can buy me today.

  104. It also directly correlates with the much worse economic situation for the average guy now compared to say the 60s.

    Post Hoc Fallacy.

  105. Post Hoc Fallacy.

    how?

    it demonstrates how the society and economy are getting progressively worse. I would say a definition of a collapse.

  106. how?

    Things definitely were better in the economy for a great many people in the goldilocks period from the end of WW2 up through the early 70’s.  Your post implied (at least to me) that you thought that the end of this era was somehow caused by dollar inflation.  We could have a long discussion about why we are where we are today vs back then, but dollar decline would not be on my list.

  107. Things definitely were better in the economy for a great many people in the goldilocks period from the end of WW2 up through the early 70’s.  Your post implied (at least to me) that you thought that the end of this era was somehow caused by dollar inflation.  We could have a long discussion about why we are where we are today vs back then, but dollar decline would not be on my list.

    I would say the dollar decline is a rather a symptom of the decline not a cause. There are several causes but one of them are the monetary policies.

  108. As the West is collapsing the rest of the world is westernizing to various degrees. The whole world is on its way to becoming Western Civilization with different cultural flavors. Some countries may look good now because they are where the West was in the 50s and 60s. But, they are all going on the same path as the West. None is striking out on a new path. They will all follow the West at regular intervals.

  109. I don’t agree with any of the collapse theories. They are too conventional, ie, readable.  People are playing draughts when they are playing Chess. The ones that will destroy all people and civilization wherever they are are off kilter, blind spot attacks. Aside from a complete collapse due to the phantom virus they they have closed the world for, they have plans to have a universal income but electronically administered.

    Which helps explain why the cabal of bankers that run the central banks have allowed crypto-currencies to operate.

    They have also, back in 2015 decided at a global G8 seminar to bail out the banks in case of a collapse, such as the one being caused by the so called Covid virus. And to implement it they had decided to do a haircut on savers, so that the savings in the bank of the citizens can be stolen. It explains Clinton’s repeal of Glass-Steagall in the ’90s and them testing it out, on a small scale, I think Cyprus or Greece 5 or 6 years ago.

    And the other aspect is that they will have a mandatory vaccine or a person won’t be able to travel, work or go out. They’ve already instituted a host of mandatory vaccines in Europe, Australia, the US, Canada and a host of other countries. First it was babies, then pregnenat mothers, frontline support such as hospital staff, soldiers, police. It was only a matter of time when they cast the net on all people of all ages in all regions.

  110. As the West is collapsing the rest of the world is westernizing to various degrees. The whole world is on its way to becoming Western Civilization with different cultural flavors. Some countries may look good now because they are where the West was in the 50s and 60s. But, they are all going on the same path as the West. None is striking out on a new path. They will all follow the West at regular intervals.

    Accurate. Most of the Eastern world is now becoming more Western, both the good (more civil rights, a little more individualism, rising standards of living, etc) and the bad (skyrocketing divorce rates all over Asia and India, etc).

  111. AlphaOmega wrote:  What you dont realize is that the dollar has already collapsed. Just check the real value of dollar 50 and 100 years ago.

    It is widely quoted that the dollar lost 85-95% of it’s value vs 100 years ago.  But that is deceptive marketing.  Productivity and wages increased much faster.  How do I prove that?  Easy.  We have a much higher standard of living.  Now even our poor people have cheap food, water, iPhones, cable, cars, a/c and every kind of appliance.

    In many ways rich people of 100 years ago would be envious of our lifestyles today.

    It also directly correlates with the much worse economic situation for the average guy now compared to say the 60s.

    As they say, correlation isn’t causation.  I would argue globalization did that.  The average guy’s manufacturing/union job moved to the 3rd world.  But you explain how the dollar/fed caused that and I can be convinced.

  112. It is widely quoted that the dollar lost 85-95% of it’s value vs 100 years ago.  But that is deceptive marketing.  Productivity and wages increased much faster.

    Yes, exactly, which is why I said that I don’t care about what a dollar would buy me in 1920 … I care about what all of my dollars will buy me today. Libertarians, goldbugs, and crypto enthusiasts love to break out that graph though.

  113. It is widely quoted that the dollar lost 85-95% of it’s value vs 100 years ago. But that is deceptive marketing. Productivity and wages increased much faster.

    Incorrect. As I’ve described many times over at my other blog, men in the 50s, 60s, and even 70s at low incomes could support an entire family on just their single income alone. Today’s men at low incomes can’t even support themselves, and usually need a roommate or live with their family (as well as the fact that a dreadful 48% of the US population is on some form of government assistance, and that’s pre-Covid!). My dad was a low-income worker in the 1970s and was able to (albeit barely) support a family of seven on just his meager income alone with no aid from government or family members whatsoever. Is that possible today for a low-income man? It’s laughable. Thanks to our reduced purchasing power.

    How do I prove that? Easy. We have a much higher standard of living. Now even our poor people have cheap food, water, iPhones, cable, cars, a/c and every kind of appliance.

    In many ways rich people of 100 years ago would be envious of our lifestyles today.

    Correct, because of technological growth, not because of increased purchasing power of our currency. I’ve said before the two things, and only two things about the Collapsing West that have dramatically improved in my lifetime is that technological growth has been great and crime rates have gone way down. Yes, our technical standard of living is much better than the 1920s thanks to technology and the last remnants of capitalism left in the tech sector prior to the last decade or so. And that’s great! But if you seriously think that’s because the US dollar has gotten stronger (ha!) then explain what I said above about low-income men now vs. then.

  114. Is that possible today for a low-income man? It’s laughable. Thanks to our reduced purchasing power.

    That explanation doesn’t make sense.  Prices in 1975 (since you mentioned your dad in the 70’s I will roll with that year) were about 1/5 of prices in 2020, but the same thing goes for incomes.  So someone with an income of $100,000 in 2020 would make $20,000 if we moved them back to 1975.  So relative purchasing power of a dollar then vs now isn’t what determines quality of life or ability to support a family. In either case your ability to do so isn’t about what one of your dollars can buy, but rather about what all of your dollars can buy.

    But if you seriously think that’s because the US dollar has gotten stronger (ha!) then explain what I said above about low-income men now vs. then.

    Neither of us claimed that the dollar has gotten stronger …. each dollar is worth about 1/5 of what a dollar would have been worth in 1975.  But once again, it’s not what one dollar will buy, but what all of your dollars will buy.  In this case they will buy things that nobody even dreamed of back then.

    We can analyze the reasons why we see far fewer single male breadwinner households now vs then, but “reduced purchasing power” of the dollar wouldn’t be one of them.

  115. As I’ve described many times over at my other blog, men in the 50s, 60s, and even 70s at low incomes could support an entire family on just their single income alone.

    Feminism caused this.  Working women basically doubled the workforce.  You double the workforce and you depress wages.   Families were doing absurd things like spending wifey’s entire salary on day care, because she insisted on being modern.

    Then it happened again in the late 80s.  Globalization forced American workers to compete with 4 billion poor Asians willing to do the same work for a bowl of rice.

    During these times high wage union manufacturing jobs almost completely disappeared.  Laid off workers had to settle for service jobs paying much less, with fewer or no benefits.

    I would argue all of this would have happened without a fed interfering with the dollar or bond rates.  Of course we can’t go back and try it a different way to prove it one way or another.

    Incidentally, this is productivity.  Same amount of work being done, but now businesses only have to pay a fraction of the labor cost.  CEOs took credit for that and paid themselves a million a month plus stock options.  There is the wage disparity socialists love to complain about.  Again, nothing to do with the fed and everything to do with a more competitive labor market.

  116. Now to be fair I have to argue against myself.  I just described why wages stagnated.  Financialization of mortgages, college loans and health care drove up costs.

  117. Perhaps not civil war in the classic sense, but when unrest hits critical mass in any large city or region, then the line between unrest and war becomes blurred.

    If the city you live in is under siege by violent rioters, and the civil authority does nothing to curtail or stop the violence, then it is only a matter of time before regular citizens are forced to use their stockpile of weaponry to defend themselves. Once that begins, then open battle in the cities becomes more likely, as the police disappear and the fedgov remains impotent to take action.

    In taking the last few months into account, where this nation has plummeted so far down the rabbit hole of open aggression by the elite against the normal everyday citizen, I do not believe in the “slow gradual destruction” theory any longer.

    In my opinion, the presidential election has a 50/50 chance of devolving into massive unrest or open battle in most if not all of the major cities in America. If Trump wins, the last 6 months will seem tame compared to the reaction of the extreme left. If Biden wins, the program that will be forced upon us will be so radical, that a violent reaction has a high likelihood of happening.

    The population may be comprised of wimps and betas, however, there are many millions of regular folks who possess uncounted numbers of weapons, and stockpiles of ammo. So far, they have too much to lose by resorting to aggressive force, but, as the decline accelerates, there will be less restraint on their behavior as they see civil authority abandon the basic social contract to protect life and property, such as it is.

    My hope is that we experience a total systemic collapse sooner rather than later. This would wake people up. Those who experience a fast collapse will still be around to rebuild and resolve things correctly. The past is only relevant to those who lived through it. A fast collapse would have obvious causes, and obvious solutions. Immigrants who escaped tyranny to live in America can tell you all about living through it. Until America collectively lives through hell, there will be no chance to restore basic principles that contribute to a free, vibrant culture.

    Just my opinion.

  118. Again, nothing to do with the fed and everything to do with a more competitive labor market.

    Yup, pretty much.  And combine that with credit innovations that facilitated people going into debt to maintain consumption.

  119. In my opinion, the presidential election has a 50/50 chance of devolving into massive unrest or open battle in most if not all of the major cities in America.

    I agree that if Trump wins the election the odds are very good there will be a noticeable spike in civil unrest all over the Collapsing USA.

    Thankfully I will be moving out of the USA almost exactly 3 months after election day (Feb 9th 2021), so I don’t care.

  120. Stephen – I never said currency devaluation was the only reason for the noticeable drop in purchasing power since the 70s. Women entering the workforce, globalization, etc, are also strong factors I have discussed before. I said money printing was a strong contributing factor, because it is.

    But I’m sure you and Ken are right. Artificially pumping trillions upon trillions of dollars into our economy for decades I’m sure has caused zero ill effects. Cool, keep doing that. I’ll be far, far away soon…

  121. Thankfully I will be moving out of the USA almost exactly 3 months after election day (Feb 9th 2021), so I don’t care.

    I rent, I have enough money to live comfortably the rest of my life.  I can pack my bags and go anywhere planes fly on 2 hours notice.  So I don’t care either.

  122. I’m quite surprised to see the passion and interest in this post. 125 responses! Compared to only 25 on how to effectively manage a divorce. For most people posting, marriage and divorce are far more of a clear and present danger to their lives. Sure, be aware of political and economic developments and how they could impact your life … but for most people, the threats are far more likely to come from a stupid decision you make regarding your personal life, at least in the near future. For most people posting, this seems to be a way of focusing on external factors instead of on the issues over which you have most control.

  123. I’m quite surprised to see the passion and interest in this post. 125 responses! Compared to only 25 on how to effectively manage a divorce. For most people posting, marriage and divorce are far more of a clear and present danger to their lives.

    Political topics (or in this case, topics related to politics) always get more engagement. The problem is that they aren’t profitable. (That’s why I’ve completely stopped writing articles about politics and instead am focusing 100% on how-to articles.)

  124. Political topics (or in this case, topics related to politics) always get more engagement. The problem is that they aren’t profitable. (That’s why I’ve completely stopped writing articles about politics and instead am focusing 100% on how-to articles.)

    How do you know these articles don’t engage enough trafic which results from sales later?

  125. How do you know these articles don’t engage enough trafic which results from sales later?

    I’m sure there’s a trickle of sales that come in that way, but a trickle isn’t worth my time.

    Plus, I’m a hardcore libertarian, and everyone (left and former right) hates libertarians, which means statistically I am far more likely to turn away a prospective new customer with my political views than to convert them.

  126. One example in the U.S. would be if the less left-wing states broke away from the rest of the country as the U.S. continues its decline. We’re talking about states like New Hampshire, Texas, and Alaska. They may break away and form their own countries. (I love it when Texas threatens to do that because it actually was its own country a long time ago.)

    Unfortunately, driven by mad will-to-power as they are, the ones who hold the knife by the handle won’t let the others go their way peacefully. We just have the record of what the Northern USA did to the Southern USA to draw our forecast from. After all, they still madly hang on to the narrative that the Southern side was evil, and its flag is still forbidden today, and why is that? Because still today, they’d be very ready, maybe even eager and hoping to, do the same again.

    ZBut I’m sure you and Ken are right. Artificially pumping trillions upon trillions of dollars into our economy for decades I’m sure has caused zero ill effects.

    Well, so far as you can intimidate everyone else in the world into pretending that your currency still has the same value as ever, it will work. Intimidation and subjection are the two foundations of the American money-printing policy.

  127. We just have the record of what the Northern USA did to the Southern USA to draw our forecast from. After all, they still madly hang on to the narrative that the Southern side was evil, and its flag is still forbidden today, and why is that? Because still today, they’d be very ready, maybe even eager and hoping to, do the same again.

    That’s correct and you might be right, but men today are not the men of the 19th century. You’d have to convince modern-day men in the armed forces to fire upon and kill other Americans in mass numbers. I don’t see that as super likely to occur (but I could be wrong).

    Well, so far as you can intimidate everyone else in the world into pretending that your currency still has the same value as ever, it will work.

    For a time, yes. But forever?

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