The horizon is not so far as we can see, but as far as we can imagine

The Ongoing Depression Which Started in 2008

Back in 2009, I said that the bailout and inadequate stimulus would cause a depression which would last for at least a generation. I got a lot of the details wrong (inflation happened only in areas of interest to the rich, for example, till now) but that there would be a depression (ignored, by and large), oh yes.

How Bailing Out The Rich Caused a Depression

The Bailout Caused The Sucky “Recovery”

Bottom line is that in a capitalist system, people who make bad bets are supposed to go bankrupt. Other people get their assets at fire-sale prices, and those people see if they can do better. The entire financial industry, essentially without exception, made bad bets in the 2000s. They lost trillions, and they would ALL have gone bankrupt, even the ones, like Goldman Sachs, on the winning side, because the counter-parties would not have been able to pay. (A non-government bailout winning strategy would have involved huge positions in money and assets that go up in crises.)

When the stock market crashed in 29, the Fed did not bail everyone out. For generations that’s been assumed by many to be a mistake. It wasn’t. Government policy after the crash was a failure, but not keeping companies in business that should have gone bankrupt was the right thing to do, and it set up the recovery and good times you see in the chart above.

(I am fundraising to determine how much I’ll write this year. If you value my writing and want more of it, please consider donating.)

We’re in a depression. We’ve been in a depression since 2008. Even “good years” have been shit. No one has re-ignited the economy, and it can’t be done while oligopolies rule the land, and private interests own government. This is the same mistake, by the way, that the Japanese made when their market crashed in the 80s, leading to what was called the “Bright Depression.” (Which is the analogy I used most often back in 2008/9 for what was to come.)

The anti-trust movement is absolutely essential to ending this. It’s not all that’s required: the power of the rich has to be shattered; they have to be forced to take their losses, and the Fed and Treasury (and foreign central banks and governments) have to stop propping them up.

Central banks have printed trillions keeping the rich afloat in the past 13 years. The entire economy, including the Chinese one, are, as my friend Stirling Newberry once noted, like patients on life support: they breathe fine, as long as we keep the power hooked up.

If we had let the rich lose everything, bailing out only those firms endangered thru little fault of their own, and used the opportunity to shatter the great oligopolies, then applied effective government support, we’d be doing far, far better now (notice the recovery from 29 starts in the 30s.)

And, since the smartest policy would have been a huge green buildout (something I was calling for back in the early 2000s) we’d also be in a better place with respect to climate change. Covid would have been handled better as well, since it wouldn’t have made Billionaires 70% richer in a year and a half, thus making it impossible for government to actually handle it properly, again, because government is owned by rich people and Covid is good for rich people.

You can have a good economy, or you can have a lot of billionaires. You can have a good economy, or you can have unregulated oligopolies. You can have a good economy, or you can have a government bought and owned by the rich. You can, as Brandeis pointed out, “have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”

Nothing in America can be fixed if the rich stay rich and powerful. Nothing in the EU can be fixed if Eurocrats remain completely dedicated to neoliberal ideas. (Britain is done, alas, I can see no path to recovery that doesn’t take at least a couple generations.)

Even countries like China are screwed by this, because the economy is a world economy, run on neoliberal lines. China is dedicated to industrial policy internally, but as part of a neoliberal world economy. They just want to take over value chains, so they can get more of the wealth and income from them.

All of this means that the ruling elite needs to be replaced wholesale, both to live in a good economy, and to mitigate the worst parts of climate change (stopping it is no longer possible under any realistic scenario I can imagine.)

It’s that simple.


Comment Moderation


Identity: Political Concepts Chapter 4


  1. rangoon78

    All attempts to reign-in “the excesses” of Capitalism have failed. The New Deal, enacted when Socialist revolution was a real threat has been beaten back. The future looks bleak.

  2. Plague Species

    It’s more than a depression. It’s a decline. We’re in a permanent decline. Peak Civilization has been surpassed. How will the decline be managed or how is it being managed? Well, we’re seeing that, aren’t we. It’s not being managed well, or at least not well for the unwashed. The wealthy elite are making out like bandits despite the decline. Are we surprised? I’m not.

  3. Z

    Our rulers’ solution is to play more divisive music and take away more chairs in the musical chair game they impose on the U.S. working class in order to have us direct our economic insecurity-based frustrations and aggression at each other instead of them.


  4. RC

    Seriously though, what are the elites planning to do? I refuse to dismiss all of them as completely mad.

    Do they have the tech to live underground or off planet during long periods of surface chaos?

  5. Z


    Seriously though, what are the elites planning to do? I refuse to dismiss all of them as completely mad.

    Maybe administering a series of COVID variants in order to manage a decrease in population at a rate that doesn’t result in complete anarchy is what they … or at least one of them … plan on doing.

    It’s the most realistic solution to this planet’s life-sustainability challenges. It mostly only kills humans and leaves the rest of the planet and its ecological systems undisturbed.

    I’m like you: I can’t imagine that every person in a position to do something about this is too stupid to see what’s coming down the pipe and looks at their children, grandchildren, and country and says, “F them, I’ll be dead anyway”.


  6. Z

    Wall Street has the Fed blackmailed with leverage. There is so much leverage being applied in the markets right now that if the Fed doesn’t keep the markets inflated with their liquidity the markets will become volatile enough to take down a bunch of over-leveraged financial entities which would destroy the entire financial system or require a publicly known bailout.

    They trained Powell to be their bartender back in the Fall of 2019 before COVID even hit. At first he was hesitant to serve them and the greedy hoodlums ganged up on him and started heckling him by doing a repo strike and refusing to buy the Fed’s repos and thereby driving the overnight repo rates up to 10% . Then he complied and opened the taps.

    What Wall Street learned in 2008 was to preempt another publicly enraging crash by making the Fed dance to their beat beforehand.


  7. Antibody

    Ian writes:
    “All of this means that the ruling elite needs to be replaced wholesale, both to live in a good economy, and to mitigate the worst parts of climate change (stopping it is no longer possible under any realistic scenario I can imagine.)

    It’s that simple.”

    It’s simple and logical but in today’s reality it’s also simply impossible.

    The elites have a death grip on power and simply ignore the demands of ordinary citizens. The citizens making the demands are disunited and, with media encouragement, spend lots of time attacking each other and supporting rival elite politicians who tell their constituents what they want to hear while changing nothing.

    Too often the demands themselves are vague and unrealistic, e.g. “defund the police”, or uninspired and unimaginative, e.g. “cancel student debt” (not even calling for a publicly funded university system).

    In a world without an organized working class or a compelling vision of an alternative to capitalism “resistance” is limited to individual expressions of displeasure and begging the elites for mercy and to sand down capitalism’s hardest edges. This lets them string the proles along indefinitely by making promises they won’t or can’t keep and by throwing the masses a few crumbs every now and then when societal tensions threaten to fatally damage the system. (So convinced of their own immortality are the 21st century elites that they don’t often bother with the last part anymore.)

    A “revolution” under such circumstances can only amount to spasms of chaotic violence and and even more repressive and ‘top-down’ society as the elites crack down in order to maintain their positions of power. Meanwhile the system’s irreconcilable internal contradictions mount and it continues steadily decaying.

    So basically everything old school leftists in the 80s and 90s and post-9/11 critics of the surveillance state warned about (and many things they couldn’t foresee) has happened. Banks and corporations have near hegemonic power and influence every aspect of life, everything that can be commodified is being commodified (including the natural world and human psychology), democracy has been killed while its trappings – largely symbolic elections and various political theater – remain and have their importance greatly exaggerated, mass movements demanding radical change are dead and a clickbait driven media that is wholly aligned with elite power plays the people against each other and a shadow police state that can disappear anyone forever on “national security” grounds operates in the background. And this is nowhere near an exhaustive list.

    The old left didn’t foresee capitalism surviving by metaphysically cannibalizing its hosts and the left being successfully co-opted, stripped of its economic justice component and pressed into service as ideological cover for neoliberalism’s inhumanity. It didn’t foresee the system becoming invisible and the masses losing their political literacy and thinking massive conspiracies are what powers events. It also didn’t foresee digital network technology and the instant communication it affords giving ordinary people the illusion of power while in reality the democratic process is all but dead.

    (Twitter users decorating their profiles with hammer and sickle icons or announcing their political orientation, e.g. “proud anarcho-syndicalist”, is a case in point. A communist without a party and an anarchist without a movement is a LARPer. Even the more “real life” fights between hammer and sickle helmeted Antifa dorks and right wing goons is largely a cosplay farce. Recall also the CHAZ/CHOP anarchist commune thing in Seattle two summers ago that degenerated into violence and chaos before disintegrating or even poor old Bernie Sanders’ “revolutionary movement” fizzling out into nothing after he threw in the towel.)

    The clown show that was the recent COP26 conference and the increasingly unhinged attempts to make China into the next Iraq via a relentless propaganda campaign lays bare the depraved nature of the western elites. (No, this does not mean I think the Chinese elites are “good.”)

    Climate change and its increasingly tangible effects are papered over with well-crafted PR campaigns that obfuscate the constantly moving goalposts (1 degree, 1.5 degrees, 2 degrees…) and linguistic games ( “net-zero”, “sustainable”, “climate resilience”) while the fossil fuel industry is brought on board as a valued “partner”…

    …while at the same time a war with 1/5th of the world’s population because their growing (temporary) prosperity threatens the west’s divinely ordained 1000 year reich is deemed “inevitable” and, as a bonus, preparing the public for it with a WW1 style propaganda campaign can help unite the beleaguered, infighting masses against a foreign enemy onto which blame for the failure of neoliberal monopoly capitalism and the internal fissures resulting from it can be projected. Brilliant!

    It feels like there is a perfect storm brewing, while the people in charge are whistling past the graveyard, fiddling while Rome burns and completely out-of-touch with reality. They really seem to think the system undergirding their power is going to last forever. But it won’t and by the time they realize this it will be far, far too late.

    Meanwhile most of the citizenry lets itself be herded toward the abattoir, following the “liberal” party line or investing their hope with seedy and duplicitous “populists” who play the system’s bad cop to the mainstream liberal good cop, dutifully doing what is expected of them and seeing their fellow citizens or a foreign country, rather than the system and the elites that run it and profit from it at their expense, as the enemy.

    So, yeah, I’m not very optimistic about a happy or even a satisfactory ending coming out of this. I can’t think of a plausible scenario where the elites suddenly “get it” or are replaced by an enlightened leadership that “knows what to do.”

    A more plausible but still remote best-case outcome is the decentralization of the United States and major western countries into small, self-sufficient communities that function without a central state structure. But even if such a thing comes to pass there will still be a lot of desperately poor people left to fend for themselves in decaying cities and not all communities will be motivated by cooperation and peaceful coexistence. Preparing for the worst but hoping for the best is probably a sound strategy for surviving the next several decades.

  8. Plague Species

    I’d say the Fed is Wall Street at this point. Government, the Fed, all the various institutions have been subsumed at this point and are captured and captive. Mission accomplished and nothing will be done to reverse it let alone resist it so complete is the inuring.

  9. Jason

    Imagine a digital currency controlled by a few international “central banks” working together supranationally (in the interest of efficiency and convenience, or something):

    Biden’s Nominee Omarova Has a Published Plan to Move All Bank Deposits to the Fed and Let the New York Fed Short Stocks:

    Deposits at Commercial Banks Would Be Replaced with FedAccounts:

    “In principle, FedAccounts can be made available as an alternative to bank deposit accounts, upon a person’s request. As explained below, however, the more effective option would be to transition all deposits to the Fed. Functionally, all FedAccounts will be essentially identical. For purely administrative purposes, however, it would be advisable to differentiate among ‘individual’ and ‘entity’ accounts. For U.S. citizens, Individual FedAccounts would be opened automatically upon birth or naturalization. These accounts would also be credited automatically with regularly received federal benefits: social security payments, tax refunds, and all other disbursements that depend on one’s citizenship status. For qualifying resident aliens, Individual FedAccounts would be opened and closed upon request, rather than automatically, but otherwise would function in the same manner. Entity FedAccounts could also be administratively divided into separate categories, depending on whether the holder is a government unit, a nonprofit organization, or a business entity incorporated or operating in the United States.”

  10. different clue


    The renewed-weekly Surviving Bad Times thread might be a good place for people to offer specific advice, ideas and sources / information on living out the prepare for the worst part of the strategy you suggest.

  11. Ian Welsh


    ironically, I have a post on digital currency in the queue for tomorrow.

  12. Jason

    Now imagine the world’s population being slowly prepared for all their personal information to be neatly stored digitally, *instantaneously retrievable* by the authorities:

    Quantum-dot tattoos hold vaccination record: Rice bioengineer reveals dissolving microneedles that also embed fluorescent medical info:

    “Instead of ink, this highly specific medical record consists of copper-based quantum dots embedded in biocompatible, micron-scale capsules. Their near-infrared dye is invisible, but the pattern they set can be read and interpreted by a customized smartphone.

    The two-year project is aimed at the 1.5 million preventable deaths that result from a lack of vaccinations, primarily in developing nations.

    “The Bill and Melinda Gates Foundation came to us and said, ‘Hey, we have a real problem — knowing who’s vaccinated,’” said McHugh, who was recruited to join Rice with funding from the Cancer Prevention and Research Institute of Texas. “They said, ‘We go on vaccination campaigns where people get into Hummers, drive to a rural village, set up a tent and start immunizing people, but they don’t always know who’s been immunized before and what vaccines are still needed.”

    *It would actually be always on and always readable, unless it is somehow disabled or “out of range” – the more ubiquitous the ID scanners, the less “out of range” area will be left to escape to, much as all a person’s movements are on camera – both “public” and “private,” though the two are essentially melded now under the banner of “public safety” – in many big cities and small suburbs alike.*

    Now imagine digital “currency” controlled by elite supranational entities, which can be cut off instantaneously (no physical store of value) integrated seamlessly with a chip embedded in your child containing both this as well as any and all other personal information deemed pertinent to the authorities controlled by said elite.

    Just another bad sci-fi movie I reckon…

    “The technotronic era involves the gradual appearance of a more controlled society. Such a society would be dominated by an elite, unrestrained by traditional values. Soon it will be possible to assert almost continuous surveillance over every citizen and maintain up-to-date complete files containing even the most personal information about the citizen. These files will be subject to instantaneous retrieval by the authorities.” – Zbigniew Brzezinski

    “This regionalization is in keeping with the Tri-Lateral Plan which calls for a gradual convergence of East and West, ultimately leading toward the goal of one world government. National sovereignty is no longer a viable concept.” – Zbigniew Brzezinski

  13. Jason

    Ian, looking forward to it already.

  14. Jason

    Just to elaborate a bit on my previous post – as obviously posting a link to an article on Gates-funded research into technologies that can be physically inserted into human beings in order that they can be scanned digitally, accompanied by a couple quotes from former National Security Advisor Brzezinski – does not a conspiracy make.

    However, I can already imagine a not insignificant number of parents willingly having little Sally micro-chipped the same way Rover the dog is, and for the same reason: fear of getting lost or kidnapped or something. And these parents are busy and distracted, so the convenience afforded them by not having to fumble around for Johnny’s credentials is quite enticing as well.

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