The Greatest Depression, Briefly Described

When I talk or write about the ongoing economic collapse, I sometimes use the term, “the Greatest Depression.” Increasingly, people are asking me what I mean. That is, what do I think will happen as the current downtown worsens? What, precisely, is the Greatest Depression, and why is it terminal?

I have discussed economic collapse, but I have not dwelled on the situation with a focus on the United States. So, here goes.

I agree with Drake Bennett, writing in the Boston Globe: I don’t think we see anything resembling the Great Depression 1.0. For starters, we were able to crawl out of that abyss on the back of a strong governmental response that put people to work building public infrastructure. And ultimately, a convenient, contrived war that gave us full employment while ensuring ready access to cheap fossil fuels (e.g., see the writings of Howard Zinn).

The days of a strong federal government, flush with gold-backed dollars and the respect of its citizens, are history. Ditto for ready access to cheap fossil fuels. We’ve pissed away all our time and money to develop a way of life that never had a future. Suburbia, the suburban home as ATM, and our entire banking system are based on cheap energy. In other words, we’ve built a set of living arrangements that relies on infinite access to a finite resource. That set of ill-conceived living arrangements is comprehensive, including capture and delivery of water, production and delivery of food, construction of shelter, the systems of health care, education, and finance, our sense of community (or absence thereof), and thousands of attributes we take for granted on a daily basis.

It all ends soon.

When the U.S. economy collapses, unemployment will approach 100%. Nobody will work when the bank will not distribute or cash checks, and the currency is recognized as a worthless piece of paper based on debt. Stock market capitulation — the metaphorical Dow zero — means a sudden and total lack of confidence in the ultimate con game, fiat currency. Shortly thereafter, the sheeple go home, burning the last tank of gas along the way, demoralized because they can no longer spend their way to happiness. And what’s at home to greet them? A poorly insulated, purposely obsolescent piece of crap.

Welcome to the ultimate throw-away society, the United States of Absurdistan.

Then what? The grocery stores run out of food. The water stops coming out the taps. The lights flickering out seem like a minor inconvenience relative to the deepening hunger and maddening thirst. The spreading darkness marks the end of civilization.

Comments 19

  • Absurdistan, amen to that.
    From my vantage point, things are at the beginning of getting unpleasant. The unfortunate problem of those who think breadlines will appear overnight is that the breadlines (ie the shelters, etc) are low–historically low–on supplies. People are pulling back, which means they don’t give as much to “charity” and they (as the article states) “hunker down”. In the US, I’m reminded of Vonnegut’s statements in Slaughterhouse Five regarding poverty, there isn’t a “noble poor” concept. The poor are poor by their own fault is the myth everyone buys into. If you admit you’re poor in the US you might as well admit you’re scum while you’re at it. So people won’t talk about the house that’s falling in on them, or the repo-man coming for their car, or the fact they can’t provide for their family anymore. They stay quiet and hide it–except to close family or close friends–sometimes not even that! Of course you don’t “see it”.
    I’ve said it before and will say it again: our local food pantries are perilously LOW on food. If everyone one runs to the St. Vincent de Paul en masse, they’re going to be disappointed. There just isn’t enough out there right now to hold up under the influx of new “customers”.
    Meanwhile, I had to take my daughter to the ER last night. Guess what? They aren’t billing people later. Why? Insurance companies aren’t keeping up with their bargain and people are skipping out on their bills (probably because they can’t pay them).
    The only solution is for everyone to adopt a new narrative and change the current game Guy refers to. That’s the ONLY solution. We can even switch to various other types of games if we like, it doesn’t have to be just one new game, but it sure as hell can’t be the old game or any form of the old game.

  • How will I read your blog?
    Do you think Jay Leno is happy to see a president like Bush II go?
    I am so selfish to want generational equity…

  • Interesting stores on Diane Rheem Show Wed. and Fox News today about the growing chaos in Mexico. What started as drug cartels vs. cops is now spreading to society at large and states far south of the border. The tv story today ended with the speculation that Mexican society could basically collapse and send a wave of 1 to 2 million swarming toward the US border, all at once. From the accelerating pace of change described in these stories, collapse could happen in Mexico before it really gets under way here.
    Meanwhile the potential for violent confrontations with smugglers has moved away from just the border region into my latitude. A friend here forwarded a very clear picture snapped by a remote wildlife camera showing from the neck down a gentleman carrying an AR 15 and wearing boots not of US origin, according to the LEO who originally forwarded the picture. This was taken in the Peloncillo Mts. across the valley from me, about 45 miles north of the US border. Gun turrets on our mud huts better provide 360 degree coverage.
    Click here to view image

  • Regarding the ongoing economic collapse in Mexico, triggered by the rapid decline in available oil from the free-falling Canterell oil field (the second-largest field in the world), the El Paso Times has this to say: “Mexico is one of two countries that ‘bear consideration for a rapid and sudden collapse,’ according to a report by the U.S. Joint Forces Command on worldwide security threats.”
    Thanks for your ever-thoughtful contributions, Charlene and Helen. You, too, bubbleboy :)

  • Thank you, Guy, for keeping the blog rolling along :)
    Helen, that is absolutely horrible, but not unexpected. The only thing that really boggles the mind is how the news rambles on ad infinitum about celebrity gossip (Obama’s kid’s private school counts as celebrity gossip IMO) while our state is insolvent, our neighbors to the south are ready to collapse into chaos, and the list goes on.
    I’m also a fan of Diane. She’s a favorite of mine. And I always (well, almost always) tune into Science Fridays on NPR.
    I heard on the less reputable version of talk radio (KTAR I think) that one of the cities in Maricopa County was considering cutting fire and police staff as a budget cutback. Does anyone know if this is true?
    Personally, I live in Pinal County in one of those “islands” without fire or police coverage, so I’m kind of used to the “you’re on your own kid” concept. Still, it is a little scary to think of public officials dropping fire and police staff.
    I like libraries as much as the next person (probably MORE than the next person), but it isn’t going to serve anyone well to have riots without police and a library on fire with no firemen to dowse the flames.
    Not sure. My husband and I were chatting and couldn’t figure out if it was just rhetoric aimed at nabbing some of that ex nihilo bailout money from the government or something they’re actually doing.
    Interesting times….

  • Charlene, the news story about Pinal police & fire layoffs might well be true. I remember hearing a few months ago that Albuquerque had just graduated a class of future city police from their law enforcement academy but had to tell them their jobs had vanished.
    Here in rural southeast AZ we depend on local volunteers for fire suppression and EMS, and a mix of agencies for law enforcement including Border Patrol, county sheriff, state highway patrol and occasionally U S Forest Service, but cell and radio coverage is poor and only the Border Patrol are in the neighborhood with any regularity. The local fire/EMS is the most dependable when a quick response is needed. The town is full of former EMTs and firefighters too so we are used to dealing with problems like a wreck, a grass fire or tree in the road ourselves till outside help arrives, if it ever does. The concept of getting out and actually fixing the washed-out road in front of one’s SUV doesn’t come naturally to the city folks who visit, which is one more reason why I think that when the crunch comes, vast hordes from Tucson won’t be likely to survive long enough to get here and start raiding my chicken coop, whereas folks arriving from Mexico will be better equipped for the challenge, both mentally and skill-wise.
    Wilderness EMT & fire training would be good skillsets for a survivalist to add to your repertoire, if you haven’t got them already.

  • I hate to say it, but I am more like the “city folk” than not. Still, I am making every effort possible to get my friends and neighbors to join with me in taking emergency training like CERT, etc. while it is still available. I have taken some first aid and cpr, but of course, that is a drop in a very large bucket. I’m taking training wherever I find it.
    When it comes down to it, though, because of a lack of resources, my main focus is on being prepared to leave for relatives in better (read: rural) locations.

  • fossil fools and the great unravelling
    a few thoughts….
    100% unemployment?
    my prediction –
    usufruct will come to the fore, along
    with the volunteer, household and the
    bartering economy.
    dont despair there is a free lunch,
    its called photosynthesis,
    energy to matter = entropy undone, at least here on earth,
    put simply, in the garden there is more every year,
    my pitiful example – a santa rosa plum produced 12
    plums last year, this year it produced over 150.
    (no additional inputs from me,I suspect the mycelium has kicked in)
    the problem with philosophy is that it is a dead end,
    (a bit like the trajectory of this blog)
    it does not put food on the table,
    compost the miserable german and gets some dirt underneath
    those finger nails!
    ever the spoiler of doom
    your unfashionable optimist

  • Matt what you’re describing sounds quite a lot like a Royalty vs Peasant system. That is the Usufructal system is it not? As much as that might work in another country, it wouldn’t last fifteen minutes in the US. Americans, by and large, have an almost elemental, instinctual hatred for anything resembling a caste system.
    Or are you talking more along the lines of where people would give others food gratis? If so I’m afraid I’ll have to point to the biggest human instinct of them all: Greed. People don’t just give others materials without some kind of compensation. We’re hard wired like that, particularly if times were especially difficult.
    The idea of growing my own food very much appeals to me. Unfortunately I live in a very urban area. I would have to fight tooth and nail just to get my meager crop to the point it could be reasonably harvested as first off there’s be various arthropod interlopers, as without the insectacides that oil brings us, growing anything edible gets hard. then there’s the four legged thieves, but a pellet rifle dispatches them without too much fuss. (And they become food rather easily) Then I’d have to worry about the two legged variety of animal that would definately come looking for their share in my bounty. Unless you were nearly totally isolated, the energy you got out of the food might not be worth the energy you put into growing it in the first place.

  • Yes,as Professor Guy and I have been telling you all along,The Greatest Depression is the Terminal Depression.It has to be.Institutional efforts to revive the putrid corpse of Capitalism will only produce a zombie.Increased bank lending will only worsen the problem.Depressions occur regularly because of glut–glut of everything.The last Depression only ended when war soaked up the excess.This time the glut is too great.
    Politicians want the banks to lend more.I ask,”lend to whom?”.We already have way to many houses,cars, retail stores,suburbs,shopping malls,ect.,ect.we need less,not more bank lending.We have a huge glut of all goods and services,and more lending just makes
    the glut bigger.Reviving the economy just makes the problem worse.
    Since politicians will not,and indeed cannot understand this,we’ll have to put up with that increasingly smelly,putrid corpse.

  • turboguy,
    as I said photosynthesis is a free lunch,
    I did not say usufruct was going to be pleasant.
    I predict 100% employment,
    ’employed’ doing things that
    we may not be accustomed to for perhaps
    very little reward
    thai grain production is largely pre industrial,
    they produce enough rice to feed 240 million people,
    on a small land mass with a pop of 60 million.
    asian ag is the way to go,
    historical these nations have produced large amounts of
    food on a relatively small land base relative to their
    if your final statement was true we would not have reached the
    20th century with the population that we did.
    from memory turnips produce the most calories per acre,
    but as you have eluded to, wild foods are best free lunch
    going if you know where to look and you know what you are doing,
    dandilions and nettles anyone?

  • To Guy and his blog members —
    I am no longer actively monitoring this blog. But I was pleased today to receive a private email from Guy inviting me to post something to the blog on a subject of my choosing, and I appreciate the invitation from Guy. So I will share a couple of very current thoughts and observations about what I see unfolding in the new Obama Administration and the prospects for America and the world in the unfolding near and intermediate future. I do not intend to engage in ongoing discussions here.
    I received a phone call yesterday from a friend who is a top-knotch raptor biologist and I always talk raptors and raptor research with him. But this time the conversation started with his comments about the exciting prospects for mankind (literally) with the election of Barack Obama. In my friend’s view, the human species itself took a major step forward by the tacit repudiation of racism in this manner, and no matter what else happens with the Obama administration, the thought was expressed that a positive threshhold has been crossed.
    And, in a way, I agree, but I do not believe that the crossing of that threshhold will necessarily prove to be unconditionally positive for mankind, for America, or maybe not for Obama himself. I would feel better if a black person who had grown up in a black family with black American issues at the table and who ran for office recognizing the grievances of his race had been able to win the election. Obama does not represent the sort of victory that I personally longed for, and his victory is more symbolic than tangible, though the fact is that many, many, many people of all races and especially black people have been profoundly touched by what has transpired. This is well and good, but I cannot say with certainty that America has changed in the sense that institutional, systemic, organic injustice and inequity is a thing of the past or will necessarily be minimized by the Obama victory. I am not certain that the issues of disproportionate black imprisonment, poverty, environmental inequity, or similar issues will necessarily improve under an Obama presidency. The fact is that if Obama had run on a justice platform as Jesse Jackson or Al Sharpton or Cynthia McKinney ran, he would have not had a snowball’s chance in hell of getting elected. And that is the sobering reality of today that no one is recognizing in all the giddiness of the symbolism of a black man entering the White House as President.
    Of equal importance, I have been listening to Obama the last day or two, and what I hear coming out of his mouth does not necessarily cheer me. I heard Obama defend the American way of life, which is the catalyst for gross injustice and resource wars for decades and ongoing. Obama has not repudiated the Iraq War as an unjust or illegal or resource war, but he has called it a “dumb” war or one that was not run efficiently and he promised to do better. Obama warns America’s opponents that they should unclench their fists if they want America’s hand. But Obama has failed to note that much of the clenching of fists by other nations is a defensive posture required for their safety by American provocation, greed and manipulation. Barack Obama talked about how foreign societies would judge their leaders by what they built instead of what they destroyed, but he failed to acknowledge America’s unfailing support for totalitarian, dictatorial governments of our allies, such as Saudi Arabia and Kuwait because dictatorship and violence and non-democracy in their governments benefits American economic interests. Barack Obama failed to acknowledge that Iran and Venezuela are democracies with free elections who have suffered a long history of meddling and even destruction of democracy by American intrigues and anti-democractic maneuverings. In short, Barack Obama is already identifying himself as a propagator of the American Empire and is already distorting America’s record as a benevolent one and already tacitly threatening more of the same bullying and American hegemony in terms of resource acquisition by military force if necessary.
    One of the subtle, but repeated messages Barack Obama is conveying to the American people, but which the giddy masses are not hearing, is the prediction, if not promise of pain to go along with hope and change. But Barack Obama has not explained what is causing and will continue to cause that pain. He has not discussed the systemic nature of inequity in the distribution of wealth, the corruption and sleaziness and intrinsic dishonesty of the entire financial and securities systems. He has vaguely criticized greed, but failed to punish it, and insists on continuing the pouring of billions of dollars into institutions that know that they themselves are not trustworthy and not even the infusion of gross amounts of capital frees up their ability to lend to other dishonest, unaccountable players in the system.
    Barack Obama is part of a system he knows to be corrupt. He received major financing from Wall Street, the real estate sector, the financial crowd, and he has staffed his team of “experts” and “problem solvers” with the very people who created, managed, developed, operated, and saluted the failed system that has proved capitalism is no friend of mankind.
    Obama wants economic growth. If he gets it, we will face the renewed threat of oil depletion and spiraling prices. If he does not get it, we will face hyperinflation due to unsustainable government spending. It is just a matter of time before we actually get both simultaneously in all likelihood because we continue to burn owl in large quantities even with the economy in tatters.
    I think the giddy America of January, 2009 is headed for a rude awakening. Those people who put their trust in Obama will be forced to rethink their faith and many will become disallusioned when they learn that he is part of the system that destroyed our civilization and did not work for the change that was really necessary. I heard Obama just today talk about exploiting the soil for energy, indicating to me his committment to biofuels which equates to a financially profitable, but unsustainable and ecologically disastrous outcome for the nation.
    Many Americans voted for George W. Bush because he was not Bill Clinton, who could not disclipline himself to keep his pecker in his pants and embarassed himself and the nation by his lust for the overweight Polish Princess who was his intern. Many people voted for Barack Obama because he was not George W. Bush or because he is black. But Martin Luther King said we should not judge a man by the color of his skin and I believe Obama will prove that America having a black president will be hardly any better off than Britain was in electing Margaret Thatcher as a female Prime Minister or than Peru was in electing Alberto Fujimori and their President. All were disasters for the future of their nations.
    I do think Barack Obama is smart. I am glad that he and his wife seemed to be enjoying themselves. Their children are sweet and cute. I see some good in the man. But I think Obama will physically age very rapidly during his term in office. Michelle will soon lose her glee when her husband starts getting bitterly criticized within the next three to six months. Barack Obama will live to regret ever desiring the office of the presidency. And America will suffer greatly. The America of late 2009 will be a different place than in January, 2009. 2010 will be worse yet and 2011 will be even worse. Talk of recovery to economic levels seen in the early years of the new millenium will be pipe dreams because the whole economic miracle was built on quicksand and cannot ever be repeated.
    The ramifications will be profound. The suffering will be immense. Eventual population decline is a given. And civil unrest means that sometime in the Barack Obama administration I predict that free communication as we know it now through the internet will become a thing of the past. So, enjoy life and what we have now while you can. Contraction is the hallmark of the future for our entire nation and society.
    Good luck to all.
    Stan Moore

  • Stan, I’m forced to ask what happened to you that you no longer see fit to post here anymore? I actually enjoyed reading the vast majority of your posts.
    Your last post was a great one, though I must respectfully disagree with your belief that Venezuela and Iran had free elections, or anything even remotely close to a free election. That’s like calling the election that Saddam put forth just before his ouster where 99% of all Iraqi citizens voted, and lo and behold, Saddam had 99% of the vote! Ahmadinejad was quite literally appointed by Khomeini and in a sham election, became the president of Iran.
    Hugo Chavez threatened the opposition with tanks should he fail in his elections. Imagine how the citizens here in the US would have reacted had George W. threatened the Democrats in 2004 with tanks should he be defeated by John Kerry? Neither of these are remotely “Free elections.”

  • stan,
    guy could not have said it better himself,
    i agree with the turbster,
    i am amazed at the confidence in which one
    makes predictions,
    i predict there is only uncertainty/possiblity
    and the previously ridiculously
    absurd statement regarding
    full employment :)
    fyi – the economic meltdown has come full
    circle – hardly a news flash, according to
    ‘access economics’
    -‘the australian federal budget is buggered’
    (i am sure this means the same thing over there)
    the usa is not buying, the chinese are not making
    and the aussies are not mining it
    the potential for huge job losses and deflation will create an
    absolute meltdown in the real estate market
    for large mortgage holders
    deflation usually precedes hyperinflation
    they are predicting 250,000 jobs are to go,
    EBA’s (pay rises) are off the agenda,
    companies are now offering pay cuts
    to stave off sackings
    the next 18 months are going to be very interesting
    the contributions have been are little
    bit low brow of late
    i was waiting for guy to pull you back
    ever the ‘professional’ dilletante

  • The market is continuing its downward trend. The United States of Absurditism may not be that far off the market. If you’re worried about how bad the California real estate market can actually get, I found a great article “How Bad Can it Get?” on this website below. Its written by a San Diego Broker and he’s got a lot of really great articles/information on his site! Check it out:

  • Great site this and I am really pleased to see you have what I am actually looking for here and this this post is exactly what I am interested in. I shall be pleased to become a regular visitor :)

  • hello friends i think president OBama has taken very positive steps to tackle down the economic crises but he should look on to the issues like global warming as well Today as we are facing global worming now a days and one of the main reason of global worming is due to the reduction or cutting down of green forests. so we all can play a role in saving the environment for the future and for our children this is the right time to start developing small gardens and educate our children how to use home garden products so that there interest towards home gardening in our houses back yard as its has become necessity act before its to late.

  • Great site this blog.people should also look to wars developing the home gardening this industry is also flourishing now a days as far as market crisis is concerned good financial measures can reduce the impact of the economic instability but can`t over come it suddenly it will take some time but hope for the best.