How Depressions Work

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty and we must rise with the occasion. As our case is new, so we must think anew and act anew. We must disenthrall ourselves, and then we shall save our country--A. Lincoln.

Allow yourself a four-year process that doesn't make sense to those living in the moment and that will be remembered, dangerously, as something that happens all at once--meaning that, when it recurs, people will convince themselves it isn't happening because of the longeurs.

1. A Stock collapse precipitates the process.
2. Banking strains, then rallies. Muppets talk up recovery and bad men award themselves millions.
3. False hope disguises deflation and unemployment for most citizens.
4. Banks collapse.
5. Government tax revenues run out, international borrowing and trade collapses and exchange crises become commonplace even though governments engage in behind-the-scenes management.
6. Governments nationalise commercial organisations through paper, or by controlling the process of granting them nominal credit, or regulation.
7. A punctuated recovery encounters international instability. Civil disorder beckons.
8. If a war doesn't get you, delayed inflation and ultimate state bankruptcy do.
9. Human misery reigns.

Anyone who identifies this process is, of course, mentally ill or overly gloomy.

The interests of banks and the monied classes in all of this are to divert as much money as possible to themselves and turn it into commodities before it loses value. They can't just transform it, because that would expose their fundamental weakness--and panic the thousands of billions tied up in the derivatives markets, as though they were beasts on a plain. Liars and those whom the British call 'pillocks' in the political classes and press happily disguise or misinterpret the process.

Ask yourself--who owns the fed? The only practical answer, though it is not the legal one, is 'regional corporations set up by consortia of banks'. Who owns them? Other banks, internationally, and those odd chains of connexion and control that make up governing classes. What have their clever friends done? Created a forest of collateralised mortgage vehicles, credit default swaps, and commercial mortgages all backed up by lines of credit running right to the government that is printing the bills and borrowing them after having washed them through banks and foreign creditors.

The forest has been burning for some time.

They've built whole social systems and hazing, brainwashing matrices of professional training around the supplemental backwash of credit and educated people in the ways most conducive and least threatening to its operation over decades. Not harshly, that's the thing, but with the velvet seduction that credit buys success, and that reversals are a symptom of personal fault.

Governments can't reverse or control it, because the people who staff them and those of property and those of energy and education and credibility all believe in the stockade, in the wooden wall that holds the fire back and in the necessity of their conservative, learned helplessness. Those who call for alternatives are in themselves too reactionary, fighting old battles and losing support every time they open their mouths. The dedication to failed strategies becomes overwhelming, and few think anew.

The world as presently imagined and constituted around the Atlantic is divorced from real consequences and run by people who are insulating themselves. Their calculated retreat from the advancing darkness is marked at each step by the casting of more and more people into default and the institutions of conformity that maintained responsibility and held down moral hazard in better times.

The stockade is breached. Protect yourself, or brace yourself. Sooner or later, all of this darkness is going to be lit by fire--and yes, I am conscious of how melodramatic it all sounds.

But yet I believe this--only faith, love and reason will lead us out now. We must be new, and think anew and act anew, and disenthrall ourselves. Soon.