Thursday, October 15, 2020

A Comment on the Economic Destruction Ahead: How Bad Will It Get?

The South Bronx

Doug Casey is one of the most important and original economic thinkers on the planet. When I come across one of his essays, I am sure to read it and always find valuable points.

However, in a piece of writing featured at, he starts out with this:

Just because society experiences turmoil doesn’t mean your personal life has to. And a depression doesn’t have to be depressing. Most of the real wealth in the world will still exist—it will just change ownership.

I have to strongly disagree. When a society moves toward greater central planning, and the United States is doing so,  the general standard of living tends to fall and wealth can be destroyed.

All one has to do is look at Mao's China, the Soviet Union, Cuba, Venezuela, and the South Bronx of the 1970s, and you can see the amount of destruction of businesses and capital that can occur.

Hell, all you have to do is look at the businesses destroyed in the United States because of the oppressive COVID panic-related lockdowns to see how destructive central planning can be.

To be sure, in a destructive period, those who are in power will live high and a certain style of hustler will do very well, but that is all. For everyone else, a significant lowering of the standard of loving occurs and the amount of wealth destroyed is far greater than the amount that simply changes ownership.

It is this type of wealth-destroying period that may be in our future.



  1. Care to predict how someone following the EPJ Model Portfolio will fare in the coming Greater Depression?

  2. I hope you don't mind some friendly pushback. My thinking is more towards Casey's than to yours. It is influenced by a book I read about the effect of the Great Depression in Canada. One of the things that has stuck with me is that even though a large part of the population were adversely affected by it, those who were able to remain employed did very well due to falling prices. Their wages remained relatively stable, but their standard of living went up because their wages went further. These were not the "certain style of hustler" that you referenced. Could the coming depression be similar....the non-hustlers who do remain employed will live comfortably, while a large-ish segment of the population who lose jobs will suffer?

    1. My grandmother used to tell me when I was a child, that the Great Depression wasn't all that bad if one had a job. My grandfather was a lawyer, and he tightened his belt a bit---had a home office where he met clients, didn't live extravagantly, etc---and according to them, it didn't affect them or their friends and acquaintances much.
      Not sure if the same could be said for a blue-collar worker who retained his job, but...

  3. I am leaning towards real bad scenario, and even really bad, like Bolshevik Revolution or French Revolution bad with big State and more tech to make it even worse.
    I do tire of reading “how to make sure your making fat cash when the world is blowing up”. I don’t doubt there are way to make some profits from this or that, but if there is no economy outside of a black market survival economy, I don’t see that as being very realistic. I’m sure it sells subscriptions though. I feel the same about Doug, whenever he writes something or has a good podcast interview with someone I send it to all my buddies and they do the same, but I think the great reset is going to change a whole lot of things for the worse, and there won’t be many rosy outcomes. It doesn’t mean one should despair.

    1. I'm leaning in the same direction...that there will be "The Greater Depression" or "Great Depression 2.0" or whatever you want to label it. But then again, I've always been a sucker for Doomsday predictions and such. Maybe it's advantageous from a survivalist perspective, I dunno.
      At the end of the day though, studies show that poverty doesn't affect inner happiness; The happiest people are those with family and friends around them, whether living in sub-Saharan Africa, Central America, USA or wherever. We tend to adapt to whatever is thrown at us, and as long as I have my own tent in my own corner of the refugee camp or reservation, and my family is safe and with me---then I'm good. I think.

  4. Let's bring Austrian Economics into this. The current, lengthy regime of money printing and low interest rates is inevitably producing malinvestment at a scale perhaps never seen before. When this unravels, as Mises has assured us it must one way or another, much capital and many durable consumer goods, such as those tens of millions of unoccupied condos in China, will not be supportable and will disappear eventually from disrepair. Casey seems to miss this.

    Unlike Wenzel I have mostly not found Casey particularly insightful, though often with lucid explanations of concepts originated elsewhere.

  5. Right! It is all part of what Casey is selling, with his second passport/foreign citizenship, get out of Dodge plan. The way he tells it, if you follow his plan you will live like a king (somewhere) while the world collapses. It is a narrow minded greed and fear based plan. No Man an Island Douggie!

  6. He only focuses on a few items in the bigger picture. I think Casey misses some nuance and it could go a wide range of directions.

    What is unrefutably obvious is the party is over and there will be pain in many measures.