Over-expansion, internal struggle, decadence, epidemics and the migration period brought down the Western Roman Empire. [1][2] Is history bound to repeat itself? This series will explore what might happen in the wake of the Covid-19 pandemic and how it might affect us. It will start out pretty dark, but the picture will get brighter from post to post, I promise.



By Danielarapava – Own work, CC BY-SA 4.0, Link

Unfortunately, what I have been warning family and friends about for years has come to pass. Even if you did not see the pandemic coming like Bill Gates [3], it has been fairly obvious that the global system is a giant bubble waiting to pop – if you cared to look, that is. [15] Cementing the creed “just consume more, and all will be fine” in our heads, our greed has summoned cancerous growth – the telltale sign of a snowball system. [27]

There are multiple cycles in the economy, one of which takes about 100 years – and that is due in this decade as the Great Depression began in 1929. [4][5] All fundamental and technical indicators have been pointing in this direction for years. [23][24] All it needed was a trigger – which now seems to be the Covid-19 pandemic. As the health care system reaches overdrive, everyone is afraid, scrambling for cash, selling everything they can and not buying anything – a deflationary shock.

The hospitality industry is the first to go out of the window as no one travels or goes to the restaurant anymore. Banks are struggling to get the liquidity necessary to stay functional [7] while their investments are tanking. Lockdown is collapsing logistics and thus production, employment, income and lastly spending. What follows will make history, among other things as the largest wave of insolvency and layoff. [8][22]

To make matters even worse, most countries are heavily indebted and many on the brink of ruin already. [9][20] Same goes for corporate and consumer debt. [10] Everyone will need credit, but most will not be creditworthy. All of this will lead to other bubbles like the housing market to burst. [11][19] People will see their houses’ values drop while their mortgages will remain the same – it really is a downward spiral.

So… bailouts for everyone? Central banks and governments are trying it for sure, greatly adding to public debt. [12] But is free money for everyone even possible? That reeks of inflation. Once the deflationary shock passes, tons of fresh money will hit very little supply as businesses are closed or insolvent. This might drive up prices and weaken trust in FIAT currency. [13][20][27]

The Great Reset Button has been there since Nixon launched the Everything Bubble by lifting the centuries-old gold standard in 1971 and the Federal Reserve declared the continuation of the expansion to be the goal. [6][14] Now, it has been pushed by the virus. According to Ray Dalio, Reuters and many more, the global economy will deleverage, causing a deep recession and probably even a depression – and it will affect everyone. [4][16][17][18][20][21][22][24][25][26]

Part II of this series will explore possible effects on the global society – and those might not be what you believe.

DISCLAIMER: This article is no financial advice and I am not your financial advisor – I’m a random guy on the internet. Always do your own research and make your own informed decisions. Educate yourself properly before you invest, for every form of investment is risky. I will not take any responsibility for any damage or losses.

I’ve asked Grand Master Sam of TradeDevils whether he thinks the worst case scenario in this chart (ca. 90% drop of the Dow Jones like 1929) is valid. His answer: “Valid, yes. Likely? No. That would absolutely destroy the world as we know it.”



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Sources

[1] https://www.history.com/news/8-reasons-why-rome-fell, as of 2020-04-03

[2] https://en.wikipedia.org/wiki/Antonine_Plague, as of 2020-04-03

[3] https://www.ted.com/talks/bill_gates_the_next_outbreak_we_re_not_ready, as of 2020-04-04

[4] https://www.youtube.com/watch?v=PHe0bXAIuk0, as of 2020-04-04

[5] https://en.wikipedia.org/wiki/Great_Depression, as of 2020-04-04

[6] https://www.federalreservehistory.org/essays/gold_convertibility_ends, as of 2020-04-03

[7] https://finance.yahoo.com/news/investors-worry-repo-market-buy-131108408.html, as of 2020-04-04

[8] https://www.nasdaq.com/articles/business-activity-collapses-across-europe-as-coronavirus-lockdowns-spread-2020-04-03, as of 2020-04-04

[9] https://en.wikipedia.org/wiki/List_of_countries_by_public_debt, as of 2020-04-04

[10] https://en.wikipedia.org/wiki/List_of_countries_by_external_debt, as of 2020-04-04

[11] https://www.forbes.com/sites/jessecolombo/2020/03/31/why-us-housing-bubble-20-is-about-to-burst/#73be09456b76, as of 2020-04-04

[12] https://www.statista.com/statistics/1107572/covid-19-value-g20-stimulus-packages-share-gdp/, as of 2020-04-04

[13] https://www.youtube.com/watch?v=TZN3AGySS3A, as of 2020-04-04

[14] https://en.wikipedia.org/wiki/Gold_standard, as of 2020-04-04

[15] https://www.guggenheiminvestments.com/perspectives/media/implications-of-the-everything-bubble, as of 2020-04-04

[16] https://www.spiegel.de/wirtschaft/corona-krise-deutsche-wirtschaft-steht-vor-tiefgreifender-rezession-a-1f811018-5ff2-4290-8573-0d32fb159ac2, stand 04.04.2020

[17] https://www.reuters.com/article/health-coronavirus-imf/update-1-imf-sees-coronavirus-induced-global-downturn-way-worse-than-financial-crisis-idUSL1N2BR32K, stand 04.04.2020

[18] https://www.youtube.com/watch?v=hIq54n25dJg, as of 2020-04-05

[19] https://www.ccn.com/a-1-3-trillion-u-s-housing-market-crash-is-imminent-and-inevitable/, as of 2020-04-05,

[20] https://en.wikipedia.org/wiki/Socio-economic_impact_of_the_2019%E2%80%9320_coronavirus_pandemic#Possible_long-term_impacts, as of 2020-04-05

[21] https://www.youtube.com/watch?v=3z0gnXgK8Do, as of 2020-04-05,

[22] https://www.forbes.com/sites/billybambrough/2020/04/05/coronavirus-is-the-largest-insolvency-event-in-history-warns-former-goldman-sachs-fund-manager-pivots-hard-to-bitcoin/#773f5db27d39, as of 2020-04-06

[23] https://www.youtube.com/watch?v=36Zhf_gmXVY, as of 2020-04-07

[24] https://www.youtube.com/watch?v=ngtCc1yH1Nc, as of 2020-04-07

[25] https://www.forbes.com/sites/alexandrasternlicht/2020/04/08/ray-dalio-were-heading-into-a-great-depression/#2fc5b5677c83, as of 2020-04-09,

[26] https://www.youtube.com/watch?v=Av_dHwdnZZg, as of 2020-04-09

[27] https://pomp.substack.com/p/the-magician-has-been-exposed, as of 2020-04-10