Collapse Narratives Return

As social mood turns at the bear market peak and heads towards a new low, the collapse narratives will intensify. The big question is whether they are correct, rather than popular due to current mood. If you believe a grand super cycle top is underway (Prechter), or you read Tainter (see this presentation), or you read Turchin, or Strauss & Howe, or Roman history, there are a lot of collapse narratives all pointing in the same direction.

Financial Sense: Peak Civilization
Two millennia after the battle of Teutoburg, we can see how useless it was that confrontation in the woods soaked with rain. A few years later, the Roman general Germanicus, nephew of Emperor Tiberius, went back to Teutoburg with no less than eight legions. He defeated the Germans, recovered the standards of the defeated legions, and buried the bodies of the Roman dead. Arminius, the German leader who had defeated Varus, suffered a great loss of prestige and, eventually, he was killed by his own people. But all that changed nothing. The Roman Empire had exhausted its resources and couldn't expand any more. Germanicus couldn't conquer Germany any more than Varus could bring back his legions from the realm of the dead.

Civilizations and empires, in the end, are just ripples in the ocean of time. They come and go, leaving little except carved stones proclaiming their eternal greatness. But, from the human viewpoint, Empires are vast and long standing and, for some of us, worth fighting for or against. But those who fought in Teutoburg couldn't change the course of history, nor can we. All that we can say - today as at the time of the battle of Teutoburg - is that we are going towards a future world that we can only dimly perceive. If we could see clearly where we are going, maybe we wouldn't like to go there; but we are going anyway. In the end, perhaps it was Emperor Marcus Aurelius who had seen the future most clearly:

Nature which governs the whole will soon change all things which thou seest, and out of their substance will make other things, and again other things from the substance of them, in order that the world may be ever new.

Marcus Aurelius Verus - "Meditations" ca. 167 A.D.
It is difficult to know the right path, but it is possible to understand the wrong path from history. Complexity, centralization and inefficiency must be ruthlessly destroyed. An example comes in healthcare and education. If you look at spending and outcomes in those two industries, there is one clear step that would improve overall efficiency in the U.S.: slash spending. The marginal return on education and healthcare spending is negative and has been for 30 years or more. It doesn't matter what you do with the smaller sum of money, it could be wasted in the existing system or the cuts might trigger new efficiencies, but by reducing spending, resources are conserved.

Complexity destroyed retirement. Before social security, many people prepared for old age by having at least two children, in the expectation that they would care for their parents in old age. A government run system is complex and individuals do not see the need for youth to support them. Some might argue that you can save and invest if you have no children, but how would that work if everyone did the same thing? There's no one to sell financial assets to in the future. Boomers are in trouble because of low fertility rates, in addition to the fact that Millennials are more interested in cryptocurrencies and are so debt burdened that they cannot afford marriage, families and homes. Comfortable Boomer retirement could disappear starting tomorrow if the 1987 and 1929 market analogs hold up. If they manage to avoid a financial decline, they will leaves ashes in their wake.

Complexity is destroying the West, but recognizing that fact is close to impossible because the society is built on complexity, those institutions that are least needed are the most powerful and revered. Staving off collapse requires a "pre-collapse" retrenchment of economic, military and political power. The very symbols of American power, such as the wealth of Wall Street, the powerful military and ever growing Washington bureaucracy (reflected in the wealth around Northern Virginia) is a sign of American collapse. When Rome collapsed, the standard of living in many parts of the former empire went up, not down, because the farmers and hinterlands were no longer financing an empire.

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