| |
Sometime in the post-apocalyptic future…
Surviving historians will brush off the dust…tidy up the graves…and try to make sense of it. Gathered around an open fire in a discarded oil drum, they will warm their hands and ask:
What? How? Huh?
We’ve looked at the best case…and some ‘worse cases’. Now we focus on the worst-case scenario — an apocalyptic combination of inflation, depression…and war.
Inflation is the only way the Feds can finance their big deficits. It is still running above 3% — the longest period of more than 3% core inflation in thirty years. Transportation rose more than 8% over the last year…and auto insurance is up more than 50% over the last three years.
Meanwhile, long-term interest rates are rising, even as the Fed cuts short-term rates. It’s been two months since the Fed began its rate cutting cycle… and the 10-year Treasury note yield has gone up 76 basis points (three-quarters of a percent). What happens when higher debt levels hit higher interest rates? Asset prices fall. Combine that with stifled trade… and mass deportations… and we could be asking for a major depression.
And then, there is the last refuge of scoundrels… war — the worst-case scenario of all. Yes, people go mad from time to time… so do whole societies. It seems unpredictable… almost random. And yet, there are signs, trends, and patterns.
| |
| Source: Getty Images |
So, we look ahead and wonder what it might be like…if the world had been at war for almost ten years… maybe twenty years. West vs. East… one side clustered around NATO… the other around the BRICS.
On one side had the most ‘lethal’ military in the world. But on the other was the fighting experience of the Russians, who had been at war on their European flank for many years…combined with the technological innovations and manufacturing prowess of the Chinese.
The ‘rule of law’ has been abandoned entirely. It’s the rule of the jungle, now. The strong do what they will; the weak suffer what they must.
Whole cities have been destroyed in tit for tat nuclear exchanges. But the elites have no death wishes. Moscow, Beijing, London and Washington have been, so far, spared.
Along the borderlands…the Eastern front in the Ukraine…and the Near Eastern kill zone…the destruction has been almost unbelievable. New weapons flatten whole neighbourhoods. AI-enhanced firepower leaves nothing alive.
By now, much of the Mideast resembles Gaza in 2025. Backed by the Trump team, Israel tried to ‘finish the job’ by seizing the West bank, wiping out Hezbollah in Southern Lebanon, and striking at the ‘heart of evil’, Iran.
But the more people the Israelis killed, the more there were who wanted to kill them. Thousands of orphans grew up with one goal — to take revenge. Israel then had no choice…but to continue bombing; after all, it had a right to defend itself.
Ten years later, the bombing, shelling, and sniping continues.
In the Ukraine theatre, too, the war got hotter. One escalation led to another. Fox News:
‘Biden authorizes Ukraine to use US long-range missiles to strike inside Russia’
Moscow Times:
‘Russia Fired ICBM for First Time in War, Ukraine’s Military Claims’
One step at a time. Until the nukes got to work. Fortunately, nuclear strikes were limited. But they were effective. Each side took big losses…and kept on fighting…with millions of deaths and millions more refugees…some fleeing West…some East.
It was in Southeast Asia that the nightmare brought a real surprise. No one knows what set it off… but when the US fleet got into a shooting war with the Chinese, it didn’t take long before a swarm of drones… in the air, on the surface of the water, and under it… had sunk most of America’s military assets in the area.
Of course, stocks crashed a long time ago… in 2025… and they never recovered. Not in real terms. Prices went up like a rocket… assets as well as consumer products. Inflation reached 50% per year.
It was an ‘inflationary depression’, they said. With so little trade, and so much of the GDP spent on war, most people — at least those not associated with the government or the firepower industry — got poor. For those in the ‘hot’ zones, however, it was much worse. They lost everything…their jobs, their houses…and often, their lives.
And then… finally, the fever broke… and after years of death, poverty, and pain, came the questions.
How did it happen? Why?
More tomorrow.
Regards,
 |
Bill Bonner,
For Fat Tail Daily
