Next Up: Global Depression – Charles Hugh Smith (10/28/2020)

The belief that central banks printing currency can “buy/fix” everything that’s broken, lost or scarce is the ultimate in denial, fantasy and magical thinking.

Let’s revisit the pandemic projection chart I prepared on February 2, 2020, nine days after authorities publicly acknowledged the Covid virus outbreak in China. Wave 2 shown on the chart is now underway with a vengeance and next up is Global Depression.



This projection was based on two well-known dynamics:

1. History offers a basic template for viral pandemics in which the initial wave dies back in summer and then re-ignites in a second larger Wave 2 in autumn and winter.

2. Humanity’s default responses to novel crises: denial, fantasy, magical thinking and manipulating data to support a simplistic, emotionally satisfying ideological position.

Each of these predictable dynamics has manifested in all their perverse glory.

A number of cognitive/logical errors are manifesting as well.

False binaries i.e. false perceptions of the situation being either/or. For example: you get the virus and either recover or die. We only count those two options. This false binary conveniently ignores:

A. the third category–you get the virus and become a long-hauler (a.k.a. Long Covid) who is debilitated for months by exhaustion and other post-viral conditions; (Long COVID slide presentation)

B. the fourth category–you get the virus and recover quickly but suffer major organ damage that isn’t immediately visible/symptomatic;

C. the fifth category–you get the virus, recover, assume you’re immune forever and then contract the virus again some months later–only this time the consequences are far more severe.

And so on. The same holds true for ideological false binaries. Those holding binary ideological positions–you are either With Me or With The Wrong Side–spend their time and energy cherry-picking and manipulating data so it supports their pre-selected ideological world view.

Those of us who simply want unmolested data so we can decide for ourselves have no recourse, as the ideologically motivated have poisoned the data (don’t test don’t tell, under-reporting, over-reporting, ignoring lag times in reporting, suppressing data, requiring data be reported to privately owned corporations rather than government agencies, discounting good data in favor of bogus data that reaches the “right” conclusion, and so on) in an endless profusion of manipulation for political purposes.

As with China’s Communist leadership, if data that can’t be gamed or manipulated enters the public domain, it’s immediately suppressed. Skeptics of China’s permanently miraculous “growth” statistics discovered electrical consumption figures did not reflect the miraculous “growth” in the officially sanctioned statistics, and so China moved to suppress this inconveniently factual data so it would not longer be available.

We’re seeing the same politicization of data in the U.S. We’re now down to public-health data collection that hasn’t yet been suppressed or manipulated: hospital admissions and death certificates. Authorities suppressing Covid-related deaths can report any cause of death they want, but the peak of deaths far above the statistical norm tells us an important fact despite the suppression/obfuscation.

Confusing categories, correlations, causes and conclusions. It’s widely held that the Covid pandemic is fundamentally a power-grab by elites. Fair enough; crises have long been the excuse given for “temporary emergency measures” that become permanent power-grabs.

But to accept that the pandemic is the cover for a power-grab by elites does not mean the Covid virus is a harmless chimera. The virus can be dangerous in ways that aren’t measured by counting deaths and the pandemic can still be the excuse for “emergency powers” becoming permanent, i.e. a power grab. One conclusion (a power-grab) does not require a second completely different conclusion (the virus is not dangerous to anyone under the age of 70 and therefore it’s no big deal).

The assumption that there’s a correlation between an ideological position and wearing a mask (or other behavior) is ungrounded. An individual can reach conclusions outside rigid ideological boundaries. Personally, I found this study of which passengers caught the virus on a bus in China useful in my own decision-making: Coronavirus can travel twice as far as official ‘safe distance’ and stay in air for 30 minutes.

The most consequential falsity in my view is the belief that the global economy was robust before the pandemic and it will revert to that robustness once we: get a vaccine, end the lockdowns, seek herd immunity, etc. etc.

The global economy was teetering on the edge of recession and financial implosion long before the pandemic appeared. Ending the pandemic cannot restore an illusion of “growth” that masked a hollowed out, fragile, brittle global economy.

The Global Depression was baked in long before the pandemic. All the pandemic did was kick out the last rotten 2X4s holding up the fading facade of “growth.”

As the global tsunami of Wave 2 sweeps away the sandcastles of denial, fantasy and magical thinking, it’s worth recalling that the Covid-19 virus has four features that make it difficult to control:

1. It is highly contagious.
2. Carriers with no symptoms can infect others.
3. A significant percentage of older / compromised patients develop severe symptoms that require hospitalization.
4. Once the healthcare system is overwhelmed, the system cannot provide care to everyone who needs it. As a result, the death rate rises the moment the healthcare system is overwhelmed / breaks down.

We’ve drawn a gravely false conclusion from central bank money-printing and technology: we now assume that central banks can print up as much money as we need to buy whatever we need in whatever quantity we need. The magic of technology essentially guarantees that there will always be a substitute, “cure” or “solution” available whenever we need one.

Unfortunately, central banks can’t “print” experienced doctors or nurses. When the front line of healthcare workers is depleted by illness and burnout, there are no substitutes or Big Tech robots-to-the-rescue. The healthcare system we’ve optimized for “creating shareholder value” (i.e. unlimited greed pathologically pursued by any means available) will break down and that will be that.

Central banks can’t “print” creditworthy borrowers, solvent companies, real-world collateral, risk-free “investing,” oil, jobs, trust in failed institutions, social cohesion or anything else of importance that is now scarce.

The belief that central banks printing currency can “buy/fix” everything that’s broken, lost or scarce is the ultimate in denial, fantasy and magical thinking. All that was unsustainably fragile, corrupt and brittle is unraveling, and thinking that ending the lockdowns, approving a vaccine, etc. will stave off causality is the supreme indulgence in denial, fantasy and magical thinking.


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