Most Likely Sequence of Events
With the information gleaned from our speculative exercise in the last several posts, we can now flesh-out the remainder of our timeline of likely events with not only what will probably happen, but how people will likely react and what the consequences will be. This allows us to paint a much more nuanced picture of the future unfolding before us.
2016-2020: During this time, countries of the world try their hardest to maintain BAU conditions. There is massive application of propaganda via the media in an attempt to convince the masses that good times will continue forever, even as economic crisis accelerates. Central banks and governments continue ZIRP/NIRP policies as well as QE and direct intervention in markets to keep businesses solvent. Financial institutions begin to fail and it is possible that full scale financial collapse will be underway; however, this may also drag on for longer than 4 years.
In response to debt defaults, bankruptcies, and other clear signs that the financial system is deteriorating, massive fiscal stimulus efforts will be launched. These will likely push in opposite and contradictory directions. For example, massive public works projects will likely include capital expansion of transportation infrastructure because these are large projects that require many workers and lots of fossil fuel energy. At the same time, in the name of creating a green energy revolution, government projects to establish utility-scale wind and solar systems will be launched along with expanded subsidies for distributed renewable energy. This will likewise result in a short-term demand for fossil fuel energy and workers to manufacture and install new equipment.
Unfortunately, these programs will be unable to build a parallel energy distribution system that replaces our current fossil fuel network, and they will only be able to function for a short time under current models of finance. As the monetary system collapses under the weight of debt, governments will assume a more prominent role in the economy and in managing the daily lives and behaviors of citizens. Desperate times will justify continued expansion of police powers and surveillance of society; security apparatuses put in place by the CIA, NSA, DHS, and other federal agencies will effectively become turnkey authoritarianism where the existing “internet of things” manages behavior, especially financial transactions and political and activist activity.
Amidst the turmoil caused by this “second great recession” or whatever the media brands it, hostilities and war will become more frequent and intense at the periphery of the developed world. Acts of violence in developed countries will continue to be linked to outside conflicts and a war of civilizations, justifying further attempts to control internal movement, financial, and political activity. The current immigration crisis from Middle Eastern countries will accelerate, and social conflict in receiving European nations will escalate and become violent. Across the globe, nationalist sentiment will grow and become politically dominant as borders close and forcible expulsion of non-nationals begins. Tension between the major powers (US, Russia, China) will grow and proxy wars will expand in the war-torn equatorial regions.
Problems of migration and refugees will be exacerbated by increasingly long and hot summers, greater drought, famine (especially in the Middle East and Africa), lack of rain, and extreme weather events.
2021-2030: By this time frame, it will be largely apparent that the catastrophe underway is not another recession or depression but a complete collapse of the financial system. More and bigger stimulus programs will be proposed, with varying degrees of effectiveness. Some of them may result in employment or the production of useful goods and services, but others will only further distort economic relationships. Those in positions of power will reap huge profits from government programs and contracts, tax incentives, and central bank stimulus measures while the common person’s quality of life continues to erode. Eventually, “green energy” projects are abandoned as environmental concerns become secondary to more important tasks such as keeping the electricity on and the mines producing. Economic indicators like GDP are negative year after year, and markets for stocks, bonds, and other financial instruments enter free-fall and cease to function.
Eventually, the banking system will no longer be able to function in a meaningful way and the movement of money will cease. This could manifest itself in bouts of hyperinflation, or severe deflation, or combinations of the two among different asset classes and in different geographic areas. Without a functioning financial system, commercial collapse will accelerate quickly as the remaining businesses are no longer able to operate, even in the developed western countries. Companies kept afloat by government contracts and direct subsidy will be the last remaining actors in the economy as we currently know it. At this point the role of government will be greatly expanded as the sole provider of many goods and services currently provided by private industry. Governmental leaders will also live in fear of losing their authority and ability to exercise control, resulting in a ratcheting up of social controls to the point of outright martial law.
Immigration will reach a fever pitch as citizens of the countries most ravaged by years of war and economic collapse flee across borders into perceived safer areas. Militaries will be deployed to control migration, and when control is no longer possible, military force will be applied against civilians in order to stem the flow of immigrants.
Somewhere in this timeframe, the progress of collapse transitions from mere commercial collapse into outright political collapse. Most less-developed countries will cease to be governed in any meaningful way. Military leaders will conduct coups and form factions that fight among one another for resources in an attempt to gain control over territory and population. The major world powers will lead outright invasions of adjacent countries in order to assert security in their arenas.
This is probably the most dangerous time period for the potential of large-scale warfare to eliminate all of humanity. While economic conditions have deteriorated to a point of desperation, large militarized political organizations are still driving events on the global stage. It seems likely that this must culminate in direct warfare between the major powers, and that inevitably this would result in some exchange of nuclear weapons. If this occurs at a late stage in the process of collapse, it is possible that attacks will lack coordination and the window of opportunity for complete nuclear Armageddon will pass. Orlov’s proposed scenario, where targeted strikes from both sides destroy military and industrial capabilities, also seems highly plausible. In any case, if humanity survives the confrontation of world powers, the outcome will likely be a dramatic acceleration of all forms of collapse as remaining infrastructure is destroyed or becomes inoperable, and military forces are fragmented or incapacitated.
On the ground conditions during this period will vary greatly. Outside of the developed countries in Eurasia and North America, the stages of collapse will be much more advanced as complete lack of organized governance takes hold. Within the developed countries, riots and fighting for resources within population centers will be common. Wide spread hunger and homelessness will take hold of the populations, who are primarily occupied with attempting to feed their families, or in the service of military, police, or paramilitary/revolutionary fighting organizations. Large cities in particular will begin to empty as the population density and lack of services leads to exponentially greater violence and declining health and sanitation conditions. Some social structures may continue to operate either independently or at the direction of military government, but clan/gang conflict, looting, and stealing will become widespread. Some areas will retain public services like electricity, natural gas, and potable water for longer, while some areas may see these quickly disappear. In the lack of these basics, conditions will deteriorate more rapidly and become increasingly violent. Total population will fall as deaths far exceed births, with urban centers leading the trend.
Finally, under the weight of constant war and lack of a secure and stable economy, the remaining nation-states will become ungovernable and will split into factions of military leaders attempting to secure geographic areas of various sizes. Large swaths of territory in formerly developed countries will completely lack any form of central authority and citizens will be left to their own devices. As the final political institutions of the first world devolve into warlord states and anarchy, social collapse sets in.
For many, the story ends here. Basic resources such as food and clean water are scarce and precious, and there is no room for the support system that currently keeps large parts of the population alive. It sounds terrible, but there will be no support for the disabled and ill. People who rely on mobility devices or life-saving medication will not live past this time period. Diabetics will go without insulin, there will be no antibiotics to stave off infections. People who lack supplies, or the capacity to forcibly take them from others, will waste away and starve. Violence defines the daily routine, where the strongest and most ferocious survive while the weak and/or principled suffer severe lack leading to death. Cities become virtual graveyards, while the countryside is dotted with survivors attempting to eke out a living from the land. Unfortunately, even those with the skills and experience to work the earth and provide for their families will be largely unsuccessful, as they are forced to fend off more powerful and aggressive groups looking to exploit their hard work.
Ultimately, even the most powerful warlords will begin to run out of resources to exert control over remaining populations and outright cultural collapse will arrive. With all mines long since shuttered, and all factories long since closed, lack of fuel, electricity, equipment, and even firepower will become too severe to exert force beyond the immediate vicinity. Population will be reduced to a small fraction of the global peak. With small groups of humans now spread thinly across the globe, conflicts are smaller scale, generally individual or group combat in an attempt to take or defend caches of resources. No large scale organization, record keeping, or communication remains.
The impacts of climate change further complicate life for survivors and large parts of the world near the equators become basically uninhabitable. Tropical diseases spread far into the northern latitudes, and the option for groups of survivors to stay in one place is no longer viable. Humanity becomes nomadic, wandering generally northward or southward towards the poles, seeking shelter from extreme weather and enough ecosystem stability to provide sustenance. Along the way, they encounter vast areas of contamination, including the remains of melting nuclear reactors and burning spent fuel ponds.
If humanity and enough ecosystem to support it somehow survive past mid-century, these humans will not resemble the humanity of today. Wild, fierce, and violent- like dominant predators in the wild- they will not have time to keep accurate records of what has happened. Reading, writing, philosophy, mathematics, and all things not directly related to staying alive will be forgotten. They may wonder at the strange ruins, and invent stories about gods and devils and being cast out of paradise. If they survive, within a few generations only myths will remain of our current great experiment in civilization.
Amonde estreluçava Meloquim quando na guela dos beantos zarpeava em agadel a verrusão: zapatia nos loucados sua bande abolegada, e já nem rulas de lourel o dondoíam nos abigos. Chape-chapenado, ia sem-senão.
Era zapego, Meloquim. Mas aparido ao porticão de sua fronca (porque de vize lhe runcavam os ingóis do seminel), não mentava ser abém de missalinhos numa corfa de lambrenos. Por isso, abindoava as avelenas, as pisternas, os linhéus, e de fós agandulava pulamente, pernicoço, no trelim da sua lorna. Todamente fardilhavam os minocos de landim, mas ninguém se bandolia nos rentalhos.
Ninguém, até o dia em que Zincário, que de froque arrançoara de Setúbal, se lanteve nos gambés e lhe reliu: «Ó Meloquim, avantiaste o relanzil da tua choba no bancão da lefarina?»
Meloquim rechubiou, esbalontado. Nem reliu. Por tinecos, inda fimpou numa troaba os arrabantes, pesarino, mas o adonso já pengava nos tribóides, com relocos de tardiva (de tardiva!) no chimpão. E nunca mais a guela do bengano Meloquim se recedeu por baladais de verrusão. Rolo era.
Some people would argue that 2016 was the year that the world economy started to come apart, with the passage of Brexit and the election of Donald Trump. Whether or not the “coming apart” process started in 2016, in my opinion we are going to see many more steps in this direction in 2017. Let me explain a few of the things I see.
 Many economies have collapsed in the past. The world economy is very close to the turning point where collapse starts in earnest.
The history of previous civilizations rising and eventually collapsing is well documented.(See, for example, Secular Cycles.)
To start a new cycle, a group of people would find a new way of doing things that allowed more food and energy production (for instance, they might add irrigation, or cut down trees for more land for agriculture). For a while, the economy would expand, but eventually a mismatch would arise between resources and population. Either resources would fall too low (perhaps because of erosion or salt deposits in the soil), or population would rise too high relative to resources, or both.
Even as resources per capita began falling, economies would continue to have overhead expenses, such as the need to pay high-level officials and to fund armies. These overhead costs could not easily be reduced, and might, in fact, grow as the government attempted to work around problems. Collapse occurred because, as resources per capita fell (for example, farms shrank in size), the earnings of workers tended to fall. At the same time, the need for taxes to cover what I am calling overhead expenses tended to grow. Tax rates became too high for workers to earn an adequate living, net of taxes. In some cases, workers succumbed to epidemics because of poor diets. Or governments would collapse, from lack of adequate tax revenue to support them.
Our current economy seems to be following a similar pattern. We first used fossil fuels to allow the population to expand, starting about 1800. Things went fairly well until the 1970s, when oil prices started to spike. Several workarounds (globalization, lower interest rates, and more use of debt) allowed the economy to continue to grow. The period since 1970 might be considered a period of “stagflation.” Now the world economy is growing especially slowly. At the same time, we find ourselves with “overhead” that continues to grow (for example, payments to retirees, and repayment of debt with interest). The pattern of past civilizations suggests that our civilization could also collapse.
Historically, economies have taken many years to collapse; I show a range of 20 to 50 years in Figure 1. We really don’t know if collapse would take that long now. Today, we are dependent on an international financial system, an international trade system, electricity, and the availability of oil to make our vehicles operate. It would seem as if this time collapse could come much more quickly.
Our economy is a mystery to almost everyone, including economists. Let me explain the way I see the situation:
(1) The big thing that pulls the economy forward is the time-shifting nature of debt and debt-like instruments.
If we want any kind of specialization, we need some sort of long-term obligation that will make that specialization worthwhile. If one hunter-gatherer specializes in finding flints that will start fires, that hunter-gatherer needs some sort of guarantee that others, who are finding food, will share some of their food with him, so that the group, as a whole, can prosper. Others, who specialize in gathering firewood, or in childcare, also need some kind of guarantee that their efforts will be rewarded.
At first, these obligations were enforced by social norms such as, “If you don’t follow the rules of the group, we will throw you out.” Gradually, reciprocal obligations became more formalized, and included more time shifting, “If you will work for me, I will pay you at the end of the month.” Or, “If you will pay my transportation costs to a land of more opportunity, I will repay you with 10% of my wages for the first five years.” Or, “I will sell you this piece of land, if you will pay me x amount per month for y years.”
In some cases, the loan (or loan-like agreements) takes the form of stock ownership of an enterprise. In this case, the promise is for future dividends, and the possibility of growth in the value of the stock, in return for the use of funds. Even though we generally refer to one type of loan-like agreement as “equity ownership” and the other as “debt,” they have a great deal of similarity. Funds are being provided to the enterprise, with the expectation of greater return in the future.
As another example, governments make promises for future benefits, such as Social Security, healthcare, and payments to the unemployed. These payments are not guaranteed, so are not considered debt. Even without a guarantee, they act in many ways like debt. Citizens plan their lives around these payments, even though they may be reduced or eliminated.
Surprisingly, even “cash” is debt. It is similar to a bond that pays zero interest and has no redemption date; this type of bond can also be easily transferred from person to person. Since cash can be hidden under mattresses, it too can be used as a device for time-shifting.
(2) The big thing that goes wrong in this time-shifting approach to operating the economy is the loss of what I would call an “opportunity gradient.”
As long as the future looks better than the past, it makes sense to make these debt-like obligations. But as soon as the future looks worse than in the present, the whole model falls apart. Even if the future looks exactly the same as the present, there is a problem, because taking on these long-term obligations has some overhead costs, such as administrative costs and a margin to cover the possibility of defaults on loans. These overhead costs need to be paid in some way. Because of this, there needs to be enough of an upward gradient to cover the necessary costs of the loans or the loan-like agreements. (This is part of what makes a Steady State Economy, advocated by many, an absurd idea.)
Once the opportunity gradient becomes negative, it becomes very difficult to get anyone to borrow money and to use the resulting debt to lead the economy forward. When the opportunity gradient becomes negative, young people are less inclined to get married, and tend to have fewer children. International organizations of countries (such as the European Union) have a harder time staying connected. The whole model of cooperation working better than “every country for itself” starts falling apart.
Just as human bodies often go downhill before dying, an economy that finds itself on a downward slope may very well be near collapse.
(3) The loss of an opportunity gradient comes from diminishing returns in many areas, including:
- Rising energy extraction costs
- Rising costs of mitigating pollution, as increasing resources are extracted and used; these pollution mitigation costs are really part of total extraction costs
- Reduced quantity of arable land per person
- Reduced fresh water per person, without high-cost treatment such as desalination
- Fewer investment opportunities that allow for true growth, such as providing tractors to farmers who previously used draft animals, or adding a new road that permits fast transit across a country for the first time
- Many more required “investments” that are simply for the purpose of offsetting deterioration in previously built infrastructure
Não tenho, para ser sincero,
muita simpatia por aquele rapaz
de óculos escuros que roubava livros
em Santarém. Rapou o cabelo,
decorou páginas inteiras de Genet,
sem que nada percebesse do amor.
E, no entanto, é ele que me pede agora
contas da vida que não vivi — esse
náufrago de espelhos abolidos e
de noites sem saída. Esse rosto imberbe
que finjo reconhecer ao longe.
Talvez lhe pudesse simplesmente
dizer: ao menos não engordei,
cretino, e escrevi mais poemas
do que tu alguma vez sonhaste.
Mas ele riposta, implacável:
não te voltarão a chamar rapaz.
Deves-me todos os poemas que escreveste.
(Manuel de Freitas)
Baixo, guitarra, furor, bateria: o habitual
da insurreição juvenil, retiro de ofendidos
ou coisa que o valha, por todo um meio Inverno
de rotos acordes. Dizer que foi um sonho
é já efabular, se até os instrumentos eram
emprestados, os gritos de empestado, a pose,
o cuspo dos pês no microfone suburbano.
Não, não era isso. Não era sequer a música:
apenas a suspeita de nenhum futuro, como
berravam os piores cantores; o desconsolo
do real, tão alheio à fantasia do possível.
Quando tudo nos chamava pelo nome e
ninguém desconhecia que devíamos à morte
uma conta calada, um balúrdio de espuma.
E assim a juventude, em nosso peito,
retumbava uma batida detestável.
Foram cinco, seis semanas de frustradas
tentativas, todas muito de partir o comboiinho
do sentido. Pelo tropel de decibéis desnorteados
percebemos que corríamos a monte, sem
feitio nem agrado. Não era por ali. Paciência,
concluímos, cada um para seu lado: o das vozes
para os livros, o baixista para as mágoas,
o guitar para a mentira, o baterista para a morte.
(José Miguel Silva)
In Walkmen, & etc, 2007