Economic Shockwaves

Coronavirus-induced shockwaves are rippling through the world economy, causing tremendous damage that we are only just beginning to measure.

Strangled global supply chains have caused supply shortages. A massive drop in demand has resulted from millions of customers forced to stay home under mandatory lockdown.

Now come the job losses. 60% of companies have reported hiring freezes, while over 13% have already begun laying workers off:

<img class=“aligncenter size-medium” src=“” alt="“Hiring freeze chart” width=“578” height=“378” />

Of course, the layoff rate will accelerate rapidly as Q1 earnings (or more accurately, Q1 “horrific losses”) start being reported later this month.

The small/medium-sized enterprises (SMEs) like your local restaurant, dry cleaner, bookstore and building contractor are being hit especially hard, as they don’t have the reserves to withstand the many weeks of no income the lockdown is placing them under. Many of them have already laid off their employees. Many may never reopen.

The jaw-dropping severity of this job carnage can already be seen in last week’s unemployment numbers. Claims spiked up to 3.3 million – nearly 6x higher(!) than the worst week of the Great Financial Crisis:

<img class=“aligncenter size-medium” src=“” alt="“Unemployment claims spike chart” width=“500” height=“337” />

So what impact will this all have? What will the rest of 2020 be like?

It’s certain that we’re heading into recession. How deep and long with it be? Will the announced stimulus efforts help?

Can we get things back to the way they were, or are we entering a “new normal”? If the latter, what will that look like?

To address these questions, I recorded the following interview today with two of Peak Prosperity’s favorite macro experts, John Rubino and Charles Hugh Smith.

Both are in agreement that the current breakdown represents “the end of the road” for the 75-year Debt Supercycle we’ve been living through. And because of that, the future is going to look and feel very different to what we’ve been used to:

After the recording ended, John and Charles expressed interest in coming back on soon to delve further into the question of: What comes next?

What specific policies, monetary systems, business models, etc will be better suited for the future we’re swiftly transitioning into?

If that’s a discussion you’d indeed like to see happen, let us know in the Comments section below, along with any other particular questions you’re interested in hearing addressed.

This is a companion discussion topic for the original entry at

The Hill is reporting - that our US manufactured stockpile of vents were sold overseas.
Business as usual in the US…

A week or so ago, I posted a link to your COVID-19 reports to Next Door. Now I can’t even bring up the main page!

Adam, great interview with two of my favorite commentators. When Charles opined we need something other than pure capitalism and pure socialism, I agree. In Michael Moore’s film ‘Capitalism a Love Story’ two employee owned and operated businesses were highlighted. One was a bakery in California with 60 employees, everyone made the same annual salary, they all voted on business decisions, there were mechanisms to work overtime, etc. The other was a smaller, robotic business with 15 employees, and the film showed this group making decisions, having wonderful lunches together, and the company grossed $15 million annually. They were all very satisfied with their jobs. I think this paradigm would be rewarding; most folks won’t vote to offshore their jobs, dump toxins in the neighborhood, or cheat themselves by way of CEO enrichment. This model would give folks a lot of incentive.
I just love the idea of employee owned businesses. Where everyone has skin in the game and everyone makes the same money, but everyone is held accountable to his/her fellow owner/operators.
No one mentioned de-centralization in the interview, which is probably the only way to build resilience/redundancy into our systems. The Transition Handbook offers a model of how to redevelop communities by way of creating a local Energy Descent Plan, and the documentary ‘The Power of Community’ illustrates how Cuba re-organized when the USSR fell and the country lost it’s oil and gas access. The way Cuba responded was a text book Transition Town scenario.
Cuba’s re-organization was fascinating. The the number one dictate, almost immediately upon losing access to USSR’s oil/gas, was to grow food. Everyone was requested/ordered to grow food and many farms were privatized. Cuba embraced organic farming - they had to, no access to synthetic fertilizers/herbicides/et el. Lot’s more interesting transitions, it’s a great film.
I’m thinking Chris’ message about growing food is going to become more and more important as this crisis unfolds.
Again, thank you Adam and Chris, for the fantastic coverage of this pandemic and for helping so many people get prepared - both recently and all along.

He said the numbers of dead predicted in the US is in the 100 to 200K range but his calculations suggestion more like 300K. He was superb in math in school. I’d go with his numbers over the more widely predicted ones.

At this the deflationary forces are huge - money is not circulating. Assets purchases by the fed will not cause inflation at this time. If not look at Japan. The trick will be to identify when this situation flips. A tough call to make right now. Thank you for the discussion, gentlemen.

“The Hill is reporting – that our US manufactured stockpile of vents were sold overseas”
Hey nordicjack, I saw this report in an article, that the US (Pompeo) sent a large amount of PPE and other intensive care supplies/equipment overseas (to China?) in Jan./Feb. 2020, as part of a humanitarian relief effort. Would you please provide the link to your source re: ventilators? Thanks! :slight_smile:

this is where we need the us president from 1920 running the show. the government and the central bank need to step away from the market/s and we need to return to hard money. the forgotten depression and how it was handled:

This virus will continue as long there is not enough group immunity. Let say it needs 80% of the people once infected. So send out the youngest 80% and let the oldest 20% quarantine. This way we can get over it fast and resume economic activities.
Or start wearing face masks and everybody in hiding. The virus will eventually get you anyway and by dragging this on for months you will totally destroy the economy.

Vitamine C plays a huge roll in clearing and recycling damaged cells. Like in avoiding to get pneumonia.

FABULOUS DISCUSSION!!! So looking forward to the future line-ups!

Great discussion!
More specifically, I truly got extra excited when you started to elaborate on a potential new “system” in the end. I guess, we are not only talking about a new monetary regime. But more or less, an opportunity to help a new civilisation with a new mentality, to be successfully born in the coming decades. I would so much appreciate if Peak Prosperity could emphasize exploring the fabrics of this potential new civilisation. Too much in our current and also historical civilisations, is designed to get our animal-type, lower nature, ignited. An example of our lower nature at work is all the existential fear we easily feel when, as now, the economy contracts. But we are more than this as human beings. Much, much more. What if a civilisation is built upon the true nature and potential of us as human beings?

This is the best that you have done IMO. It raises the question for me: Have the PTB done this on purpose - in France we are really in a situation that we call “système D”. D means démerde - literally get yourself out of your shitty situation (by yourself). Not enough masks for the hospital workers - everyone swallowed the masks are not useful - even harmful - only like the flu etc. Then Pres Trump announces a treatment coming from France - we would not have heard about Chloroquine otherwise. Then some of the juicy points come out: the health minister quits BEFORE the wave of Covid-19 hits France - my wife (French) tells me her husband owns an important pharmaceutical company … Normally I should not be on internet like I am, but with each passing day I feel an urgency to try to be “a Paul Revere” announcing something to prepare others for the shock, A Catcher in the Rye - I mean we can’t just sit here waiting (Neil Young Helpless). At the same time your timing “Economic Shockwaves” appears to be perfect. We have been set up - and what should we be doing about it? I mean I have been preparing for this (not the virus) in earnest since 2012. Diffcult to know what I can do? Some people would say, “People get what they deserve” - that is not my Creed.

Per 100,000 people
Hospitalisations - people admitted into hospital per age group for Covid-19 31/03/20
less 15 years 3.3 personnes
15 to 44 13.8 personnes
45 to 64 33.7 personnes
65 to 74 47.9 personnes
greater than 75 103.2
from mapthe
couldn’t read the rest of the URL

This is a long read but it’s worth it. With a cup of green tea and some soothing, ambient music, I managed to get through Charles’s essay this morning, and thought some of you might find it interesting and insightful, like I did. It will take time for me to ponder more and digest the perspectives he’s offering here - human, political, economic, health, legal, medical, environmental and so on … but the question does need to be asked: What will our “post-Covid pandemic” world look like?
This is the perfect time for a little (or a lot of) introspection.
Thank you, Chris & Adam and this thriving PP community for keeping us ahead of the curve, informed, aware, and ready. I visit this site at least twice a day (often more!) cos there’s just so much to learn and that’s thanks to all of you.
Stay safe everyone!

He said the numbers of dead predicted in the US is in the 100 to 200K range but his calculations suggestion more like 300K. He was superb in math in school. I’d go with his numbers over the more widely predicted ones.
Not that accounting requires advanced math, but I’m way above average in that subject. However, I’m not sure this issue requires advanced math, actuarial, or accounting skills. It’s all based on what assumptions you make. For example: US Population = 330.5 million Percent who eventually get infected = 50% Case Fatality Rate = 0.8% 330.5 x 0.5 x 0.008 = 1,32 million I don’t know what assumptions they are using, for their numbers. That would be good information to provide, to validate their projection.  

Correct…I think that the assumptions are the piece that’s missing, and given the fluid nature of how this is unfolding in addition to the effects of mitigation, the numbers will need to be updated on a daily basis.
Projections, forecasts & estimates require updates & validated data sets.

Have posted this link before, but it might be relevant in the discussion on a ‘new system’:
Not a solution, but a good indication of where to start…

Yes, let’s let our young people get 20-30% lung damage, and “recover” with lifetime SOB. Great idea.

About 2 thousand years ago, paul wrote in Romans, quoting David from 2000 years before that:
None is righteous, no one one understands. No one does good not even one, together they are worthless.
Doesn’t that describe today? In four thousand years, human nature has not changed one bit.
To the contrary, those revolutions that tried to create a "new society " ended in complete disaster: France 1800s, Russia 1920s, Germany 1930s, China 1940s, Cuba 1950s…
I have no faith in human institutions to do the right things, when their moral center is based on humanism/liberalism. None.