Why The US Needs A Depression
Chris Laird
There is a book out there that I advise all of my readers to get. It is The Fourth Turning, by Howe and Strauss. That book describes how any society goes through four stages of development. The first is the survivor, creator generation. The second is the children of them, they continue and boost the creativity of the first sacrifice generation. The third is a consumption driven, flaccid generation. The fourth is the loser generation destined either for war or economic collapse, they are losers because they have none of the personal discipline that the first sacrificial and creative generation had.
After the fourth turning, the society begins to raise itself from the ashes of the old flaccid one. That is, if they are not conquered by enemies, or die off in some plague... (both of these have happened and ruined societies).
When you read that book, you will see why I recommended it. Now basically that book states that depressions or wars are necessary cycles, that are results of HUMAN PSYCHOLOGY.
It is my view that human societal development cycles are what drive economic cycles. Economics are derivatives of human activity, and does not drive it, rather it is a secondary effect of people seeking this and that over time. But what drives all of the economic cycles that we are familiar with (possibly with the exception of the Kondratieff cycle)
(The Kondratieff cycle is based on the logarithmic progression of the consumption of resources, as it relates to boom and bust cycles. Kondtratieff was a brilliant Russian who studied why markets for anything consumable seem to always progress through boom and bust cycles, he found it is explainable mathematically, and that all boom bust cycles follow the same function, growing exponentially until there is a collapse of the market. The Communists in Russia sent him to die in Siberia, because Kondrateiff's conclusions showed that even a Marxist market will follow the same boom / bust growth cycle. It was the commie belief that, according to Karl Marx, communism would ultimately succeed economically and socially and end in ever lasting happiness.) Are the gestational periods of these 4 generations, and the psychological effects that result from first, harshness, then comfort, then excess and corruptness and loss of personal discipline. A common example is Rome's rise and eventual decline... Another is the rise and decline of the British Empire, another the rise and fall of both Imperial France and Spain.
In the 4th Turning, as I recall, they consider a generation 20 years......It is amazing how you can track the rise and fall of societies using these timelines, as well as the natural cycles of their economic development. The sum of the 4 generations is called a saeculum, it is from 70 to 80 years in length, or the length of time it takes the grandfathers to pass away from the scene....
Societies that last longer than 100 years (as leaders) must resolve the inevitable destructive cycles of their 4th generation... This is a law of humanity that is prevalent in every race, color and creed. It knows no geographical or racial boundaries.
Now, in the Untied States, people rightfully bemoan the economic excesses of the US government, excessive taxation, and spending profligacy. But also there are correlative excesses with in the society at large. The societal excesses are the result of a lack of personal discipline, and vigor. This is because we are now in the 4th turning generation of the US post the great depression period commencing in 1929. If you add 80 years to 1929, you get 2009.
If you are familiar with the events leading to the great depression, that period was called the 'Roaring 20's' and for good reason. It was the period of the book "The Great Gatsby" which chronicles the life of a rich dilettante in the 1920's and all his debaucheries, and revelries. But it was not only Gatsby who was reveling. The average American was busy buying stocks and guess what??? participating mightily in a nation wide HOUSING BUBBLE generated by easy credit.....
How familiar is all this?????? Eh?
Now, I wouldn't be so precise on adding 80 years to 1929 and then getting 2009, and then saying that will be when the next great depression starts. But I would say, it is very reasonable to conclude that 2009 will the about the time of this event, or will be during this event. I do not believe that economic cycles act like a perfectly predictable sine curve, with exact, (I mean exact!) periodicity. But what I would say is, the general form of economic cycles is a true fact. They are just not precise like is often presented by many economic analysts, though their general idea of cycles is a very legit concept for economics.
The evidence presented in the 4th turning and the 70 to 80 year generational cycles is overwhelming. That is why I want you all to go get it, and I will say the book is very readable, it is not as bad as my discussion above! ;)
So, to get back to the original thesis of this section of the newsletter, I had said that the US needs a depression. Now don't get me wrong, though I write a lot about a coming depression, I certainly do not want one. Those things are BAD. But what is necessary is a spanking to readjust people's attitudes, who are members of that weak, undisciplined 4th generation. You cannot readjust a generations attitude without either a great depression (a recession does not do it) or a great war (a mild war does not do it either). This is the conclusion of the 4th Turning.......
When I look at the much bandied about problems of the US, too many promises to the baby boomers, intractable and impossible to cut social welfare... and a demographic problem... (probably due to population growth, which follows the logistics equations which relate the growth of a population to a fixed amount of food as a model. Logistics equations relate the growth of any consumer to any consumed product... and show that the population always grows until a collapse and die off stage, where 99 percent dies in a very short period of time, the strange thing about this phenomena is that the population grows right up the last moment as if there was nothing wrong, and the crisis hits like a ton of bricks....it is also closely related to the Kondratieff cycle in many respects mathematically)
...I get the idea that all the moral objections to the excesses of the 4th generation are essentially pointless. What matters is that the 4th generation is biologically and socially and psychologically DESTINED to endure either a great war or great depression. Biologically destined because of demographics that are, well, mostly just biologically driven. Socially and psychologically because of the dynamic of the 4th turning of generations.
The demographic problems of the US and the West and even China (yes they have one and so does most of the world!) are as much biological problems as economic ones. And demographic problems are very serious because of that, as they proceed inexorably to their final conclusions irrespective of all the great efforts to address them. Demographic problems lead to feast famine cycles, the behavior follows logistic equations in a very clinical manner, where human populations fare no better than a colony of bacteria in a glass with sugar water. Amazing but true, and well documented as well.....
So, then, a great depression is a biological and psychological necessity, that readjusts the flaccid and weak and undisciplined 4th generation. Thus what the US needs is a great depression, for many unavoidable reasons.
I use the theses such as these quite a bit in my analysis of world economic and political events in my weekly newsletter.
Stop by and have a look.
October 10, 2005
Chris Laird
Editor-in-chief,
PrudentSquirrel Newsletter
www.prudentsquirrel.com
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