The Age of Chaosterity, or How Bad It’s Going to Be Over the Next Few Years

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Hi! How’s everyone? Welcome back old friends, welcome new ones, and today we’re going to discuss…

The situation. Facing many of you now. In America. And spreading beyond.

In fact, I’m going to coin a new term for it. Chaosterity. That’s a combination of “chaos” and austerity.” Let me warmly thank in advance the New York Times columnist who rips it off and never cites me.

I don’t usually write posts like this anymore, because I’ve moved on from trying to warn people who are too ignorant and foolish to listen and learn, but for my friends, I think you deserve to understand what lies ahead.

We are now entering one of history’s most challenging eras, and I don’t say that lightly. You can be one of these people who sort of tries to argue with me, as if this is some kind of dumb game, and then ends up getting fucked, and is now in panic and despair, but instead I recommend you sit down, make a coffee, and learn what I am going to teach you today.

Because I won’t often do this anymore.

Welcome to Chaosterity

Trump’s approach. What is it? It’s Chaosterity. Not just his, and this isn’t about him, he’s just a guy, this is a paradigm spreading around the globe, and it’s about forces in history, not just figures.

Let me discuss each of those in turn, chaos and austerity, then put them in context, then I’ll explain what they imply.

Trump and his dudes recently attempted something pretty incredible, even for them, and it went largely misunderstood. They tried to lay off the government. That’s three million people.

That’s the largest attempted layoff in history. That is the correct frame with which to understand, and I’m going to teach you why in a moment, but for now, understand that much. The largest attempted one in history, all of it, because of course the government is always the largest employer in a society, and laying off all of it is more or less unheard of, even right down to ancient times.

That’s only the beginning of the “austerity” part. They also attempted to “freeze” the government, which created so much…chaos…that itself got frozen. The group attempting to “freeze” the government, aka “pause” funding, didn’t quite understand just how incredibly severe consequences would be.

Among other things, much of America’s medical system began to go down. So you’ve heard, for example, that Medicaid payments were stopped, but you didn’t hear that medical residents and institutions were panicked, questioning if they’d get paid or not, which, of course, if it wasn’t “rescinded,” would have crashed more or less the entire healthcare system.

If that “freeze” hadn’t been paused? In a few days, the financial markets would have begun crashing, because of course, all the affected people and institutions, which include everything from healthcare to education to transportation and beyond would have had to pull their money out of the bank, and that would have caused bank failures.

In other words, they would have crashed more or less the entire economy.

That is why they had to “rescind” this, but the problem is that it’s just…”paused.” And that kind of thing has led government bond yields to rise, meaning that investors are demanding more to hold Treasury debt, because now they are taking much, much more risk.

When that happens, interest rates have to rise. Or at least certainly can’t fall. Which is why the Fed didn’t cut them.

So. Let’s summarize those three things. What does Chaosterity mean?

—Mass unemployment

—Dramatic declines in investment

—Higher interest rates

—Higher prices (aka, fueled by a mania for tariffs)

Sound like a happy recipe for a tasty meal to you?

How to Create a Depression

What is all that a recipe for?

A depression.

It is the textbook recipe for one, in fact. 

What happened during the 1930s? The financial system seized up. Interest rates went through the roof. Prices skyrocketed. As a result, unemployment soared. The economy went into shock.

If you wanted to create a depression today, what would you do?

—You’d lay off as much of society’s largest employer as you could, millions of people, all at once.

—That would have knock-on effects, because those three million people support maybe another five to ten or so each, whether kids, parents, siblings, household help, local businesses, doesn’t matter, so now we’re talking much, much larger numbers, on the order of thirty million, and that’s already ten percent of the population.

—Those jobs wouldn’t come back, so the change in employment levels would be permanent.

—You’d do everything you could do destabilize the financial system, like putting all government investment in limbo. Just like government is society’s largest employer, so too, it’s its largest investor. Now think of what suddenly “freezing” all that does. That’s right, it causes markets to crater, the moment they can’t absorb all that risk anymore.

—You’d raise prices, fast and hard, through protectionism and tariffs, aimed at your largest and nearest trading partners.

I could go on, but the point’s already made.

If you wanted to start a depression, this is exactly what you’d do. I’m not saying that’s what this administration wants, I don’t really care what they want, I’m just pointing out to you the obvious: this is a recipe for a depression.

Now, that depression in some ways has already started. Economists won’t call it one, because of course maybe there will still be some level of growth, but that doesn’t matter so much, because of course, the economy isn’t growing for people, whose incomes and living standards fall, as the ultra-rich take it all and more.

That’s just a technicality.

Already, huge, huge parts of the economy are frozen. We have a frozen labor market—people can’t get jobs, hiring is at its slowest for 10 or 20 years, everything is stuck and in limbo, people are sending thousands of applications over years, and can’t find a single thing. The housing market’s frozen, too. So is the insurance market, which can’t absorb the costs of climate change or political destabilization.

The economy’s sending up glaring, utterly troubling Red Flag after Red Flag. A bad economy is why people choose demagogues in the first place, and this is why the Democrats got destroyed, as much as I tried to teach them. But when an economy’s entire labor market is frozen? People can’t get jobs, despite trying for years, and that’s a common experience? When its housing market is frozen? When its insurance market is? All that tells us that something like a depression is already brewing.

In more formal terms, it tells us an economy can no longer supply people with basics. Whether jobs, incomes, money, insurance, housing, and so on. And when that happens, that is what a depression is, in real terms. It’s not just the technicality of a “shrinking economy” over whatever period of time, measured in terms of illusory growth—rather, what all that is supposed to mean is: can an economy supply people with the basics, or can it not even do that much anymore? Do their living standards just fall and fall? Do their lives spiral into despair and penury?

This is happening already right now in all the various ways above. That is a consequence of the fatally poor choices America made over the last several decades.

But now it’s up against an even bigger problem, which is that the policies of the administration coming into power are basically what you’d do to start a depression. Or in this case, maybe finish the job of starting one.

What the World’s Smartest Minds Agree On

Do you know who PIMCO is? PIMCO the world’s largest bond investor. In other words, it talks to governments, and sets priorities, because it’s buying their debt.

Do you know what it’s telling leaders right now, in despair? Don’t do this.

Forget about the moron capitalists. Look at the smart money. Like PIMCO. What is it saying?

Don’t choose austerity. Don’t do foolish thing like lay off millions of people, or “pause” all spending. That is going to hurt all of us. Including us, the bond investors, because we need a return, too, and all that’s going to do is spiral the economy into a very, very, very bad place.

Instead, take our money. You need it, and we have it. All we want is a plan. Not one year or two year, not near term. A solid, realistic plan for the next thirty years. About how your society is going to grow, in mature terms. What are you going to build? Hospitals, schools, corporations, markets? What is your goal going to be? How are people’s living standards going to rise, because we all know, that’s the only to pay off this debt?

But you can’t choose nothing, or worse, more austerity, because we already hold your debt, and if you do that, you won’t be able to afford to pay us back, or anyone else back, because your economy will be in something very much like a depression, even.

And guess who says the very same thing? The IMF. The World Bank. Any financial institution with half a mind these days. Funnily enough, right now, they’re all…LOL…social democrats. PIMCO says, explicitly, these aren’t the days of the “bond vigilantes” anymore. We have changed, and you should, too. We want investment, we want real growth, we want people’s living standards to rise, that is why we are here.

So when even the world’s capitalists, and its most serious financial institutions are saying to leave the days of predatory capitalism behind, as if they’d grown a soul, maybe you can see why I raise the point. 

But leaders aren’t listening.

From America to Britain to Europe, they are just making poor, poor choices, not based in reality, not based on what even investors want at this point, idiotically, but just what they…think…people want. Maybe they’re idiotic, maybe they’re weak, maybe they’re just clueless, I don’t know, I don’t care, I’m trying to help you.

All of that tells me that the next few years are going to be incredibly difficult.

We are entering one of history’s most challenging times, one where things now truly begin to implode and fall apart, as of course I’ve been predicting, to many people’s dismay, who didn’t listen to me, and are now fucked, writhing in panic and despair.

Don’t be one of them.

So what does all this mean for your life?

Getting Yourself Ready for Chaosterity

You had prepare for Chaosterity.

It is going to define the rest of this decade, almost no matter where you live, except in a very very few lucky places. The rest are already heading towards Chaosterity, or already there.

—America’s there now.

—Britain’s there.

—Canada’s about to be there.

—Europe’s there, or at least much of it is.

So how do you cope with this?

One, you prepare yourself financially. You should not expect prices to fall, nor interest rates to. They won’t. You should be saving and investing as fast and hard as you can right now, and you have to absolutely minimize risk, because of course, if you understand the above, then you understand that both stock and bond markets will only grow in risk, ever more prone to crashes.

Two, you must prepare yourself professionally. Like we’ve discussed, job markets are frozen right now. They aren’t going to get better, as we head into a depression, or whatever you want to call it if you’re hung up on the technicality. These jobs are never coming back, many of them. When they are finally successful at gutting government? Those jobs will never come back.

Society will have a permanently lower employment level.

You had better not be on that list. If you have a job, even if it sucks, keep it. While you look for a better one. While you create your own “job,” which in this day and age can and should be a combination, a portfolio, of different incomes at different levels of risk. You had better get serious about your career now in this way—not being part of a permanently lower employment level. That is going to take skill, thinking, and deep, deep insight.

Three, you must prepare yourself relationally and expectationally. I cut out all the toxic relationships which were draining me, as you know. What you should understand is that if we continue on this path? A lot of people aren’t going to be there for you. The very ones you think will be right now. They will be too destroyed, too ruined, too helpless, and all that will make them hostile and angry and upset, too. You must be the strong one. If you want to take care of those you love. Almost certainly, close to nobody will be able to take care of you, because everyone will be coping with this, as it spins and careens out of control.

That is part of why I always say: forge a confident, mature relationship with the world now. In a very short period of time, people will not be who you think they are. They will be coming to your for money, support, guidance, or maybe even blaming you for what the next few months and years are going to do to them, which is destroy and ruin them. They will not be able to help you. The only question is whether you will be able to help those who deserve and appreciate your help, and that begins with you.

That alone is enough. I hope it gives you some guidance and orientation.

Let me say one last thing. All the above will happen much, much faster than people think. We aren’t talking about a timescale of years, really, but probably just months. The effects of Chaosterity will be lightning fast.

When the “freeze” happened, basic systems went down immediately. As they try to lay off the…entire government…time and again…eventually, they’ll succeed, in some fashion, at some level, and then there will be a wave of mass unemployment. Even if they don’t wreck the economy immediately, that doesn’t matter, because in the business world, risk is what matters, and as it spirals out of control, everything from prices to interest rates will rise, while all the markets and system which define your life will go on freezing, into…

Permanently Lower Levels of Everything

Permanently lower levels of everything.

What did Brexit do to Britain? It destroyed it. It permanently lowered levels of everything, and caused the greatest slide in living standards in history. That is what “lower living standards” mean.

This is in a sense what Sinking With the Ship means.

So you must understand all this, well. If you want to turn into some kind of dumb intellectual game, you will Sink With the Ship.

Remember what I taught you the other day?

The point of your life right now is to change it.

Lots of love,

Umair (and Snowy)

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