#BookClub: The New Great Depression – Winners and Losers In A Post-Pandemic World, By James Rickards

Depression is as much psychological as numeric.
The New Great Depression

In physics, “Hysteresis” means a lag between input and output in a system upon a change in direction. In economics, hysteresis loss refers to “an event in the economy that persists into the future,” even after the factors that led to that event have been removed. Hysteresis loss can include the delayed effects of unemployment, whereby the unemployment rate continues to rise even after the economy has recovered. This book is regarding the economic consequences stemming from government interventions and monetary responses to the pandemic. Though monetary and fiscal activism has powered stock markets to new highs, the after-effects on the life of people in the future are unknown and unimaginable.

The post-pandemic situation is quite unlike the 2008 or 1929 global crisis. The New Depression that has emerged from the COVID pandemic is turning out to be the worst economic crisis in U.S. and world history. Most fired employees are likely to remain redundant; or turn to low-paying food-grocery delivery agents. But for knowledgeable men and women, all hope is not lost. The author feels that short-term inflation may take hold before a more permanent deflationary environment develops in the “new Great Depression.”

The bestselling author of “The Road to Ruin” and “Aftermath” reveals true risks to the current fiat-currency based financial system and what investors can do in time to survive during a time of unprecedented turbulence. Drawing on historical case studies and access to the powers that be, the author shines a clarifying light on the events taking place now and what effects those could lead to. This book offers an intriguing perspective of pandemic, global responses and federal interventions, and what to expect in the future in light of those responses.

From the Book

“Deflation, debt, and demography will wreck any chance of recovery, and social disorder will follow closely on the heels of market chaos. The happy talk from Wall Street and the White House is an illusion. The worst is yet to come.”

“America’s greatest economic problem today is debt. The size of the debt blunts monetary and fiscal policy. Monetary policy fails because concern about debt causes Americans to save rather than spend. This kills velocity and makes money printing impotent. Low rates don’t help, because that forces more precautionary saving to meet personal goals. Fiscal policy fails for the same reason. With debt levels so high, Americans expect default, higher taxes, or inflation. All three outcomes are reasons to save more today in anticipation of bad outcomes in the future. The U.S. economy is in a liquidity trap, and it’s worse than the one that existed in the 1930s because the government can’t replace the consumer; the government is the point at issue.”

Depression is described as “chronic condition of subnormal activity for a considerable period without any marked tendency either towards recovery or towards complete collapse.” He makes the important point that depressions are as much psychological as numeric. Risk aversion induced by the pandemic may entrench a high-saving, low-consumption mentality.

“It’s too much to blame Hitler on the Spanish flu. Still, the evidence suggests some linkage between the virus and (Woodrow) Wilson’s impaired mental health and at least certain outcomes that contributed to another war.”

“In a polarized society, the tendency is to single out bad actions of the ‘other side’ and downplay the antisocial acts of those whom one supports. Antisocial behavior has political ramifications, yet the behavioral aftermath of COVID-19 is not political; it’s clinical and epidemic.”

About the author: Ashok Jainani
Ashok Jainani
(MA, MBA) is an independent market strategist and investment professional on devising multi-asset class market strategies and also advises on branding and corporate strategy. He uses proprietary trading tools in formulation of investment strategies using macro-economics, fundamental and technical analysis. He is also involved with a large social infrastructure project. He has wide academic knowledge in behavioral psychology, economics and financial markets and professional wisdom acquired over 29 years working in various capacities with well-known institutions, including UTI, SHCIL, The Economic Times and Mumbai-based stock brokerages heading research and market strategy. His periodic reports have been accessed by US Federal Reserve, has been interviewed by business channels and his views and articles have appeared in local and foreign media. He led an analyst team at a Mumbai brokerage to win ET-NOW StarmineThomsonReuters Awards and ZEE Business Awards 2009. A guest faculty at leading management institutes, he is widely travelled and visited several factories across diverse industries. Authored book titled Market Myths; MacMillan Publishers India (May 2011).Author can be reached at [email protected]

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