The Great Decline of Modern Civilization (with Solutions)

There are three areas of society, all seemingly unrelated to each other, which are all essentially one problem:

  1. Societal & Political: This website will show the growing rate of failure in society on the whole, mainly American. It will use scientist and strong evidence.
  2. Economic: Our world stopped growing decades ago. The govt has attempted to prop it up, but delaying the inevitable will only increase the depth of the crisis when the crash does eventually happen. Our economy has been decaying and polarizing for a long time now.
  3. Technological: The coming general artificial intelligence (AI) and general labor (robotics) will produce a shift so large, and with little chance of humans reinventing themselves fast enough, unless you count play and fake work to be important, or merge with machines.

Let me reiterate: All of these issues are tied together, and when the dam bursts, it will be a flood of problems. For example, the coming WW3 is inexorably tied to the coming changes in economics (we are out of money) and technology. This site offers a sweeping view into the coming chaos and its underlying causes. Most importantly, the question is what can be done about it? Can it be prevented? Possibly, yet it requires a complete change of thinking in the general society. A tall order for sure, which seems unlikely without pain first (I am a social scientist by education, a technologist/entrepreneur by trade, and an hobby-economist by night.)

The only thing that holds the world together today is the glue of success, and materialism, often measured in monetary terms, and when the money runs out, which is slowly happening today, so will the glue that holds the house of cards together. Maybe a decade or two at the most before the world’s greatest catastrophe that we will have ever seen.

If I talk about the problem, then I am a complainer and pessimist, however, if I say nothing, then I just ignore the problem as many prefer to do; additionally, I am now part of the problem simply by allowing it to happen. The world needs to know we are on the verge of the largest crisis in the history of mankind. I will elaborate my predictive risks in other articles. Here, I will summarize the main issues, and use solid evidence to support it.

There are two time periods this focuses one. Most of it focuses on the near term (next decade or two). Some of it, mainly the technological, focuses on the long term risks.

Here are a few examples:

  1. If the world’s banks (central banks) were in the midst of the largest, most experimental, and probably financial experiment ever, to try to keep economies going, do you think most citizens should know about it?
  2. As risk mounts, what types of planning would you do? If any disaster was coming, would you not want to know in advance?
  3. If I could convince you that the world was in real trouble, would you start working on backup plans in case it happens?
  4. It seems important that everyone get a basic education on why we have the wealth that we have, and how long it might last.
  5. There is substantial evidence that America is remarkable in many ways, but it is clearly headed down a dangerous path. and the causes are plentiful, ultimately wealth being one of the main ones.
  6. If the world was deep in the midst of measurable social and moral decline, would you notice or even care?
  7. If AI were about to wipe out jobs faster than they could be replaced, would that interest you? Even if we found new jobs, would they be meaningful, fulfilling, or could we live in an endless state of excess?

The odds of escaping these series of events seem quite low, especially the first few, when you look at the largest evidence.

I will cover the 3 main risks, and then likely outcomes to the risks.

RISKS & CAUSES

Risk #1: We Are Out of Money – an 80-100 Year Process Nears Completion

You see, the USA has been on a slow, steady economic decline for at least the last 40 years, and nothing on the planet can stop it. This is what I call the most important chart in the world today.

How could such a simple chart mean so much? Well, because one of the main purposes of the Federal reserve existing is to smooth economic cycles, which may work in the short term, but in the long term, not so much.

Every time the economy starts moving really fast, the Fed increases interest rates in hopes of increasing the cost of borrowing money. When the economy slows, they decrease interest rates. The main goal of the Fed is to prevent large ups and downs.

  1. In the long term, since 1980, the economy has been slowing for decades.
  2. We are effectively at 0% (since 2008), which means there are no ways to “boost” the economy by lowering interest rates, unless you go negative, which I talk about elsewhere on this site. Last I checked, we were one of the only Western (and other aging Asian) countries not at negative interest rates.
  3. Can you throw money into the system to lubricate the gears? Sure, currency inflation is a tool, used by many empires throughout history. Does anyone not know the story of Rome’s inflation?
  4. If we cant boost the economy anymore, then what choices are there? Likely there will be a depression, followed by global conflict as the lack of money tends to cause. In the last decade or so, the Fed is finding increasingly novel, and likely risky, methods for bailing out, or propping up our economy. The easiest one to see is how they keep buying securities to prop up private debt/equities. I just think of it as either a fake economy or an increasingly communist one–at what point are they no longer a market participant, but the reason for the market existing?

For a variety of reasons, this slowing growth is really a large part behind increasingly large asset bubbles. Why?

Population Decline

One of the most fundamental causes is a change in population demographics. This is not new to economists, but for most people, few realize that as population growth has slowed (fertility usually slows as a result of wealth/urbanization), the ratio of old to young will be a powerful lever in causing the natural decline of a society. I call this one of the concerning charts in the world, and its affecting many Western countries (however, we contribute a disproportionately high percentage of GDP, which is simply how much a country generates in gross income in a year). Combine that with the fact that the costs of senior living are skyrocketing due to both health costs and government programs like Medicare, and the leverage is increased.

Working Age Population

While Western countries keep trying to attract young bodies (a.k.a. immigration), even that has slowed significantly in the US in the last decade. In fact, immigration is really the only thing that kept the US increasing in population at all since fertility rates dropped below replacement levels all the way back in the 1970’s!

Age Dependency Ratio

If the Fed Caused the Great Depression, There is no Reason to Believe it Won’t Substantially Contribute to a 2nd Great Depression

…regardless of their “good intentions.” Milton Friedman provided the best evidence that the Federal Reserve caused the 1st Great Depression by contracting the money supply.

They conclude then that in order to prevent another depression that the Fed should simply engage in the opposite behavior: expanding the money supply (borrowing, spending, and printing money). While this sounds logical, and may even buy lots of time, they also simultaneously increase the long term risk, much like building a higher dam as the water level increases. It simply delays and increases the potential momentum for the inevitable, so when that dam breaks, it will be worse. It may be just as effective to let the markets govern themselves with more frequent short term pains since such are reminders to limit the decay in moral hazard.

RISK #2: AI, Automation Technology & People

Everyone is well aware now that the coming technology has the potential to replace jobs, however, the question is not whether people will reinvent themselves faster than the machines?

  • Will enough of the population be able to make use of advancing tech to avoid a class of techno super elites?
  • Will we hand over so much control to the machines that we no longer understand them or cannot influence their decision making power?
  • Will retraining be possible if machines learn faster than humans, which they are in fact?
  • Even if the technology does not replace jobs, the other reality is undeniable: What will happen in a world with so much excess? Unlimited recreation?
  • I write about tech risk in depth on another blog, keeping this one primarily focused on social and economic factors.

In fact, this is probably the largest risk to humanity, far more than these economic issues. You can read more here:

RISK #3: Moral Decay

Has there even been a case of material success in civilization that did not simultaneously lead to moral decay? This is the fundamental risk. The world may change, but people do not. With our environment changing so fast, and the inevitable generational knowledge loss, this is the ultimate risk to humanity. Moral behavior over time, as a comprehensive subject, is scarcely mentioned or studied, to my knowledge.

OUTCOME PILLARS

I will use economics, politics, sociology, history, and other evidence for my analysis, and you should know that if I am right on even just one of these highly improbable factors, then perhaps the rest should be given consideration as they attempt to show the long-term US and global direction.

PILLAR #1: Increasingly Risky Asset Bubbles & Risk of the Aging Western World

We are out of gas and I dont mean petroleum. We are out of the fuel that drives economies forward, and we have spent the future trying to save it.

The only solution by govt’s seems to be to create increasingly large and therefore riskier, asset bubbles, and why they will not go away. We are now at a govt/ level bubble.

While this has been in motion for 60 years, I disagree with the Federal Reserve’s monetary policy, and will show how they are actually increasing risk each time a recession occurs. Greenspan and Bernake did what they did because it averted short term issues, but inadvertently the just increased long term risk. Yes, they bought time, but it seems irresponsible to have done what they did.

This is not just a US problem. The Western world and Asia attempt to bandage their aging, over-burdened/leveraged debt driven economies, and global risk increases.

This includes discussion of alarmingly risky negative interest rates, which is vital that all Americans understand. If you dont understand why we had a housing bubble, and why everything like homes and education are so expensive, now you will.

These global behaviors are leading to global asset bubbles, and the definition of a bubble is the delusion of the masses, or that 99% of the population are wrong, but only becomes obvious after the market corrects.

The bubbles generally coincide with the stock market crashes (recessions). Ultimately, I would expect that we will be stuck in a long term depression/recession, the likes of which we have not seen in recent times.

To comprehend the growing size, and therefore risk, of asset bubbles: Read pillar #1 here

PILLAR #2: Asset Deflation, Price Inflation, Unpredictable Prices

There are likely to be ups and downs as time progresses. There are lots of puzzles about the world today regarding for example, the persistent lack of inflation. Examining these will show some interesting trends. One that seems most likely for example is a decline in most investment classes, with an increase in necessities.

Further economic struggles seem likely as debt continues to mount. This will lead to further erosion of the US’ credit rating, and ability to borrow (create more debt).

Read about pillar #2 here.

PILLAR #3: Bankruptcy

Bankruptcy of American banks, and globally, slowing the market even further, etc… large in part caused due to leveraged investments that pile up risk.

No surprise if we also see a run on the banks, perhaps to cryptos and gold. The govt. will attempt to rescue them, but if the govt. exceeds its max threshold, then who will bail out the govt?

Increasingly, part of this will continue to drive that power has flowed up to the federal level for the last few decades if not longer, which present numerous risks unseen by most. One is tyrannical behavior as power is held in a few people’s hands, second, loss in individual accountability, and third, an increase level of problems when things, like the banking system, do finally fail.

Read about pillar #3 here.

PILLAR #4: Loss of Hegemony & Dollar Devaluation

When the USA loses its ability to be credit-worthy, meaning, the world will doubt that America can pay its debt back, then the flow of money to America will reverse.

This seems likely to coincide with the end of the petro-dollar, and US hegemony, meaning, the world reserve currency, and our privileged status of being the richest country on earth, the sole super-power and visionary leader of the world.

The process may be slow, but it would seem otherwise if history is a clue.

Read about pillar #4 here.

PILLAR #5: Global and/or Civil War

As  desperate financial times call for desperate measures, and as the current behaviors already hints at this, the chances of engaging in war with Russia and other countries (even domestically) do not seem unlikely.

This will be mainly driven by economic need or uncertainty, which we are already facing, and will grow.

We are not solely limited to external war threats as internal tension increases in the USA, which also possibly lead to civil war. I will show some of the interesting sociological trends that indicate we are moving in that direction. Such a situation is often the result of an unpredictable and poor country. If you think its bad now when times are good, then what will happen when the money runs out?

Some of it began years ago after the last bubble, such as Occupy Wall Street. It will happen again., especially when you understand the great technology changes in the near future that promise to make jobs obsolete.

Read more on pillar #5 here.

Common Questions – FAQ

Will these happen in this order?

It’s anyone’s best guess, although I tend to put them in the order that makes the most logical sense.

For example, the current student loan, farm, tech and other bubbles could pop within the next recession (2019-2020?).

I do think that these will all be relatively close together though. Currently, a 30 year horizon for much of this seems likely, which matches hegemonic theorists, but events such as war could take longer. The next recession will reveal many fractures.

The biggest short term question is: how many bubbles will the govt. create before it is out of tools?

Why Use this Order of Events?

This order is not in stone by any means. In fact, many may overlap over varying ranges of time. The only thing I really try to understand is human behavior in grouped areas.

Is Collapse Inevitable?

Given the large population, and self-interested behaviors of the current population and its leaders, general moral decline that accompanies material success, and the growth trap hegemony provides us, I do not see how the path will change, unless the majority become aware of, and attempt to fix the situation. But even this is difficult. For example:

  • What would need to happen if we decided to seriously reduce, or even eliminate our credit-based economy, accepting rewards before the work is done,
  • If this required the youth of today to work twice as many hours, retirees to go back to work, and major cuts to social security/healthcare spending, would that be possible?
  • Could we gain control over monetary and inflationary policies?
  • If maintaining hegemony requires a constant upward military growth pressure, would we b willing to end it voluntarily?
  • Will people spend their time in helping others instead of spending it on leisure?
  • In short, will the world repent? An old, yet oft repeated message in all religions of the world.

Some factors are more difficult to change such as fertility rates, but even with slow growth, as long as spending maintained balanced, and no debt was owed by future generations (e.g. reduced total debt), then fertility is not a core issue because the whole world is slowing growth. This is why I always return to spending as the larger issue.

Ultimately, the USA needs to be the most moral country in the world, because it is the very center and engine of the world. Other countries are not required to have such high standards, which is why the onus falls on us.

“Many people have predicted the downfall of the US for decades, so you must be wrong too”

I am sure there were many citizens of Rome warning that Rome would fall at some point, and that they were wrong for a number of years. However, at some point they were right. Who will argue that the world never changes?

The most important thing to remember is that each recession becomes one step closer, and if you read the pillars, you will see that each one brings us closer to the edge, not that anyone knows which one we will run out of bandages.

More generally speaking, nations cannot last forever, and like Ancient Roman historian Polybius, I see the growth of wealth as the main predictor of decline. The same Polybius who famously wrote of ‘separation of powers’ also said that mob rule was the most common outcome of democratic societies, and perhaps most importantly that no society will last forever.

1 That all existing things are subject to decay and change is a truth that scarcely needs proof; for the course of nature is sufficient to force this conviction on us.

2 There being two agencies by which every kind of state is liable to decay, the one external and the other a growth of the state itself, we can lay down no fixed rule about the former, but the latter is a regular process.

3. I have already stated what kind of state is the first to come into being, and what the next, and how the one is transformed into the other; so that those who are capable of connecting the opening propositions of this inquiry with its conclusion will now be able to foretell the future unaided. And what will happen is, I think, evident.

5 When a state has weathered many great perils and subsequently attains to supremacy and uncontested sovereignty, it is evident that under the influence of long established prosperity, life will become more extravagant and the citizens more fierce in their rivalry regarding office and other objects than they ought to be.

6 As these defects go on increasing, the beginning of the change for the worse will be due to love of office and the disgrace entailed by obscurity, as well as to extravagance and purse-proud display;

7 and for this change the populace will be responsible when on the one hand they think they have a grievance against certain people who have shown themselves grasping, and when, on the other hand, they are puffed up by the flattery of others who aspire to office.

8 For now, stirred to fury and swayed by passion in all their counsels, they will no longer consent to obey or even to be the equals of the ruling caste, but will demand the lion’s share for themselves.

9 When this happens, the state will change its name to the finest sounding of all, freedom and democracy, but will change its nature to the worst thing of all, mob-rule.”

Polybius 6.57

I discuss much of the cause of decay in detail on this site, but in short, wealth/success corrupts, and absolute wealth corrupts absolutely–time guarantees it.

What Makes You Qualified?

Let me return a question: Who is qualified as an expert, especially in unknown topics? Are the best investors typically because they are licensed brokers or run mutual funds with billions of dollars? Probably not. There are two kinds of experts: the formal and informal. I have a bit of each, along with deep observation of historical trends. Perhaps an expert is someone who predictions are determined to be more correct than not, so I guess we will see

If the Great Depression was worsened by the Fed, which was run by the “smartest people in the room,” then who was the expert? History is full of such examples.

For example, the best hedge funds in the world no longer do well. In fact, many of the top investment banks near collapsed due to bad investments, only to be bailed out. Show me an expert in broad domains, and I will show you a failure. If the dot-com bubble included the most successful businessmen and investors, then collapsed, then who was the expert?

The term expert is best left for areas that are well understood and have countless case studies, and controlled lab experiments to at least attempt to support it.

If the govt gives out cheap loans so homes can be affordable and it causes a massive housing bubble meltdown, while some no-name investors predict and profit off the “expert” Fed’s mistakes, then who is the expert? This is not to downplay all experts, but realize the group think, poor incentives, and reduced thinking for yourself may contribute to future bubbles or “black swan” events.

So, while I think the bubbles are increasingly risky, I may be wrong, but you should read this and make your own conclusions. At least you will be informed of the current situation without media and govt. hype.

Equally important: I think it’s best to look at predictable behavior: E.g. give people free money, cheap loans, removing consequences of default, and how do you think most people will act? Money changes people. While investors like to look at mathematical explanations of market changes, human behavior and perceptions provide a much deeper explanation.

I am a very broad and cross-domain thinker and write about the coming changes in technology, business, and life, which is a big part of the changes happening.

The Benefits of a Reset (& Solutions)

Destruction and struggle are essential facets of life that allow us to be human and have compassion. While war is obviously not wanted or necessary, financial decay may be. An example illustrates this well:

While going on a diet can seem like bad news at first, we can be sure that such a diet is probably overdue and will make us healthier again in the long term. America is the fatest country on earth. Does anyone wonder about non-visible areas of excess in our lives? A few benefits will be that it will drive greater:

  • interdependence (community/familial)
  • caring
  • simplicity in living
  • return of focus to fundamental societal values as the focus on wealth and ease declines

If the world stopped working tomorrow, how many people would quickly get to know their neighbors again? Would this be a good things?

How many of us, and to what degree are we living in excess? Am I the only one that, in general, thinks we have too much in many aspects of our lives? We have far more than we need in order to be happy and in fact, too much of a good thing may be making us unhappy. Of course this varies a lot from person to person, but overall, our waste of time and resources seems excessive by historical standards.

There are aspects of this that I am not sure how we will circumvent such as a potential collapse of population and the growing reduction of human interaction.

How Can a Person Minimize Personal Risk?

Most people ask what they can do about the situation. In short, you take control the decisions in your life, push in the opposite direction, and try to influence others to do the same. Live as if it the crash has already happened. It will likely be more painful for those that dont. How? Mostly just common sense things:

  1. Live frugally: save everything you can (cutting expenses), and taking care of others. The Chinese save 40% of their meager income. Americans save 2% of their relative high incomes.
  2. Eliminate debt: While others go into more debt to keep up with the Joneses, focus on ignoring societal pressure to conform. Focus on education/skills that pays better returns, while it lasts.
  3. Vote: Vote for fiscally conservative policies, which may not solve the problem, but it will prevent the cliff from growing.
  4. Self-sufficiency: Overly-prepared people are not wrong. They are usually just early. Even converting part of your lawn to growing an ample garden seems wise.
  5. Look for meaning outside of work: If you did not need money, what would you do for work or what would you do to create value in your life or in the lives of others? This is important for a few reasons, such as learning to create non-incentivized values, but also prepare for a world where basic living needs may be commoditized.
  6. Self-sustaining communities seem like a wise idea, but impractical for most. These seem to be growing as well. However, developing a strong community is valuable and achievable today. America, and many nations, were built bottom up.
  7. Add value in all that you do: While fed policy for example makes cheap loans, which in turn drive up housing prices, which in turn make houses expensive for everyone, you can still buy the most affordable house on the market, or, buy a fixer upper, and add value to it. Once a civilization loses the mindset of creating value, growth is constrained. More importantly, add value to the lives of others.
  8. Be humble: Well, how to explain or achieve this is difficult to say the least.

The most important point is that you have a lot of control over your immediate environment. The closer the ecosystem, the more control you have. While I may have minuscule control over federal actions, I have large amounts of control of my own life and home. My advice to you is the same: take control. Actively decide. Plan.

What Else Will Happens During This Era? Technological Disruption and the Decline of People

This site does not discuss the technology side of things as much (that is another site I write here), but I discuss some of the most critical factors here.

Technological change is and will be the greatest catalyst, or agent of change, ever, and that includes all kinds of change (physical, societal/cultural, behavioral, economic, etc…). So although we are out of money in the short term, technology promises unlimited resources and power in the future, which brings a whole new set of problems.

I think the best predictor of a major reduction of a society or nation (disintegration), is when they simply become of no value to themselves or those around them. When we live to consume instead of produce, when the struggle to survive evaporates. In this way technology will accelerate the needlessness of the Western world, and the USA and ourselves. Population collapse almost seems like the most likely outcome, although there are some surprising variables hidden in this prediction.

When demand for people disappears, so will the supply of people, already in in process now for many decades. I am not sure what this means other than a world that is run mostly by computers.

Anyways, back to flipping burgers and raising kids…

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