Just How Bad Are Things Going to Get?
Surveying the state of affairs, such as markets, the overall economy, and social cohesion—things like this, I remember something very wise I was told when I was younger: “As bad as things are right now, they can always get worse.” I think many of us are presently resigned to the fact that things—on so many fronts—aren’t great right now, and they don’t seem like they’ll get better soon. But just how bad are things going to get? Are we talking “dust bowl” bad? Or are we talking “roving death squads and cannibalism” bad? Neither is great, but one of these is probably preferable to the other.
The tariffs thing seems to be escalating, with China and the US now in a tit-for-tat over who can boycott each other the hardest. For better or worse, the current US administration seems focused on an isolationist approach, and the rest of the world seems to be coming to terms with just what that means. For the average person or business, however, it could very well mean bankruptcy. The tariffs have destroyed margins for so many businesses. Mass job losses are inevitable. Even if you take the most favorable view of the administration’s actions and think this will be good in the long run, it will almost certainly involve a lot of pain in the short and mid term. Right now, that’s our future.
So, if I’m being as pessimistic as possible, I don’t think we will just rebound and have things be smooth sailing from here on. I think Bitcoin will be fine, even if its short-term price action gets uglier. What I’m more concerned about is people experiencing real economic hardship and whether or not this is the start of a very bleak era for the average person. An economic depression means more than a sustained market crash; it means a level of human misery the West hasn’t really experienced in decades—if ever. How do we think about investing in these times? I think another problem is that there has been such rapid change in markets, society, and technology that many of the approaches that have been effective in weathering difficult economic times might not apply.
One of the darker scenarios I see is a collapse of the United States akin to the fall of the Soviet Union. Overnight, professors and middle-class professionals were turned into menial workers and criminals, absent any other opportunities for average people. An even darker scenario is a hot war between the US and China. The United States bombs the Three Gorges Dam, China retaliates with strikes on the Western and Eastern seaboards, and that’s a wrap, folks. The people pushing the buttons won’t be meaningfully affected, but everyone without state-level resources and a heck of a lot of infrastructure is almost certainly doomed. I take comfort in the fact that when I imagine this kind of scenario, it seems completely unlikely, even in light of recent events.
I pray that cooler heads prevail and that we can limit economic destruction for the average person while forging a better future. What that will look like—who knows?
