I know it's hard now, but remember way back, a couple of years ago, when 2020 seemed crazy? Yeah. The good ol' days. By the end of 2020, this dating commercial made complete sense.
The decade of the 2020's crept in with a yawn. Uh... yeah, Happy New Year, another year in the 21st century, another new decade. No big deal. None of us had a real idea just how quick things would get out of hand. Then came Covid, and 2020 spiraled into what seemed like another dimension. "Yeah, everybody, you're grounded! Stay inside for two months. Oh, and you're fired." It just kept getting crazier.
Then, on New Year's Eve 2020, we all whispered, "Oh, thank God, 2020 is over..." We didn't realize 2021 was waiting backstage, saying, "Hold my beer." Apparently that was about the time 2022 started doing shots, and stumbled in a year later, slurring, "That's all you guys got? What this..."
Since 2017, I've been blogging about the financial storm clouds I saw brewing, which led me to believe we were in for at least another Great Recession level event, and quite possibly a full blown Great Depression in the 2020's. Why did I think that? There are two main ideas I saw building, some long and ultra long term trends. When combined, I realized, these are not going to be the "Roaring 20's" again, like the 1920's, which many people were predicting then. It appeared this decade would be really chaotic, to say the least. So, in late 2019, I dubbed this decade "The Tumultuous 2020's" in a 20 chapter book/blog thing I wrote, called Welcome to Dystopia: The Future is Now. In it I tried to articulate a whole bunch of big ideas that had been growing in my head, all interconnected with each other, and most focused on th enext 10 to 15 years.
The Big Freakin' Transition
This is not my idea. It's my name for an extension of a concept, by futurists Alvin and Heidi Toffler. This husband and wife team brainstormed together, and Alvin wrote the books with their ideas, from the late 1960's until 2007. In 1980, he published The Third Wave. While there were a lot of nuances, the basic idea was that we were leaving an industrial-based society, and moving into an information-based society. At the time, more than three years before the Apple Macintosh personal computer debuted, that idea was radical. The Industrial Age was blazing at full steam then, and factories in small, medium, and large cities, acros the U.S., churned out goods. Those physical items would then be sold at local grocery stores, small mom and pop Main Street stores, discount stores like Kmart and Walmart, and huge department stores in malls. To most Americans, it seemed the world had always been that way, and always would be.
But Alvin and Heidi Toffler saw a dramatic increase in information in society beginning. That led to a need for new technologies to deal with more information, and those new technologies, along with changing social norms, were on the cusp of changing everyday life in ways even science fiction writers couldn't imagine. The Tofflers saw much of what was about to begin happening, new technologies, new ways to live, work, and shop, and ultimately new social norms resulting from those other changes.
I've read several of Toffler's books, and have watched every video and interview I can find of him online, multiple times. In the 2010's, I began to realize that The Third Wave idea wasn't just about factories being shut down years earlier, and good paying American jobs being outsourced. I began to realize that the Third Wave, the change from the Industrial Age into the Information Age, was happening in different industries at different times, more than 25 years later.
Telecommunications began the transition from Industrial to Information Age in the 1970's. Rhen came the closing of factories nationwide, brought on by new technology, industrial robots, and outsourcing of jobs to less expensive countries. Music went digital in the 1990's, as we also saw the rise of the internet. Print media began the shift to digital media. In the 2000's, TV, video, and movies went digital, social media and smartphones emerged, and suddenly everyone could share text, pictures, and videos with half of the world. We all became publishers, radio stations, and TV stations, in a sense.
As we headed into the 2010's, the Retail Apcoalypse began, and shopping, the act of consuming itself, shifted from huge brick and mortar stores, to a much more online and smartphone-based model. These have all been, fundamentally, shifts from the old, Industrial Age models, to new, Information Age models. The rate of change has been accelerating. It started slow, but changes in different industries compunded, and change happened faster and faster. It became obvious to me, that the 2020's would be a time of nearly all remaining industries and institutions being forced to change, from waning Industrial Age models and mindsets, to Information Age models, whether they want to, or not. It's a matter of survival.
Alvin Toffler died in 2016, but much of what he and Heidi foresaw, and what he wrote about, is still playing out. The Big Freakin' Transition is my name for the transition period we are in, from the Industrial Age to the Information Age. It started around 1956, by the Tofflers' reckoning, and will go on until probably 2040 or so. Just thinking of society as being in this in-between zone, helps all the craziness and chaos today make sense. At least for me. But the 2020's will be one of the most chaotic decades, with this transition happening in many different areas of society, all at once, that have been lagging behind, like education, banking, politics, law, the automotive industry, religion, and government, among others. The Big Freakin' Transition is the 80 or 90 year long transition period we are in, between the Industrial Age and the Information Age.
The Phoenix Great Depression
Another long term trend playing out now is one I read about in a book by economict Ravi Batra, in 1990. Among other ideas, Batra showed that the U.S. has had an economic depression, or great depression, every 30 or 60 years, going back into the early 1700's. The only time the cycle didn't fit, was for about 30 years after the Civl War as the country got rebuilt. Other than that, if we didn't have a depression at the 30 year mark, then we would have a deeper or longer one, often a great depression, at the 60 year mark. That book was called The Great Depression of 1990, and that's exactly what Batra was predicting.
We didn't have a great depression (officially, a five year economic contraction) in 1990. But we did have a 6-7 year stagnant economic period, officially dubbed a "double dip" recession. The reality of economics today is that even if the Great Depression of the 1930's happened again, with the exact percentages of decline, unemployment, and everything, it would not be called a great depression today. It would be a "Triple Dip Recession" over a 7-8 year period, or something like that. Economists are deathly afraid of usng the word "depression," That's today's PR and political economic world.
All that aside, we could make the case that the 1990's recession was a mild depression. In any case, it was a long, stagnant, economic period, right when Batra said it would happen. The rise of the internet helped bring us out of it. But it wasn't near as deep and catastrophic as he predicted. As the long recession dragged on, Batra faded from popularity. But I was fascinated by his ideas, and I started watching the economic markets, pretty much every day, for years. I would see the markets go up or down, and try to figure out what made them move. I also read about 200 books in the 1990's, and listened to 150 more on tape, many of them business books. I began to understand bits and pieces of how trends happen, and what made the markets move. I stayed pretty broke, working a variety of low wage jobs, while reading like crazy. I didn't invest any money until the late 90's, and then only bought a few commodity options (oil calls when oil was around $12 a barrel). I ran out of money, and my options expired worthless, a few months before oil shot up in late 1998. I had the right idea, but was just six months early. I had to quit my job because of an injury in 1999, and became a taxi driver. That soon led to my first bout of homelessness, as I learned how to make money in a cab.
As 2016 and 2017 came along, I realized that the Toffler's Third Wave, and Batra's 30/60 year cycle of depressions, along with a few other cycles, seemed to be merging. It looked like we would go into a major recesssion sometime between 2017 and 2020, and that economic downturn would force a lot of businesses to shift into more Information Age business models. The economy tried to drop in late 2018, but the markets got propped up, and The Fed soon lowered interest rates. Then, in September of 2019, came the Repo Market crisis, and The Fed started adding much more "liquidity" into the banking system. Then, six months later came Covid-19, and the shutdowns. Suddenly things became to change much faster than even I expected.
In my thinking, the main thing happening, Big Picture, was that we were seeing more and more industries, businesses, and institutions, begin making a shift from an Industrial Age model, to an Information Age model. This usually was sparked by new technology leading to new players and new business models, which put lots of pressure on the traditional business model.
Since I was a taxi driver form 2003 through 2007, I'll use my old business as an example. The taxi industry, which went back to the 1700's and horse drawn carriages, changed overnight, and I mean LITERALLY OVERNIGHT. This happened when taxi companies pulled out the old CB radios, and put dispatch computers in the cars, to give us fares. Suddenly, the next day, every driver had to work 7 days a week, and there were soon many more cabs on the road. More taxis, the same amount of business, and more drivers working 7 days a week. All that led to each driver making far less money. I struggled to pay my weekly taxi lease of $550, and put $300 worth of gas in my cab, before I made any money. I worked up to 18 hours a day, to just survive, and so did many other drivers. And then, a few years later, came Uber and Lyft, to drive nails in the taxi industry coffin. New technology, new business models, new players, that brings Big "D" Disruption to an industry. That is what happened to many industries, and many more have that happening right now. Like so many other workers, I dealt with industry Disruption first hand.
When we put these two ideas together, The Big Freakin' Transition (Toffler's Third Wave), and Batra's cycle of depressions every 30 or 60 years, they lined up. Officially, in the Spring of 2020 we dropped into a deep recession (technically, it was a depression, the GDP drop was way over 10%). Personally, I clock the beginning of The Phoenix Great Depression as September 2019, with the start of the Repo Market Crisis.
In my thinking, The Phoenix Great Depression is a 5 to 7 year period, from late 2019, to at least late 2024, and more likely through 2026-27. In that period I see us having multiple "recessionary waves," mixed with periods of rebounding, most likely due to intervention by The Fed. The Spring of 2020 was the first recessionary wave, and we are now heading into the second wave. There will probably be three waves of recessions, like in the 1930's. There could be four. In addition, we have all these industries and institutions that are going through fundamental shifts in their business model or working model, due to new technology and new social norms. Many are fighting for the survival of the business, or soon will be.
The best example is that we used to shop at Sear's and J.C. Penney's en masse (Industrial Age), and now most people do a lot of their shopping online (at Amazon, eBay, online sites for major retailers, and small businesses with online stores), the Information Age. That type of transition will happen to EVERY business and institution. Like the mythical phoenix, every institution that hasn't made the shift yet will "burn up and die,"and either completely change its operating model, or go out of business. New businesses and models will rise up, and replace them.
So The Phoenix Great Depression is the 5 to 7 year period when we have multiple recession waves AND a huge number of businesses and institutions changing to new operating models. And that isn't going to happen in 12 or 18 months. It will take several years. Whatever the reality is, I believe these years from 2019 to 2027 will feel like a great depression, to most people, when they're over.
There are other trends and transitions happening as well. Respected investor Ray Dalio talks about the long term "Debt Cycle," which is his analysis of some of these same forces, but focusing on how debt rises, falls, and causes shifts over time. It's the same basic idea, but he's focusing on different aspects of the change going on.
So that's as brief as I can explain my concepts of The Big Freakin' Transition, The Phoenix Great Depression, and the Tumultuous 2020's. They are different apsects of the same crazy decade and major waves and forces playing out.
Here's the August 2019 blog post (on my old blog) where I called a "Great Recession" level event coming, even before the Repo Market crisis hit.
This is the post where I coined the term "The Phoenix Recession." I was thinkng great depression, even then. But no one even wanted to hear the word "recession" in October 2019, so I went with this title.
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