A crippling of supply chains and distribution of products due to restrictive movement policies. Shrinkage of the active labor force. Spiraling inflation and devaluation of 100 global currencies. Depleted inventories for many businesses due to supply chain strain. Higher prices on most consumption-related products and industrial products. Shortages with empty shelves in stores. The political instability is followed by constant protests and the fracturing of social order. Decrease in security and safety for many countries. Drying up in financial lending and credit markets. Decreased economic output for the entire globe. Global humanitarian crisis. Partial food and energy rationing on industrial and residential levels, even within developed economies.
The above is not the script or scenario for the next Hollywood apocalypse blockbuster in the making, but rather a macro situation currently under development across the globe. Everything mentioned above is already in motion, it is just that it might not be noticeable to many yet, because it is happening fractionally within some countries and not others, being multi-themed, creating a cloak of deception for many observers.
Recently globally spread events are likely connected to the same theme and part of the same macro cycle in formation most likely. If the reading of this article makes you discontent and upset, feel free to re-read it within 3 years when the cycle depth potentially increases and the conclusions make more sense since much of the material in the article is projections and requires extrapolations with plenty of research on each topic.
By no means is this article written from the point of fear-mongering, it is just by chance that the global macro situation that has been present over past years rapidly came into depths (2020-22) where it might unfold in some sort of shift towards very challenging conditions in near future, a generational crisis event seen every many decades. The name of such crisis cycle being used in the article: The 4th turning (phrased by Neil Howe).
To back the conclusions and projections in the article there is over decade-long extensive research into all things rigged, macroeconomics, history, and most importantly warfare. Why is warfare as such key? Because if this indeed is the 4th turning, warfare is indeed the key component and its attribute historically speaking, understanding history well along with modern era (hybrid) tactics is critical to connecting the dots of what might be unfolding around us.
Potential for the most challenging 5 to 10 years in the modern era
The situation unfolding in the next 5 years could be the most challenging within last 50 plus years if the cycle keeps progressing as it has been set directionally over past two years. This is not just about the health crisis of the early 2020s or the economic crisis of 2022s with inflationary waves present or the energy issues, this is about a complex multi-directional crisis unfolding as of this articles writing. But because it is multi-directional just like any cycle typically is, it can stay hidden for a long time before it becomes obvious, since things might seem fractured and un-connected on the face surface. Connecting the dots fast is required to see it unfolding early. All 4th turnings historically have been agenda driven, things arent set in motion spontaneously.
The 4th turning
What is a 4th turning? Briefly summarizing it is the end of the cycle or the “Crisis” phase also known as the “Fourth Turning”. After 3 cycles (of many decades) of typical expansion and globalization followed by the last crisis (4th) cycle which ends as a major challenging event for the population.
Do not worry about the term "the 4th turning" so much, I use it in the article because it relates to what some other historians have called it before. The actual name one might use for the generational crisis event, and the last unfolding of the 4 cycle stages is not important. Any name would do, it's the context that matters on what is meant by it.
But to condense it down somewhat, the majority of historical 4th turning stages are going hand in hand with major geopolitical escalation involving superpowers global or regional, such as we currently see US/Russia/China (US-Russia in Ukraine 2022).
This helps to put things into perspective more quickly, because geopolitical shell is the most identifiable factor of 4th turning even that in reality there are many other risk events that are correlated to it (and impact civil population before actual war does).
But do not be mistaken, this article is not a summary of the upcoming geopolitical escalation, it is more about the hidden crisis in the making, fueled by internal players within each continent. It is masked underneath the geopolitical cover story. Even if geopolitical escalation remains well within the proxy mode only (Ukraine currently for example), the humanitarian and economic crisis is well under development to impact a large portion of the global population, as it is unfolding on the sidelines of the geopolitical front-cover stories. Since a lot about this cannot be said directly for security reasons which might arise in the future I will take the right to withhold some of the revelations and the rest is up to every individual to research and connect the dots further.
This article is made to establish some foundation on what has been happening recently globally for those who are looking to dig deeper into rabbit holes some more. And while the article is written from the standopint of large conviction, not necessarily everything might turn out to be true in the near future.
The ignition of the new societal cycle: The case for de-globalization and crippling of global supply chains because of it
As someone who has been researching market and historical cycles for many years, it becomes quite noticeable over time that a large portion of participants are unable to spot cycle rotations fast. This means, spotting a new cycle in the making (opposite from the previous one) in the early stage. All cycles in the middle or late stage become obvious to everyone, but the value extraction always comes from seeing it fast in the making, not late. Which is why early recognition is always so required.
We are likely in the early stage of the 4th turning currently, with the timeline set from personal assumption 5-8 years forward. Using past historical cycles since the 1500s and their average durations as a guide, plus measuring where approximately we started as an ignition point (around 2020). It is difficult to exactly pinpoint since the actual start and finish have no exact start or finish on a precise day.
The main takeaway historically has been, whenever the 4th turning sets in motion, globalization starts to break partially and supply chains become significantly crippled. There are many cases all ready to be made to validate that this is already taking place:
-Russia was recently dislocated from global trade by many trade partners (deglobalization)
-Supply chain constraints present due to lockdowns in 2020-22 creating a lack of supply, and creating inflationary pressures long term (supply chains clogged)
-Formation of the counter-China alliance (The Quad) in the Asian region in preparation for potential escalatory events in the future (escalatory geopolitics)
-Militarization and high increase in military spending for Japan, and Germany as two major nearby powers close to current ongoing key proxy conflicts (significant peace-off data jump if placed within historical context).
-Call for nationalizing supply chains away from China (2016-2023) and global trade by the US, and reshoring of supply chains (trade dislocation)
-....
The above events when combined, (and considering they all took place just within 2 years!) are by no means random or something to dismiss. This is a major risk-off escalation, that if placed within a 50-year historical context stands out like a sore thumb. The escalatory prints show that a new cycle has ignited. Typically once it happens, the genie can't be put back inside a bottle, until the cycle unfolds completely. There are no guarantees but history suggests that is typically what happens.
Every generation has a peak at some point followed by a decline, this is often noticeable only within the rear mirror
The purpose of highlighting this is not the scare or dramatize, but to quickly give an overview of the likely situation. In most cases, strong negative situations catch many off guard because they do not assume things could get as bad, using recent history as a projection. So if you have been living in one of the middle-income countries with slower growth but a very stable globalized path over the last 30 years, whether it's the UK, Germany, Spain, Canada, or similar, chances are the path has only been to the upside. If you look in the rear mirror and that mirror only shows 20-30 years of history, you will not see the key clues of 4th turning there, because you are looking at the same cycle of expanded globalization and a green era. The clues of 4th turning require to look back far enough which means 100,200,300 years.
Since we have lived through such a high technological and living standard expansion era over the past decades, it is almost unimaginable to think the things could turn. But history tells you one consistent fact, that every cycle just before it tops out things look the greenest. The fourth turning historically has been consistent however, indeed, timing has not been the same between that cycle repeating (plus minus 20 years), which is why the current one might catch many more off guard even more due to the prolonged length of the prior cycle towards it, relatively speaking using historical samples.
If you are a millennial your existence (as generation) on the planet most likely was present in an era where the path was more or less to the upside, societal speaking, regardless of your personal challenges or slumps. With exception of some exotic or emerging market countries here and there which had major downturns over the past decades, that could be true for a large bulk of the developed world, the consistent increase in living standards has been the case and one of the major "facts" proving it was the expansion of deflationary environment present, which is classic 2nd and 3rd turning of a cycle (cheap goods and more access to welfare).
However, chances are that we have seen the peak, which was set in 2019. Onwards the path is likely to be a lot bumpier, and for millennials who haven't been through such globally challenging situations yet, it will require some adaptivity. But to be frank, most generations have not been within the developed world, unless you have been alive for nearly a century. When facing a situation like that it is important to always research history well, to see what should be done, people who have not been through challenging situations in their lifetime tend to underestimate how difficult it might get, or set the wrong type of actions which leave them worsening the consequences.
And it's not that finding solutions is easy, because it is not. It is just that being aware of the situation in development is the first required step to even give yourself a proper chance, taking the right steps.
Using the prior cold war and restructuring of global trade as an example
As the global economy kept opening after the last few decades globalization pushed deflation into the majority of developed markets, and kept inflation under control in emerging markets using growth and capital investments as the counterbalancing force. However let's not forget, that within this globalization project if we take the full scope since WW2, rather than just the past 30 years since the breakup of the Soviet Union we can conclude one thing: As the clash between the US and the Soviets deepened, the fractioning of globalization took place in certain places, mostly within Eurasia, or to be more specific, southern Asia and East Europe. Those periods were present in the 60s,70s, and 80s within that landmass.
The results were political instability, conflicts, inflation, and a decrease in living standards in general within that area, but meanwhile, the rest of the globe still enjoyed a good pace in process of further globalization. And one can measure the negative slump in living standards using the 60s-70s-80s and US / Soviet Union as a good measure of what we might face today. Keep in mind, this isn't about a regional empire that is being on the fractioning side anymore (as SU was), but rather most of the globe if we combine all the crises that are currently unfolding (additional to geopolitical ones). This means that consequences could compound higher relative to the 70s.
The reason why highlighting that is that currently we are shifting into a similar position where the rivalry between the US, China, and Russia is rapidly increasing, and the same deglobalization forces are already going to be present within similar proxy territories that were in cold war V1. Which includes the territories mentioned above such as East Europe and South Asia primarily, however, it's important to understand that reach this time will be far greater probably. The process of deglobalization will not be as limited or isolated regionally as it was before, it could be more widespread and passive.
The functioning of global economies in the 1970s for example was not to the same level globalized as it is today, and the self-sustainability rates of economies were typically higher because that was the rational thing to do. This makes current situation in 2020s different in a sense, because levels of globalization and interconnectivity are much higher, which makes the dislocations of one area quickly spread into another. It makes everyone more vulnerable.
Cold war V2 and the fragility of global trade
Whether you realize it or not, we are already within the second cold war, in motion for multiple years. Fast forwarding 50 years, the difference is, that the whole global economy is much more linked together, the supply chains are more interconnected, and on top of that, there are many more countries with larger food or energy or capital deficits because they can afford (low risk) to do so in an era where one can just import the lack of one resource and pay with exports of another (due to safety of huge military alliences). And as long as the whole political situation remains functioning smoothly, there is no need to be afraid of any national security questions that can arise from running large deficits.
Well, what if, the political situation was to progress to where three major superpowers enter into a cold war, where trade security all of suddenly gets shattered? Or what if hidden elements of internal crisis formation within each country globally are forming at the same time (creating local supply chain sabotages without interferance of other countries)?
Regular businesses or population do not notice the significance and the shift of actual conflict status between those powers early (until its already super obvious), so there is no adjustment being done to prepare supply chains for possible hickups, at least not fast enough. This leaves everyone within the community fragile for potential fallouts if they were to emerge in global trade, which is where this situation seems to be heading. The Russian trade and resource dislocation was just an initial step shown in 2022, we are about to see how deep this goes in a multitude of different events that might take part in upcoming years on all continents.
Historically one very key factor to keep in mind. Trade can break up all of sudden, to a degree where most never expect it. For example, two strong trading nations (England and Germany before WW1) can go into break-up mode fast, even if for the population ahead it seems unthinkable to happen as an economic consequence would be significant for each. This is why one does not get such hints ahead from the public or media, only history tells quiet tales through references.
So on one hand many do not realize the depths we are currently marching towards, but on another hand would it matter? Not that much perhaps because most businesses even if faced with reality are either unable or unwilling to relocate supply chains, because there is a large cost connected to doing that. Not everyone has the capital on hand to do it most do not. So it becomes a sit-it-out situation, a stalemate, and hope for the best. For things to eventually turn on their own before unraveling.
Let's look at this point from national security angle for the US, which above all countries by default is the most informed on this situation, since the capital and manpower used to be on top of large-scale issues like that goes way beyond what most other countries can spend. Over the past 3 years as the trade challenges (trade tariffs, chip sanctions, sanctions on companies, ...) between the US and China kept increasing, if one looks at how many small, medium, and large-scale businesses relocated from Asian-based supply chain sourcing and production toward more US-oriented ones, the numbers aren't high at all. Even though the US administration has been directing many large companies such as Apple, Microsoft, Nike, and other giants to start shifting production, that took place very slowly, and the amount of production shifted is until now still very small. There are good reasons why that is, but let's leave those aside.
We have faced a relatively high inflation surge and financial market disruption in 2022 for all the events that happened in the past 2 prior years. If trade between US and China was to start breaking down to a significant angle, one can just roughly assume what kind of inflationary wave that might create, using prior smaller examples as drawing point (assuming Ukraine is not the only proxy conflict that happens in near future).
China is one of the biggest deflationary buffer economies for global products especially, depending on the angle one measures it (ex resource consumption). This assumes, that under the 4th turning, we might see the further unraveling of events within the South China sea, to justify the worrying points above. Again dislocating it out of the cycle it's not so much of an issue (low chance of happening 2010-2020), since superpowers once they engage, everyone gets dragged in typically, and when they do not engage, the majority or in most cases all superpowers are sitting idle. This means if Russia was dragged into a major confrontation (or dragged itself into it) we can assume that historically speaking, it isn't very likely more other large players would not also start to push the cogs into their motion as well. Again this is not to take any direct provocative messages, it is just within historical data as a significant suggestion using the past 150 years.
Once one major super-power gets engaged in proxy conflict near its borders (that might be existential as Ukraine might be at this point for Russia) it increases chances significantly that some other powers start to use the situation to push the agenda forward as well, filling the void where necessary, mostly for the reasons of deflection.
As the trade between US and China keeps weakening and the output of Russian resources towards global markets collapses, the result of both those actions is a few factors, which will be by far key drivers on the macro side for upcoming years. A quick summary: It is highly inflationary. Which is if one assumes we still have at least 2 years of this minimum, and most likely not just two but four, we can assume we have not seen the end to inflation globally by any means. It will remain sticky and possibly escalate in the future into higher CPI prints as well over next years.
Free speech and conduct of "assessing the misinformation", the signature print of the 4th turning
To highlight again, this articles focus is not about geopolitical escalation, it is to highlight the broader picture of 4th turning in itself, because that goes beyond just geopolitics.
To return to the prior title point about "generational top and then decline", there is a good case to be made that 2019 might have been top in the free speech exercise globally but especially regionally. We have seen the best of the times on free speech internet and perhaps later even in public life. Or we could call it top in free use and access of information with no central policy makers "special touches".
As we progress deeper into this new cycle, the limitations will start to increase probably. If one studies it historically, it starts slowly by testing the terrain, and then once there is no initial resistance (because for the majority it takes so long to connect the dots that things are well into motion already) the agenda of modifying or curating the speech becomes severe. This is the signature print when it starts to happen globally as we are seeing over the past two years, it is one of the most significant "hand reveals" of 4th turning in play. Especially if it comes from multi-angles and is not just related to a single event to invalidate the chance of isolated action.
Two freshly formed "speech and content modification" laws over past year as examples:
Canadian bill C/11:
EU Digital services act:
A very important factor to keep in mind is to distinguish the global 4th turning cycle and not to confuse it with just smaller events that happen during any decade:
-regional proxy conflicts (Iraq 2003),
-rising inflation in a particular country due to mismanagement (Zimbabwe),
-the insurrection against the EUs elite class within a single country (Greece 2015),
...or some other similar past isolated events are NOT the 4th turning cycle indicators.
Those events unfold typically spread out within any other globalization prone cycles as well. If one region faces one larger event every 10 years without follow-through on many other continents it does not signal a major cycle shift in play.
The key to distinction is when deglobalization and fracturing events start to happen globally, in many countries at once. That is a 4th turning signal, which we currently can observe taking place. All five key lower points are present globally and increasing, and typically correlated to 4th turnings (if they happen at once, together):
Combinatory-crisis indicators highlighting the 4th turning
1. Rising inflation
With fewer Russian commodities going into global markets since 2022 (due to sanctions), there are either partial shortages of those present or likely to be in near future (energy inventories, metals, etc), which leads to bidding on higher prices as a result of it. Whenever one depletes a nation's inventories, the price nation is willing to pay for critical resources can start to rally significantly and fast, especially developed nations can have deeper pockets.
We have not seen shortages yet (since inventories had buffers and were stored well ahead of sanctions), but it might happen in upcoming years as inventories get depleted without restocking the shortfalls now that sanctions are in place. The consequences of that are already noticeable in global energy inventories falling (but not being only result of Russian sanctions):
As the weakening of the Russian economy drags down the neighboring Asian or East EU economies, the industrial output of those countries decreases, especially if they face a shortage of energy supplies needed for industrial production, primarily Germany. All of which over time leads to inflationary pressures rising. This is not to establish the worry about empty global inventories, but rather to establish a much more likely scenario first, which is a lack of supply leading to prolonged higher prices of raw materials and therefore consistent inflationary pressures globally. That scenario is highly likely, although we shouldnt exclude potential shortages of resources in the first place either as a secondary scenario (but lesser likely).
So why don't you see the excess worry in the EU or Germany for that matter on this subject?
Well:
1. There is limited action the country can take to improve the situation quickly (if at all), so worrying and creating media attention doesnt help either
2. Many underestimate long-term consequences because of short term "nothing is happening yet to worry about".
On another hand the supply chain issues in China from virus exposure and measures taken such as lockdowns, tariffs, and decoupling of financial markets between the US and China, along with US companies starting to exit the production space and relocate (Apple, Nike, etc), all of which within the next years will probably lead to a reduction of deflationary products from China. Whether one likes the quality of their products or not, it is indisputable that Chinese and South Asian products, in general, were a major contribution to deflationary force exports around the world by creating excess supply, lowering both labor force costs and product goods costs, a win-win for consumer.
As this engine in upcoming years starts to slow or shut down, the result will be inverse, as the EU and US will have to start sourcing a lot more locally, relocating supply chains. This increases costs and creates a more inflationary environment for everyone, especially for the end consumer of those products. Sure one can rebuild Chinese-made products at home, but at what timeframe and what cost (infrastructure, capital, labor force...)? The answer is inflation plus time (2-4 years ?). A lot of inflation.
2. Rising frictions in nearby proxy countries
The friction between those major economies does not happen strictly within the space of their relations that much directly, but most likely within their proxy countries. Whether its Ukraine, Taiwan, Pakistan, Kazakhstan, or any other key proxies, typically the frictions arise there as the struggle to maintain those countries within the grip of each of the superpowers increases the chances that one of those superpowers will use covert means to "restructure" country politically. Either through use of financing mass protests that slowly lead into revolutions, using armed forces within the country that turn into rebellion, sabotaging supply chains that lead to economic breakdown or similar other means.
All of this is already well in presence in at least 3 key proxy countries, but many more will likely come about in upcoming years. To understand the significance of this, those conflicts act as a large draining force on the economy of such a superpower. For example, if the Russian economy gets significantly weakened by the long-lasting Ukrainian conflict, then chances to recover political ties with their trading partners decrease and as their economic situation worsens due to large deficits and inflation it can also lead to a collapse in economic output, which even further increases global inflation rates. Those proxy political frictions, therefore, are major further inflation drivers, because they prevent the "boat to turn around". And the same would apply to China or Iran if any such similar conflicts would happen in near future. Regardless of outcome on such proxy escalations, the guaranteed process in between is: inflation.
3. Formation of new geopolitical alliances
Creating new alliances just when 4th turning starts is common historically. Typically when new alliances are formed, some previous ones are broken up, but not necessarily on the political side. For example, a new political alliance can be formed but the consequence of breaking the trade alliance instead. For example, entering into BRICKS while breaking from the TPP. This is sometimes inflationary as previously made deals now have to be scrapped and restructured with the capital cost.
Using 4th turning context historically as an example, often ahead of the biggest generational conflicts, the chessboard gets to be reshuffled the most. Meaning the new partnerships and strategic alliances start to connect just a few years before the actual large-scale escalation begins.
One can track over the past 2 years the formation of (1.) The Quad alliance, which is a major Asian-regional re-aligment, (2.) expansion of NATO towards Russia (Finland, Sweden, Ukraine), and (3.) closer cooperation between Russia and China. Those are not small-scale changes.
4. Protests increasing globally with no breathing room
We have seen a large increase in global protests which in many countries ended up with the storming of political embassies or presidential residential units (Middle East and South Asia in 2022). We even saw it in the United states (2020), which out of any is the most important signal regardless if many would consider it "non-event".
The protests had many different themes whether it was the increase of living standards costs, inflation, or the loss of trust in government, the actual reasons don't matter. Truckers, farmers, or just any other citizens, it is not the key signal. The key only is to observe the increase in pace, happening globally at once. As that is not normal and something one would notice to such a consistent degree unfolding (for example since early 2021 the different versions of protests in many countries just keep going without any month of disruption in between if one tracks the entire globe).
5. Living standards decline globally or worsening conditions
There are several ways to establish a thesis that for some portion of the population the situation has worsened. While not all have yet been impacted negatively in the early stages of 4th turning (work from home in early 2020s), and some even benefited so far greatly (upper 0.1% of population) it is the overall population and average that matters to establish the core confirmation on this.
We have seen a :
-shrinking of personal savings,
-businesses being closed down for a while, or disrupted in operations 2020-22,
-businesses dislocated or related due to deglobalization political issues (EU-Russia, US-China),
-inflation worsening the costs for the average person on food and energy consumption, and more.
And to highlight the same point again, it matters because it is happening globally for a large portion of countries at once. The slump in living standards happens in any isolated country every so often, it is not a signal of cycle formation. It is, however, when it escalates at once in many regions.
The hybrid warfare of 2020s fourth turning
We have established that current context of situation between US and Asian challenging powers could leading to a frictional environment where Asian economies (in farther future of 2030s) could start to pose a large challenge to the US and historically often situations like that did lead to major regional or global conflicts, as powers have to figure out who will take the charge from here forward, and the decision for that is made by whichever country emerges as the winner from the emerging conflict.
Suppose we were to say that this is indeed where the path would lead us within the next 10 years. If that is the case, does the control structure of the US (as the current leading power) believe so (and its key institutions)? The answer to that is a firm yes, there are many clues to look for within the national security apparatus on finding that answer. Similar clues can be found within the European agencies financed by the US, which work to orchestrate the geopolitical views of the EU aligned with the US on most occasions, those institutions are within the same opinions and post a lot of similar research material.
Now let's drag the point forward, is it within everyone's goal to avoid large-scale military conflict? Answers to that can as well be found which point toward yes (but historically that didn't stop the escalations in the first place).
So leading structure of what we could call western powers and the Davos/G8 team all agree that the future should be set by those institutions, but at the same time, it is impossible to avoid challenges posed by the emerging and growing Asian sphere of influence. That primarily means Russia and China, but potentially even India in the future, although the scope of that article is a strict limit to a 5-year time horizon no more, which invalidates India for now as major influencing power.
So without going into direct conflict to settle disputes which would be very unpredictable, there is another way how to ensure the G8 team still gets to lead the path forward (not from my but their view), which is by creating a cloud of global chaos. Orchestration of a globally present attack from the nation-state within (not the outside attacker).
A situation that would drain the economic capacity of challenging countries to fight back as they would be too consumed with extinguishing their fires at home, by creating situations where the companies would not need to be asked to relocate supply chains, but rather the supply chains would start to fall apart "naturally" due to the chaos induced from many different angles (virus, proxy conflicts, inflation...).
Meanwhile, the conflict is in stealth mode and also in western countries in form of similar asymmetric modes creating equal chaos to prevent any disruption of power (viruses, free speech clamping, supply chain disorder, inflation issues).
Therefore addressing with the same vector angle two different separate issues, for those obviously who are actually within the control of G8 and western societal order which would have such interest to "manage situation" in such way.
Therefore we enter into what could be called evading the hard WW3 by creating the soft WW3. And the word soft is by no means non-harmful, it is just a much more covert and deceptive way than what most would typically expect from global conflict. Just as cold war v1 between 1960s and 80s was quite covert and indirect in many ways, imagine that but multiply by a few fold to get the idea. Keep in mind one very very important factor: The world has become more complex than ever before due to technology improvements, which makes for use of much more covert methods of warfare than ever before without being even noticeable who is directing it to many observers. The more complex the science and technology gets over time, the more complex the cold war environment can as well. Since people had hard time following up on 60s/70s events at that time (while complexity was lower), you can imagine why it could be even more population left in the blind in current times as complexity increases and so does deception.
The idea of soft WW3 is through the use of hybrid warfare.
One could call it global controlled demolition, controlled (from the top) walking into the 4th turning. The 4th turning is unfolding as of writting of this article with the use of the umbrella of asymmetric warfare:
-global hacking and ransomware attacks (Albania, Iran, etc...). Attacks launched directly on major corporations and state actors, unseen before, even that hacking attempts on small scale are not uncommon.
-exapanding global energy shortages through policy decisions and mass industrial fallout (Pakistan, Turkey, Sri Lanka, India, China, and the list will expand much more in 2023/24).
-health crisis attacks (pandemic)
-large scale proxy conflicts (Ukraine but few more as higher potential in 2023-25)
-financing orange revolutions, protests to cripple supply chains (multiple countries a past year with extensive highly organized protests-dishonest protesting)
-information warfare and through mass censorship to ensure every citizen is unquestionably following the interest of their state whether they realize it or not (Canada C11, EUs Digital services act, CCPs strict surveilance ...)
-attacks on supply chain infrastructure (toxins, raw material factories burning across the globe at unusual time pacing, chicken farms and food processing plants burning down)
-animal viruses shrinking the meat supply (HN1 and swine flu), although those were present years before, last year has seen a large increase
-etc...
To highlight: The above events can happen as incidents if isolated. Things like that happen any year. What makes them a 4th turning ignition is the mass scale of the same events happening globally and at much larger than just an isolated event scale ratio (5X or more multiplied across 10 rather than just 1 event). It's the consistency that matters to solidify an unusual activity present.
The command center, the head of the octopus
It is important to establish the command center structure to understand just where the directed actions come from, as those countries are likely to remain in a more stable situation in upcoming years relative to the rest. That of course if things progress as per cycles typical path, and there aren't any unexpected turns such as proxy conflict somewhere going wrong and escalating into a direct large power-to-power confrontation after which the the path projection gets disrupted.
The role of the US within all of this ignition of 4th turning is not surprising. Historically dominant powers or empires have in such challenging/rival situations (facing growing China and Russia) started escalation somehow by creating provocation, to weaken the challenging powers. Whether through the use of cold war methods or direct conflict provocation, either or. This is how dominant empires remain to be so by being the ignition forces themselves, not waiting for others to make a first move.
However, this is where things get much more unusual in a sense, where the global corporative elites at the center of Davos in a small peaceful country of Switzerland come into play as significant contributors to their own vision, of what this crisis should be about. Or rather where to take it.
Again, historically not unusual, as leading elites of nations often collaborate to create deepening crisis events for the sake of solidification of power within such states, sometimes for the personal wealth effect, and sometimes for the sake of just displacing competitive elites somewhere in the same or other countries, regardless of what happens to passively involved population, or sometimes because of their own vision of where to take the evolution.
For elites to create a plot within the already unfolding crisis and merge such crisis into a bit different direction is again nothing new from the historical context. However, I do believe that many tend to underestimate the comparison of actual power on the executive side between a nation-state such as the US or the Davos-WEF on the other hand. Surprisingly those come way closer than many might believe and many actions over the past years have proven so.
Because the control of this managed deconstruction/reconstruction of supply chains has to be maintained with source control being as much unaffected as possible (to ensure the situation doesn't escape into unmanageable and no longer controlled) the control centers are probably going to remain under less negative exposure than rest of the countries or regions globally. That if there is no "rebellion" taking place at some point aka revolution.
The US administration actions are therefore highly coordinated with the corporate structures represented at Davos. The power of US institutions (military, agencies, financial capital) is leveraged and used along with key corporations represented at Davos. They both need each other to execute the agenda. And by "they" obviously we are talking about the ruling class, since most population is not part of that play, the sandbox is pretty tight and small.
Those places might be as well large safe-havens places in upcoming years, with a large influx of refugees or new citizenship requests if we assume that 4th turning indeed does deepen. If you see a large interest in people trying to move to places such as US or Switzerland, within next few years, you really shouldn't be surprised.
To keep it short, due to where the command center is positioned, it is most likely those countries will face the lower damage from all the foreseeable disruptions that will happen on a global scale. Those are less likely to shift into some deep crisis scenario, however with that said, this is global event unfolding with all nations being affected.
Peak inflation? Think again. The fourth turning cycle is typically met with multi-years inflationary period.
As someone with decent financial market research experience, there is nothing worse than calling a peak cycle just when the fresh cycle has started. If this is being done wrong, it is possibly damaging to one's actions taken since mean reversion will be expected to come every moment but that moment just keeps not happening for a long time. Remember we are probably only 2 years into the 4th turning most likely, early into the cycle. If this indeed is the 4th turning of course.
If there is one thing that most "peak inflation" proponents in markets out there have in common is that they do not understand the significance of just how much the whole geopolitical and macro situation had to do with the inflation we are seeing, as that is needed to establish the right view for upcoming years. To think of everything that just happened over the past few years as a coincidence that will soon be reverted into the normality of 2015s or 2019s would be the most likely wrong expectation. Historically every few decades the larger region goes into a large inflationary cycle that lasts for several years, this time the difference is it won't be just the larger region, but as per current inflation data prints, the entire globe instead is upticking in inflation.
The 4th turning by itself does not provide a meaningful clue that inflation should peak early into the such cycle. Historically peak inflation in 4th turning happens when the cycle is about to exhaust (7-15 years into formation), and that clue has significant destruction of economic activity as its front signal ahead. This means since we do not see that yet, and there is a lot more cooking into the upcoming future on all the hybrid risk events that were listed above in the article, it is critical to understand that most likely inflation not just that it has not peaked, but it will be with us for a long time. Inflation comes down as disruptions come down, for which a significant downtick in yearly disruption is needed, and currently, we are only up ticking since 2020.
The short term CPI prints on inflation might swing for sure, but long term big picture we are probably heading to higher levels. It won't be a straight ride either, it is likely to be similar to the 70s environment with significant inflation&deflation turns, but overall path is higher for an almost entire decade.
In my view, it is extremely likely that inflation has by no means peaked, and will last for at least several years at a progressively increasing pace. It might not be a straight-up higher CPI print month after month, there might be short-term setbacks for the month up to a few months (due to central banking policy responses), but on year to year basis most likely there will be higher prints each year from 2021 to 2026.
Not all economies are equal by any means, however. Those the most reliant upon global trade will have higher CPI prints, and those more self-sufficient will have lower prints. But high energy and food imports are potentially the biggest future determining factor for which countries might recieve high inflationary spiral.
On top of that other factors will dictate which country gets higher prints versus the rest (such as nations' social-cohesiveness-and-stability, security, and energy self-sufficiency).
So if we take into conclusion that inflation will keep dragging at higher numbers than it was previously common in a globalized deflationary economy, we have now established a good starting ground on how that will impact everything into the next years and get rid of peak inflation mindset is probably a good idea in the first place. This is critical to understand for those engaged in markets, as the prolonged inflationary environment can change valuation models for economies listed on equity markets and change flows, meanwhile weakening of bond markets can create bankruptcy fallouts even further worsening the picture.
It goes without saying that in 2022 we have seen the biggest plunge in bond markets and as well large equity price plunges, but if we assume inflation will remain sticky, this is not the end of the story yet.
And to keep in mind, many market pendants that are highly convinced the inflation has peaked are typically invested in equity or crypto markets which above all prefer a deflationary environment, therefore they are biased. Its important not to operate with wishful thinking and rather see reality for what it is and reposition if needed.
With exception of a few market participants, I think it's fair to say that almost all of us would prefer to see the inflation peak and mean reversion back to the deflationary environment that we were accustomed to for the past two to three decades, but the article here suggests to bring realism and critical facts about situation forward and perhaps adjust to harsher unwanted change in reality regardless of wishful considerations. From a market standpoint, there still are opportunities, even within inflationary environments, it just requires more skills to ride short-term cycles well.
If we do take into account that inflation will keep dragging on, and if you were to agree with what was said above, especially if you understand the geopolitical background of all actions that took place recently, then ask yourself: What could be next? How should you position? And by that, I by no means only mean about financial markets, but anything that you could be impacted by the rising inflation on daily basis and security frictions that the 4th turning could bring. And that does include a lot of things, health, security, productivity, food or energy security and income issues, investment exposure, and a lot more.
Preventive actions taken depend highly on the individual's location and country itself and not to mention a good amount of luck on swinging through over upcoming years.
Preventing escape-inflation by creating depression
A 10% rough increase in yearly inflation (global average in 2022) does not seem to be that much, and many will not even notice it as early into the cycle as consumers. If you just keep your sight forward and don't track much media or talk to primary supply chain businesses, chances are you might not even notice such an inflationary spike until two years down the road.
The negative effects of inflation build up over time, gradually and then exponentially (if large structural issues are causing it such as 2020-22 changes). This means the initial uptick is not an issue until later down the road which makes many underestimate the actual impact when early into the cycle. Negative effects can be easily dismissed early, and then over time, the effects start to grow. This is true if inflation upticks significantly versus prior years and then stays elevated to high extent, as we have seen in 2022-23 so far (uncontrolled inflation spike with hold).
If you believe the inflation could keep rising for 5 years straight due to the 4th turnings cyclical path of fragmentation of globalization, you have to start making expectations right now on what that will do to living standards globally within 5 years (since we have global inflation spike and not just regional), especially in more fragile countries.
In some emerging market economies where central banking policies might fail, the inflation could be doubling up each year, reaching large % moves YoY, but in developed nations, although it is possible, it's much less likely. The control structure will likely limit chances of escaping inflation by creating a forced deflationary environment and halting inflation surges at some point through demand destruction policies (spending cuts, consumption cuts, etc...). This means demand destruction is going to be the likely path they will take in G8 economies, but as a business or consumer do not think that this is helpful as a deep depression-style crisis can arise from such actions. One dodges the inflationary spiral by creating a depressionary crunch (large unemployment spike, falling wages, market crash...).
The fallout of supply chains, starts with too expensive energy
Without going into too many details, we can sum up that the two main weaknesses where the supply chains are currently under pressure and will potentially remain are 1: Food and 2: Energy. But primarily energy is where things are playing out so far, because food has much later lag effect. Both of those components are a must for a functional society and it goes without the need to highlight, that if there were major failures in supply chains to abrupt in just one of those two or both at once, the consequences would be severe.
The likely result of all the turmoil that is cooking over past two years are:
-higher energy, food, and other natural resource prices
-shortages of both energy, primary energy products (fertilizers for example) and food as result in near future (2024-25 potentially), leading to even further higher prices and countries starting to hoard the resources, blocking the exports (everyone for themselves as much as possible as a result which is partially what we have seen last year by a block of wheat exports by many nations along with fertilizers bans on exports to maintain local production priority).
Gas price spike over last two years:
Goes without saying that many people are under impression that the surge in energy prices started exclusively because of the Russian-Ukraine war which erupted in 2022 February. The upticks in energy and inflation happened much sooner before that and were the result of supply chain constraints caused by forced lockdowns of the economy of the mid-2020s. If you lock down the economy and shrink the flows of supply well what do you expect to happen? Keep in mind, it takes half year to a year before the economy displays the crunch of supply chains on actual asset or resource prices. That is why it wasn't that obvious initially.
This is critical point to be aware of because it highlights the functioning of 4th turning which is not just about the Ukraine proxy war. The supply chain attacks have been set in the path well before that.
Increasing food prices on chart below:
Food prices have been soaring as well, but it is important to keep in mind, this is not a highly liquid and time-sensitive resource, meaning it reacts much later to actual issues within supply chains (unlike energy). All the negative effects will likely build into food issues only over time and start to impact the globe within a year or two and no sooner. There have been already many warnings given by the global technocratic institutions that hundreds of millions in emerging market countries could face hunger issues due to prolonged effects that might build into food markets (mostly due to too high prices to import food, or energy issues causing slump in domestic food production).
It is the possibility that a portion of the global population might face large hunger or starvation issues if supply chains and fertilizer issues keep ongoing (many countries are unable to produce nitrogen-based fertilizers if gas prices are too expensive).
Just as much of the population might underestimate just how sticky inflation could get in upcoming years, the food issues will likely as well be underestimated in how significant they can become if things don't turn around on the energy and supply chain side.
Remember this, everything you see listed under the current 4th turning cycle is a long-term issue, not so much short-term. This makes the negative effects that much easier to underestimate since people arent good at creating good long-term projections on adjusted situations typically. It goes back to that "placing the frog in hot water or slowly raising the water temperature" argument.
Too high energy prices are therefore the main initial issue, as they create issues down the supply chain. Without affordable energy, food production can suffer (expensive natural gas prevents farming vegetables in greeneries for example in Italy or UK).
Too high energy prices combined with falling energy inventories also disrupt industrial outputs, leading to a productivity slump across the entire industrial supply chain to an extent, as we have seen in Turkey in 2022 for example.
Now one might add green energy agenda additionally to that list (2020-2030) and one is creating even less affordable energy over the short/mid-term in the already energy-troubled global economy. Sure in the very long run (20 years) that is the path to create extremely cheap energy, but the route to that if forced too quickly can cause major disruption and create a squeeze on prices.
Those events listed above are by no means isolated, they are connected to the same origin. The energy crisis unfolding, which is likely to escalate globally especially within Eurasia in 2024-26 will have the same signature prints as the examples listed above.
The Eurasia is likely set to face energy crisis (the result of which will most likely be shortages as US has experienced in 1970s, but deeper) unless the events that caused it were to be unturned and fixed quickly over next year. Chances for that are probably slim.
The lower the buying power of countries residents is the more fragile the situation, especially if a low-self-sufficient economy (highly dependent on imports)
Suppose the crude oil and natural gas prices reach the points where the consumer is forced to significantly tighten consumption due to the cost increase somewhere in 2024. If such conditions were to take place it can happen much quicker in developing nations than it can in developed nations.
For example, since living standards and wages are higher for a resident of the US relative to a resident from Ecuador, but the crude oil or gas might be sold internationally within similar benchmark prices, there is a pain threshold above which at some point Ecuadors consumer is no longer willing to pay for gas to fill up the car, but the US consumer still might because there is more capital at use and energy for US consumer is priced within petro-dollar status allowing less inflation-import exposure. The % of residential income exposure on basic items or materials is much higher in emerging nations (which makes for potential quicker supply fallout). In emerging market economies residents tend to pay a high % of their monthly revenues towards basic items such as food and energy, therefore the threshold at which the imports might become too pricy is at a much lower price relative to the consumer from let's say within the United States. The buying power of the United States can eat away the lunch of other nations if the energy crisis was to escalate.
Not to mention that if trade balances shrink of nations across the globe (as we have seen in 2022) and dollar reserves are depleted, it can become difficult for nations to import energy or food in such a situation. This is basically what we have seen in Sri Lanka and Turkey as well. This means that the strongest buying-power nation keeps consuming, and lifting prices higher while the rest are having trouble accessing the resources creating a supply shortage due to economic fallout and demand dampening.
Dollar reserve depletion and trade balances worsening in many countries:
Now while all said above doesn't matter much in normal market conditions, it all suddenly starts to matter a lot when resource and dollar (Forex) prices all of sudden reach absurd levels, as we have started to see with many raw resources within 2022 (such as industrial gas prices or electricity for Euro markets for example). While we haven't seen it with crude oil yet, we might likely see oil at such high prices somewhen in the future 2 years, using the 4th turning path as a guide, if geopolitical escalation in the South China sea was to come about (Malacca strait and Persian gulf bottleneck).
Demand destruction is the cure to inflation - the major pitfall in such method - hint (it could lead to a multiyear depression style crisis)
Since policy makers and central planners cannot magically increase the supply of resources or products, the only solution to decrease and dampen the prices is by creating demand destruction, thought many policy combinations.
One might assume that proponents of demand destruction that have recently been very loud in the media have their point. If prices go too high, someone "should" stop paying for consumption and the prices return lower.
Lets quickly outline why this is a very short-term and very oversimplified view and is highly likely to turn false in the upcoming few years, if 4th turnings disruption is the actual cause of inflation creation (agenda driven cuts on supply).
Sure short term some demand destruction waves can come about, but long term on year to year basis, it is more likely that inflation will always front-run the demand destruction force in environment we are currently in, therefore even if some countries are "shut off partially on the demand side" the prices won't come back down too much before they head higher again. This is because the multi-directional forces on supply chain issues and constraints of supply are currently much bigger than any damp-on-demand that is or can be created unless there is a major economic depression style crisis.
However, as a consumer or business the most important point to comprehend fast:
In the 4th turning cycle, the state takes much stronger control and becomes often very oppressive. This means underestimating if central planners can really make their best go on demand destruction would be a naive assessment most likely. It just as well could happen to a large extent. One should never underestimate the disruption ability of state central planners in such times. As individual one should prepare for it as best as possible.
Examples of already under-implementation demand destruction acts (2021 onwards):
-raising interest rates, creating a crunch on the credit ability of people to borrow (world)
-limiting electricity or heating use for residential use in some countries (multiple countries)
-limiting the use of electric vehicles use (Switzerland)
-limiting movements under lockdowns (world)
-limiting livestock production by farmers due to emission cuts (Netherlands)
-...and more to possibly come
As the prices for resources increase globally, certain countries might either decrease imports, or the consumption itself might decrease (for example consumers driving less on daily basis). And if emerging markets countries are first to implement such measures, as we have seen so far over last year it is being the case, then why does that matter and how does it disturb the "demand destruction" argument for prices to then come down? Lets quickly outline that below:
The large bulk of global resources are produced within emerging nations, for each ton of exports being reduced on a national level by such country it sooner or later starts to affect supply chains and industrial production of other nations as the supply of exports shrinks (steel producer in US unable to source South American iron ore for example).
The output on both sides is reduced. If many countries start to suffer from the reduced output of resources they produce because global prices of crude oil or gas have just reached too high levels or because demand has shrunk in developed nations due to demand destruction policies, that results in a large number of natural resources and products is being stopped in production and exports. It doesn't get produced anymore, and therefore does not reach the consumer within developed or emerging nations. This in total decreases supply and keeps bids on the prices. Which means higher inflation is likely as result.
The only way to prevent inflation hike to happen is if some central policy actions forcefully start to weaken demand within developed nations to prevent a rush on supply-shortened resources. Which could come in form of interest rate hikes, lowering of employment, and many more. Which we have seen already to some extent. But as mentioned earlier, this backfires because destroying demand in a developed economy creates developing nations to reduce exports, creating shortages or lowering the supply of such exports within the circulation, as a net factor increasing inflation. This means the more demand is destroyed, the higher the base inflation could get over time.
But one might say, that surely is just incompetence of policymakers so we have to deal with it. If you think this is an incompetence issue you have missed the point of what the 4th turning is about. Events within 4th turning are historically planned with big picture agenda. Mistaking incompetence with agenda is classic beginners strategic mistake.
Examples of how "controlled demand destruction" can backfire:
Think of it this way (due to too high prices of energy central policymakers re-adjust demand consumption and abilities of industrial and consumer use):
- an X actor imports 2 units of crude oil instead of 5 which is done typically (less demand)
-an X actor consumes 2 units of crude oil (gas stations) instead of 5 (less demand)
-an X actor produces 2 units of export resources or products instead of 5 units typically (less output and supply, more inflation)
Meaning that reduced supply output is nearly a guarantee because it is the effect of demand-control policies. This in turn means, that more and more demand has to be destroyed and taken away for inflation to be kept in check. It can create a spiral (if used in excess as seen lately).
As the economic activity shrinks due to demand fallout, whatever nations export shrinks as well. Think of Venezuela 2014-2022, they sit on the largest stockpile of crude oil in the world, yet they are unable to export much due to collapsed economy.
If the industrial output is crippled because all of a sudden there is rationing going on with energy, what happens next is the export cutoff. Countries to ensure that the local population is getting by the exports are cut and prioritized for consumption locally, or if exported then at much higher prices, to pay for increased prices on imports to prevent trade balance from progressing too deep into the red.
The more taps that are eventually turned off from such major resource and industrial-producing emerging nations, the more of this long-term inflation gets spilled into the globe, the more exports get shut off, and the less stuff gets out there, which bids the prices of the lack of those products in countries where either consumer or industry demands them.
So all of this again, under a normal situation is not an issue, but if supply chains are disrupted from as many angles as we see recently, and if prices of energy keep rising, all of sudden this becomes a very real problem.
This leads to the fact that no matter how much demand is removed or destroyed short term, the actual long-term inflationary consequences are potentially far bigger.
De-globalization of supply chains and its impact on global population
What we are seeing above are the effects of de-globalization in formation as a signature of 4th turning in the making. In a global society where an excess of the population relies on functional global trade and supply chains to sustain a highly populated globe, an inverse disruption of global trade could leave cascading consequences everywhere which go far above just leaving a negative economic impact on individuals, they could create existential security issues (if 4th turnin was to deepen in next years). At no point in history has the planet been more globalized, at no point in history had we more population, and at no point in history have the consquences of possible disruption been so high.
The potential fallout of businesses globally due to upcoming energy shortages and high inflation
Whether its the UK farmer that can't pay for expensive natural gas to heat the grown vegetables in greenhouses (due to negative margins), the Germans chemical industry that has to shut down production due to the inability to source enough gas (Ludwigshafen plants cant operate on energy deficits), or the Chinese electricity-producing utility companies that have to stop coal-based electricity production due to negative margins.
The end product is now made at reduced supply, which results in supply chain misfunctioning, and decreasing inventories, which over time fuels higher prices on everything from a base material down to the end product. It becomes a loop for inflation.
An important factor to keep in mind is the stories that came and went in media. There was a lot of dedication given in the mid-stages of last year until the attention just went away after prices started to come down, but the structural problem never really went away. It will likely persist for years, the inflation, Russian supply cutoff, and supply chain disruption this is all still ongoing.
This means there will probably be resurfacing of the above issues at a much larger scale at some point down the road, the timing of which could be difficult to tell. But we can already see that most fragile countries are already facing full industrial blackouts/cutoffs as the first sign of what might come such as Pakistan, Turkey, and Sri Lanka. The point is, do not hold the media accountable to paint you a long-term picture that you have to comprehend, this is on you as an individual.
So let's assume that inventories of food and energy are likely to get reduced by some amounts in the upcoming years if structural issues do not get solved. At which point could it become an issue? The question is highly subjective because it depends on the price hikes one can afford to absorb.
The result of any upcoming reduced supply is likely to be price hikes that have been the story of the past year in many countries.
But you have to think broader than your situation. Sure as a consumer with decent cash on hand perhaps you can afford steady inflation hikes for 2 years if the situation does not improve. But can your nearby businesses and citizens afford it as well? The equation has a fallout at the point where the more you tighten the margins and expand expenses (typically an inflationary process) the fallout of business already begins very early. It is just that it takes a while before it starts to impact everyone. If you can afford 5 price hikes on food by 5% increments per year but your nearby food processing plants or farms cannot keep up without hitting negative margins too deep, well then you have a problem. Because at some point in the future, those fallouts of farms/processing plants/manufacturing facilities can start to add up to shortages in supply and therefore actually reduce available consumer supply. Again this is not a fictional scenario, it is what happens in every highly inflationary-prone country historically. It is a combination of deflationary and highly inflationary scenarios at once. We have to think globally about where this situation could lead, if things are not improving and it's important to step outside of your perspective and look around you, are businesses able to absorb it?
The drain on global resource inventories starts with energy but it could end up trickling down to consumer products if prolonged for two years. This is why tracking timing on how long energy crises and issues are lasting is key. The longer they persist the worse end long-term effects we could see as a result. First year is not nearly as bad as third or fifth could be.
But drain on energy inventories or price increases is already an old tale, the media has already chewed on it, what has not been signaled at all however is the next step.
As the inventories decrease and prices rise of primary resources, and the industrial outputs shrink, the consumer will at some point start to notice the sharp rise of products on shelves (perhaps 2024-26).
Mind that due to the length of the globalized supply chain, you do not see too much of that yet, as this can take up to a year or two before it reflects in the consumer price.
Every piece of the supply chain on its way absorbs a portion of the cost increases, starting with primary resource producers, to refiners, to final exporters, but the consumer is last positioned in the supply chain, so over the initial first one or two years everyone else but the consumer is likely eating up the costs. It is only after those companies are no longer able to do that (or are facing bankruptcy) is where it starts to get passed on to consumers. Lag effect.
If it isn't obvious to you yet as a consumer it's mostly because you are the last one in the supply chain and you aren't well in touch with people on the ground of primary supply chain distribution links. Again, most points in the article just like this one are all projections, if 4th turning was to progress as it has been and deepens over the next two years, the projections as outlined above could come into formation.
Because of the above said if the energy crisis gets unsolved we could see persistent inflation globally, which will force central banks to keep elevated interest rates into the recessionary environment for possibly 3 years or more, causing significant damage to businesses and credit markets.
We have already seen the fastest rate hiking environment in decades but keep in mind, this is all before we have even seen any long-term effects of sticky inflation. This means we could globally face elements of depression (dampened demand from central policymakers) combined with still elevated inflation (because inflationary forces are too strong to be muted), so the persistent downward pressure on both liquidity and growth. It is likely that this will lead to bearish movements in global equity indexes over long run, valuations will be reduced.
Rise of global protests, political insurgencies, color revolutions
Something rather obvious is the upcoming rise of protests across the globe: If we take for the fact that this crisis is not localized but rather global it shouldn't come as a surprise that major uprisings could spring up just about anywhere. Think of it as the Arab spring of 2011 but on a global level which could be seen in not just a few countries but rather dozens of global regions. Based on risk factors it could be that major protests arise in 50 countries across the globe just all within a single year. Well, this is partially what already happened, but so far on somewhat limited scale (per sector typically).
Data on chart below likely confirms an entry indication of the global 4th turning likely, as jump is rather massive:
Historically speaking, when such a major jump in protesting or rebellion happens fast, it typically leads to something darker down the road, especially if in multiple regions or countries and remains consistent.
But before you get excited about protests as "the solution" to take back control from repressive or incompetent governments , keep in mind this (and why the control structure of 4th turning wants you to protest/rebel):
Protesting has a major drawback as it adds fuel to the fire preciselly when supply chains are already in weak state. It cripples and slows down the supply chains even more, as part of the labor force becomes further unavailable and blocks certain transport routes and friction in social stability arises. Again not issue if one protest happens in entire content within a span of a month, but when many start to roll at once within region (as we have seen 2022) and keep going, the supply chains get further clamped.
The more such protests rise globally the more it feeds into the global energy and supply chain crisis as a whole, but most importantly keeps inflation ticking slowly higher. The more transport dislocation and labor force fallout constant protesting causes, the more it trickles into higher inflation slowly. And you would not notice that, unless you carefully observe the compounding effects of 100s of protests globally, assuming those keep up in pace over the next years. One might think you are taking control by protesting, but you could just as well be digging a further hole by doing so as well especially if unsuccessful in agreements made. And this is not call-to-no-action, it is just to think twice before making a move.
If we head deeper into energy crisis in upcoming years and inflation across the globe reaches higher levels, the people will be "naturally" called to action and protest. It doesn't take too much to rally people, even against the likable political ruling structure (as we have seen in Sri Lanka), that is once things turn sour quickly enough. Remember the key part: quickly enough.
As for what was mentioned on supply chain issues and targeted attacks mentioned below in the article, it isn't as much of an issue when one protest rises in an X country. Nor are two, but the issue starts to build into global inflation rates, once the protesting rises across the globe and keeps rolling just like the lockdowns on coronavirus kept rolling for almost two years. Locking down the economy for a week in a few countries won't do much, but if done on a global level, at a continuous rate (half a year) and now you have global supply chain issues and massive long-term consequences of inflation (which is why inflation indexes started to uptick globally before Ukraine invasion).
Trucking, farming, oil transportation, railroad workers, industry workers, think of any subsector of supply chains and you might notice that those protests have been building up recently a lot. When the world is facing a reduced energy supply (Russia, Ukraine) and a reduction of resources and labor force (labor participation rate decline), adding any longer-lasting protests just fuels the fire of more issues because it prevents supply chains to heal. To be aware of how sometimes the masses seek for expression of opinion through protests as means of helping with chances, while the reality might be completely opposite because the long-term consequences aren't seen well, especially if you fight a battle you can't win. This is especially true if victory chances to achieve something on protest are extremely low, which just might be for most protests.
Hidden hand financing of protests (trust little which you see in media)
Additionally, there is an issue. If one studies the historical playbook of how a few different intelligence agencies or superpowers in the past helped to finance and create major uprisings through the use of covert operations to switch the country from the team read to team blue over past 100 years of examples, it shouldn't come as a surprise that current crisis in many countries has likely influx or a helping hand as well, to ensure certain countries destabilize perhaps faster than they might otherwise without any such additional "help".
Without going into details, as literally with just enough capital there are endless micro routes that can be found to achieve political destabilization within the country (as long as enough weakness is present within the state locally), it should be kept in mind, that all you see in media might not be as spontaneous as it seems like. The way how those movements are often financed is that only a smaller portion of protestors (10-20%) might be covertly run, while the rest is honest participants, but that small portion of participants that are financed (and trained) is sometimes the core heart of the movement often there just for sake of creating troubles and no sincere interest in achieving anything other than disruption.
The dollar capital markets within the potential 4th turning
1. The dollar shortages in the global financial system and emerging markets
In an inflationary environment dollar shortages are not uncommon, there are many countries to study as use cases. Let's highlight how inflation and a geopolitically risky environment can lead to the strengthening of the dollar globally, causing shortages at some point down the road.
One might be thinking, with FED and their latest QE in 2020/21 and 35+% of monetary base increase within just a year surely anyone isn't going to project the dollar to increase in value relative to other currencies in such circumstances? Well, you would be wrong assuming otherwise, as the USD has strengthen versus most currencies past year, mostly because a new variable was introduced: risk-off with inflation.
When a strong risk-off environment happens globally (2020-22) capital flows turn into safe havens, even if FED creates plenty of new money/liquidity in between. That, in turn, becomes a rolling ball, because, under the petrodollar system, many nations import energy priced in USD. As USD strengthens versus other currencies, energy becomes more expensive, and the trade balances of countries slump south. This is one of the key mechanisms that leads to shortages of dollars within the system and keeps upward further pressure on the USDs move. It is why the US is in no rush at all to solve the Ukraine situation, in fact, quite the opposite as it keeps demand for USD high and its value relative to other currencies lifted. Petrodollar afterall is one of the US-es main passive weapons.
The 4th turnings key signature print is increase in risk-off environment. One should study well which asset classes are impacted positively or negatively by typical risk-off scenarios.
The globe works as one united capital mechanism more or less, even in an era where supply chains might be breaking to a certain extent, the capital can still find a quick way to escape. So when emerging economies try to compete by printing money on a level par with FED, the capital will flee from the emerging economy into the US, because when you can choose between two less-worthy currencies, you pick the one with more safety and historical stability. This causes dollar shortages locally (physically) often in emerging nations in such inflationary conditions as were present last year, for example, Kuwait or Egypt being such a case.
2. Global political instability and case for a stronger dollar in the next years:
The dollar has typically without almost no exception performed well against currencies in which countries faced security or capital shortfall issues. That has been true to a very high extent for the past 100 years.
If one takes what was said above in the article that security across the globe could worsen amidst rising protests, rising prices and political instability in near future, the capital across the globe could flee to the US and within financial markets from riskier currencies and capital markets.
Those flows have not been priced in yet, even though USD has already appreciated in 2022 significantly. While yes rate hikes and tightening by FED have been priced to some extent, the large insurgencies of political instability across the globe have not been priced in terms of capital outflows into the advantage of the USD. There could still be a lot more upside because of it, assuming the path of 4th turning goes deeper.
3. Sticky inflation and the case for a stronger dollar in the next years:
Another reason why the appreciation of the USD will likely continue is the fact that the US is an energy and food exporter as well inflation exporter. When combined with the fact that USD is the reserve currency, and one might need USD to buy imports in those resources in other countries, this increases the demand for the dollar globally. The so-called petro-dollar recycling.
If global inflation causes prices of crude oil, natural gas or food to uptick (as they have), this means the nations globally need more dollar buying power to make up for imports. And since nations only have limited USD reserves on hand and those cannot be printed by their local central banks, and trade surplus cannot just be magically created quickly, this creates a negative trade balance in such situations as we see currently which ends up devaluing the national currency and even further increasing the need for more dollars locally. It is a process we have seen happen last year in many nations at once.
Japans record trade balance slump example recently:
(Keep in mind, worsening the trade balance quickly is a much more serious issue than expanding countries' debt. Often economists and those who track markets spend too much time looking at debt while completely neglecting trade balance changes.)
But one might ask, so what if the USD strengthens (along with raw materials increasing in price)? Why would it matter and how would that lift into further global inflation?
As the dollar strengthens, the import costs for many import relying economies start to increase, and the trade balance often worsens. Countries' export income stays the same, but imports become more expensive. The deficits increase, the debt quality decreases causing bond prices to slump, ability to finance growth in the economy decreases, all of which fuels the rise of inflation not in the US but everywhere else primarily. The most common factor is cut on growth and exports which in combination can create an increase in total global inflation.
So strong dollar is not an issue if the global economy is normally functioning with healthy supply chains. And high prices of energy are not a problem either as long as economies aren't buying oil denominated in dollars. Well turns out, that this is exactly the situation we are facing currently.
The result of which over a few years is likely in some countries (2021-26):
-Currency weaknesses
-Capital outflows
-Economic growth drops due to expensive imports
-Inability to access more debt in international markets due to worsening conditions
-Financial bubbles within a country deflate due to outflows and instability
The new reserve currency rises from the ashes in aftermath of the 4th turning?
Suppose one was to force the global system under one single major currency block, (just as the Euro idea was sold to multi-colorful European nations), but one would want to do it on a global scale instead not just regional. Well, one would be faced with huge resistance and challenges, differences between many economies are too large to just sell their monetary system control to some outside central bank which might or might not sit in Switzerland.
Well theoretically, but what if there is a significant credit event in the near future where it becomes a need to adopt such global currency just as the world had to accept USDs reserve currency status after WW2 because that was the only undamaged regional credit system backed by functional economy after the last 4th turning (unlike most economies that were broken at the time)...
Because of the proximity of regional supply chain ties and some decent similarities between economies, it wasn't that impossible to create a monetary union for the EU. However, doing it on a global level between emerging nations might be a much more difficult challenge.
First and most important of all it would most likely face resistance to be accepted unless the system is pushed after a significant crisis event. Which historically is how global systems tend to be restructured.
Just as the dollar was solidified as a partial global currency after the last 4th turning event in the past century it wouldn't be too big of a stretch to see a next step of that, but with a different currency instead, issued by IMF or BIS perhaps (some globalized technocratic institution as likely candidate).
Such currency is under testing/research/formation progress for years already (IMFs SDR currency) makes one wonder why is it being kept there. Just as an interesting research subject? Unlikely. Remember, history leaves clues that globalization is broken down so that it can be re-forged again into more globalization after crisis events, and a monetary system is a part of such reshaping taking place typically.
Most of the situations that the IMF or World Bank got engaged in with emerging nations over the past 50 years, were typically within some dire economic downturns, where countries were in major need to get credit from anywhere and there was no other place to go.
Just as world war 2 resulted in the formation of the new global monetary system, which helped to consolidate the reach of globalized institutions, it is possible if the current macro situation was to get into major depths, that system would be re-consolidated once more, or with other words "upgraded". A global monetary and credit union that would operate on top of nation-state economies and eventually merge with them fully, lead through emergency lending done by IMF and WB for economies that would face inflationary collapses in the upcoming developing crisis. So keep eye on those stories resulting in upcoming years to see the progression of the system developing, there is a good chance it just might.
If you are wondering why mentioning this "highly speculative" thought about potential new global reserve currency formation somewhen shortly, it is because after many 4th turnings historically global financial or monetary system had a major restructuring phase. If one was to discuss a potential about it at any random time, it just might be within this cycle.
Supply chain prioritization on per country basis
One factor important to keep in mind is why certain countries can quickly become more exposed in the current situation than the rest is due to the prioritization of supply chains. You see, when all goes well the global economy functions very unified, at least seemingly so. But it's only when things start to break down on the supply chain side, then it becomes noticeable that supply chains are primarily made to go towards the highest bidder, and towards nations with older reliable supply chains, most of which are developed nations (G8). Hence prioritization comes into effect, when supply chains become disrupted globally, meaning the goods and resources start to flow toward G8s more than they might toward emerging economies.
When prices of natural resources and products begin to rise, developed economies can outbid emerging economies and therefore create shortage situations in emerging economies by doing so, whether intentionally or not. In turn, this hurts developed economies as it backfires due to shrunken trade in the future but thats whole another story. This is very important to understand since the current European energy crisis (due to the Russian supply cutoff) will be an example case where we might see Europe corner out many competition nations from the supply of energy. "Everyone for themselves" effect, the inverse of the “All for one and one for all, united we stand divided we fall.” phrase of The three musketeers.
This is for example a situation we currently see in Pakistan where they have been unable to source LNG gas for the past two months due to competitiveness issues:
Emerging market countries could be outbid-ed for certain natural resources, and we are already witnessing this. However mind that it can get still worse from here since currently everyone is still relatively stored on inventory capacity globally, but when those inventories are drained (over the start of 2024 perhaps), some countries could start to blame each other for causing an economic war between each other. This is why the Russian supply cut-off and energy crisis stories went out of media circulation so fast, it's because of relatively well-stored global inventories in G8 nations especially. It will take a year of churn through a lower supply environment before those resurface again probably.
LNG in the article above is just one example, however, the energy is the most critical out of all resources, because everything comes to standstill if there is not enough energy for the economy to operate. Even a country that is somewhat self-sufficient in food supply can face a large crisis if energy demand is not met to quite a large extent, as we might see within Pakistan lately. Pakistan is a major food-producing nation, yet an energy shortage can dislocate any country into a security problematic situation.
As the image below suggests, a high portion of Pakistan's electricity production comes from Nat Gas and Oil which can quickly become a mounting issue if not supplied frequently. This concept applies the same to some other nations as well that are in a similar situation to Pakistan (electricity production through imported gas/oil which is common for many countries).
Electricity Blackouts and the potential for global depression if the energy crisis persists
Compounding all the effects of supply chain disruption over the past 2 years led by high energy prices in 2022 and supply dislocations of 2021s lockdowns, we could see how this could reflect in high electricity prices, especially within the nations which have been doing a lot of electricity production from natural gas such as Europe and China. That obviously would not be an issue if nuclear plants take their share and keep production of electricity running, sadly that is not the case as nuclear plants have been shutting down across Europe over the past 2 years at worrisome speed. It would normally not be an issue, but when done in an energy crisis environment it leads to lifting the floor on electricity prices higher and could even lead to shortages of electricity in future.
It is possible to foresee that there might be selective blackouts (a few hours) within certain countries on daily basis, within the Eurasian landmass. Those blackouts or often called brownouts might last for a few hours. Germany and Austria have been already making smaller preparations for such events to take place, but of course in reality no nation can prepare for that if it was to happen on a continuous basis. An individual can to some extent, but a nation cannot. And if you think that blackouts on large scale are a science fiction in 21st century, you havent been paying enough attention to certain economies over past two years and issues they faced.
This is an especially scary prospect because barely anything can be as damaging to overall economic productivity as to see blackouts in the 21st-century economy.
So far we have witnessed large-scale blackouts in 2021 China, 2022 Turkey, 2023 Pakistan, 2022 Sri Lanka, Lebanon 2022, and some other countries. To highlight again, this is a worrisome development because it is happening in many countries which are not close to each other and is part of complex crisis development the one that surrounds the 4th turning. It is by no means all about energy issues that cause the blackouts, this is just one of the developing sub-crisis.
Considering the US is well under-way to pursuing green energy agenda which is removing fossil fuels from the market, and aiding the energy crisis to deepen, and the fact that the Russian energy supply will be cut off probably for many years, and adding on top of that nuclear plant's shutdowns (which are a major high liquid source of electricity), we have a long term recipe of the energy crisis to remain present.
This presents the potential for both deflationary and inflationary pressures on the global economy. On one hand, it lifts prices and makes things more expensive (everything in the supply chain) but on another hand, it dampens the activity (if blackouts shut production or too high electricity prices for the industry to handle) which results in forced demand destruction and leads to actual depression style of environment. That is obvious if we assume this keeps ongoing for a few more years and effects keep building up. Obviously, since the point raised in the article is that 4th turning still might have several years to go.
The two highest risk areas for upcoming blackouts are probably Europe and China, but let's first address how current electricity prices in the EU are already at unsustainable levels for industry and they could lead to large-scale layoffs and industrial recession within the EU and China if unsolved.
The chart below highlights the rising costs on the electricity side for industrial use, for the EU.
Without the Russian gas, the EU will be left without the needed energy source which will be difficult to get from elsewhere at least within the next 2 years. This will likely force much of its industry to either shut down or relocate, and that does not include just the industry which operates through the use of natural gas. We could see a lot of EU industries facing huge layoffs, and shutdowns in output which will only feed increased inflation rates globally. Especially Germany which is the heart of the Eurozone will see the biggest issues along with Italy, all of which could lead to the devaluation of the Euro (at least against the USD). And before anyone jumps to a conclusion on how devalued Euro might be good for EUs exports, don't. EU is a major energy importer, a weak currency is the last thing that one would want in the current energy crisis.
As a result of high electricity prices in both Europe and China, we could see power rationing. This means the government tells you as consumer and businesses to:
-cutting the use of air conditioning
-significantly limiting the heating of homes with gas to spare it for industry
-30% of forced consumption reduction in many households to "help stabilize energy markets"
-shutting off industries that are heavily electricity intensive
Again those are by no means my suggestions, due to increased power of state in 4th turning it is likely that we will be taken under more forced measures from top down.
Factory shutdowns in China
As a combined result of continuous viruses and lockdowns, very high electricity prices, and overall supply chain bottlenecks, and geopolitical fractioning the factories in China might start to shut down at a rapid pace somewhen down the near future. The result of that would be highly inflationary for the whole world, on the consumer level mostly, because cheap deflationary products that China produces would start to shrink in export output, leading to surging in prices globally.
This includes especially items like electronics or similar things that the rest of the world cant produce, or at least is not producing at any high capacity.
One might think that this is just a fictional scenario. If everything said above keeps in the direction it is currently set such as:
-geopolitical proxy escalation US-China-Taiwan (de-globalization of trade)
+
-high inflation (turning margins for companies negative)
+
-energy crisis and shortages due to less supply (shut-downs)+ =
Then the result of that would likely be that the biggest net energy-consuming nation-China would end up facing large energy and capital deficits at home, eventually leading to factory shutdowns to some extent. This is if we assume that the 4th turning cycle keeps its direction of escalation as it has been leading since 2020. It goes without saying that if such a thing would happen, it would be highly inflationary and recessionary for the global economy. Since we had major proxy war starting in 2022 in Europe, it would be within realistic parameters to think and worry about ignition of potentially another one, within Asian region.
Crippling supply chains by targeted sabotage
How does one know when a train accident is an "honest" one because it is part of the typical yearly accident rate, and how do you know when there is active sabotage likely present?
This is a very long answer to explain, perhaps something for another article because it requires in-depth research and connecting the dots. The summary being: A lot of events we have seen happen over the past two years were not by accident.
Suppose we were to say that to achieve the deepening of the 4th turning cycle and global complex-crisis event, the supply chains would have to be constricted and crippled to the extent that the flow of resources is reduced, feeding into the global inflationary loop.
Think of it as something that usually happens in a war situation, where supply chains are damaged across a large area (typically through sabotage), but this time it is on a micro-managed scale spread through fractional smaller scale events that on a single case basis seem harmless, but when compounded over few years might start to contribute and build a larger damaging picture to supply chains.
To most people all this goes unnoticed because it is by no means their area of focus, if anything one article about a train derailing they notice in media surely won't help them to build a cohesive picture of what has been happening to supply chains across the globe. This is why even though some of the recent events such as pandemics have been "in your face" most recent supply chain events are diverse enough so that the majority do not connect the dots. A train derails here, toxins are spilled there, and a chicken farm burns in another area. For separated events, it is very easy to dismiss them as random and just "an accident". But sure goes without saying that some indeed are that.
Because we live in an interconnected world, where resources are priced globally to the same benchmarks, the attack on the grain supply train in Canada for example, is at the same time attack on prices and supply availability in China, if there are enough of such repeated events that happen trough just a year (short amount of time, packed with enough disruptive events). A large amount of particular resource supply removed from the market through disruption in country X is felt sooner or later in country Y even if far away.
This means that for the first time (due to globalization) we have a concept where attacking oneself as a state actor could mean attacking another country at the same time (on the supply chain level), and the effect could be inverse in terms of damage applicability. Meaning a developed nation attacking itself can cause much more damage to other weaker countries that have more fragile supply chains, especially if such an attacking nation would be the US, the biggest supply chain oriented and the one impacting global benchmarks the most. This is especially true because developed nations can absorb much higher inflationary costs and damage to economic output than emerging nations can, at least before the damage is felt and rendered into GDP later on.
So if you think it would be impossible that a portion of events that happened recently could be due to planned sabotage, and whether that would even make sense, re-read the part above.
To make sense of targeted sabotage, keep in mind that inflation scales relatively across the countries. A 1 % point added to inflation in a G8 nation is 3X or 5X the actual inflation print in an emerging nation (even if reported numbers are the same), due to the higher portion of personal income that residents spend in such nations on basics (energy and food primarily).
To understand what was said above and why the US stands out above the rest, and how that can be deployedas an advantage due to much higher buying power on chart below:
(The relative importance of individual countries to total consumer spending power 2018)
Meanwhile, while the world has eyes on all those bigger events (such as the pandemic in 2021), behind-the-scenes fractional attacks are happening on supply chains. Those events even though seemingly random are there to continue the path of further disruption that is already set by the bigger events mentioned above. Typically those micro-attacks resort to:
-derailing of trains and ship fires (reducing supply of resources and creating delays)
-gas fields explosions (in multiple countries)
-refineries explosions (filmed drones attacking refineries)
-petrochemical plants explosions (China and other countries)
-food processing plants fires (unusual uptick in high grade processing plants fires)
-less reported viruses on animals (pork, chicken, crude rubber plants, etc) in US and China decimating the population of farming animals
Each processing plant that goes out of function adds a little bit more to global inflation, especially once those numbers across the globe start hitting the numbers in hundreds and hundreds of large-scale plants, the impacts now all of the sudden can be very significant long-term.
It doesnt seem much but when H5N1 virus outbreak is combined with farms burning out it equals to:
It is higher probability that we will see a continuation of those micro-supply chain disruptions in the upcoming three years (well into 2025), where within three years the total number of processing capacities that went offline could be at much higher numbers than it is today. The compounded destruction could be in hindsight much more obvious for those willing to connect the dots. Remember the point highlighted early in the article: Early into the cycle few see it, in the middle of the cycle majority notice it by then. Using the starting point of the potential 4th turning cycle 2025-7 could be the middle.
While each of those smaller scale events, such as a refining factory plant going up in flames in the middle of Shanghai might not seem much of a global issue, mind that in isolated cases maybe not be so. But when combined into numbers of hundreds in a very short amount of time (2021-22) and combined with already major disruptions in supply chains from the events mentioned above, now it's where the actual consequences start to pile up. 10 major oil refineries being shut down and a few going out of function can quickly contribute to a 5% of reduction of total refining capacity for a country such as the US on the gas pump, leading to price hikes. And just as an inflation 5% hike might not seem much in year one, it becomes a much larger impact in year 5, when that number is due to the long term erosive nature of inflation.
As we can see from the chart above, supply chains are actively in focus and many companies are addressing or discussing the issues either because they want to or because they have to. While within the general population, the issues don't get too deep into details, the companies (bigger ones) are already faced with a very challenging situation. The key message of the chart above is if supply chain was to be some unicorn word that is largely overused recently, it's better not to think of it this way.
It is a must to recognize that major restructuring of global supply chains is possibly coming, and for them to be rebuilt it is likely the deconstruction process will take large negative consequences before that.
The links might be partially broken to be re-linked again. What is meant by that, is reshoring supply chains, making them shorter and more localized. That is not my advice but if one researches the ongoing key policy strategic guides from US and EU technocratic institutions this is the plan for the near future.
The point is not to argue if this is good or bad, it is to recognize, that if the restructuring of supply chains were to happen on large scale, the consequence of such actions would be guaranteed elevated global inflation. For a few years or more.
Viruses and then some (why else WHOs new pandemic treaty?)
If one was observing the 2020-21 lockdowns situation it was incomprehensible how many people were obsessed with whether the locking down of this or that place is the right response, or whether the health conditions of X and Y person were related to a virus or not. Speculative parts in motion.
Meanwhile, most missed the non-discussible part of the equation on how the virus response (lockdowns) will leave a footprint for a long time to come, even once the pandemic is taken under control, through:
-disrupted supply chains (lack of workforce and shortage of materials)
-elevated inflation levels
-economic downturn and shrinked savings
-de-globalisation of trade (shortened supply chains) and more inflation
-repressive health policies that could lead to a reduction of free speech/free will
While everyone is obsessed with nonessential information and thinking one step ahead, the key questions were all three steps down the road. Instead of asking yourself whether the government and health agencies did the right thing, looking a few steps ahead, at what could happen as a consequence of the actions taken, it wasn't difficult to see inflation rising after the deflationary crunch is done. If a new pandemic comes around again somewhen shortly, remember the indisputable fact is, that we will have more inflation as result, because the supply chains will get more deprived of resource shortages within the system as a result and lack of production and delays could expand it too. And that doesn't even address any health issues that might or might not happen as a result of the virus or responses to it. And if one assumes we are early into the 4th turning, chances are we could see more of the "themed" situations happening as result.
A glimpse into the future is already there for one to check within the upcoming legislation, (for some reason certain corporative non-state actors are preparing for a world where there will be a need to be constantly aware and ready for upcoming pandemics, (which is a bit strange considering we had no issues over 100 years containing those using prior methods)).
https://www.europarl.europa.eu/doceo/document/P-9-2022-000921_EN.html
Whether it's monkeypox or any other type of virus that pushes the globe into another pandemic, (justifying the above documentation to be pushed into legislation globally) it does not matter, there are good reasons to assume that more pandemics could come, which might justify the global health crisis and management responses that will end up reshaping actual political level systems to large extent as well. Again...if it happens.
Considering the actions taken (ei lockdowns) from central policy planners the supply chain disruptions that came from such responses to the virus - were actually harsher than the actual danger or damage of the virus itself to the population in 2020-2021 (if dollar vs human cost can be compared). Obviously using subjective "capitalistic" view to judge that, but it could be well argued so unless you take under the assumption that every single life saved was worth the harshness of resulting negative damage to economy due to lockdowns. Which means, if there was an V2 situation in near future, one can now use the blueprint on where the chain reaction and consequences might go for inflation and demand.
Potential for largest solidification of US power since the WW2
Key: The 4th turning cycles historically lead to either two results:
-Dominant empire overturns the challenging powers and increases its power
-Dominant empire gets overrun by challenging powers and falls apart or slowly starts to decay
This means the next 10 years likely will be critical for the US and the direction it will take after the cycle completes, assuming that we do see the cycle progress deeper in the first place.
Typically large powers trough history have established their foothold through geopolitical escalations (within the 4th turnings), which allow the global or regional power to be absorbed as a "last man standing" effect starts to take place. If supply chains and production is going through major dislocations elsewhere globally then one country or continent that manages to avoid it at least by a decent degree typically historically had the opportunity to secure the portion of long-term viable power. This is what partially happened after WW2 to the US and its global status.
If we take the upcoming situation and consider the fact that the US has a large landmass and that is an agricultural powerhouse, with vast energy resources, whereas if European industry would fall short of energy, US industry would find plenty of domestic energy to outcompete the established European companies and Asian for that matter as well.
If there is political will and support for large infrastructure bills as we have seen over the past two years, this additionally explains why we might see large consolidation of the US to become the global manufacturing and agricultural power of the 21st century. All carried under the umbrella of upcoming energy and supply chain crisis as needed catalysts to achieve it. That of course unless the scenario two outlined above happens, under which US is unable to control the challenging powers which could result in exactly the opposite results.
If credit markets across the globe get under stress it is likely more and more capital might leave both Europe and Asia, and find the best and worst place to park their value, which might be the US. Considering the fragility of both Europe and Asia, it is not impossible to see in upcoming years that the scale starts to tilt towards the side of the US more and more, in fact, we already see that very clearly through the exchange rates of both EUR/USD and JPY/USD which both took huge selloffs over the past year, as all said above starts to be priced in.
Two major weaknesses could possibly both play out in Europe and Asia in near future, which the US will not be affected by as much.
First is energy security, both the EU and Asia are large net importers of energy, (with exception of Russia and Iran), however, based on current geopolitical developments it is likely to see that both Russian and Irans exports could be cut off, which even further signals how important this dislocation and weakness might be. If Eurasia cannot access enough energy, because the only energy exporting centers it is being torn apart through geopolitical dislocation (Russia) or through destabilization (Iran, Iraq, Mid East), then the energy deficits could become a key problem, especially because markets and economies are not planning or being ready for it.
The second is all that follows as consequnce of energy in-security. Since energy is the building block of any economy, for supply chains of anything to remain functional and not highly exposed to inflation, energy has to be available and ideally at cheap price. If that fails, the consequences are felt across the agricultural sector as fertilizer production stops (as seen last year for nitrogen-based fertilizers), and prices of food could jump. The production of urea for diesel trucks could become dislocated (due to too high gas prices), impacting transport and functionality of all supply chains to some degree, prices of gas for consumers could increase to the point in which consumption would have to be reduced impacting economic growth and productivity not to mention social stability. All of which feeds itself into a spiraling loop of decrease followed by a decrease. All stated above is what we have already seen last year, it could increase significantly still.
Above being the critical weakness, is what is currently in progress and already happening across the Eurasian continent, the only question remaining for the next few years is, how bad could it get? But the key is, it won't be as bad in the US, due to the security of key resources, which explains why the outperformance of the US and consolidation of power is likely to result coming from this. Increased LNG gas exports are by no means what is meant here, this is only a tiny piece of the whole equation, and this goes well beyond that in scale.
The diversity strength of the US can become its weakness if 4th turning escalates on its soil
The US is diverse in population structure, not just because it has a mix of many nationalities but as well the differences in wealth status are very wide. That can be in peaceful times an advantage, as it provides the nation with more diversity and competitiveness, a higher level of micro-frictions due to diversity which strengthen the nation to an extent, and provides more opportunities to outcompete other nations by utilizing its more colorful/diverse structure.
That same advantage in diversity can become a significant weakness if 4th turning was to take place on the soil of the US.
This means the lowering of living standards, higher inflation, health issues, and uptick in inter-societal frictions it could cause a more destabilizing environment due to group splitting, especially if certain higher level actors would to take advantage of it. Wide wealth gaps can aid as fuel to the fire, due to splitting the society more into groups in times of crisis, and the mix of nationalities provides isolations on the socio-economic structure to an extent. And since the US is much tougher and more armed on residential and government levels it can lead to higher internal friction if economic or other crisis drags the hardship in the country to higher levels.
This is why the US as a nation does not need to fear outside powers as anyone conquering or dismantling it would have a hard time achieving it (oceans as barrier, strong military, advanced technology etc). The actual real danger can come from within-the internal friction if the 4th turning was to escalate and leave no continent out of its impact. Each nation around the world has its own set of weaknesses, this is one of the bigger ones for the US.
If that might be the case, the state (hijacked by the 4th turning) could try to dismantle the population ahead to protect itself against the resistance, which means paying attention to such acts if they start to take an uptick over the next years:
-full guns control (dismantling the population of their resistance ability)
-free speech control (state silence any opposition voices that bring too much clarity)
-significant violence increase (due to weakened economic situation, violence increases)
-political insurrections around elections (because of 4th turning each side understands how serious it is for them to win to stop the other side from achieving the agenda)
The above is playbook that often happens in such sitautions historically in tough and strong nations and is the most likely one to apply to US, if 4th turning was to take place further.
The reason why this has to be mentioned is that we are facing a global crisis unfolding as of this writing. This means while yes the US has been to some degree left out so far, chances are it might not be. Either way, there is no point in speculating about it, it is just to point out the facts in case signs align with above-mentioned clues, this could be an indication that no continent will be left out of this crisis.
Countries with island based supply chains and/or large populations
As the situation progresses over the years, it is key to understand how certain countries and areas are potentially more exposed to this supply chain crisis than the rest. Basically to ensure resilience and as least damage to the economy and population in terms of inflation or security, a few factors should be ideally present:
-small population relative to the size of the country (Australia or NZ as great examples)
-higher living standards (less % consumption on basics such as food or energy)
-continental supply chains to ensure flexibility from many different nearby choices (versus islands which are more limited)
-versatile economy (not being too dependent on single or just a few sources of revenues)
First row: less risky
We could say that two countries stand out relatively with a stronger position on the above criteria, one is the United States and the other is Canada. Australia as well has its own advantages, but not as many as US or Canada, at least not within this framework of supply chain issues.
Second row: medium risk
On another hand, there are countries such as India and China that have weaker positioning and a more fragile situation, with the high population being one of the key weaknesses, along with very high resource consumption intensity for industry. In other words, a large population combined with high resource consumption on the industrial side can lead to severe issues in GDP growth and security of supply chain issues were to become even more problematic globally in foreseeable future.
Third row: high risk
And then there is the third category which is mostly:
-island-based nations or emerging nations close to the equator
-or states with historically high levels of inflation and relative weakness and fragilities such as Central and South America
-And most problematic are countries that import high amounts of energy and food and might be too reliant on tourism, which is the least ideal factor in the current situation. Those countries are more likely to face high risks if the supply chain crisis worsens.
It's important to note that if the global supply chain crisis worsens over the next few years in the developed country (G8) one might get missing items off the store shelf or prices that rise by 20%, which is very annoying and unfortunate for the consumer.
At the same time, another country on the emerging markets side under the same situation exposure might already be facing the full breakdown of supply chains and the inability to access fuel or food for a portion of the population.
The point is, the damage is very asymmetric and it can be quicker in weaker and more exposed countries. But make no mistake, if troubles rise in many weaker countries globally at once, the spillover effects turn to those resilient nations as well, just not instantly. It takes perhaps a year or two to notice them.
To highlight the points made above for example, we could see why the UK over the past year is struggling with higher inflation than most European nations, and facing larger energy security issues already early into an energy crisis. Island-based supply chains. Hawaii as similar example, facing large hikes in food prices, due to large import dependency.
Debt defaults and bankruptcies as side effect of worsening macro environment
There is a case to be made as, to how recent turmoil in 2022 with the plunge in global bond prices due to inflation and financial market distress could lead somewhen in near future (2023-25) to larger scale defaults in corporate or even state sectors.
And that scenario does not even include the need for the 4th turning to take place.
Statistically, a recession with a significant debt cascade happens about every 10 years roughly and it has been over 10 years since the last one. Combining this factor with the potential for the 4th turning to deepen can validate why the risk of such events is now higher than in any prior 5-10 years. It does not guarantee of any such things to come about, but it significantly increases the risk of it happening within the next 3 years.
The chart below highlighting a 10-year interval roughly between recessions:
We have seen a significant uptick in bankruptcies already in 2022, and that is even before the significant raise of interest rates that took place last year becomes absorbed into the economy and starts to place strain on the debt, especially consumers.
All points you have seen in an article are presented from a standpoint of being potentially early into the 4th turning cycle. If we truly progress deeper and if this is the 4th turning in fact in the making, one has to extract the projections forward to the needed angle. This is why the article is written from the point of projections and potentially actionable information rather than concluding just what can be seen out there as of now, which is the job of the media.
It is likely that over this year of 2023, we see the global economy plunged into recession and potentially even depression within the next year due to demand destruction policies. If none of this happens, the point made for a wave of defaults is null. But if it does come to fruition, it is likely to lead to a significant surge of debt distress events.
Remember this when making extrapolations:
When the last time the global economy faced recession was in 2008 or 2000 when there was no presence of:
-energy crisis,
-geopolitical escalation,
-global protests,
-supply chains disruptions,
-pandemics...etc.
This means using the past recession as a reference could be underestimating the significance of the current situation, if we do push toward financial crisis it is likely to be somewhat worse than the prior few references due to much stronger combined factors building at the same time. This is not just the financial sector in distress as it primarily was the case prior few times.
Potential for global cyber attack and increase in micro-attacks
There was a significant uptick in cyber attacks across many countries over the past two years. The consistency and scale of these attacks going directly on countries' digital infrastructure (Iran or Albania) or the social connectivity infrastructure (US) has been rapidly increasing at the scale which stands out relative to prior years.
To return to the prior point made in the article about hybrid warfare. If one was to conclude we are passing into a generational crisis as part of the 4th turning, then it would be naive not to expect most of the available routes to be deployed as part of such hybrid warfare. This means whatever has been under the surface of attention for decades could become significantly escalated as a part of the additional hybrid attack-angle.
The attack vectors could be social media, personal data, supply chain functionality, banking sector and transactional systems, and others. Since so much depends on online infrastructure for the economy to operate smoothly, disruption of such activity can cause a partial stall in supply chains and services.
There is already well enough data to conclude that cyber attacks have rapidly increased over the past 2 years, which validates the entry into 4th turning potentially. Those attacks for now, however, have been mostly fractured and smaller scale, the major risk is if the nationwide infrastructure was to get attacked as we have partially seen in Albania, Kosovo, and Iran in 2022 as the damage of such actions is higher.
Keep in mind that such a rapid increase of entire state digital infrastructure attacks combined with an increase in fractured attacks on a yearly basis is not part of prior normal (large jump in aggressiveness and scale of attacks). It highlights something bigger is developing likely under the shadows.
It probably gets more darker before it gets to be the light again
One could conclude that it is likely we are only within 30% of the total depth of the full cycle (using history as the context of reference and extrapolation) since the typical 4th turning cycle lasts 10 years or more. There is a point to be made that from many levels things could escalate into more chaos before they get better, which requires seeing the situation for what it is to prepare within each individual means.
One thing we can't be sure of however is just how quickly things might progress deeper (if they do), and how escalating the nature of it will be.
One very important question to ask yourself and keep in mind: All of what has happened so clustered over the past two years on multiple fronts, was it all done so that it just goes away all of sudden? Or would it make sense that it could deepen first more because most agendas have not yet been achieved by whoever is trying to achieve the 4th turning to progress further?
Most major global or continental-scale crisis events that were part of 4th turning, do have large liquidations present at the end, typically resulting in the breakup of large nation-states or the potential consolidation/globalization of new ones with a merger. And because we have no such signal yet, potentially, there could still be more depth unfolding soon.
And by the way, this is under no direct implication that the situation should worsen only because some events that have recently happened might not just be accidents.
Even if you were to think or assume that everything was completely random, and each event is not connected the same principle would still apply, because the negative consequences are still compounding from all that has happened. For example, whether the Ukraine proxy conflict and coronavirus lockdowns are or aren't connected, it doesn't matter from a long-term standpoint of inflation, regardless if spontaneous or not. Both of those events build on the same stack and long-term consequences.
Are we all just a sitting ducks?
If we take under the assumption that certain things mentioned in the article come to fruition in upcoming years, but some of which are still very speculative currently to prove in advance, even if we take the lowest and most optimistic possible scenarios, we are still facing already present challenges, such as:
-a large increase in global inflation,
-drop in living standards globally,
-tougher credit market conditions
-partial globalization and trade fracturing
-...
Therefore even in an optimistic scenario, one should be asking, how to hedge the risks and negative exposure to the current global situation unfolding? Or if we take the harshest possible scenario emerging in many countries, what can be done on an individual level to protect against those conditions? Sadly there are no easy solutions to any of that, they might be expensive, and require a certain extent of sacrifice on comfort.
However, on individual level some "beginner" steps to consider:
-optimize your health
-create a larger food/energy supply at home than you would normally have (3 months of storage)
-create larger cash buffer and capital savings than typical to hedge for potential surprising scenarios in the next few years
-reduce your financial market exposure in long-term investments
-reduce the overhead of day-to-day business costs
-if dealing with supply chain businesses, find ways to shorten your supply chains and source more locally if possible
-take fragility risks seriously if living in high-risk EM countries, especially for food and energy
-do not underestimate how significant the deterioration of free speech can be and optimize the exposure in a personal or digital capacity
-relocate if at high risk or untrustworthy region
None of the above suggestions are easy and many might not even be actionable. The idea is each country or each individual has its own set of weaknesses, which means each individual has different responsibilities to adjust to the situation and actions to take. One piece of advice would be, regardless of how intensive your work or personal life might be, take some time and study events unfolding around you, the insight will be critical now more than ever if this indeed is the progression of the 4th turning cycle.
Potential path of the 4th turning
If 4th turning is un-disrupted in upcoming years, the possible scenarios could unfold in such a manner:
-Continuous rise of inflation globally YoY until 2027 (but met with large deflationary shocks in between due to central planners stepping in)
-More health crisis, more restrictive responses, and supply chain disruptions
-Significant lowering of free speech and individual rights
-Rise of unrest on political and personal levels
-Food security crises in many countries that highly depend on imports
-The industrial and state-security crisis in China
-Economic (industrial) shrinkage for Germany and Japan
-The rise in personal income spending on energy and food that could lead to rationing and shortages (empty shelves), in some countries
-High level of freshly installed governments across the globe
-Electricity blackouts present in many countries on daily basis
-...
Conclusion
It is difficult to write an article like this because the projections are grim and often if one comes with such bold conclusions they better should be well explained so that it isn't just based on quick assumptions and over-dramatic conclusions. This certainly has not been done in this article, for the sheer amount of length it would take to do so. It is impossible to go into details and do so well on a subject like this, so the reader should either take that, build upon it with further research, or dismiss it, it's up to you, here are given conclusions and those words aren't meant to scare but rather to provide some connecting of the dots on what the global economy could face as result in upcoming few years.
This could likely be the most challenging geopolitical and macroeconomic situation that we all might face. It has the potential to be one of those situations where whether you like it or not, everyone's attention will be pulled toward the same struggles because it might be impossible to ignore the magnitude of those forces and their implications. Just when one wants to shrug off the pandemic annoyance of 2020, the geopolitical trade fracturing comes around Ukraine in 2022, and when one tries to swipe that annoyance under the carpet, the energy crisis of 2023 and possibly the global economic crisis comes about, and so on...
But do not get into a brace position for the impact, because it could be dragging for years rather than something that happens with a quick in-and-out scenario, at least that is what history references tell us.
Due to their passive nature, it's more likely that people fall asleep behind the wheel without actually noticing how much the conditions are worsening until they start to hit the bottom. Or to use the saying "if you throw a frog into hot water the frog jumps out due to recognizing quick alarming temperature change, but it might not do so if the water temperature is raised very slowly over a long while which ends up being very harmful potentially". The same principle applies to macrocycle recognitions.
This article is written with one core goal, to help those who are already sensing unusual developments recently for them to come to conclusions one step closer than they might have been before. This article is meant just to wrap the global picture together, for those already researching different areas over the past years.
This is the first part of the article and the next pieces might be updated over the next months, starting with this one as a rough overview or foundation piece. If the article seems like a bit much to take in, it should, as this is roughly 13 years of extensive (warfare, elite-corporative system, macro-economic and geopolitical) research for the potential preparation of 4th turning.
This article is meant to connect the dots to some extent and it is intended for those who have already spent years researching the dark rabbit holes and can see strange events occurring lately but just can't point out exactly what it is all for or what is the common denominator and with that said take everything with a grain of salt and skepticism since the majority are projections, which in future could turn false as no one has exact insight on how the cycle might progress. References can deviate from current reality.