Just like that, the game has changed. The black swan has arrived. It turned out to be a cold. Literally. Certainly a pretty bad one, but just a cold nonetheless. COVID-19 has caused a total immune overreaction from governments across the world, who responded by completely shutting down their economies, now suffering from a self-inflicted tetanus lockjaw. The problem is, the value of all of government currency is based on economic production, and now governments are all about to dump tsunamis of extra currency on a stalled global economy that will accomplish nothing but push up consumer prices, almost directly. We may as well take a magic marker and add three zeros to every bank note. There’s not much practical difference between doing that and the policies being proposed now.

The hard truth is that the only solution to this problem is to let every single firm that cannot handle this, go bankrupt as fast as possible. The economy needs to clear all the dead weight built up since 2008, and really since 1971, as soon as possible and we can rebuild from there. That means a severe restructuring of the entire world’s production structure, pretty much, and it will cause dislocations, pain, and riots. Sound bad? It is, but all of this will happen anyway when currencies are debauched to the point of near worthlessness, except in that case the dislocations will be much worse because money as people currently understand it will stop functioning.

National currencies can still be saved, but only if governments are willing to let all the bad debt be liquidated, which includes their own. Just like when you get a new credit card after you declare bankruptcy, your credit line is very small and you can only spend what you make, this is what governments the world over will have to accept.

But they won’t. They absolutely will not. It simply won’t happen. Governments will never admit to their own bald bankruptcy, and they will keep inflating their currencies to infinity, let paper money die, and we’ll have the dislocations, pain, and rioting anyway. This is what we are now facing. This is what every company in decent financial shape must understand now, or even the best companies with the most conservative, healthy finances may not make it through what is about to come.