5 Signs We're In A Global Depression
Britt Gillette
April 8,2025
From Substack
The world is now facing the worst economic environment since the Great Depression, and before the dust settles, the world will also witness the greatest financial crisis in human history.
A debt-based monetary system (such as the one the world runs on today) is much like a Ponzi scheme. It requires ever increasing amounts of debt to avoid implosion - just as a Ponzi scheme implodes once it runs out of new investor cash.
In a system such as ours, once debt reaches its pinnacle, the system starts to collapse. This is because bankruptcies and defaults result in a shrinking currency supply, and that shrinking currency supply makes it more difficult for other borrowers to meet their debt obligations. This, in turn, leads to more defaults/bankruptcies and further shrinking of the currency supply. This vicious cycle continues until it reaches a free market equilibrium, and then growth can begin anew.
This process is known as a deflationary spiral.
The Great Depression was a deflationary spiral spurred on by massive central bank credit creation, and we’ve seen many of the same policy mistakes that led to the Great Depression repeated our day and time – most notably, massive central bank credit creation in the aftermath of both the Great Financial Crisis and the COVID pandemic.
Now, the consequences of those poor policy decisions threaten to plunge the world into a new economic depression.
Below are five signs we’re already in a global depression, and one set to get much worse before it gets better:
1) A Global Trade War
Following the Trump administration’s tariff announcements on April 2nd, the world is now engaged in a trade war in addition the deflationary problems it’s already dealing with.
As reported by CNN:
“President Donald Trump on Wednesday unveiled expansive new tariffs in a major escalation of his trade war, referring to the historic move as a “declaration of economic independence.”
Using national emergency powers, Trump announced 10% tariffs on all imports into the United States, and even higher tariffs on goods from about 60 countries or trading blocs that have a high trade deficit with the US. That includes China and the European Union, which will be levied new duties of 34% and 20%, respectively.”
In response, China’s Finance Ministry said it will impose a 34% tariff on all goods imported from the U.S. starting on April 10. Meanwhile, Reuters reports the European Commission offered a "zero-for-zero" tariff deal to avert a trade war with United States as EU ministers agreed to prioritize negotiations, while striking back with 25% tariffs on some U.S. imports.
This is eerily similar to the passage of the Smoot-Hawley Tariff Act in 1930, which sparked a global trade war and exacerbated the global depression already underway. We're seeing signs of similar damage taking place as a result of today's tariffs.
Here are some examples of the global impact:
As reported by NBC:
"Jaguar Land Rover will pause shipments of its Britain-made cars to the United States for a month, it said on Saturday, as it considers how to mitigate the cost of President Donald Trump’s 25% tariff."
As reported by CNBC:
"Stellantis is pausing production at two assembly plants in Canada and Mexico as the company attempts to navigate President Donald Trump’s new round of 25% automotive tariffs, the company confirmed Thursday."
In addition to the tariffs themselves, one of the biggest problems businesses now face is uncertainty itself. Regardless of whether the trade war now underway results in higher or lower tariffs, businesses face increased uncertainty when it comes to planning and making decisions on future capital expenditures. This uncertainty is illustrated in the chart below:
(Graph)
And many of these companies make up an outsized portion of the average person’s retirement accounts.
In my January 21st article, "This is the Biggest Speculative Bubble Since 1929… It Will End in Similar Fashion," I pointed out Apple comprised 7.41% of the S&P 500 index – a larger percentage than any other company. It also sported a price-to-sales ratio of 9.65 and a price-to-earnings ratio of 39.8 – both of which are extreme overvaluations for a mature company such as Apple.
Now, tariffs threaten to totally upend Apple's profitability. As ZeroHedge reports in "'This Could Blow Up Apple' iPhone Maker Plummets; Most Impacted By Tariffs Among Mag7s":
“Apple shares are plunging almost 10% in premarket trading, as the iPhone maker is viewed as especially exposed to the Trump administration’s tariff announcements.
As Bloomberg economists write in an overnight report (available to pro subs), ‘the US reciprocal 34% tariff on China and other nations where Apple has manufacturing will likely amplify operating-margin deterioration, given we don’t expect the company to hike prices to offset the effects.’ They add that revenue growth ‘could remain under pressure if Apple does raise product prices, in addition to uneasy consumer sentiment, which might delay upgrades.’”
But tariffs are just the tip of the iceberg, we also face this…
2) A Broken U.S. Economy
The Federal Reserve Bank of Atlanta now expects first quarter GDP to be -2.8%:
(Graph)
This is despite Americans working more than ever:
(Graph)
And despite working more than ever, personal savings are plummeting for most Americans:
(Graph)
The American consumer is simply crushed under the weight of heightened inflation, mountainous debt, and poor choices. Nothing better illustrates this situation than the recent announcement of a partnership between DoorDash and Klarna:
(Graph)
The partnership gives consumers "more freedom to choose how they want to pay." So the next time you order food marked up with an expensive delivery charge, you can pay in "four equal interest-free installments" or "defer payments to a more convenient time." For example, you can pay for your Chick-Fil-A chicken sandwich over a period of 36 months. Sounds like a great idea, right?
It's really no different than charging all your food to a credit card and paying two to three times as much for the food over time as you carry a balance. And as Debt.com’s most recent survey shows. Most Americans are struggling under the weight of massive credit card debt.
As reported in "Debt.com’s 2025 Survey Exposes Disturbing Trends in Credit Card Debt as Inflation Continues to Pressure Americans’ Finances":
As policymakers push forward with efforts to cap steep credit card interest rates, the latest Credit Card Survey from Debt.com sheds light on how inflation has significantly impacted the financial stability of Americans—and how many are still struggling to dig their way out of debt.
For the second year in a row, one in three Americans say they rely on credit cards to make ends meet, with a growing number already maxed out. The national poll of 1,000 adults illustrates how rising costs have shifted credit cards from being a tool of convenience to a lifeline for survival.
Key Findings from Debt.com’s 2025 Credit Card Survey:
32% of Americans have maxed out their credit cards
37% use credit cards regularly just to make ends meet
44% say inflation has caused them to carry a larger monthly balance
Of those maxed out, 80% would rely on credit cards during a financial emergency, and 23% owe more than $20,000 in credit card debt
Americans are also struggling to pay off their auto loans. Many are falling behind:
(Graph)
The Federal Reserve Bank of New York reports, “High auto loan delinquency rates are broad-based across credit scores and income levels.”
The burden of debt is so crushing for the average American, revolving consumer credit is in contraction for only the third time in recent memory. The other two times? The period of the Great Financial Crisis (2009-2011) and pandemic lockdowns (2020):
(Graph)
This is a big problem for the largest economy in the world. As previously mentioned, our monetary system is a debt-based monetary system. In order to function properly, it requires ever greater amounts of debt to be issued. Once the debt stops growing, we enter a deflationary spiral and everything breaks.
And that’s a big problem, because the second largest economy in the world (China) is already trapped in a deflationary spiral…
And It Will Be Worse Than the Great Financial Crisis…
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