What Collapse Destroys, or, How the Wealth of Nations (and People) Dies

Hi! How’s everyone?

Today we’re going to discuss collapse. How much is already being destroyed in America. And what it means. I want you to understand the economics of collapse, but in a sophisticated way, not just “look at the stock market!”

We’re now in the implosive stage of American collapse. If it feels like things are fracturing ruinously around Americans, that’s because they are. This is a story of wealth—the real thing. That doesn’t just mean in financial terms, but the real wealth of nations and people.

Now. Wealth is a mysterious, subtle, difficult, and strange subject. Let me try to demystify it.

What is it? Americans think that they’re wealthy if their stock market portfolios are doing well. That’s not real wealth. That’s just paper wealth. Real wealth is…let’s conceptualize, so you can understand just what’s being destroyed.

The best way to think about wealth is as capital. America, like any society, has many different kinds of capital. Capital is, loosely speaking, what we can invest to improve our quality of life. There’s money, financial capital, sure. But this is only useful insofar as the other kinds, the higher ones, which it sort of denominates.

So, for example, there’s institutional capital. You can think of that as the integrity and sophistication of different kinds of institutions, from universities to the military to the press to business itself. And here, you can already begin to see, that Trump’s had a devastating effect. He’s ravaged America’s institutional capital already—and like any of the forms of capital, you can immediately intuit one of the rules now of genuine wealth: it takes moments to destroy, but decades, at the very least, if not generations, and maybe centuries, to build and create.

Then there’s of course political capital, and by this we mean the functioning of a society’s basic mechanisms of governance. Is it a democracy? In what way? Does the rule of law hold and apply? Is consent from and amongst “the people” still the arbiter of government? Here, again, Trump’s absolutely just crushed this form of capital and ground it into dust. Nobody much thinks of America as a democracy anymore, around the world, at least.

There are looser forms, too, like social capital, which is about the ties between people, relationships. This, too, Trump has savaged, turning Americans against one another to a degree that fears of civil war aren’t uncommon. Alongside that is intellectual and human capital, or how educated and skilled people are, not to mention how happy, and of course Trump doesn’t want people to be smart and fulfilled, but angry, bitter, and foolish—his attacks on science, research, and education, in particular, have destroyed vast, untold amounts of human and intellectual capital already.

I could keep going, but the point isn’t just to delineate many forms of capital for you. It is for you to genuinely understand what is going on here.

America’s wealth is already being destroyed. This isn’t some kind of effect that’ll happen in some far-flung future. It’s happening before your eyes, and the reason that so many people are so upset and so angry, is precisely this. And if you’ve struggled to put a name to all these emotions, now you know: it is real wealth, the genuine article, that is turning to ashes, as Trump lights it all on fire. The wealth of nations, not just the grift of billionaires and tyrants.

Now. What about…the real world? All that I’ve sketched out for you is conceptual. Or is it?

Remember what financial capital, aka money, is. It’s…nothing…in itself. Just papers chits and bits on screens and numbers. It is utterly meaningless without the higher-order forms of wealth, which are what I taught you about above. What these chits and bits and numbers do, and all they do, is specify how much higher order capital there is, or, what it is “worth.”

Now you understand wealth. So let’s go a bit further. In situations like these, implosive ones, what happens is this.

Higher-order wealth is destroyed when societies collapse. Often, suddenly, and in massive, massive amounts. Universities are purged, institutions wrecked, books banned, and so forth. And the paper chits-bits-numbers take a while to catch up.

Because of course they have an inertia all their own. They “value” what is left of the old economy, all that wealth that used to exist, and they resist valuing it all a a new, lower level, because of course, to do that would be to admit wealth has been destroyed, which nobody who holds all those chits and bits wants to do.

But eventually, as they say, reality catches up. The revaluation, when it comes, can take many forms. A sudden debt crisis, a stock market crash, a currency cratering. That doesn’t matter. This is the part where if I taught you well, you will genuinely understand wealth in a better way, and know why that part doesn’t matter: because the wealth that has been destroyed must be revalued at a lower level, and these are just ways to accomplish that task.

This is what is on the cards for America now. It will take some time for “money” and “assets” to reflect the destruction of higher-order wealth—the genuine wealth of nations. But America in real terms now becoming a pauper now. That is what nations without science, industry, and the arts become. It is where autocracies end.

America is rich in the way many Americans are “rich.” Now, in terms of paper wealth. But paper wealth is not the real thing at all. People often think that what should back paper wealth is hard assets, like gold, and that’s sort of true, but misses the point. What really backs paper wealth is higher order wealth. Money is worthless if it can’t buy, doesn’t denominate, knowledge, democracy, truth, beauty, goodness, life, and if you don’t believe, go ahead and ask yourself how much you’d like to invest in North Korea, Russia, 1930s Germany, or Saddam’s Iraq. Not a lot.

Paper wealth is just that in the end. And the challenge in times like these is to really understand that. Right now, many Americans are “rich”on paper. Those who only stay that way will end up neither. America’s wealth is being destroyed before our eyes, and eventually, every America’s assets and holdings will reflect that. This is the tragedy of what Trump is doing, and only the smaller part—the larger one is that rebuilding this much wealth is all but impossible.

So. Do not settle for merely being wealthy on paper now. This is just the beginning of the wealth Trump will destroy. And over time, the gap between overblown financial valuations and what wealth really is will shrink, until at last, those paper riches are just empty numbers.

I’ve taught you all this because Americans aren’t taught well about wealth at all. Existing in a hyper capitalist society, they’re too often taught, by an American economics that’s stuck in the 1970s, that money is wealth. It is assuredly not. What I’ve introduced you to is the much more sophisticated notions and conceptions of wealth that come from European ways of thinking about economics, particularly the Paris school, and I urge you to sit with them and reflect on them carefully.

Now let me give you a little tool you can always use to think about wealth well. I call it the Eudaimonic Ratio, and that just means “a good life,” in ancient Greek. Here is its definition.

No amount of “money” in America can buy you the quality of life that exists in Europe. And in that regard, wealth, in a more practical way to to think about it, is the relationship between the cost of living and the quality of living. In functioning societies, it’s stable. In genuinely wealthy ones, it’s low: a cost of living of 1, for example, buys you a quality of life of 4 or 5 or 10. That’s a Eudaimonic Ratio in practice.

But as societies implode, this ratio comes undone. A cost of living of 1 barely buys you much at all—while the quality of life shrinks fast, as a result of everything from tariffs, to soldiers on the streets, to prices spiking, to the currency falling, to the debt exploding, to, eventually, research shuttering its doors, fundamental institutions failing, ideas and intellect being attacked, as a society’s mind goes out. And all the paper gains in the world do not ever—ever—make up for that.

Do you think Russians still prefer to hold rubles? Don’t kid yourself. Paper wealth is not a substitute for the real thing, and the Eudaimonic Ratio is the very first rule of thumb of finance and economics that everyone should probably know.

Now. In America, this ratio of the cost of living to the standard of living is going in the wrong direction, very, very fast. In recent years, prices in America have exploded, while life expectancy itself has cratered—which is sort of the ultimate example of this ratio. And it’s turned the Eudaimonic Ratio into something much more like a Collapse Ratio.

The Ratio of Collapse is what wealth destruction feels like in real life—when the cost of living explodes, but the standard of living plummets. And that reflects and highlights a gap between paper wealth, which many are desperate to preserve, and the real thing. This is the lived experience of social collapse.

Focusing on accumulating paper wealth while a society is collapsing is one of the most foolish things you can do. It is how you end up in the very trap where you lose a great deal—at the final moments where you should have extricated yourself from such a trap closing around you.

But this is where too many Americans are, grasping at stock market bubbles, and so forth, and it is where American finance is, and what it’s telling people to do, too, sadly. Do you understand why? If you do, I’ve succeeded in what I wanted to teach you. (As a summary, it’s because paper wealth only ever really denominates real wealth, and real wealth is what collapse destroys.)

I gave you this little set of tools and heuristics to use so that you can understand just how much wealth destruction lies ahead of you, not just in grand conceptual terms, but in very real lived ones.

America will not recover from what Trump has done. The question is whether you will. Wise minds and nations are already beginning to understand that.

Love,

Umair (and Snowy!)

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