Winter is Coming

The why and how of a new recession/depression; a scathing indictment of business and finance

Introduction

There are two schools of thought currently in business: “AI is coming” and “Nobody ever got fired for hiring Big Blue.”  Today we are going to discuss these two philosophies and why they are both incorrect and for the exact same reasons. Normally we talk about healthcare and health insurance here and we will get around to that and how the coming crash relates to health insurance.  Let’s take a look at some leading indicators, then jump into what causes them and finally what all that means to healthcare.  

Softening Global Growth

Global growth is projected to moderate in the coming few years and beyond. From the OECD:

Global GDP growth is expected to moderate from 3.2% in 2024 to 3.1% in 2025 and 3.0% in 2026, with higher trade barriers in several G20 economies and increased policy uncertainty weighing on investment and household spending. Annual real GDP growth in the United States is projected to slow from its very strong recent pace, to 2.2% in 2025 and 1.6% in 2026. Euro area real GDP growth is projected to be 1.0% in 2025 and 1.2% in 2026, as heightened uncertainty keeps growth subdued. Growth in China is projected to slow from 4.8% this year to 4.4% in 2026.

There are a couple of things going on here.  First, trade barriers.  Ever changing tariff structures cause uncertainty and therefore a reluctance on business to make capital investments.  More on tariffs and China upcoming.

Inflation

Inflationary pressures persist in many economies, with headline inflation recently turning up again in an increasing share of economies. Services price inflation has stayed elevated, with a median rate of 3.6% across OECD economies. Over 2025-26 inflation is projected to be higher than previously expected, although still moderating as economic growth softens. Headline inflation is projected to fall from 3.8% in 2025 to 3.2% in 2026 in the G20 economies. Underlying inflation is now projected to remain above central bank targets in many countries in 2026.

Stimulus

The economy, in the US at least, is still reeling from the last rounds of the Biden stimulus packages.  Some form of stimulus was needed of course, but the previous administration took it far too far and caused inflation that we are still feeling years later.  J. Powell and the Federal Reserve have kept interest rates high, to combat this inflation, further hurting the economy  

Tariffs

Tariffs are quite literally barriers to trade.  The second Trump administration is attempting to ease tax burden by having foreign producers pay tariffs on imported goods.  This is a laudable idea but like stimulus and everything the government does, it has unintended consequences.  In this case, the consequence is slowing down trade, therefore profits and leading us to a recession.

Corporate Culture

In 1919 The Dodge brothers brought suit against Ford in Dodge v. Ford Motor Co. alleging that Ford was spending money expanding and improving his company instead of paying out dividends.  This was upheld in the supreme court defining that any public company exists for the financial gain of its shareholders and has a fiduciary responsibility to them.  We know that the law is the lowest common denominator.  There seems to be a focus on hiring people that ‘fit the corporate culture’ and who look different from other employees.  We call these initiatives Diversity, Equity and Inclusion (DEI).  DEI may be right or wrong, and really nobody should care because the lowest common denominator states that the company exists only for the financial gain of its shareholders.  Anything that detracts or distracts from that is not only a bad idea, it is quite literally illegal.  We know that Dodge v. Ford has softened over the past century, but the statute still stands.  Any goal that doesn’t increase profits, is contributing to this coming economic collapse.

Venture Capital and Private Equity

Business isn’t cyclical.  There is nothing that causes the economy to crash every ten years but greed and stupidity.  The government starts to forget, and rolls back regulations.  The finance bros. come up with some new scheme and collectively lose a ton of money.  Speaking of finance, this is something that literally doesn't produce anything.  There is no product nor service that they can point to and say “I did that.”  Venture capital (VC) or private equity (PE) will finance a bunch of companies with no knowledge of how they work nor what they do and just hope for the best.  Getting a round of funding is cause for celebration at most companies and their value goes up.  This is wrong.  Ponder this: if VC or PE can pump up the value of a company simply by trading them money for equity, and then execute an Initial Public Offering (IPO) and make money on the fact that the value went up, what have they produced?  Where does that extra money go?  Think further about the people that invest in that company at the higher value.  What value are they getting?  Is the company any more innovative or efficient?  It is not.  The money that new shareholders spend goes straight into the pockets of the VCs and PEs, never to return.  This causes a devaluation of the entire system.

China

China is problematic in a couple of ways.  First there is no real innovation there, they simply steal what others produce and siphon profits off into their own government.  I say government because this is a communist country and the government literally owns everything.  Second, China has a real labor problem.  Sometime before the decade is out, their labor force is going to age out and retire.  The birth rate controls, the “One Child” policy of the 1950s that lasted  for decades through the 70s and 80s in two- and three child policies, had a huge impact on society. They learned to want to have only one child.  Consequently, there aren’t enough people to do the work to keep them an economic super power.  They will collapse and they quite probably will drag the world economy with them.  

Tariffs Revisited

If the Trump administration’s tariff policies actually cause manufacturing to move back to the US and the Chinese economy really does collapse it will look like sheer genius, moving manufacturing back to the US.  That would give us the edge in manufacturing and save billions from starvation since we will have the resources to take up the manufacturing slack caused by the impending Chinese collapse. We are not supporters of any government, but even a broken clock is right twice a day.

Buy Now Pay Later

Klarna, et al., has never and looks like it will never turn a profit.  This is another case of the finance bros. pumping up something that nobody asked for, doesn’t need and won’t use and is completely failing.  It is a case of the VCs and PEs trying to fleece the great unwashed and finally getting told to pound sand.  

It is actually more complicated than that.  Klarna specifically, was heavily reliant on AI, particularly in customer service and internal operations, aiming to improve efficiency and streamline processes. This reliance on untested, speculative functionality has turned around to bite them.  They have scrapped the AI to rely on more traditional call centers and human customer service. This leads us to our next topic.

Artificial Intelligence

Artificial Intelligence (AI) is a marketing term made up by marketing majors who quite literally do not understand what they are talking about.  The finance bros. saw an opportunity and generated a marketing campaign around AI and sold it to almost everyone.  They even believe their own hype as evidenced by Klarna as stated previously. In last week’s article “17 Reasons Why We Can’t Have AI” we detail the reasons why AI isn’t intelligent and will fail and is basically useless for almost all applications.  The reasons for this fall into a few categories:

1. Things are easier, faster and cheaper with traditional code
2. AI hallucinates
3. Uses language, which is imprecise in all cases
4. Only ‘knows’ what it is trained on, and that is usually from the swamp of the internet

Go take a look at the article, it breaks these things down more granularly.

I predict that AI will go the way of the Dot Coms.  The AI  bubble will burst (causing a recession order of magnitude bigger than the Dot Coms) and the hype will settle down into something that we can actually use AI for, and it is far, FAR smaller than the Dot Coms.  We still have the internet and we actually DO use it for commerce, though I would posit that the picture trading/social media and conspiracy theory mongering take far more bandwidth than any other economic activity.

Venture Capital and Private Equity Revisited

We have proven that the VCs and PEs rely on and thrive on hype and use it almost exclusively to make their collective living.  This indicates a fundamental lack of any substantive knowledge about, well, anything.  This is so much the case that we should probably actively avoid anything they do as utterly worthless, in much the same way we don’t listen to used car salesmen and for the same reason.

But it is actually worse than that.  With the rise of the finance bros., we see a decline in virtually everything else.  There is a ‘brain drain’ on every other sector of the economy because the smart kids aren’t getting an education and learning to DO something, they are getting training in “The Art of the Deal.”  this is such a problem that I have suggested we limit the financial workers to $100,000 in income and tax the excess at 100% in an effort to encourage college bound seniors into actually doing something that matters.  This, however, will never happen and consequently, this group will heavily contribute to the coming economic collapse.

Nobody Ever Got Fired for Hiring IBM

We’ve covered the greedy part of finance until it has no meaning but let‘s talk about stupid for a minute.  Since the finance bros. have no particular area of expertise and really can’t DO anything, they are super risk averse.  Sure, they are all about the next big thing, because it is new, whether they understand it or not, but that’s because of the IPO discussed earlier.  On the other hand, did you ever wonder why everyone needs a Salesforce or ServiceNow or SAP installation?  I can solve that riddle for you: everyone else is doing it.  Just like IBM in the 60s, everyone follows what the successful people are doing, not realizing that it has nothing to do with what they bought or installed.  

The subject of an upcoming article will be “The Success Fallacy” and the reasons why everyone seems to do what the people who make money do, even if it is not right for their particular situation.  Ever hear of Blockchain or Hadoop or Big Data?  How about NoSQL or Snowflake?  What about AI?  These are things the stupid business people parrot and think they need without any understanding of what they do or how they work.  Now we spend millions or tens of millions on things that don’t help us much or at all.  All of this wasted time and effort will lead to companies being less profitable and to the coming economic collapse.

Conclusions

We have listed eight things that indicate or cause the coming economic collapse. We even came up with several subpoints to illustrate the main points.  These things fall into just a couple of categories:

1. Avoid fInance and its associated hype like the plague
2. Economic Consequence of Social Engineering

Do What Matters

In our first category “Avoid Finance,” don’t speculate.  Don’t fall prey to the hype.  Just like the Dot Com bubble and for the same reasons, you are being sold a bill of goods and you should simply refuse to participate.  I had three houses in the 2008 financial crisis.  I refused to participate and didn’t lose a dime.  I kept doing what I do and paying my mortgage, and everything worked out fine.  This, by the way, was caused by the finance bros giving mortgages to people who could not afford them and with bad payment histories, with the thinking “we’ll make it up on volume.’  This didn’t happen.

What about the economic consequences of social engineering?  First, this is a meritocracy.  We hire people to do the things they do because they are good at it.  if you think it is high time we hire “a black woman” you are a racist.  If you think that is wrong, let’s turn it around “Let’s hire a white man.”  You aren't “doing what matters,” you are letting social pressure and emotions overrule logic and rationality.

Back to Healthcare

How does all this relate to healthcare though?  I think we have definitively proven that the finance bros and the social movements, whatever they are, suck all the air, and the resources, out of the room.  I will submit that our plan to fully automate health insurance and save the average consumer about half being ignored by the finance bros. is actually a win and a validation on our part.  Add to that the plan to save another 25% by putting ‘teeth’ into health insurance by offering incentives for good lab test results, 75% reduction in total, just a little too complicated for the average finance bro.  Add to that the fact that our plan would remove the ‘business’ from health insurance by removing the manual processes and replacing those with automation is seen as removing a profit center.  That is seen as removing a profit center because it is.  

The whole point of our solution is to remove people, and streamline and automate processes.  To that end, again, we have automated health insurance.  We provide the Electronic Medical Record (EMR) to the doctors, free of charge, and they document your medical care. As they document procedures they perform, we pay for them in real time and we pay 150% of Medicare.  For this service, we charge the patient $10/month, plus the actual cost of the risk.  That is it.  No adjudication, no denials, no delays, no negotiating, no networks, no brokers/agents/salesmen, no skyscrapers in every major city in the nation and no hundreds of thousands of employees to pay for.  This saves the patient about half, and the practices will actually make more money, with the increased payments and the lack of need to pay for a third party EMR.

If we are correct about these figures, and we are, this will put an additional $2.45 TRILLION into the economy and keep it OUT of the finance bros. collective hands.  Over time as the healthy living incentives work their magic, we can get the US from 335 deaths per 100,000 to the OECD average of 226 for behavior based, avoidable chronic disease, we will see another $1.27 TRILLION in dividends.  These two things alone will mitigate any misuse of the system by people who do not have your best interests in mind.

We have this system in prototype now, fully functioning.

Contact us here or on our site and we will be happy to provide a demonstration of the fully functional prototype.

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We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living. Implementing this system should be fairly simple and will completely revolutionize the way healthcare is paid for, saving countless lives. We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable.