By 1930, the economic crisis had engulfed Europe, Latin America, Asia, and became the global one. The decline in production (recession) continued everywhere until 1933. America's national income fell from $87.8 billion in 1929 to $40.2 billion in 1933. More than 135,000 commercial, industrial, and financial companies failed. During the three years of the crisis, almost half of American banks went bankrupt.
Then the fall stopped, and a phase of stagnation began. In different countries, the authorities made titanic efforts to pull their economies out of the swamp of stagnation. The ideas of the English economist John Keynes, who advocated active state intervention in economic life, became popular.
Keynes saw the main reason for the crisis in the disparity between the production of goods and services, on the one hand, and the limited effective demand of the population, on the other. Before Keynes, Karl Marx wrote about the same thing in the 1860s in Das Kapital, who believed that within the framework of the capitalist mode of production, this contradiction is insurmountable. Keynes did not think so, he proposed to compensate the lack of solvent demand of the population with demand from the state, using the state budget for purchasing goods and placing orders. The military orders and military expenditures of the state, according to Keynes, were quite sufficient to compensate for insufficient solvent demand. For the sake of increasing public spending, the English economist believed that it was possible to allow that the state budget was in deficit, closing the deficit by public borrowing and increasing sovereign debt. All of this can be read in Keynes' famous book, the General Theory of Employment, Interest and Money (1936).
In the West, they tried to apply Keynes' recipes to get out of a difficult economic situation. The most consistent ideas of the English economist were implemented by the US authorities. Their practical implementation started after the arrival in the White House in 1933 of Franklin Roosevelt with his "new deal", which softened the socio-economic situation in the country. A program of public work (road construction, land reclamation, canal digging, forest planting, and other types of labour that did not require special qualifications of employees) was carried out at the expense of state money. This program provided employment and minimal means of subsistence for millions of ordinary Americans, but it has not been able to pull America out of a condition of stagnation. The authorities could not even overcome poverty. Americans recognise that during the years of crisis and depression in the United States, famine, according to various estimates, killed 5-6 million people. In Europe, too, stagnation persisted, and the population was poor.
The only exception were two countries - the USSR and Germany. The Soviet Union in the 1930s developed dynamically, carrying out industrialisation, demonstrating to the world the advantages of the socialist model of economy. Germany, which at first stagnated along with other Western countries, also began to develop dynamically after Hitler came to power in 1933; an "economic miracle" arose in the country, but it was fuelled by money from American and partly British bankers, who prepared Hitler for a rush to the East against the Soviet Union.
Keynesian methods have not made a miracle. All the economic methods available at that time to revive the economy were exhausted. For the West, this was especially frightening against the backdrop of the high economic dynamics of the USSR - such contrasts in the economic dynamics of the Soviet Union and capitalist countries could lead to the final victory of socialism in the world. This inevitably led the ruling circles of the West to the idea that the only way out of the economic stagnation, which had become chronic, could be war. Moreover, a big war - a world war.
On the example of the First World War, the United States realised that global armed conflicts can radically change the economic situation of a country. On the eve of the World War I, the United States was the world's largest international debtor (in terms of private sector debt; in terms of public debt, tsarist Russia was in first place). And at the end of World War I, America became the largest net lender, and the US dollar became the world currency along with the British pound.
The United States, England, France, Germany, Italy, Japan, and other leading capitalist countries started to prepare for World War II. It was believed that the war would cancel all debts, imbalances in the economy would disappear, and rapid development would begin with the reset of the national economy's balance sheets. Debtor countries dreamed that they would win or even destroy their creditors. And the creditor countries dreamed that they would get markets, natural resources of debtors, and billions of dollars in reparations from the defeated. Within the warring countries, a moratorium was imposed on the usual rules of the market economy, and the state with its iron hand levelled the accumulated imbalances (demands and obligations), referring to wartime. War is a powerful argument for the state to impose iron order in a capitalist economy using administrative and command methods. No Keynesianism can do this. And the Second World War, which started on September 1st 1939, became a means of getting world capitalism out of dangerously prolonged stagnation.
Fast forward to the 21st century. In 2007-2009 the world experienced a global financial and economic crisis. This crisis did not lead to the elimination of all the accumulated imbalances in the economy. After the end of the acute phase (recession) in 2009, there was stagnation (depression), which should have been followed by recovery. A year, two years, and three years the revival was expected but the expectations were not met. Today, the year 2020 is on the calendar, but there is no revival.
Compare: in the 1930s, stagnation lasted from 1933 to 1939, six years. An agonising, lingering putrefaction, interrupted by the war. The stagnation after the 2007-2009 crisis has lasted for 11 years. Again the painful rotting, almost twice as long. In certain sense, the situation of the stagnating West in the 21st century is better than in the 1930s, since the USSR with its dynamically developing economy is no longer there. The Soviet competitor to the West has disappeared, but there is China with its unprecedented economic growth rate. The economic dynamics of China over the past three decades can be clearly called a phase of recovery. No Western country in the entire history of capitalism has experienced such a prolonged rise. So, the West needs to do something.
Of course, representatives of the Western ruling circles have more than once come up with the idea of unleashing a great war and using it once again to overcome the cursed contradictions of the capitalist mode of production. The idea is very tempting, but at the same time - deadly. After all, the two precedent wars avoided nuclear weapons and other weapons of mass destruction (WMD).
The third world war will inevitably require the use of WMD. So, there was need of a replacement for the world war that could help miraculously even out the imbalances of the capitalist economy, revitalize it, and preserve the status quo of the ruling elite.
An alternative to a hot war can be a cold war, which today is preferred to be called a hybrid war. It involves the use of financial, trade and economic, psychological, information tools, cyber weapons, special methods of special services to fight the enemy, but all of this does not give the authorities the power to switch from market methods of managing the economy to administrative and command methods. And only with the help of the latter can the accumulated imbalances in the economy be overcome.
...And then the coronavirus appeared. The authorities started to inflate the threat, creating an atmosphere of fear in society. Using fear, the authorities get unlimited powers and start actively interfering in the economy. Such methods are contrary to the principles of "civilised" capitalism, but, as they say, administrative and command management will not last forever. As soon as the distortions of the economy are corrected, everything will return to normal: market methods of management will return, "civilised" capitalism will be restored again, and a revival will begin, which will then turn into economic growth...
Experts say that the "state of emergency" will last until the end of the year. At maximum, until the middle of the next one. The "virus war" will be lightning fast and victorious. During this time, mass bankruptcies will take place, debts and claims for amounts measured in many trillions of dollars will be liquidated. There will be a deflation of bubbles in the stock and other financial, as well as commodity and real estate markets. The capitalisation of companies will collapse by many trillions of dollars. The economy will start to "breathe" again, the recovery will begin, which then turns into the long-awaited growth.
Note: the "virus war" will end not when medical statistics show a significant decrease in the number of infected and dead from coronavirus, but when stock and other markets reach the bottom. At this point, the owners of money will buy up devalued assets and reach a new level of control over the world economy. The decision to end the "virus war" will not be made by epidemiologists, but by the owners of money.
After that, economic growth will begin. When it ends, the economy will go into another recession, and then the ruling circles of the West will again come up with some kind of virus. And again, the performance called "fighting the pandemic" will be repeated. This is the principal new scheme of the economic cycle. It can be fair to call it a viral-economic cycle.
The owners of money who organised the current pandemic do not need endless cyclical economic development. And they do not really need capitalism. They are interested in the ultimate goal - power over the world. They dream of establishing a new world order, where there will be no nation states, where a world government will be established. This order will no longer have anything to do with classical capitalism. It may be called the new slave system or the new feudalism.
The viral war that began exposed the plans of the world's elite, highlighted its agents, and revealed many secrets of its subversive activities. The pandemic will make millions of people in the world think about what they have not thought about before, believing that the project of a new world order is the imagination of a bunch of conspiracy theorists. The result will be (already is) the willingness of millions of people around the world to fight. No, not against the coronavirus - let the doctors and other professionals deal with it, but against the owners of money.
Wrecking an economy to create a cycle of growth is dumb childlike behaviour driven by greed and selfishness.