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Before the Storm: In anticipation of the Great Depression of the 21st Century
World-renowned economists are sounding the alarm, warning of a new global crisis. What are its preconditions, and what wrong worldview decisions can cause a new Great Depression? And what Ukrainians should do to withstand new economic challenges.
22 October, 2025
Monetary Policy
Trade & Investment
Governance and Regulations
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Gita Gopinath, a Harvard professor and former IMF chief economist, recently made a serious statement about the inexorably looming crisis. The "market correction" could wipe out up to $40 trillion (!) of the US stock market's market capitalization. Not only American holders of Doe Jones, S&P 500 or NASDAQ shares will suffer, but also all those who use the services of the mentioned exchanges.
After the financial crisis of the second half of the 2000s, American households under extremely loose monetary policy significantly increased their investments in the stock market, especially in high-tech securities. Europeans, who do not have a single stock market, have done the same.
L"To gauge the potential impact, I estimate that a market correction on the scale of the dotcom crash could wipe out more than $20 trillion in U.S. household wealth — roughly equivalent to 70% of America’s GDP in 2024."L
Source: Gita Gopinath on the crash that could torch $35trn of wealth
https://www.economist.com/by-invitation/2025/10/15/gita-gopinath-on-the-crash-that-could-torch-35trn-of-wealth
https://www.economist.com/by-invitation/2025/10/15/gita-gopinath-on-the-crash-that-could-torch-35trn-of-wealth
Such a crisis threatens to cause foreign investors to lose more than $15 trillion, or ~20% of global GDP. Unlike the dot-com crisis at the beginning of the XXI century. The former chief economist of the IMF warns that the global economy is not expected to overcome the crisis in a soft, easy way.
L"Today’s market crash is unlikely to result in the brief and relatively mild downturn that followed the dotcom bust. Far more wealth is at stake now, and policymakers have far less room to cushion the blow. The structural vulnerabilities and the macroeconomic backdrop look far more severe. We should be prepared for deeper global repercussions."L
The bubble of Artificial Intelligence
This time, the catalyst for the global crisis is technology companies. As of mid-October 2025, ITC corporations accounted for ~43% of the S&P 500 index capitalization. The so-called "Magnificent Seven" (Alphabet (Google), Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) accounted for ~36% of the market capitalization of the companies in this index. For comparison, in 2015, their share was 12%. The last time in history this situation occurred was in 2000, when the Top 10 companies accounted for 27% of the capitalization of the Index, and technology companies in general accounted for 47% of market capitalization. Then the bubble burst, and the S&P 500 lost 49% of its capitalization or $5 trillion. This is an unprecedented concentration of capitalization. Behind it is a very fashionable, over-hyped artificial intelligence technology. According to JP Morgan's Investment Strategy Group, AI-related stocks accounted for 75% of S&P 500 company revenues, over 80% of revenue growth, and 90% of capital expenditure growth after ChatGPT's launch in 2022.
The revenue calculations intended to justify the share prices of tech companies reveal the irrationality of investors' expectations. AI companies have a market value that is 29 to 241 times their revenue. The share prices of AI chipmakers are worth 58 to 125 times their revenue. This sector of the economy generates $50 billion today, and to justify the share price, the revenue in five years should be at least $2 trillion.
The bubble of trust in the State
The U.S. stock market bubble goes hand in hand with bubbles in real estate and government debt, as well as a sharp decline in trust in the state and its paper tokens. The following events, trends, and conditions add fuel to the fire:
- Russia's "hot" war against Ukraine, along with the hybrid war between Russia and China, against the West;
- trade and technological war between the US and China;
- aggravation of trade relations between the EU and the United States, exacerbated by the sharp weakening of NATO and the European security system;
- disintegration of the international trading system within the WTO;
- technological disruption and the fall of the developed EU countries (Germany, France, Italy) into the zone of stagnation and the imperative of structural transformation;
- the migration crisis, exacerbated by multiculturalism, DEI/ESG culture and practice, and woke-ism as modern forms and manifestations of Marxism;
- a crisis in public financial management, exacerbated by a high tax and regulatory burden. The debt burden is such that it is necessary to declare a default or drastically cut public spending and raise taxes. According to the IMF, by 2025, the UK's public debt will amount to 103.4% of GDP, the US - 125% of GDP, the euro area - 87.8% of GDP, and the G7 countries - 125.7% of GDP.;
- the spread of the toxic, destructive practice of singling out large corporations from general market conditions and state insurance of their risks. These are companies that have acquired the status of systemically important, "too big/important to fail";
- Excessive privatization of investment, consumption, and production of education and healthcare services;
- a failed long-term experiment with combating climate change that has led to a dangerous distortion of the capital structure and an additional burden on households and businesses.
Disappointing conclusions
The great Ludwig von Mises warned: don’t turn money into paper tokens, don’t let the State run businesses, don’t disable the profit-and-loss mechanism, don’t blindfold the economy by regulating prices. Beware of debt.
In his book The Theory of Money and Credit, the great Ludwig von Mises wrote:
L"If we want to avoid recurring economic crises, we must avoid credit expansion that creates booms and inevitably leads to busts."L
But the genius of social science was not heard. The big and rich countries chose a different path - they preferred other idols. K. Marx, J. Keynes, P. Samuelson, and communities of mathematicians, historians, psychologists, and futurists formed the theoretical basis of economic policy in most countries. It is defective because it violates the laws of economics, thereby causing crises, small and large.
If we keep putting on patches for too long, sweeping the debris of small crises under the rug, and failing to eliminate the causes of imbalances while hoping that the State will handle everything, the most unpleasant event in a country’s economy may occur — a depression. If dozens of countries act according to the same pattern, a global depression could happen.
In the mid-2020s, the world found itself in a high-risk zone for just such a development.
Today, it is impossible to ignore the impending tsunami. Almost every day, we receive warnings from various people and organizations.
Economist Harry Dent Jr.:
L"The "bubble of everything" will burst, leading to a depression that will be worse than the 2008 crisis. A stock market crash will be more catastrophic than the Great Depression."L
Steve Hanke, a well-known monetary policy expert from Johns Hopkins University, said:
L"The US will have a recession comparable to the depression; shrinking money supply signals a downturn."L
Nouriel Roubini, famous for his prediction of the 2008 crisis:
L"A "perfect storm" of risks converging on a single point causes a major crisis."L
Elon Musk also regularly warns of an impending crisis.
The most convincing confirmation of these forecasts is the rapid growth of the gold price. Investors around the world are looking for a safe haven, an asset that will help them survive a wide swath of financial and economic turbulence. And all because mainstream economists have refused to be real scientists and have turned into servants of the state-bureaucratic syndicate.
What to do? Buy gold, convert paper tokens and stocks into hard cash (the most reliable currency at the moment is the Swiss franc), stock up on coffee and chocolate, and fasten your seatbelts... We are facing another season of the “Hunger Financial Games.”
Ukraine will feel this only indirectly, but the middle class in the U.S., EU countries, and wealthy parts of Asia will lose tens of trillions of dollars. After this crisis, the world will be completely different. And we need to start preparing for this new normal today.
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Monetary Policy
Trade & Investment
Governance and Regulations
Trending
Economic crisis
Yaroslav Romanchuk
A well-known Ukrainian and Belarusian economist, popularizer of the Austrian economic school in the post-Soviet space. He specializes in reforms in transitional economies in the post-socialist space.
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