Before starting reading this article can you think if you can answer the following questions?

1. The population of ancient Rome was ~1.5million people in peak and then big cities disappeared for more than 1,900 years…Why?

2. Ancient Rome had a very developed sewage system and then it disappeared for more than 1,500 years…Why? It reappeared in France during the time of Napoleon and in Saint Peterborough it was finished in 1950’s

Understanding of these quite simple questions will allow us to see what’s happening in the world currently. I am strongly convinced that world economy is standing in front of the Global crisis which will be SIGNIFICANTLY more severe than Great Depression in 1930’s. There are objective reasons that are leading to this and below I will try to explain you why…

Let’s start from the start

Current economic model where we live now appeared fairly recently…. Just in the 16th century. Most likely, it happened because of Little Ice Age period (https://en.wikipedia.org/wiki/Little_Ice_Age) that started in XIV and lasted ~150 years. Such that you have a good impression of how bad it was – it was for the first time in human history when the sea around the Venice got frozen, which never happened either before or after. And Northern Europe had to answer a question: “How to survive?” because for the previous 100 centuries Europeans had feudal system with subsistence economy. Main occupation was agriculture: out of a 10-year (for argument’s sake) harvesting cycle 3 years were good, 2 years were bad, and 5 were average. Good years allowed you to save a little bit more so you could survive during bad years. However, due to these climate changes number of bad years increased to 6 and number of good year decreased to 1 or 2 which was clearly not enough. Population had had to solve 2 problems: 1) Where should we take money NOW in order to buy food (somewhere from the South were it was still warm? and 2) How we should change economic model which will allow us to produce enough goods which then can be changed for food (again somewhere in the South where it could be produced with a surplus)? Answers to both these questions were found…

Peasants in feudal society

Creation of new economic model

In 1517 Martin Luther posted his 95 theses on the door of All Saints' Church in Wittenberg (https://en.wikipedia.org/wiki/Ninety-five_Theses). You can read more about these theses using the above link, although the summary is as follows: “We believe in God, but we don’t need and intermediary between us and God”. Of course, there was religious foundation behind this but the reason why it became so popular is purely economic: people needed money and the only source of accumulated wealth was Catholic Church through various taxes and sale of indulgences. Peasants didn’t have money and feudalists didn’t have money because they were spending everything to maintain their armies involved in multiple wars. One of the remarkable examples here was Henry XVIII who used a formal “divorce argument” to get married on protestant Anna Boleyn, claim himself as the Head of the Church of England, and ravaged many catholic churches in England.

Martin Luther

This was a crucial moment as it became the first sparkle that led to emerging of modern banking: fractional reserve banking, ie lending money using banknotes backed by gold of depositors. Effectively, banking (in the way how we understand it now) is less than 500 years old. The reason why it didn’t appear before is because concept of Interest was prohibited by Bible (for religious and economic reasons – I can explain why separately if people are interested. However, this is the reasons why we don’t see any bubbles during the period of subsistence economy). In Islamic countries, for instance, it is still prohibited by religion.

Henry VIII and Anna Boleyn

The story described above is effectively the birth of new economic model and tremendous growth which Europe and the US enjoyed during so called Industrial Revolution XVII – XIX. Nowadays, we call this economic model “Capitalism”. However, already in the beginning of 20th century this model started showing weakness. Why? Because of an intrinsic problem this system has. The problem which will inevitably lead us to the 2nd Great Depression. The problem that I am going talk about in the Part 2

For Part 2 please follow this link https://steemit.com/philosophy/@conspi-theorist/why-global-crisis-is-inevitable-part-2-the-biggest-problem-of-capitalism

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