The Panic of 1873 is one of those events that was important at the time, but gets little discussion today. One reason is it does not fit modern narratives, as the villains and victims are not familiar today. It is one of those events that just seemed to happen and all of these years later it is not clear why it happened. There are lots of possible causes, but not one obvious cause. The resulting decades long depression, however, setup the 20th century and the two great industrial wars.
Another important event that gets little attention these days is the Great Fear that preceded the French Revolution. This was a period of panic, fear and conspiracy theories that swept rural France. Rumors circulated about various plots by the King and the aristocratic classes. For reasons no one has been able to explain, the peasants became increasingly sure the First Estate was about to overthrow the Third Estate, which eventually led to the revolution.
One of the many interesting things about the Bolshevik Resolution is the parallels between it and the French Revolution. Lenin was supposedly a student of the latter, so the lessons of it informed his decisions. Whether this is true or not is like so much else about our history. No one can say for sure now. One clear parallel, however, was the fear and panic preceding the February revolution. Suddenly, no one could trust anyone, so everyone was willing to believe the most outlandish tales.
The one thread that runs through economic panics, periods of civil unrest and great social upheavals like revolutions is the collapse in trust. It is not just the trust in individuals like a king or rich people. Human societies have been dealing with dishonest rulers for a long time. Monarchs come and go and people quickly adjust. When everyone knows the problem is a man or group of men, the solution to the problem is always at hand. No man, no more problems.
Panics are different. The fear is driven by the sense that nothing can be trusted, even one’s own assessment of events. In the case of economic panics, when a big powerful bank fails, impoverishing its clients, how can one trust anything about the financial system at that point? If all of a sudden the currency loses a big chunk of its value, how can anyone trust the economic system itself? In times when the foundations of the system lose credibility, no one can trust anything in the system.
A simple example makes this clear. If in your place of work, the software system used by the company suddenly produces errors, everyone raises an alarm. Work stops until the people in charge of the software either explain why the unexpected result is, in fact, correct or they find the cause and repair it. The software system holds the business rules of the company, so when those rules appear to be to failing, the logic of the business is called into question. The users begin to panic.
The reason people panic is that trust is built on predictability and predictability relies on rules and the orderly enforcement of those rules. When the rules stop making sense or their enforcement becomes arbitrary, it becomes impossible to predict the outcome of one’s actions. When you cannot trust the rules, you cannot trust the results of your own decisions, which means you cannot trust even yourself. When people can trust nothing they are willing to believe anything.
America appears to be in one of those moments when the people are suddenly thrust into a world in which they can no longer trust anything. The extraordinary events of the last election have caused tens of millions to question the system itself. Even those who voted for Biden are coming around to the idea that it was not on the level. Now we are seeing wild claims rocketing around the internet about what is happening to various people and what is happening behind the scenes.
The new rumors and claims are a bit nutty, but the fact is this has been building for a while, going back to before the prior election. Think back and there were all sorts of rumors about Hillary Clinton. People were willing to believe them because she is a terribly corrupt person and a notorious liar. You cannot trust anything that is said by her, her associates or anyone aligned with her. Today, everyone views the system the same way we have viewed Hillary Clinton for decades.
Another interesting aspect to this time of rumor and panic is the fact that the political class has not learned from the economic class. The lesson the bankers learned from the depression of 1929 is that one tool in their arsenal had to be a form of shock and awe as they addressed the crisis. The display of power by the central bank would fill the void of trust and quell the panic. This has proven to be highly effective, as we saw with the mortgage crisis in 2008. Everyone trusted the Fed.
Looking back at the French and Russian revolutions, there were points when the ruling class could have restored some trust in themselves and the system. They had opportunities to change the dynamic and bring people back into a political process they could trust. They failed to do so, often choosing a path that further eroded what little trust the people had in them. We’re seeing similar failures today, as the ruling class carries on as if nothing is happening outside their mansions.
This is how suspicious minds become radical minds. When people get suspicious over something like the election anomalies, they are looking for an explanation from a source they want to trust. When that natural authority mocks or dismisses their suspicion, that becomes part of a new narrative to explain both the anomalies and the unexpected reaction to it. That why the rumors are flying. Suddenly, tens of millions are in the market for a new narrative to explain what they are seeing.
Just as important, tens of millions of American are moving from a mode where they think the government has bad elements to a mode where the suspect the government itself is the bad element. When public trust in the system sharply declined a generation ago, the system had a solution. Reagan channeled that distrust into a reform effort that restored trust in the system. Today, the Pretender Biden and his coterie of flunkies and door holders is channeling that distrust into conspiracies.
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