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  • Dr. Timothy X. Merritt

Facing the Unfathomable: Government Strategies for Dealing with a Greater Depression

Abstract: Explores how economic policies governments might employ to respond to the Greater Depression, a hypothetical future economic crisis. Dr. Ranell seeks to guide his company through a Greater Depression characterized by high unemployment, low GDP, and cycles of hyperinflation and deflation, he must position Global Multimodal Logistics assets where he thinks they will have the greatest potential benefit. In this third step of a STEEPLE analysis, the impacts of previous economic depressions are used as a guide to question what a Greater Depression might look like for the modern world.

Background (STEEPLE Analysis) for Directed Fiction

  1. Socio-Cultural

  2. Technological

  3. Economic

  4. Environmental

  5. Political

  6. Legal

  7. Ethical

This article is the third of a seven-part STEEPLE Analysis designed to examine the future impacts of a fictional Greater Depression. The specific Framing question for this exercise is:

How might Global Multimodal Logistics (GML’s) decision to purchase six hybrid airships be affected by a global-scale Greater Depression occurring in the decade of the 2020s?

From this perspective, it becomes possible to examine trends from the seven categories defined by the STEEPLE analysis. The third category is Economic. This article seeks to offer a plausible answer to the following question:

How would the government's response to Greater Depression’s effect on global economics impact GML?

Dr. Ranell knows governments will be compelled to enact policies and programs to address the ravages of a Greater Depression. Because GML is a global shipping corporation, Ranell can relocate assets to take advantage of opportunities anywhere in the world. Alternatively, he can pull resources away from countries whose policies are making the situation worse.

The term "Great Depression" conjures up images of economic turmoil and widespread suffering. It is a phrase often used to describe a prolonged period of economic decline characterized by high unemployment, low GDP, and deflation. The last Great Depression, which occurred in the 1930s, had a devastating impact on economies worldwide, and it took decades for many countries to recover fully.

Dr. Ranell knows that the world's governments must play a crucial role in addressing the crisis that emerges during the Greater Depression. They will be compelled to implement policies and programs designed to stimulate economic growth, relieve those suffering, and prevent the situation from worsening.

A global economic depression will be addressed in different ways by different countries. Also, the approaches will likely vary as the economic cycle swings through its various stages. As the CLO for a global logistics shipping corporation, Ranell is in an ideal position to judge between competing approaches to the economic turmoil. At the same time, he scours the globe for opportunities for profit and threats to his organization. His four-part analysis of various nations will revolve around their government’s Fiscal Policy, Monetary Policy, the degree to which they embrace Modern Monetary Theory (MMT), the impacts of government-issued cryptocurrency, and how they manage their gold reserves.

Fiscal Policy

Fiscal policy refers to the government's use of spending and taxation to influence the economy. During an economic depression, the government can use fiscal policy to stimulate demand and boost economic activity. This can be done through increased government spending on infrastructure projects, social programs, and other initiatives that create jobs and put money into the hands of consumers.

Examples of targeted fiscal policy measures include unemployment benefits, government-sponsored medical benefits, and social security networks. When people lose their jobs, they may not have the income they need to pay for basic necessities like food, medical care, and housing. These benefits provide a safety net for those out of work, helping to maintain their standard of living and preventing them from falling into poverty.

Unemployment and stagflation have both emerged as challenges during the Greater Depression. The safety nets are collapsing. “Social Security and Medicare both face long-term financing shortfalls under currently scheduled benefits and financing,” a Social Security Administration report warns (NY Post, 2021).

Economic depressions are most often characterized by deflation coupled with high unemployment. High levels of unemployment can lead to social and economic problems, such as poverty and crime. However, economic depressions can last a very long time, even more than a decade. During that time, there is likely to be an oscillation between deflation and inflation (Dalio, 2021). Stagflation is a condition where high inflation is combined with stagnant or declining economic growth. It can be challenging for policymakers to address both of these issues simultaneously, as the effective measures for combating one may be detrimental to the other.

Monetary Policy

Monetary policy refers to the actions taken by a central bank, such as the Federal Reserve in the United States, to influence the supply and demand of money in the economy. During an economic depression, the central bank can use monetary policy to stimulate economic activity and help stabilize financial markets.

One way the central bank can intervene is through adjustments to interest rates. Lowering interest rates makes it cheaper for businesses and individuals to borrow money, which can encourage spending and investment. The central bank can also use quantitative easing, a process where it creates new money and uses it to purchase securities, such as government bonds, from banks. This can help to increase the supply of money in the economy and lower borrowing costs.

Maintaining financial stability is crucial during an economic depression. If people lose confidence in the financial system, it can lead to panic and further undermine the economy. The central bank plays a key role in preserving stability by providing liquidity to financial markets and acting as a lender of last resort to banks in times of crisis.

Another aspect of monetary policy indicative of a Greater Depression are waves of defaults and bankruptcies. When businesses and individuals struggle financially, they may be unable to meet their debt obligations, further weakening the economy and creating a vicious cycle of decline. “If he is right in his assessment of the world economy, the next decade will contain mass unemployment, mass personal bankruptcy, and business insolvency, a severe, protracted recession, and a wave of financial crises and defaults in countries around the world” (Roubini, 2022). Governments will need to step in and provide support to help prevent these defaults and bankruptcies from occurring or to mitigate their impact on the economy. However, this may represent a megathreat that federal banks will be powerless to stop.

Modern Monetary Theory (MMT)

Modern Monetary Theory, or MMT, is a framework for understanding the role of government deficits and debt in the economy. It asserts that deficits and debt are not necessarily bad things in a sovereign currency system where the government can issue its own currency. They can be necessary in times of economic crisis, such as an economic depression, to stimulate demand and keep the economy from collapsing.

According to MMT, the government can use unconventional fiscal policies, such as helicopter money, to boost demand and stimulate economic activity. Helicopter money refers to the government giving money directly to households or businesses, essentially "dropping" it from a helicopter. This can help to increase spending and stimulate economic growth.

However, it is essential to note that there are limits to what MMT can achieve. If the government uses these unconventional measures excessively or without proper safeguards, it can lead to hyperinflation, a condition where prices rise at an unsustainable rate. Hyperinflation can erode the value of money and cause widespread economic problems.

There are historical cases that demonstrate that wealth can grow even during periods of hyperinflation. “The technique involves accurate forecasting, anticipating governments response, and nimbly investing ahead of the chaos. Investing is straightforward if you can foresee the policy response to a crisis” (Rickards, 2021). This is what Ranell’s job is now.


In recent years, cryptocurrency has gained popularity as a potential hedge against economic instability. Cryptocurrency is a digital or virtual currency that uses cryptography for security and is not backed by a central authority, such as a government or bank. Some cryptocurrency proponents argue that it could be used as a tool for governments to stimulate demand and economic activity during the Greater Depression.

However, there are also risks and limitations to using cryptocurrency to respond to a Greater Depression. For one, cryptocurrency is still a relatively new and untested technology, and it has yet to be clarified how it will perform in a crisis. There are also concerns about the security and stability of cryptocurrency systems, as they are vulnerable to hacks and other forms of cyberattacks.

Another issue to consider is the balance between individual freedom and government control. Cryptocurrency operates outside the traditional financial system and is not subject to the same regulations and oversight as traditional currencies. Those who value personal freedom and privacy can see this as a positive. However, it can also make it more difficult for the government to monitor and control the economy.

There is an ominous rise in the interest of governments to issue their own forms of cryptocurrency. “The current push for centralized digital currencies was made feasible through digital identity technology that enabled a level of control over people which was unimaginable 10 or 15 years ago” (Keitlinkska & Phillip, 2023). This development is in the diametric opposite direction of the original problem cryptocurrency was designed to address. Instead of freedom from government mismanagement of the economy, the new cryptocurrencies may give governments Orwellian control over individual lives.

“(All) of these deficit-financed interventions must be fully monetized. If they are financed through standard government debt, interest rates would rise sharply, and the recovery would be smothered in its cradle" (Roubini, 2020). Is there any other plausible government response?

Increasing Gold Reserves

Gold has long been considered a store of value and a means of exchange. During times of economic turmoil, such as the Greater Depression, some governments are increasing their gold reserves to stabilize their economies and protect against financial instability. “The United States economy could be in danger if China and Russia end up deciding to trade within their own gold-backed money” (Fitzgerald, 2023). There is a race for governments to purchase billions of tons of gold.

There are some pros to this approach. Gold is a tangible asset widely recognized and accepted as a store of value. It is also relatively scarce, which can help to maintain its value over time. In addition, holding gold reserves can provide a sense of security and stability for a country's citizens and investors.

However, there are also some cons to increasing gold reserves in response to economic turmoil. For one, gold is not an unlimited resource, and there are only so many gold reserves available to be acquired. In addition, the process of acquiring gold can be expensive and time-consuming. There is also the risk of an international currency war, where countries compete to devalue their currencies to make their exports more competitive. “The goal of a capital war is to cut the enemy off from capital because no money = no power” (Dalio, 2021). This can lead to a downward spiral of competitive devaluations, where everyone in the global economy loses.

Ranell Must Weigh Government Responses

As Dr. Ranell seeks to guide his company through a Greater Depression characterized by high unemployment, low GDP, and cycles of hyperinflation and deflation, he must position GML’s global assets where he thinks they will have the greatest potential benefit. It is a situation that requires a multifaceted approach, as more than one policy or strategy will likely be required to address the complex and interconnected issues that arise. At each stage of the process, he will call on you to make the final decision.

Fiscal policy, monetary policy, Modern Monetary Theory (MMT), cryptocurrency, and increasing gold reserves are just a few options that governments may consider in response to a Greater Depression. Each of these approaches has its pros and cons, and you must weigh each option's potential benefits and drawbacks carefully.

Facing the unfathomable calamity of a Greater Depression is an unprecedented challenge that requires consideration of a range of options and to be prepared to adapt and adjust their strategies as the situation evolves. It is a daunting task, but with careful planning and commitment, it may be possible to navigate this crisis and emerge stronger on the other side.


Dalio, R. (2021). The changing world order: Why nations succeed and fail. Avid Reader Press. New York, NY.

Fitzgerald, S. (2023). Blaine Holt to Newsmax: Loss of reserve world currency puts US in danger. Newsmax. Retrieved from

Keitlinkska, E. & Phillip, J. (2023). Digital currency launch in Nigeria matters for the rest of the world: Investigative journalist. The Epoch Times. Retrieved from

NY Post Editorial Board (2021). The ‘Build Back Better’ plan would be utter poison for a struggling economy. New York Post. Retrieved online:

PESTLE Analysis. (2015). Difference between STEEP and STEEPLE Analysis. Retrieved from

Rickards, J. (2021). The New great depression: Winners and Losers in a post-pandemic world. Portfolio. An imprint of Penguin Random House.

Roubini, N. (2020). A Greater Depression? Project Syndicate. Retrieved from

Roubini, N. (2022). Nouriel Roubini: A Greater Depression is Coming. The New Statesman. Retrieved from

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