As the US Economy Collapses, What Will Happen and How to Prepare

From around the web

Future historians are likely to identify the Bush administration’s rash invasion of Iraq as the start of America’s downfall.

The causes of a crash like this are many and varied. While most media sources tend to report on things in terms of a simplistic dichotomy (this or that), reality tends to be more complex

The World Economic Forum ranked the United States at a mediocre 52nd among 139 nations in the quality of its university math and science instruction in 2010.

I have previously warned my readers that the damage caused by this trade war would get progressively worse the longer that it lasts.  

Many companies have been trying to ride it out, but eventually the money runs out and layoffs start happening… 

Anyone who thought that this trade war would not have very serious consequences was just fooling themselves.  According to one source, tariffs paid by U.S. businesses are up 45 percent compared to a year ago.

Most people simply don’t understand the gravity of the situation.  Nothing was ever fixed after the last financial crisis.  Instead, we went on the greatest debt binge that humanity has ever seen, and central banks started creating trillions of dollars out of thin air and recklessly injected that hot money into the financial system.

Flooding the market with trillions of new fiat currency units and pushing interest rates to zero for the greater part of a decade made a new crisis inevitable. So now we are in the terminal phase of the largest financial bubble in human history, and there is no easy way out.

And that is why our leaders have been piling on the debt and global central banks have been recklessly creating money.

But it is inevitable that our bad choices would catch up with us, and the pain that we are going to experience is going to be absolutely off the charts.

This crash will be unlike anything the world has ever seen. Put simply, there has never been this much debt in the system (hundreds of trillions worldwide), so there will be no historical precedence for the crash. Under Trump, fiscal deficits will push up interest rates and the dollar even further, and hurt the economy in the long term.

Trump’s fiscal stimulus will fuel inflation more than it does growth. Inflation will then force the Federal Reserve to hike up interest rates sooner and faster than it otherwise would have done, which will drive up long-term interest rates and the value of the dollar still more.

This undesirable policy mix of excessively loose fiscal policy and tight monetary policy will tighten financial conditions, hurting blue-collar workers’ incomes and employment prospects.

It is worth remembering how America’s 1930 Smoot-Hawley Tariff Act triggered global trade wars that exacerbated the Great Depression.

The Nobel laureate economist Edmund S. Phelps has described Trump’s direct interference in the corporate sector as reminiscent of corporatist Nazi Germany and Fascist Italy.

To be sure, expectations of stimulus, lower taxes, and deregulation did boost the economy and the market’s performance in the short term. But, as the vacillation in financial markets indicates, the president’s inconsistent, erratic, and destructive policies have taken their toll on domestic and global economic growth in the long run.

The stock markets worst enemy is unpredictability and Trump is considered to be very unpredictable. Can you feel it? How greed is now giving way to fear?

Already, in anticipation of higher short-term rates, investors have driven longer-term interest rates higher. Yields on 10-year Treasury notes, for instance, reached as high as 2.86% on Monday, up from 2.40% at the start of the year and 2.03% in September.

The IMF’s latest Financial Stability Report, is a surprisingly candid discussion on the topic of whether “Rising Medium-Term Vulnerabilities Could Derail the Global Recovery”, which is a politically correct way of saying is the financial system on the verge of crashing.

In recent years, Republicans have been characterized by two principal positions: They like starting wars and don’t like paying for them. George W. Bush initiated two major wars in Iraq and Afghanistan, but adamantly refused to pay for either of them by cutting non-military spending or raising taxes. Indeed, at his behest, Congress actually cut taxes and established a massive new entitlement program, Medicare Part D.

Bush’s actions were unprecedented.

No one ever imagined a US president would actually conspire to attack his own country in order to engineer a political agenda…but one did. And now, by Trumps own inaction, is doing the exact same thing Bush & Cheney did.

The Federal Reserve bank and its manipulation of the currency supply is directly causing this depression.  

Suddenly you reach a point where there is too much money chasing limited resources. According to economic theory, that is when inflation happens.  

One group caused another group to lose their property’s value. In most places, this activity by another name is called “destruction of property” or “theft.” However, currency devaluation is such an esoteric and ingenious form of theft or destruction that it goes unnoticed and unexamined by the majority of the population.  

Whenever central authorities inflate the currency supply it causes the value or purchasing power of the currency to decline. This value is basically lost or “stolen” from the people.

Debt brings consumption from the future into the present, and so it increases short-term economic activity at the expense of long-term financial health.

The only reason why we have even gotten this far is because interest rates have been pushed to historically low levels.  If the average rate of interest on U.S. government debt even returned to the long-term average, we would be paying more than a trillion dollars a year in interest on the national debt and the game would be over.

Even common sense tells you a society completely based on financing there is something seriously wrong. Remember, the markets always surge before the crash. We’ve had the surge, so we know what comes next.

The entire western civilization and their governments are completely broke. What part of this do you not understand?

We can barely afford the debt service now at practically 0%, so just how exactly are people and the governments going to afford two, four or nine times the payments??? 

Our financial system is based on a pyramid of debt, and we have allowed Wall Street to operate like a giant casino.  Our entire economy has essentially become a colossal Ponzi scheme.

A rather minor business cycle slowdown in 1994 was fought with a tidal wave of new credit under Fed chairman Alan Greenspan. That ultimately resulted in the Dot Com Bubble crash of 2000, but the lesson went unlearned.

Instead the Fed concluded that the idea was sound, but was simply not taken far enough. The elite cheerleading squad, captained by Paul Krugman, fully supported a doubling down, and the corporate media unquestioningly went along with the program.

So Greenspan and Bernanke created the Housing Bubble 1.0 by offering the world’s credit markets a price of money so low it couldn’t be refused. Housing was the story, and the Fed supplied the credit.

As predicted by a scant few of us, that all blew up spectacularly in 2008. And no constructive lessons were drawn from that experience, either.

With the political aircover to “save the system” (from the problems that it created!), Bernanke, Yellen, Kuroda and Draghi then led the most aggressive, coordinated central bank bender in all of human history.

Trillions and trillions were printed up, and many times that amount were leveraged and loaned.

Here we all are; stuck together in a world awash with credit. $250 trillion in debt. Four times that amount in unfunded liabilities. And a mind-bogglingly massive amount of tangled financial derivatives roughly the same size as both those debts and liabilities put together.

And the politicians never examine the costs to the public or the benefits to the public of financial reform. That is never part of the discussion.

As the U.S. economy collapses, you will not have access to credit.

Banks will close. Demand will outstrip supply of food, gas and other necessities. When the collapse affects local governments and utilities, then water and electricity will no longer be available. As people panic, they will revert to survival and self-defense modes. 

A U.S. economic collapse will create global panic. Demand for the dollar and U.S. Treasurys will plummet. Interest rates will skyrocket. Investors will rush to other currencies, such as the yuan, euro or even gold. It will create not just inflation, but hyperinflation as the dollar becomes dirt cheap.

Millions of investors, pensioners, insurance customers, and creditors will lose a fortune. (The FDIC currently only holds enough reserve for 40% of the nations current depositors, which is pointless anyway since the dollar will have no value)

You can’t depend on fractional reserve banks to provide access to your funds during a crisis.

As occurred during the last crisis, we are likely to see some traditional financial institutions and even national governments become insolvent. They can print money in an attempt to stop the bleeding, but this inevitably leads to high inflation or hyperinflation.

Very few Americans have any significant savings today. Most live on credit and those with savings have it stored in financial instruments that will be wiped out as the bankers collapse the system to hide the theft they have been involved in for decades. Those who think they will retire with their IRA, pensions or social security will suddenly find them all gone never to return leaving them with no means to care for themselves.

The debt load for the working poor has nearly quadrupled in the past 20 years as a percentage of their income.

It’s this system that dooms every average worker to poverty. And almost guarantees that the rich and the powerful will stay that way.

This was not some “random” event caused by uncontrolled “complexity”.  This was engineered complexity with a devious purpose.  

As the next great depression hits it will be unlike anything we have lived through before. Nothing will be as it seems and only those that have the resources to adapt will come through it whole. Preparation is the key to adapting to future events and those without resources will reap a bitter harvest as they struggle to survive. No announcements will be made, no warnings will be given by the establishment, it will just suddenly happen out of the blue and everyone will say it was unpredictable. But those who prepared will know better. 

Those who trust in government or only live for today will reap what they sow and it will be unpleasant at best if they survive at all. A simple strategy to insure you do not suffer does not have to be expensive or complicated. The best plans are simple and allow you to adapt to the changing times. 

History shows, pundits obsess over what precisely triggers a crash, as if that matters. It doesn’t, because ’cause’ of a bubble’s bursting can be anything

Click for more: How to fight the NWO
Click for more: How to Prepare
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This is the age old strategy of Centralization; to remove all choices within a system, by force or manipulation, until the masses think they have nothing left but the choices the elites give them.