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Monday, January 17, 2011

Urban Survival - World Economy Affects the U.S. and the Coming Collapse

Whether we like it or not, and most of us certainly don’t, a World economy exists and disruptions within this economy have major effects on the U.S. economy. For some of you knuckle draggers out there, the World economy s not the same as the infamous “One World Government” concept, however make no mistake about it there are people, and people in powerful positions who desire a one world government. But what I am talking about it the global economy and how inflation and collapses in other countries combined with nationalistic trends greatly effects not only how the U.S. economy reacts but dials up the chances and effects of a economic collapse in this Country.

The United States is a consumer and much less the manufacturer or provider like we were 50 years ago. We are simply dependent on other countries not only for consumer goods, but largely for foods and particularly so for oil. Without the our military power and demonstrated willingness to use it, our need for oil can be leveraged by the world’s producers and other large consumers (China, Russia and others). This can, and will, as some experts predict, drive the price of gasoline up to $7 a gallon by the end of this calendar year.

In China , trying for an orderly transition to new civilian leadership in the near future will face a threat from their own military which is executing an unprecedented growth in military expansion and technological development. There is a rift between the civilian Chinese leadership and the military that will only grow as their own economy suffers from reverberations from the decaying U.S. and global economy. If the U.S. defaults on debt owed to China , and as the U.S. necessarily voids or changes trade agreements as an effort in self preservation – the China problem will pick up steam.

Chinese needs for oil that grown at an incredible rate. It will only further grow not only driving the price up but create potential political firestorms as the global economy competes for a limited supply.

Just image gasoline at $7 a gallon. That means Diesel fuel even higher. That means all consumer goods, being trucked across the country, at never to expected high prices. Imagine bread at $6 a loaf,…..milk at $12 a gallon and you start to get the picture. Most people don’t know it now, but consumer commodities have risen an average of 43%. Some of you may admit that in the back fo your head you are aware of growing prices, but it will be really evident when that percentage increases to 400%, 600% or even $1000.

Fuel oil for heating will be at astronomical prices. Electricity, since much of it is produced by fuel oil driven plants, at twice to three times what you pay now. In short everything will go up in price and go up exponentially. This is inflation,…no,…this will be hyper inflation.

What will not go up is your income or buying power. In fact, that will take a dive. If you near the poverty level, this will have incredible and dire consequences for you and your family’s ability to survive. This will also produce a large class of people that will be desperate. This number may reach 60 million. Imagine 60 million people, a full 20% of the U.S. population who cannot sustain themselves.

The U.S. government will have to create large scale entitlement programs just in order to feed these people and keep anarchy at bay. I fully expect the deployment of first line U.S. military combat units to enforce martial laws in some high population density areas. The U.S. government will not be able to borrow more money, so they will print more fiat currency further driving us into hyper inflation….and eventual anarchy.

Beginning in maybe April, certainly no later than July, the banks, lenders, housing market and certainly the people will take a giant hit as adjustable rate mortgages will be re-set causing a large number of people to be upside down in their homes (that is owing much more than the property is worth), and interest rates will skyrocket. Foreclosures will exceed previous record highs. The government will try to control this with more stimulus money drawn from a empty bank account further deflating money and adding to the hyper inflation, and may try to control the dive through government take over (nationalizing) of banks and maybe the whole mortgage industry. This will embolden the U.S. Government to nationalize other segments of the economy such as health care, insurance, and possibly the oil industry.

All of this spells doom for us. What can you do? Do what you are doing now,…..preparing for inevitable. But do it smarter. And do it at an increase pace. And above all, wargame your plan against all the possible scenarios. I have long said that Survival is a Team Sport,..but it is also a thinking man’s game.

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