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Friday, March 21, 2014

TEOTWAWKI - The End of The World As We Know It

Received from Herbert who is prepping in Missouri. ”Have you thought about how much the interest rates will rise when the economy starts to go downhill? I think we’ll see rates going up and up and when around the 12% mark for homes and vehicles, which would make credit cards around 24%, there will be a food shortage, or maybe a money shortage, or maybe both and food riots will commence in the inner cities. The government will be forced to act with military forces occupying the cities and our enemies will act. The Russian’s can’t re-take Crimea but if they haven’t taken Ukraine by then, they will. Then Poland and Hungary. China will move to control the China Sea, Japan and the Philippines. It’s going to be a mess. Have you thought about the strategic move to by survival equipment on credit such as a new truck, plenty of spare tires and an additional fuel tank, a couple of expensive rifles and ammunition and long term food? A prepper could end up new long lasting gear and be better prepared and after the economy collapse, will there be any institutions to collect? Land could be bought also. A Bug Out site with a water source in an area with decent weather, decent neighbors and no big cities. What say you?”

Herbert – I just cannot advocate going into a contract planning to default – however I think you’re point is valid is that if you need something expensive that you have to buy on credit, and is vital to your survival plans, then get it now before you can’t afford it. And if the interest rates rise and/or the institutions collapse, money is going to be your last concern. Unless you are counting your gold and silver as money.

However, on your point that the coming collapse will be based or begun due to economic issues, such as the collapse of the dollar and influenced by world events,....well, that is pretty valid. A recent article from Peak Prosperity gives us a little more insight:

Economist Warns of Collapse Risk: “Will Not Allow Life to Continue As We Know It”

Earlier this week we noted that an invasion of the Ukraine by Vladimir Putin would likely lead to a complete destruction of U.S. stock markets. It’s not so much the invasion force itself, but rather, the economic maneuvers that would come with it should Russia take this course of action.

Well known economist and founder of the Shadow Stats web site John Williams seems to agree. If Russia were to begin unloading US Dollars it would almost instantly lead to a collapse of not only our financial markets, but our entire way of life. And while Russia alone may not have the economic power to single-handedly crush the U.S. economy, if their trading partners and allies like China got into the mix, coupled with front-running investors who may suspect the move is about to happen, it could well be a blood bath on a global scale.

This wouldn’t even be an issue if the U.S. economy were operating at healthy levels, but as Williams notes in the following interview with Greg Hunter’s USA Watchdog, it’s anything but:

What you have to keep in mind is that back in 2008 we had one of the greatest financial crises the United States ever faced. The system was on the brink of collapse at that point in time.

What the Fed and the federal government did was spend every penny they could, anything they could create or anything they could guarantee. They did everything they could possibly do to keep the system from crashing. They guaranteed all bank accounts. So, they saved the system, but now what they did has not borne fruit. We have not seen an economic recovery. We have not seen a return of health to the banking system.

So, the system is very vulnerable; and if the Russians carry through with their threat, you have, indeed, the risk of it collapsing the system.

It does have the effect of creating a hyperinflation, which I think it would. It’s the type of circumstance that will not allow life to continue as we know it because the U.S. is not able to handle hyperinflation.

We’re not structured for it. Zimbabwe had one of the worst hyperinflations that anyone has ever seen. They were still able to function for a while because they get paid in a rapidly depreciating currency. It was so rapid it became like toilet paper overnight… they would go to a black market and exchange it for dollars. We (the U.S.) don’t have a black market to escape from our dollars. Gold is probably the closest thing to that. Gold will tend to rally here as the dollar sells off, barring very heavy intervention by the central banks which you may see.

The fundamentals will eventually dominate, and you will see a very weak dollar and very strong gold coming out of this. As it stands now, even without Russia and China, our economic system is, once again, on the cusp of a serious deleveraging. John Williams highlights that January retail sales, a leading indicator of economic health, gave the strongest signal since September 2007 that a recession is looming, if not already here.

One huge indicator of this is that Staples, a leading supplier of office supplies nationwide, is shutting the doors on 225 stores. And, they aren’t the only ones getting hammered by a pullback in consumer spending. The world’s largest retailer, Walmart, saw sales drop over 20% year-over-year in the fourth quarter of 2013. And as trend forecaster Gerald Celente once noted, “as goes Walmart, so goes America.”

So, in reality, Russia can probably sit back and watch the U.S. economy slip into a coma over the next couple of years. Of course, if their intention is to return their nation to super power status, an attack on the US economy by dumping the dollar would speed up the process and amplify the fall-out, causing a multi-generational depression.

Last year Barack Obama faced off with Russia over Syria, a situation that could easily have led to a much wider conflict. Now, the same players have taken the game to Ukraine. In both instances we’ve heard warnings of a potential collapse of our economic system in the event of an escalation. The point is that it really doesn’t matter if it’s Syria, Ukraine, Iran or some other periphery conflict. It should be clear that eventually this is exactly how it’s going to play out with respect to the US dollar. China and Russia will make their move when they are good and ready. When that day comes the implosion will be so fast that most Americans won’t even realize what has happened or know how to cope.

UrbanMan's comments:

1. It is a fact that we are not prepared for Hyper-inflation. We do not even grow enough food to support our own country. We (as a country) and we (as prepared individuals) must be able to grow and harvest food to support our survival. If you are not planning or prepared to grow your own food, then you are a fool.

2. Zimbabwe indeed had hyper-inflation,....what they also had was rampant violence from the starving and pissed off poor on those who owned farms and manufacturing. That will happen in this country. The government is certainly creating a base for it with all the class warfare and themes that the rich are creating the havoc in this country.

3. "The U.S. does not have a Black Market to escape to....." Yes we do. It's called Gold, Silver, Fuel, Food, other commodities,.......it's called ammunition, tools and services. But it is only valid for those who prepare.

4 comments:

  1. Every time I hear about hyperinflation, hyperdeflation, profiteering and price gouging, the image of Morgan Freeman playing the president in Deep Impact comes to mind. 'I am freezing all prices, freezing all wages. What a gallon of milk cost you yesterday, it will cost you next week...' I can understand that that type of control just wouldn't happen in Zimbabwe or Croatia for that matter. But money only has the value we all say it has anyway. Couldn't a large group or large percentage of the country just says 'no... I don't care what the market says anymore!'

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  2. what is your source for the comment, " we do not even grow enough food to support our own country "

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  3. I have family in Iowa, and when I'm driving through the endless corn fields, I laugh to myself because you can't eat even one kernel of it till it's been processed into high fructose corn syrup... maybe that's what he means?

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