The reality of impending economic collapse

[themadscientist]

All,
Watching the markets and talking to the average joe, I get the impression that the fundamental problems in the world economy have been so easily forgotten.

I'm a greedy mofo, I have always like accumulating wealth and I know the average person ranges from too busy to pay attention to actively avoiding the truth. Let me save you the trouble, we are heading for a melt down. This link sums it up nicely and parallels my views and motivations for my preparatory activity.

http://goldswitzerland.com/index.php/hy ... e-heights/

I highly suggest you give it a read and start critically looking at the mechanisms of our economy. I think if you do you will see what I see, coming collapse.

In a scenario like this that paper in your wallet and the digital representation of it in your bank account will rapidly lose real value as the promises upon which it is based are found to be lies. In that world only real assets will retain value. There are many examples of what hyperinflation looks like, it will proceed in a predictable fashion and as is almost always the case the little guys, us, get hammered. Only by preparing now can one hope to survive.

Before you dismiss this as alarmist rant, take the time to seriously look at the facts and ask some hard questions about whether what you are being told by the government and some investment analysts adds up. I think you find that it doesn't. Once you realize that you will have to decide what you are willing to do to protect yourself from what is coming. I hope you will take the initiative and invest in yourself and your future.

[themadscientist]

I am sensational, yes. It's a curse I must live with but I wear my awesomeness humbly.

[Dattebayo]

As a person who practically lives from paycheck to paycheck, is a renter and has no savings, I really can't see any impact it will have on me or pretty much anyone I know very well (with very few exceptions).

I will continue to work day-to-day and take out quarterly estimated taxes and work in all kinds of different fields; moving to another area if needed. Lesson learned, specialization is death. Be a renaissance man.

[krimsonviper]

Rest assured, I have many dead hookers in trunks. Surplus even.

[Rev_D21]

Glad I have two Fender Stratocaster guitars nearing 25 years old to hold on to.

[themadscientist]

As a person who practically lives from paycheck to paycheck, is a renter and has no savings, I really can't see any impact it will have on me or pretty much anyone I know very well (with very few exceptions).

I will continue to work day-to-day and take out quarterly estimated taxes and work in all kinds of different fields; moving to another area if needed. Lesson learned, specialization is death. Be a renaissance man.

$10 a gallon gas.
$5 loaf of bread.
Your municipality defaults on its debt.
Police and Fire service cut
Trash pickup suspended
etc.
etc.
prices changing throughout the day because the velocity of devaluation is at terrific speed. Don't think you won't be affected.

The spiraling hyperinflation of post WWI Germany gives us indications of what one might expect.
http://www.historylearningsite.co.uk/hy ... ermany.htm

The impact of hyperinflation was huge :
People were paid by the hour and rushed to pass money to loved ones so that it could be spent before its value meant it was worthless.
People had to shop with wheel barrows full of money
Bartering became common - exchanging something for something else but not accepting money for it. Bartering had been common in Medieval times!
Pensioners on fixed incomes suffered as pensions became worthless.
Restaurants did not print menus as by the time food arrive…the price had gone up!
The poor became even poorer and the winter of 1923 meant that many lived in freezing conditions burning furniture to get some heat.
The very rich suffered least because they had sufficient contacts to get food etc. Most of the very rich were land owners and could produce food on their own estates.
The group that suffered a great deal - proportional to their income - was the middle class. Their hard earned savings disappeared overnight. They did not have the wealth or land to fall back on as the rich had. Many middle class families had to sell family heirlooms to survive. It is not surprising that many of those middle class who suffered in 1923, were to turn to Hitler and the Nazi Party.

[Rev_D21]

Brittany Spears CD $39

[rc1honda]

This is a interesting topic. One thing is for sure. We absolutely need to stop spending so much and increase our Gross domestic product. If we continue to borrow more then we produce the US will no longer be able to afford the interest on our loans and then we are f***.

The only thing that kept our economy from a complete meltdown in 2008 is the fact that the USD is the global standard currency. Other global powers are trying to change this fact. Once they do the USD will lose almost all buying power and value.

Now the gold standard is irrational and impossible to return to. But we really need to decrease spending and increase GDP if we are going to avoid the meltdown in the next 5 to 10 years maybe sooner.

Peter Schriff has some great ideas about this topic and warns of this collapse. He did the same thing in 2006 warning about the real estate bubble and everyone laughed him off. Now people are listening to him.

[Dattebayo]

moving to another area if needed. Lesson learned, specialization is death. Be a renaissance man.

This is key, tho.

[sbird1]

I think you are a bit alarmist, TMS, as I have stated previously, but I do think many should heed the advice of keeping real assets (such as your famed silver bar) and being a jack of all trades. It never hurts to be prepared.

[themadscientist]

Brittany Spears CD $39

teenybopper CDs will be the new money!

[air_forced]

Grocery stores and gas stations don't take gold. Therefore, IMO it's just something pretty to look at.

[Dattebayo]

Grocery stores and gas stations don't take gold. Therefore, IMO it's just something pretty to look at.

LOL

THAT's a stupid comment if I ever heard one. Okay, maybe not completely stupid, but a grossly under-educated one, perhaps...

[Rev_D21]

Brittany Spears CD $39

teenybopper CDs will be the new money!

I had to bring a wheelbarrow full of cash for the latest Justin Bieber CD.

[air_forced]

Grocery stores and gas stations don't take gold. Therefore, IMO it's just something pretty to look at.

LOL

THAT's a stupid comment if I ever heard one. Okay, maybe not completely stupid, but a grossly under-educated one, perhaps...

It was a joke. I understand the effect of an economic collapse and hyperinflation. However, I'm still not rushing off to buy gold. Gold don't pay my bills, and I don't make nearly enough to afford both. And I don't think there will be an economic collapse anytime soon, if at all.

[Dattebayo]

It was a joke.

OH WOW man...

[air_forced]

I just think it's ridiculous how people freak out about things. Just like when the weatherman says a snow storm is coming and everyone rushes out to the grocery stores and buy out the whole store. I'm all for preparation, but people overdue it.

[hbpignosePA]

according to those pesky mayans we only have a year left so....


in all reality, the uncertainty is what drives people to shear insanity. you gotta believe in something; even its its just yourself and your own ability to survive.

[rc1honda]

according to those pesky mayans we only have a year left so....


in all reality, the uncertainty is what drives people to shear insanity. you gotta believe in something; even its its just yourself and your own ability to survive.

Wait, this isn't doomsday prophecy or crappy weatherman we are talking about. You can go to any major university and get a degree in economics. I really don't take the Y2k stance the the sky is falling on America. But the reality is Americans have been high on the drug of consumerism.

It's basic econ, your GDP has to outweigh your spending or your currency is has less value. You have to manufacture and sell more then you consume to sustain a real wealthy economy. With the FED printing money to help bailout failed banks, and help trim down the national debt, it means more US currency in circulation which in itself deflates the value of the dollar. Not to mention the average American is a spending spree like no other time American history. We as a country to need to produce more, spend less, and save more on average or the 2008 bubble will be a just a pre cursor.

I don't believe that America will collapse. But the middle calss is going to lose a lot of buying power in the years to come. soon the days of a the average American buying 300K houses and 40K new cars will be gone. The debt of the country fast catching up with the debt if the individual. Interest rates are going to have to rise to keep America afloat. Which mean a lower standard of living for most.

EDIT: We are seeing this very thing happen at the state level. There was a thread a few day back about a yahoo article stating the top 10 cites going bankrupt in the next 5 years, my hometown of Chicago being one of them. The state infrastructure is already collapsing around us. After this year Chicago will be bankrupt and will need federal help. Or in this case the building of more in city casino's. Problem is that these once huge cites were all built on the backbone of industry whose jobs have long been sent overseas.

[kornmanz]

you gotta believe in something; even its its just yourself and your own ability to survive.

Nuff said. Now stop worrying so much and just live life.

[Oatmealman]

I'm not very worried about this.I have no loans,no payments(other than rent and bills).I'm a firm believer in if you don't have the money in hand you can't afford it and it's unfortunate that most people today believe way to much in a piece of plastic.Anyways i'm all down a collapse.I've got my guns,enough food to survive for a few years,enough ammo to supply a small army,and my jeep which while it isn't fuel efficient most people shy away from a vehicle running tires taller than most their cars coming at them at 60mph.Bring it on bishes

[Jesda]

Brittany Spears CD $39

I remember when music stores had midnight release parties for new pop albums. FREE PIZZA!

[themadscientist]

I often have to calm my metal friends as many do proudly trumpet their stack of gold and silver. To lean completely on that is myopic. As has been correctly suggested if for the wrong reason, gold is not a common medium of trade. To assume in an economic crash WalMart is going to start denominating thighmasters and sam's cola in grams of gold is dumb; it ain't going to happen. That is why I always tout the merits of HARD ASSETS. That could be anything real. Food, medicine, tools, weapons, books with important knowledge, acquiring knowledge through training and higher learning etc. In what people commonly refer to as SHTF, gold and silver get buried and the steel brass and lead (guns)come out to defend the tin and plastic (food and supplies).

Some people do go too far in my opinion, but most are not ready for something as pedestrian as a heavy snow storm or a blackout. Look at the recent complete failures of municipalities to respond to this recent bout of snow storms. Realize that across the country the financial state of local governments are deteriorating. States are running deficits, most in violation of their constitutions. As the cry goes out for federal bailouts nobody mentions or seems to comprehend that that is not some magic well of money, that is our money coming back to us to a certain degree, but increasingly foreign money loaned in the form of government securities. Those debts are arguably unpayable and the rotten albatross of national debt is getting heavier. To ignore the plain facts are to tilt with fundamental logic ultimately to your own detriment.

[HashiriyaS14]

Anyone who buys actual gold or actual silver is a nut, unless they just like looking at shiny shxt.

If you think that currency X is going to be devalued, then you buy derivatives based on currency Y, a basket of currencies, or metals (i.e. an ETF, probably).

You only buy the ACTUAL METAL if you think we're headed for a Zombie Apocalypse, because if we weren't, then a derivative based on gold is just as good for hedging purposes. It's actually better because it can't be lost or stolen and it's more easily sold and transferred.

VALUES of certain assets or currencies have collapsed in the past and may well collapse in the future, so as always, hedge and diversify. The markets and exchanges themselves aren't going anywhere, and we aren't reverting to a paleolithic barter system just because a few banks fold. Paper securities are fine.

Also, on gold specifically, it is at EPIC highs right now. Why you'd buy something at a peak historical valuation is beyond me. Buying gold right now is like buying California residential real estate in 2007. If you want to diversify out of dollars, don't buy gold, buy an ETF based on a basket of other currencies.

[themadscientist]

Who bought at peak? Not me. Who says this is the peak? Not me. Who is diversified? Me.

Derivatives, yeah, great idea. Ask all those people that dabbled in the housing market derivatives how well they worked for them. Ask Greece about Derivatives. They could show you how the investment banks helped them hide their debt and then created credit default swaps to profit from the failure of the monster they created. You should look at the back story on PM ETFs, musical chairs man with metal sold several times over. JP Morgan has a bunch of law suits coming their way. Contracts coming to maturity and they are unable to deliver and are forced to negotiate a metal contract for cash. You keep trusting those scumbags if you choose.

As the world moves away from the dollar as a reserve currency, China quietly divests itself of dollar-based investment vehicles, countries in Europe fall like dominoes under the weight of similar crushing debt and flawed economic models as the U.S., but while they kick in austerity we hurtle towards quantitative easing 3, you are actually still drinking the kool aid? Delusion is a hell of a drug.

I have yet to see anyone demonstrate how the current trend is going to be reversed. You speak as if you have the answer Hash; take a shot.
Tell us how we stop deficit spending and pay down the debt.
Tell us how to put Americans back to work.
Tell us how to deal with a dead housing market with people getting kicked out of their homes and those hanging in there upside down on their mortgage.
Tell us how we get the cities, states, and our federal government to a point of solvency.

Tell the "nut" how you intend to counter clearly present FACTS about the state of our economy. Until then you are just talking out of your a**.

[Jesda]

My answer is simple: Allow the market to correct itself by allowing it to naturally weed out poorly run firms and failed schemes.

Recessions hurt because they're supposed to.

[Encryptshun]

My ideas may not be popular on this forum, but they are as worthy of true consideration as any other:

Tell us how we stop deficit spending and pay down the debt.

1) cut military spending by 50% across the board by 2025. Do so by: (a) developing a standard business case process and standardized ROI metrics; (b) requiring all current and proposed military projects to be submitted in accordance with that process; (c) take first-round budget cuts and use it to pay for an external auditing firm to conduct a full-blown process and efficiencies audit of the military administrative, benefits, and logistics programs. Eliminate wasteful spending from those programs (which will make things easier on our troops who now have to go through way too much red tape for simple requests). We can reduce our military spending by half and still more than adequately protect our security and sovreignty.

2) Disallow any Representative or Senator from voting on any bill he or she authored (unless authored as part of a committee) if that bill specifies any pork project or otherwise grants "favored" status to the state and/or district he or she represents.

3) Reinstate line-item veto

4) Perform a full forensic audit of all governmental agency budgets and set realistic targets for spend reduction by either budget elimination or privatization

5) Rewrite the tax code so that it is simpler and no longer favors any particular segment of the income-earning population by means of tax loopholes. Bring the IRS into the 21st century.

6) Instate a 1% federal income tax on all internet-based commerce which would otherwise not be subject to state income tax

Tell us how to put Americans back to work.

1) Make it more difficult for companies receiving huge tax incentives from the government to send jobs overseas. Specifically target jobs outsourced through federally-funded programs (such as defense) from being outsourced to foreign nations (like Israel).

2) See #6 above. By making it a bit less lucrative to buy online, you encourage local shopping at local businesses who employ local people.

Tell us how to deal with a dead housing market with people getting kicked out of their homes and those hanging in there upside down on their mortgage.

This is certainly a huge issue, but I don't feel that it would cause the sort of impending economic collapse you are talking about. Our economy has already felt the brunt of that. Ask China to come buy all the distressed properties at current loan value (not current market value)....let them sit on them until the real estate market rebounds at which point they can do with them whatever they want. They have the liquidity to absorb the float on the capital investment and we'd get tax revenue from the sale after the fact. Don't make it any easier for them to emigrate to the U.S. so they can't use it as a colonization program.

Tell us how we get the cities, states, and our federal government to a point of solvency.

Require all governmental entities to pass an audit each year and treat the financial reporting of the public sector like the financial reporting of the private sector. Each taxpayer is a shareholder, so each should be entitled to see quarterly statements and year-end financial reports. Most of the spending that goes out of control is becuase of conflicts of interest, corruption, and poor fiscal management (bad procurement practices, lack of interest in gaining competitive advantage, etc).

/2cents

[themadscientist]

I'd vote for you in a heartbeat. Other than the housing thing, those are all great ideas that would move us in the right direction.

Unfortunately, one comes to the question, "is government going to stop acting irresponsibly?" If you think so, I would expect you to assume they see the writing on the wall and that they will do what it takes. If, however, you think government has no real interest in fixing things, you would not be optimistic. That's where I am.

I think any person who works, supports their family, and manages to cover their bills can understand how to fix our economy on a basic level. We are dealing with a group of people in government, however, that don't live in the real world and actually have a vested interest in maintaining the status quo.

I put forth that ideas to repair our economy are plentiful, will to execute those ideas is absent.

[jamesgios99]

John Keynes would not be happy with this thread

[rc1honda]

My answer is simple: Allow the market to correct itself by allowing it to naturally weed out poorly run firms and failed schemes.

Recessions hurt because they're supposed to.

THIS
The bailouts should of never happened. We should of let those banks fail. Some say that letting AIG fail would take our economy with it. i don't think it would have. It would of been bad for maybe 2 years but then equilibrium would return and the markets would stabilize.

Now the same people that helped cause the 2008 depression are still in power. And the FED under congress are printing money like no tomorrow. I don't think Gold is a safe play right now. But i do think Silver is. Gold And Silver have a ratio, ironically called the gold/silver ratio. Where silver typically is 1/16th the price of gold. With gold trading at 1400 a ounce and silver trading at 40 a ounce, silver is bound to make a huge surge or gold take a huge tumble. Either way silver is a way safer commodity right now then gold.

But now we need to vote for people who are going to reign in spending and balance budgets. No more free lunches. No more loans for people who can;t afford them. No more sending jobs and companies overseas. Keep big business in the US. Encourage blue collar work and industry. Keep the auto/steel/mining/and construction industries as big as can in the states. How do we do it?