The Signs of an Economic Collapse
The Signs of an Imminent Economic Collapse
An economic collapse may be described as a blow to the economy of a nation, particularly during a crisis. Right now, we are definitely in the midst of a crisis that is having some devastating effects on our economy. Whether or not politicians and the media want to admit it or not.
Depending on each situation, an economic collapse has the potential to last several years. Most people are aware of an example of this with the Great Depression which occurred between 1929-1933. There was also an economic collapse in Indonesia that lasted from 1997 to 1999.
With an economic collapse comes the decline in social and economic life. There will be a decrease in consumption and production and investors will be cautious. For example, when Indonesia experienced their crisis in 1997, their GDP fell by 13.1%. A key factor to take notice in, is the fact that their inflation rate was 72%! To no surprise, following all of this, there was social unrest.
Are we currently experiencing extreme rates of inflation ourselves? A good rule of thumb to use is the price of silver and gold. As these always remain the same. But, it appears that the prices of both silver and gold are being manipulated. (This may also make a good investment opportunity for those looking for a great deal on silver and gold). So let’s look at another sector that is possibly being effected by inflation. You don’t have to look any further than your refrigerator. Yes, the price of dairy prices are increasing significantly, such as milk, butter, and eggs. This is a possible sign of quickly rising inflation.
- Berries. High in fiber, berries are naturally sweet, and their rich colors mean they are high in antioxidants and disease-fighting nutrients.
- Fish. Fish can be a good source of protein and omega-3 fatty acids, which help prevent heart disease.
- Olive oil. Olive oil is a good source of vitamin E, polyphenols, and monounsaturated fatty acids, all which help reduce the risk of heart disease.
- Leafy greens. Dark, leafy greens are a good source of vitamin A, vitamin C, and calcium, as well as several phytochemicals (chemicals made by plants that have a positive effect on your health). They also add fiber into the diet.
- Nuts. Hazelnuts, walnuts, almonds, pecans — nuts are a good source of plant protein. They also contain monounsaturated fats, which may be a factor in reducing the risk of heart disease.
The Hallmarks of An Economic Collapse
Let’s start with looking at what the economic cycle looks like. There are four phases in an economic cycle: trough, expansion, peak, and contraction.
Here are some signs of an economic collapse: interest rates increase, debt crisis, and currency crisis. And right now I think we can check most of these boxes as being our current situation.
Now let’s take a look at each one of these signs in more detail to see whether this may be our current situation.
During a downturn in the economy, historically, interest rates have increased to rather high levels. This induces a striking blow to both businesses and individuals, as their ability to take out loans is diminished.
Also, with increased interest rates, defaults on homes begin to increase. Businesses will also start dumping their assets in order to pay their loans.
We can also see that we are in a debt crisis by the fact that we are in a major fiscal deficit. In fact, it is currently at 28 trillion as I write this. Now, they have put us into a higher deficit “in order to stimulate economic growth”. But at a certain point there is no return.
The problem we are facing right now, in my opinion, is that the government has taken on too much debt and now we are at risk of a major financial default. Imagine one day your entire bank account being wiped out. That’s what it will look like when this happens (and it will happen suddenly).
And the final tall tale sign of an economic collapse, a currency crisis. This will happen when other countries lose their faith in our currency. I am afraid that we are dangerously close to the total loss of faith in the dollar with this wild dollar printing expedition that we are currently on.
Hyperinflation Is A Sign
One sign that we are in a currency crisis is the appearance of hyperinflation. This is where the purchasing power of a currency falls drastically. Foreign investors will also lose their trust in the country and start to remove their investment money.
As this begins to get worse, you are going to be able to purchase less and less with your dollar. So I would advise to build as much of your stockpile as you can right now because each day your dollars are losing value.
What Could Cause An Economic Collapse?
Usually, an economic collapse requires some exceptional circumstances in order to be triggered. What you will see is overall panic in the economy with decreasing household consumption and income. Unemployment will be increasing overall along with poverty.
Here is what to look for: stagflation, war, hyperinflation, and a stock market crash.
Painting A Picture of What This Looks Like
Stagflation is where inflation is going through the roof and the economy is stagnant, put into simple terms. Stagflation is also a difficult one for the government to put under control. For example, raising interest rates will help slow down inflation but on the flip side it also makes purchasing more difficult, affecting the real sector negatively.
War also can have devastating effects on a nations economy for obvious reasons. There are many possible conflicts that the U.S. may engage in, for example, rising tensions in the China sea and also recent rising tensions with Russia.
Simply put, hyperinflation is a condition where there is totally out of control inflation. You will know when you have reached the point of hyperinflation because your money will essentially be worthless. Like taking a wheel barrow of twenty dollar bills to purchase some bananas.
And the final potential sign of an economic collapse is a stock market crash. There were many cases in history where crisis were started by the bursting of a bubble from soaring prices in the stock market. Of course, the great depression being an example of that.
Currently, we have a soaring stock market and real estate market where many analysts are looking at this and wondering when it is gong to pop. And is the bursting of this bubble going to be the trigger for the initiation of the economic collapse? Only time will tell.
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