We must first make assumptions on what Economic Collapse is. History tells us. All paper money falls into one of two catagories, those that have failed and those that are going to fail. They failed in the past (including United States currency) in a spiral of constantly losing value. The federal government continually increases the obligations that it must pay for. Buyers of federal debt slowly back away from buying long term debt and later will not purchase even short term debt. The government begins buying its own debt by issuing new paper money. As more paper money is issued it loses more and more of its value. When the public becomes aware that the issuance of paper money is out of control, and that holding it weeks or days will result in a loss of value, they attempt to convert the paper money that they have into assets that retains some value. To do this, they have to remove any cash they have from banks and other institutions and convert it to something else. What ensues is a run on the banks.
When will this happen? We have some clues because of the process that will take place prior to the event. To understand this process, we must look at a recent event that changed the politics of the United States. Scott Brown, a Republican was elected to the Massachusetts senate seat formerly held by Ted Kennedy. Just thirty days prior to this, he was thirty points behind in the polls. The mainstream media (MSM) have more influence on the general public than any other source. Generally the MSM support the liberal and socialistic candidates and ideas. So why was Senator Brown elected thirty days after he was 30 points behind?
The last thirty days created a change in the MSM reporting. Brown ran against Obama's unpopular policies. MSM broadcast and print articles began appearing that supported Brown. Incidents showing his opponent (Coakley) in an unfavorable light began appearing. The MSM and the liberal majority changed their minds in the last few weeks and Brown was elected. Loss of confidence in the paper dollar will occur in a similar fashion. However; it can occur at a much faster pace such as days and weeks instead of months.
The MSM generally is in favor of big government spending and supports the socialistic policies of the Obama administration. The problem with socialism is that eventually you run out of other people's money (Margaret Thatcher). At the point that MSM begins to see the hazards of the uncontrolled printing of money, the beginning of the end is near. Then the MSM will begin to report the REAL MONEY CRISIS. For those that ask, "When will the SHTF?" That is when.
The events that follow this are events that you will not want to be a part of. Long lines will appear at banks for those trying to get their money out while it still has some value. Paper money will be issued in greater and greater denominations. Food and other necessities of life will skyrocket in price. Soon a bank holiday will be declared while the government attempts to control the panic. Rules will be enforced that restrict how much money may be withdrawn at a time. Attempts will be made to "freeze" food prices. Payment for all good and services will be turned upside down. Everything will rapidly increase in price. Soon, the paper money you have will not buy the things that you need. At some point, $1,000 will not buy a pair of shoes.
The events that follow this are also predictable because they have happened before. Gold and silver become extremely valuable. Pre 1965 silver coins (they still have some silver in them) will become a known standard of value that is accepted by those that still have something to sell. The barter system for goods and services will return. People that want to eat will grow gardens. Most people who have had life savings in 401Ks will be poor again. The winners are the ones that have planned in advance and the ones that still have outstanding loans or mortgages. The mortgages will no longer have any value. Homeowners will be able to send a million dollar note to a mortgage holder and tell them to keep the change. The change will not buy a loaf of bread. Large cities will become dangerous places to be.
Those that plan ahead can avoid the most severe aspects of this scenario. It is up to each individual to plan ahead early enough to survive. A following article will outline some suggested courses of actions that any individual can implement.
February 2, 2010