The challenge before many commentators, analysts and economists is to determine whether or not the global economy is in its last throes or whether some combination of money-printing and inflation export strategies will save the day for developed countries such as the United States. In the meantime, the stock market is growing consistent with QE (quantitative easing) strategies of the Federal Reserve. In fact, the Fed has signalled further injections of liquidity into the market through extension of its “Twist” and “QEoo (Quantitative Easing Ad Infinitum)”. Clearly, the Federal Reserve cannot stop this policy. To do so would mean a total collapse of the economy as we know it. Still, the injections of currency into the system is not working as desired and unemployment will likely continue to rise globally as well as in the US. Most economic indicators are pointing to a downward trend on all technical measures.
It may be that a year from now, we will be looking back at the collapse of the US dollar and the tumbling of the global economy into a severe inflation and increased and massive unemployment as clearly predictable because highsight is 20/20.
Yet, many doomsday commentators still hedge their words by now claiming such a potential collapse may occur in the next 3 to 5 years. They were predicting a currency collapse in 2012, 3 to 5 years ago. This begs the question, How is it the system still survives? Not even the perceptible abandonment of the US dollar by most major countries as the reserve currency is having the critical and pernicious effect predicted.
My own sense is the country is moving through something akin to a hospice process. When a currency system enters the final stage of its life cycle, two different dynamics are at work which are closely interrelated and interdependent. On the observable plane, the nation begins to exhibit chronic problems such as unemployment and gradual increased inflation of basic goods. Usually this is an undramatic progressive series of economic changes which are not, in themselves, grave emergencies. These changes provoke rallying cries for more growth and consumption and expansion of the social “safety net”.
The other dynamic of the dying process is psychological and is a different kind of process. The spirit of the dying economy is exhibited by the inexorable decline of a few economic sectors, sluggish investment and a reduction of overall productivity. This release also tends to increase the awareness by significant sectors of the informed population of the reality of the situation. The idea that an end is approaching and a recognition that things are no longer working as they should is met with an optimistic belief in our “American Exceptionalism” and the marching orders of “Buy American” and continue unsustainable consumption to “help” the economic “recovery”.
Although the economic system is ready to implode, public opinion may still be unresolved or unreconciled to such a reality because it simply seems impossible the country could collapse. In some financial sectors panic takes hold and efforts are made to jump start the economy. Calls are made to support “stimulus”; the injection of liquidity or other approaches to prop up the system. By the time, the stimuli become chronic, as is the case now, the system may still tend to show “growth” and linger as a result of habit, the so-called normalcy bias; people maintain the regular activities of economic normalcy. Some sectors begin to hedge and move into a passive role in the economic activities taking hold in a stimulus environment. The economic system continues to sputter forward.
These processes will happen in a way appropriate and unique to the values, beliefs, and lifestyle of the nation. In the US, severe political polarization and independent political ethos can very quickly lead to civil disobedience that can spiral out of control into a generalized violence. The implosion process will go through 12 stages:
First, there will be small sectors gradually left behind: inner city economies, youth and senior unemployment, marginal group poverty and rural towns experience depression. The national focus on urban areas grows and there is an increase in food stamps and emergency measures to keep the lid on general discontent among marginal populations.
Second, larger segments of the public begins to perceive something is wrong and there is little information or dialogue because no one seems to know what to do. There is still a confidence “someone” is taking care of the situation. Families begin to talk about how to cooperate more in these “hard times”.
Third, the public begins to experience confusion. Individuals begin to question their decisions and choices relative to whether they live or the occupations they chose. At this stage, they still don’t realize they are simple grains of sand in the larger macroeconomic beach.
Fourth, spot shortages begin to occur at retail outlets and more businesses shut down. More and more cities declare bankruptcy and some areas experience extended energy outages.
Fifth, political leaders begin to play the blame game relative to levels of governments. Federal, state and local leaders will begin pointing fingers at each other for the sluggish economic performance.
Sixth, violent incidents, car wrecks, suicide, family abuse and physical assaults begin to escalate significantly.
Seventh, productivity plummets and unemployment reaches levels never before experienced. Government begins to encourage “conservation” of energy and promote austerity and money “management”.
Eighth, larger segments of the middle class begin to feel the crunch of inflation and loss of their standard of living.
Ninth, anger takes hold and politicians begin to hide from public forums. Demagogues will find a receptive audience and rioting and other forms of social violence emerge.
Tenth, the public struggles to maintain normal activity. It becomes more difficult due to hyperinflation and scarcity of goods. Living quarters in homes and apartments become the only refuge of safety. Neighbors initially try to survive individually and do not share their distress with others.
Eleventh, lawlessness takes hold and neighbors begin to coalesce into safety brigades.
Twelvth, the realization the system has imploded takes hold and the public experiences fear, tears, frustration and general disbelief that it is actually happening. They finally realize the country’s economic system has imploded.
How will you know when the end of the economic system has occurred?
Although you may be prepared and aware of what is occurring, you may not be prepared for the actual moment. The most obvious realization most people will experience is that there will be no one there to help when there is no money in their hands or in their bank. There is no economic hospice counselor or economist on hand to help them through the collapse of their financial well-being – no police nor benefactor, will be waiting in the wings ready to save you from the death of a currency system and the nation it undergirds.
The actual implosion, more over, will be swift. The twelve steps described will take no more than six months to play out. Some say December 2012 is the first month of the coming hospice event. I suspect we are entering hospice in America and no one can know for sure how long the national body will survive. One thing is certain, the collapse will occur and no treatments, medicines or stimulus are left that will help.