Are you ready for the US economic collapse?

[Guest danax]

My buddy from high school is a big gold investor and so I get his emails advising and scaring me to liquidate anything possible, pay off my house and buy gold. Gold guys are big doom and gloomers and love to pass around these apocalyptic scenarios. Here's his latest one.

I don't understand high level world economics but what this article seems to be saying is that we are dependent on foreign governments investing in US securities and anything that would cause them to shift their investments would cause a big problem for us here.

And then there's "peak oil" and how oil prices will continue to rise and and cause their own mass economic destruction, baby-boomers bleeding the government dry by 2030, the no-end-in-my-lifetime "war" spending.

Instead of civil debate regarding which developments are best for the city, are we instead going to be brawling amongst ourselves over copper wire from the same projects we all talk about once they're abandoned in 10 years?

This stuff is fascinating if I'm in the right mood but normally I avoid it since I've been hearing such things for decades. However, there are a lot of negative factors that seem to be looming so I have decided to try to pay my house off asap.

[Houston1stWordOnTheMoon]

My home is paid off. My cars are paid off. I have food stored up. But i dont have any gold :(

After the happenings of September 11, 2001--that was a wake up call to me to not hitch my financial future to the happenings in New York. The New York financial house of cards is faulty and weak. It jumps to the negative if it rains hard in the middle east. If you are able to pay off your home and car, i would STRONGLY advise it. If you are able to pay for items you desire in full without the use of credit, i would STRONGLY advise it. Not a bad idea to keep a nice size of cash on hand independant from banks too.

[RedScare]

I got nervous when the fiscal conservatives started outspending the big government guys, leaving us with no one in government practicing fiscal discipline. My car will be paid next month. I haven't used a credit card in well over a year. House is not quite there, but I'm working on it.

Look at it this way. If I'm wrong, I have no bills. I can live with that.

[Houston1stWordOnTheMoon]

I got nervous when the fiscal conservatives started outspending the big government guys, leaving us with no one in government practicing fiscal discipline. My car will be paid next month. I haven't used a credit card in well over a year. House is not quite there, but I'm working on it.

Look at it this way. If I'm wrong, I have no bills. I can live with that.

You are right. The runaway spending thats occuring will bite the country in the ass, by spending this nation into an international debtors prison that will be hard to get out from under. Anytime theres a call to open the public treasury, it raises a red flag for me ;)

[nmainguy]

All our property is paid for as are our vehicles. We have one credit card with no debt and we pay as we go.

Regardless of what anyone tells you, debt is bad. I've even heard some Republicans try to excuse away our national debt by saying "some debt is good". Well, I know where they're coming from: The School Of Suspend Your Reality While I Cover My Ass and Screw Yours With Your Pants On.

Pay your bills; stay solvent and hang on to your land.

[TJones]

All our property is paid for as are our vehicles. We have one credit card with no debt and we pay as we go.

Regardless of what anyone tells you, debt is bad. I've even heard some Republicans try to excuse away our national debt by saying "some debt is good". Well, I know where they're coming from: The School Of Suspend Your Reality While I Cover My Ass and Screw Yours With Your Pants On.

Pay your bills; stay solvent and hang on to your land.

Well, I own one of these

and this and this

are paid off, and I am fixin' to buy one of these .

I have some of these but not many.

So, if the economy falls, and I see these outside my door.

I am gonna use this

until I run out of these

[brijonmang]

Well said ^^^

[Captain Impossible]

I don't really forsee a massive economic collapse. I can see a repeat of the 1970s, but even something along the lines of the Great Depression is certainly unlikely, and a post-apocolyptic disaster movie situation is right out.

[westguy]

Superheroes don't kill people!

[Houston1stWordOnTheMoon]

Uh oh. pictures of guns and bullets. Somebody is going to get a bad label...........

Life long membr of the NRA here and a firm believer in "an armed society is a free society" ;)

[brijonmang]

didnt they predict a big collapse at the beginning of 2005???

[TheNiche]

My buddy from high school is a big gold investor and so I get his emails advising and scaring me to liquidate anything possible, pay off my house and buy gold. Gold guys are big doom and gloomers and love to pass around these apocalyptic scenarios. Here's his latest one.

I don't understand high level world economics but what this article seems to be saying is that we are dependent on foreign governments investing in US securities and anything that would cause them to shift their investments would cause a big problem for us here.

And then there's "peak oil" and how oil prices will continue to rise and and cause their own mass economic destruction, baby-boomers bleeding the government dry by 2030, the no-end-in-my-lifetime "war" spending.

Instead of civil debate regarding which developments are best for the city, are we instead going to be brawling amongst ourselves over copper wire from the same projects we all talk about once they're abandoned in 10 years?

This stuff is fascinating if I'm in the right mood but normally I avoid it since I've been hearing such things for decades. However, there are a lot of negative factors that seem to be looming so I have decided to try to pay my house off asap.

Its strange, but the Chinese seem to have way more confidence in our economy than we do. They own so many treasury securities and partially-peg their currency to ours so that the dollar is kept artificially strong (and it isn't THAT strong, despite their investment) so that we can continue to afford to purchase their goods at levels that are artificially inexpensive. In a way, it nets out because they're essentially selling their goods to us way below market price. After all, we do benefit from inexpensive products not only from China but also from other countries. Unfortunately, it also dramatically reduces our savings rate (capital investment) and curtails our goods-producing employment levels. The employment impact kind of makes it so that the rich get richer and the poor (and middle class) just kind of stay that way...not too much downward movement, though. The savings rate will bite us in the ass in a couple of decades when social security becomes a burning issue...and it will...because savings allows us to grow the 'pie' instead of just arguing how we're going to divide it. On the other hand, it also makes expensive things (like wars) less expensive to finance.

I don't forsee a depression or some sort of sudden collapse. As their economy develops, they'll back off slowly. They even started on that progression last year. But one thing that comes up repeatedly in China's philosophies is that change must be undertaken one small step at a time. This is good for us. Anything other than gradual would indeed be catastrophic. However, I don't see China as an enemy...they depend upon us too much, and they know it.

"Peak oil" is unlikely except possibly as a short-term phenomenon. There's just too much of it.

War spending is to be expected. However, our spending on the military as a percent of GDP is still pretty low in comparison with WW2 and Cold War years. If you assume that our war debt is being financed using treasury securities and how relatively low the interest rates are on those, that the inflation rate will take a bite out of them, and that our economy is likely to grow at a long-term rate of 2% to 4% while the treasuries are being paid/refinanced, the burden of the debt really isn't all that frightening. People may debate how the money is spent, but its certainly not going to run us into the ground any time soon. We've been there and done that already.

Well, I own one of these

Why a Desert Eagle? That's one of the worst guns to have in the event of civil unrest because extra ammo is hard to find.

When planning ahead, always plan on what'll be available. .22, 9mm, .357, .45.

Having extra ammo at home may be useless if you lose your house or are away from home when the civil unrest begins.

[TJones]

Well, Niche, because I already own the damn thing. and .44 magnum is very plentiful, because it is so damn expensive it stays on the shelves.

[TheNiche]

Well, Niche, because I already own the damn thing. and .44 magnum is very plentiful, because it is so damn expensive it stays on the shelves.

I am curious, though. Why the DE? As a consumer, what attracted you to it?

[Houston1stWordOnTheMoon]

Well, Niche, because I already own the damn thing. and .44 magnum is very plentiful, because it is so damn expensive it stays on the shelves.

The .44 is VERY expensive, but it is one hell of a machine!!!! Sure to lay to rest any jaded jackass that gets in its way

[TJones]

I am curious, though. Why the DE? As a consumer, what attracted you to it?

I don't know anyone else that actually has one of these. I just happened to be in the Gun Shop and it was a sweetheart deal I couldn't pass up. .44 and 2 clips for $650 bucks.

[Guest danax]

Its strange, but the Chinese seem to have way more confidence in our economy than we do. They own so many treasury securities and partially-peg their currency to ours so that the dollar is kept artificially strong (and it isn't THAT strong, despite their investment) so that we can continue to afford to purchase their goods at levels that are artificially inexpensive.

But, since the Chinese own so much of our debt, they have a certain degree of control over our economy. They could dump their holdings and trigger a recession or just threaten to and gain leverage in other areas of negotiation, like trade.

Are they trying to get us by the won-tons?

[Jeebus]

Not a bad idea to keep a nice size of cash on hand independant from banks too.

Cash will be worthless if the economy crashes. Metal is the way to go.

Oh, for all you that own cars, they too will worthless if the economy crashes, even if you have gold to trade for gas - there won't be any to trade for.

[CE_ugh]

Well as a college student, I own nothing but debt. Luckily I have a couple of guns so I could easily take over a abandoned silver mine out in Nevada and start up my own militia and terrorize the countryside; just like in that horrible movie "The Postman".

[RedScare]

At least as big a problem as foreign owned debt is the fact that we continue to run $500 Billion deficits yearly. Currently, the gov't. "borrows" $160-180 Billion annually from Social Security, making the $500 Billion deficit look like "only" $320 Billion. The total National Debt is $8.4 Trillion. In 2018 or 2019, Social Security will no longer "loan" money to the gov't. The National Debt will jump more than the $300 to $400 Billion a year that it does now. Interest rates are already going up. Servicing that debt is getting progressively more expensive. Much like using a credit card to pay another credit card, the gov't. will print more money to pay the debt, causing inflation. Too much of a bad thing, and it all collapses.

These things CAN be fixed. But, like I said earlier, there is no one in Congress or the Oval Office willing to do so. In fact, they are pushing to cut taxes again. Anyone who suggests biting the bullet will be crucified. Perhaps they are doing it on purpose to eliminate Social Security. But, the consequences could be far worse.

[Houston1stWordOnTheMoon]

When the big collapse comes to America, the entire world will swim in the same stew. The largest consumer of world goods is the USA.

Cash will be worthless if the economy crashes. Metal is the way to go.

Oh, for all you that own cars, they too will worthless if the economy crashes, even if you have gold to trade for gas - there won't be any to trade for.

Which Hollywood movie did you get this from?

[TheNiche]

At least as big a problem as foreign owned debt is the fact that we continue to run $500 Billion deficits yearly. Currently, the gov't. "borrows" $160-180 Billion annually from Social Security, making the $500 Billion deficit look like "only" $320 Billion. The total National Debt is $8.4 Trillion. In 2018 or 2019, Social Security will no longer "loan" money to the gov't. The National Debt will jump more than the $300 to $400 Billion a year that it does now. Interest rates are already going up. Servicing that debt is getting progressively more expensive. Much like using a credit card to pay another credit card, the gov't. will print more money to pay the debt, causing inflation. Too much of a bad thing, and it all collapses.

These things CAN be fixed. But, like I said earlier, there is no one in Congress or the Oval Office willing to do so. In fact, they are pushing to cut taxes again. Anyone who suggests biting the bullet will be crucified. Perhaps they are doing it on purpose to eliminate Social Security. But, the consequences could be far worse.

Government debt isn't always a bad thing. The terms that we're getting are pretty damn good, after all. If we're going to spend like we are (and I don't want to get into an argument about this aspect), then debt is better than taxes. The "problem" that is foreign-owned debt actually works in our favor in this way; more foreign direct investment means lower interest rates.

When it comes time to pay up the debt, which will be discounted as a result of inflation and more than likely made up for by way of economic growth, I'll bet that taxes will make up most of the difference. The worst thing that I would forecast, ceteris paribum, is a drawn-out 'malaise'. Probably not a "collapse".