Will America Survive The Next Economic Collapse?

[AnarchyRam]

I am writing this as a warning. We have an opportunity here to see a financial crises BEFORE IT HAPPENS and to plan for it.

I'm a firm believer in the Austrian school of economics and everything that I type is based off of that philosophy. The DOW just recently hit 17,000. We're starting to see price rises in most sectors. I especially notice this in food. I just can't buy what I used too. But this is why the DOW going so high is not actually such a good thing - eventually those numbers translate into higher prices which then put a huge burden on people who begin to pull back, and when the pull back.... then the economy starts to turn down. In a sense, the Fed's ultra-low interest rates are going to nothing but cause a huge roar in the stock market, inflation and a bubble and then the final collapse.

This is what happened in 2008. The DOW back then made it up to DOW 14,000 and prices for energy and materials started to rise, and this rise in prices put pressure on businesses to cut back and lay off workers. The people also had to cut back which further hurt the economy. This, combined with more unemployment then led to people not being able to make mortgage payments, and foreclosing on their homes. Then you get a glut of homes sitting on the market, thereby lowing the value of the homes next to them. This also then put home builders out of business - ect, ect. On and on the cycle goes like a train that can't be stopped. Without massive printing or bailouts and even then it'll only be for a time.

The cycle of the market bubble formation and bust should be very familiar to us by now.

A similar cycle is developing right now, only this time - the government now lacks the tools, credit or TRUST to do anything about the next "crises". So just consider this as you plan for your future. Just remember, this market is either going to tank or inflation is just going to get worse and worse. Those are the only two options. Deflationary depression or an inflationary and dollar destroying binge.

Either way, we're screwed. Good news is we won't be able to afford to police the world anymore. So I suppose I'm wondering - do you have any ideas? I like investing in tangible assets such as property, gold, silver and even bitcoin. But the question is - can you really prepare for financial catastrophe? I really foresee a day in my lifetime where we no longer use the U.S. Dollar anymore because nobody abroad wants it. I think it's possible, now that we're at Dow 17,000 that we could see a day when the Dow drops 3,000 or 5,000 pts.

To see a dramatized version of such an event watch here -

I guess we'll see. But I do genuinely feel this next economic collapse may change America forever.

 

[bluecoconuts]

Yes.

 

[Greg Stone]

You lack any sense of history. What did the the US have in the way of " tools, credit or TRUST" in 1930? How about the flu epidemic of 1910's? How about the Civil War? But people love their doom and gloom...

I'm a big fan of the Austrian economic school as well. They predicted the fall of communisim and explained why it would inevitably happen. They predicted no similar end for our system. All economic downturns eventually end. The government might make the recovery faster or slower depending on how they respond.

 

[AnarchyRam]

You lack any sense of history. What did the the US have in the way of " tools, credit or TRUST" in 1930? How about the flu epidemic of 1910's? How about the Civil War? But people love their doom and gloom...

I'm a big fan of the Austrian economic school as well. They predicted the fall of communisim and explained why it would inevitably happen. They predicted no similar end for our system. All economic downturns eventually end. The government might make the recovery faster or slower depending on how they respond.

Back in oldin' days we produced much more. Today we just consume and borrow. Pretty soon though, this trend is going to reverse and this entire American dollar hegemony is going to end. I'll even let Ben Bernanke speak for me as for my concerns;

The Video below is supposedly what Ben Bernanke told Congress in 2008.


i guess, for once, I agree'd with Bernanke. If they had not bailed out wall street, I think he was right. And once again, Congress simply cannot bailout wall street again when the inevitable collapse comes again and this time - We already have interest rates at all time lows and the debt is staggering. This next time, may be the last time. The great economic reset is upon us.

 

[AnarchyRam]

Yes.

Based on anything else other than country love? lol

 

[Mojo Ram]

In with this...
-----------------------
Raise Middle-Class Wages, Not the Minimum Wage
There was more bad news for workers’ paychecks in the recent April jobs report. Wages and salaries were flat. No raise at all – not even to keep pace with inflation.

Yet President Barack Obama continues to obsess over raising the minimum wage – as if he holds a magic wand to make American workers better off. Even some Republicans are advocating the same policy as a misguided strategy to help the working poor. Obama says it is time working people “got a raise,” and he’s right. But we’d argue that raising the minimum wage to $10.10 is a clever diversion from the real crisis: falling middle-class incomes.

For the vast majority of workers, the problem isn’t a flat minimum wage; it’s a declining middle-class paycheck. The minimum wage affects, at most, only 6 percent of workers – and almost half of them are in starter jobs or are teenagers. What about the other 95 percent – especially those working parents with children?

These are the people who desperately need a raise. According to statistics from Sentier Research based on monthly Census Bureau data, the median household income in inflation-adjusted dollars is still some $4,000 lower today than it was before the recession began in 2008, and about $2,000 lower than it was since the recovery began in June of 2009.

Usually, periods of recovery from a financial meltdown are years when workers rapidly make up lost ground in income and job opportunities surrendered during the recession. In this case, average workers have continued to lose ground. This explains why more than half of workers think the recession never ended. For them it hasn’t.

This bitter pocketbook reality speaks loudly to the utter failure of Obama’s economic policies – bailouts, stimulus plans, $5 trillion more in debt-financed spending, Obamacare, failed green energy investments, and tax hikes. This president has thrown everything from the liberal playbook at this stagnant economy and, alas, none of it has worked.

To be fair, the wage meltdown really began at the end of the Clinton years when the technology and dot-com bubble burst. The chart below shows the disturbing trend of middle-class earnings. We suspect that a major reason for the lack of progress in the 2000s was a weak dollar that shrunk the real purchasing power of Americans’ earnings. The price of gold has quadrupled from 2000 to 2014, rising from $300 to $1,300 per ounce.
MORE...
http://dailysignal.com/2014/05/13/raise-middle-class-wages-minimum-wage/
-------------------------------------------------
...before this thread gets put on lockdown.
The middle class has always driven the economy. We bought the 4 bedroom/2 car garage houses, Honda Accord's, the big screen tv's, we took the family vacations, we went out to dinner regularly, we did our xmas shopping at the mall and not Walmart, we insured everything, we had 401k plans and savings accounts that were left untouched, and we had confidence as consumers. Since 2009 big business has done its part to turn the $60,000/year worker into the $30,000/year guy who feels like he's just lucky to have a job. Why? Because after the crash of 2008 consumers panicked, big business panicked and everything slowed down to a crawl and has been been stagnant for years. Corporations felt they had to make cuts and restructure its workforce in order to please Wall St and its high-end wealthy shareholders....AND THEY CONTINUE TO DO THIS. But why won't it recover?
Because today's consumers are yesterdays middle class, and inflation doesn't care. Get it? It's a vicious cycle of futility.

The economy will not recover until the middle class stops shrinking and effectively growing the lower class. I don't have the answers, but it's not going to get any better without MAJOR change.

NOTE: I did not post this to trash our President or Republicans or Democrats or anyone. Left vs Right pissing contests are a big reason why we're in this mess and why nothing's being done about it anywhere.

 

[rhinobean]

The lack of effective government, ie "Congress" is why our economy is stagnant! Not talking spending, talking regulation of consumer goods like oil. Doing nothing is killing this country and Congress is to blame! Pandering to special interest is part of the blame Congress must be held accountable for!

 

[BonifayRam]

Will America Survive The Next Economic Collapse?

Next? next I am of the thought that this nation has done nothing to fix anything since late 2007 yet...Washington DC has borrowed $$$ & borrowed $$$$ & continued digitized print $$$$$ ourselves on the conveyer belt into a bigger massive wood chipper waiting there for us at the end.

So we are Depending on the current Washington DC cadre of lawless elites known as elected Democrats & Republicans plus the bloated federal administrative bureaucracy to fix the problem? They are the problem!

Sad thing is the nation's voters keeps electing them & placing them back in office so they can continue to do the same......................so NO we will not survive anything with this current bunch in Washington DC leading the charge back to economic solvency.

 

[rhinobean]

That's the problem! Fat cats got theirs and don't think they are in dangers of losing it! I'm afraid that when the next collapse occurs, anarchy will rule out! We see it but do the majority of people? Probably not! Hope they come to their senses before it happens so it can be undone!

 

[Greg Stone]

Back in oldin' days we produced much more. Today we just consume and borrow. Pretty soon though, this trend is going to reverse and this entire American dollar hegemony is going to end. I'll even let Ben Bernanke speak for me as for my concerns;

The Video below is supposedly what Ben Bernanke told Congress in 2008.


i guess, for once, I agree'd with Bernanke. If they had not bailed out wall street, I think he was right. And once again, Congress simply cannot bailout wall street again when the inevitable collapse comes again and this time - We already have interest rates at all time lows and the debt is staggering. This next time, may be the last time. The great economic reset is upon us.

To start with, I notice you have not refuted my main statements, that the Austrian school of economics did not predict what you claimed they did and that the US has recovered from much more severe crises. As to manufacturing, it is important, but you fail to note that it is flowing back to the US. I just returned home from Louisville where GE has sunk a billion dollars into bringing a factory complex up to date that is so large it has it's own zipcode. They are bringing ALL major appliance manufacturing back to the US from overseas. This is happening all over the country. Everywhere overseas where manufacturing had moved during the last 3 decades wage inflation has eliminated much of the wage advantage: China for instance has had wage inflation averaging 20% a year for decades. Increased use of robotics has also decreased the advantage of cheaper labor. Add to this the increased cost of fuel to transport goods to the US, the hell transportation time plays with inventory levels and the threat of the host manufacturing country ripping off the US company's intellectual property and it has turned out that manufacturing overseas was not the panacea that was envisioned.

Economic crises were much worse in the nineteenth century and the first half of the twentieth century than anything we've seen sense. I do agree with you that actions like TARP and taking Chrysler through bankruptcy kept the downturn from being much worse.

The real story is that by opening the US to the world economy without the protection of tariffs, etc. there has been a natural regression of US wealth toward the world average and a shifting of wealth from the middle class to the upper class. Perhaps this was inevitable, but it was certainly accelerated by government favoring the wealthy over everyone else. I'm a CPA and remember being taught in my 70's college business courses that "greed is good" and that the free market would magically transform our greed into general economic prosperity. Despite its utter failure as an ethical system "greed is good" is basically correct, except that the general economic prosperity took place primarily in Asia while the US declined.

 

[rhinobean]

To start with, I notice you have not refuted my main statements, that the Austrian school of economics did not predict what you claimed they did and that the US has recovered from much more severe crises. As to manufacturing, it is important, but you fail to note that it is flowing back to the US. I just returned home from Louisville where GE has sunk a billion dollars into bringing a factory complex up to date that is so large it has it's own zipcode. They are bringing ALL major appliance manufacturing back to the US from overseas. This is happening all over the country. Everywhere overseas where manufacturing had moved during the last 3 decades wage inflation has eliminated much of the wage advantage: China for instance has had wage inflation averaging 20% a year for decades. Increased use of robotics has also decreased the advantage of cheaper labor. Add to this the increased cost of fuel to transport goods to the US, the hell transportation time plays with inventory levels and the threat of the host manufacturing country ripping off the US company's intellectual property and it has turned out that manufacturing overseas was not the panacea that was envisioned.

Economic crises were much worse in the nineteenth century and the first half of the twentieth century than anything we've seen sense. I do agree with you that actions like TARP and taking Chrysler through bankruptcy kept the downturn from being much worse.

The real story is that by opening the US to the world economy without the protection of tariffs, etc. there has been a natural regression of US wealth toward the world average. Perhaps this was inevitable, but it was certainly accelerated by government favoring the wealthy over everyone else. I'm a CPA and remember being taught in my 70's college business courses that "greed is good" and that the free market would magically transform our greed into general economic prosperity. Despite its utter failure as an ethical system "greed is good" is basically correct, except that the general economic prosperity took place primarily in Asia while the US declined.

Agree that Asia has been the main benefactor of nafta. How long you think Americans are going to be pushed before the greed bites them so hard they revolt?

 

[ChrisW]

The upside is gas prices may fall below $3 a gallon again. The only thing that may hurt us is publicly traded companies will want a bail out again. We need to stand firm and let these places fail. The damn stock market and shareholder profits are a big thing that's wrong with how big companies are run.

 

[Greg Stone]

Agree that Asia has been the main benefactor of nafta. How long you think Americans are going to be pushed before the greed bites them so hard they revolt?

Dictators and kings have always had the problem of how to keep their subjects from revolting. The traditional methods (neatly explained in Machiavelli's "The Prince") have included creating bogey men in order to direct the public's anger elsewhere. As the anger has grown conspiracy theories and the exaggeration of actual threats have galloped ahead. The OP has provided an example, aided by the charlatans selling gold. The "War on Terror" takes a real threat, albeit one that has only once killed nearly as many Americans as die in car accidents each year and elevated it to an existential threat requiring Trillions of dollars and giving up the rights we are supposedly defending. Pure myth includes "One World Government", "Taking all our guns" and many others.

The sad thing is that we don't have to revolt, we only have to educate ourselves and vote. Votes ultimately trump wealth which is why doom and gloom is so prevalent - it discourages and misdirects voting.

 

[BonifayRam]

The sad thing is that we don't have to revolt, we only have to educate ourselves and vote. Votes ultimately trump wealth which is why doom and gloom is so prevalent - it discourages and misdirects voting.

I agree Greg Stone.....educating ourselves is key!! ....its not a quick thing and takes time....what happens when the voters who are uneducated & do not care to know of such things or take the time to educate themselves while they are eating at the food trough provided by the government ....quickly outnumbers the educated voters?

 

[bluecoconuts]

Based on anything else other than country love? lol

Of course, I base everything on more than just feelings.

 

[Ramhusker]

No one talks about the inflation we are seeing. I wonder why?

 

[Greg Stone]

No one talks about the inflation we are seeing. I wonder why?

Certain food prices go up and down, gas goes up and down, the net effect over all is a very low inflation rate since the 2007 recession. It's not a topic because it is not a serious problem.

 

[LosAngelesRams]

 

[Thordaddy]

Certain food prices go up and down, gas goes up and down, the net effect over all is a very low inflation rate since the 2007 recession. It's not a topic because it is not a serious problem.

If you know Austrian Economics ,then you know your concept of inflation here is erroneous, we do have inflation but it's being wrung out of consumer prices by a 17000 Dow and real estate prices rising.

Further your statement that the OP lacked historical perspective itself lacked historical perspective since the demographics of the U.S. urban vs. agrarian has flipped and if Howard Ruff wasn't right about the societal chaos a people unable to feed themselves after a breakdown in the economy as apocalyptic as described I'll be surprised.

I am halfway sold the Cloward -Piven Strategy is being implemented as we speak.

Will America survive ,probably, I have doubts the constitution will

 

[Ramhusker]

Certain food prices go up and down, gas goes up and down, the net effect over all is a very low inflation rate since the 2007 recession. It's not a topic because it is not a serious problem.

I know MOST things fluctuate but some are not coming back down. Gas hasn't come back down since it hit $3. Milk hasn't come back down since doing the same. Bacon prices have doubled if not tripled. Anything affected by ethanol production has gone up and stayed. (milk, bread, eggs, meats, vegetables, etc) Inflation is happening without a doubt but in a stealth manner. Not a word from the media, hmmmm.