All paper currencies inevitably turn into dust. Often causing a gov / social collapse. As I see it, it's the biggest source of concern and the most likely TSHTF situation. It's a runaway train, nothing can be done about it. The debt cannot be repaid in any other way. Other than inflating the currency into oblivion.


This is the future of US. Hard to say where will go from there. If the gov will take the hyperinflated currency, remove about 5 zeros and create a new fiat currency. Or if will collapse completely.

Neat.

Doomsday is coming,  might be before we hit a quadrillion in debt

Ehhh, the FED is going to raise interest rates slightly in September, in part, to keep inflation down, so we'll see how that pans out.

Crude is tanking and there's a glut, so at least shipping our 10,000 rounds of ammo will be cheap.

Chris

Raising rates talk is just talk, it is part of the smoke and mirrors that the economy is doing well.

They have been talking about raising rates for 6 years.

The debt is repaid by financing it with new debt.

The US has never paid down debt except for a 2 year period during the Clinton years, due to a republican controlled Congress, and then it was only a couple hundred billion.

The fed reserve owns more than 6 trillion dollars of US debt, that will never see the light of day. They don't need a return on their investment for 2 reasons, the print the money and they never get audited. Every dollar of US debt the fed reserve buys is free money.

Whether it's "smoke and mirrors," or not, they're going to raise them eventually and 'eventually' seems to be in September, according to Yellen's comments earlier in the week.

What happens after that, is anybody's guess?

Chris

OK, when?  The timing might matter.

How did the collapse happen?

Well slowly at first, and then all at once.

Well sure, it all falls eventually.

The US is different, though.


We control the world energy prices with a dollar that we can create from nothing.


But what is really special is that we have the guns to force the world to accept the dollar at such and such rate.


And we can/have/will eliminate oil producing nations that try to sell outside of the dollar.

sounds like a great opportunity to be heavily in debt -- in fact, have A LOT of debt.

for example:
mortgage that US$1M dream house w/ farmland you were always wanting; hyperinflation happens, pay lender back the loan in full with inflated dollars.  
tractors, cars, trucks, everything could be acquired the same way -- get the loans, take delivery of the equipment, and just wait for hyperinflation.

what is stopping you?

ar-jedi

The problem is, it's not that simple. Everyone one of us is a creditor as well as a debtor.

So you finance that "million" $ farm, pay it off half-way, the problem is that you loose your job and unable to pay the remaining amount.

I understand that under inflationary circumstances, the remaining $500,000 that you haven't paid off is equal to say $50,000 in its purchasing power but if the job market completely collapses, you won't be able to come up with that.

Case in point, during the Great Depression, farms were lost over small debts like $100. They could not come up with $100 or even $50 to save the farm.  I realize the currency back then had 50 times the purchasing power of today. Seems unreal, but true story.

Actually the coming hyperinflation will be a lot worse than the GD1. During the GD part 1, money gained value. Here we are looking at a catastrophic loss of purchasing power.

So you get your monthly paycheck and what used to buy nice housing, now buys you  a pack of chewing gum. Creditors get screwed and we all are creditors also.

Fiat money going into nothingness it came from usually results in social collapse.

Right... However the world is moving away from the FRN, which will really bring inflation home. Look at all the alliances formed daily. Just check the news. China, Russia, middle east. They don't want to use the FRN in payment for gas / oil.

I look at prices daily, inflation is already right here, right now but it's only beginning to take off.

> The debt is repaid by financing it with new debt.

Yeah, and they have rolled it over a gazillion times.  It's the equivalent of having a 1000 credit cards, each one paying for the previous. some day the process will come to an end and the house of cards will collapse.

See, the problem is, the gov has no choice but to inflate to keep the economy going.  
Say theoretically if the gov came to its senses via some conservative administration and actually paid off a huge chunk of the debt. It would cause a massive collapse of the economy, a massive credit contraction and be hugely unpopular. Long-term, it would be a beneficial correction, but short-term, a disaster, and they always think short-term.

No more money for social programs. No credit for anything. Everyone is up their eyeballs in debt / credit. Education, housing, cars, credit cards, etc. Imagine all that goes away and suddenly you cannot get any credit. Our lifestyle is 100% financed by credit. And we pay a huge interest rate on it.  Even if we don't see it.

Okay, say even if *you* have zero debt. No CC or anything.  The problem is, where you work, your employer borrows all of it, directly or indirectly. Stock market is involved. So a credit collapse would influence your source of income, whether it's one employer or 10,000 customers. They translate credit into FRNs, what we call "dollars". So if debt is reduced, credit shrinks, the supply of FRNs shrinks.  

Every FRN (federal reserve note) exists because it has been borrowed. To you, it's an asset, to others, a liability.

Neat pics, good questions, and the answer is not that hard either.
Many of the countries you see right now, some very powerful, have done just that before. Drop several zeros and restart with a new currency. Its no walk in the park but its been done many times before so its logical to blieve we'll see it happen again.
In the old days it was done through currency debasement. Silver coins would go from 90% silver, to 50% silver to no silver and then the empire collapses. Happened to the Roman Empire, in more recent times it happens to the United Kingdom who was at times the most powerful empire the world has ever seen with colonies all over the planet. They went from real money (90% silver until 1919) to 50% silver up to 1947. In the case of the United Kingdom it was that slow slide from being a world empire to just not being it anymore, a fire that slowly died and a few little ambers are left compared to what it once was. History is just full of lessons.
FerFAL

I look at history a little different.

The soviet union collapsed when it hyperinflated its currency. Although a case may be made that hyperinflation was just the result of the collapse, not the other way around. could it be both.

the confederacy in richmond va collapsed when they inflated the currency.  It was a seriously contributing factor.  They printed paper to finance the war, more than the North did.

so did the original articles of confederation / Continental congress of 1777.  The currency hyperinflated and that is where the phrase comes from "not worth a continental".  The constitutional convention of 1789 was a new government fundamentally different from the one that preceded it and only lasted 13 years.

The tsarist russia had hyperinflation to finance WWI. They wore out the printing presses and collapsed.

Napoleon came to power and restored monarchy when the previous gov had one of the worst hyperinflations in history and collapsed. Without that collapse and the hyperinflation that caused it, doubtful Napoleon could have come to power.

The list just goes on and on.

Anybody in power with the slightest grasp of economics 101 knows that the only way to pay off the debt is by running the printing press into oblivion. Think Weimar republic, which also collapsed producing you know what.  There is no mathematically feasible way to pay off the debt.

Like I said before, the fed chairman has been talking about raising rates for 6 years.

It isn't going to happen. It will crush what is left of the real estate market, and everything ekse ( which is everything) that relies on credit.

Which is exactly why the fed is not going to raise rates in september. Raising rates is contracting the money supply and the velocity of money.


the economy is limping along on free money, changing that will cause the huge deflationary pressures to come to the surface and they know that.

Except you are forgetting one factor. The US has never paid off net debt. The US has always just refinanced debt with new debt. In the past, due to natural resources and manufacturing and being the only surviving industrial complex after WW2 we grew the GDP to make the debt managable.

Now we are unable to grow the GDP due to globilization. Instead the solution has been to have the fed reserve 'buy' US debt. But unlike say China that wants their money when the notes mature, the fed reserve has no interest in getting their 'investment' back. They don't need their investment back because they print the money and never get audited. The fed reserve is a black hole for US debt. It goes into the fed reserve and never comes out. It is the biggest monetary scam and QE in history and most people have no clue it is happening, because they assume the notes will be presented on maturity like any other 'buyer' does. But the fed actually doing that will be counter productive to the best gig in the world of printing the dollar and never getting audited.

I am not saying it will not collapse, I am saying it may take a very very long time to collaspe.

This!

Several of us have repeatedly correctly stated this over the past 4 or 5 years every time the issue has been brought up.


Sadly most folks analysis of this issue is way too SHALLOW...

The .gov CAN'T raise rates without too much pain for everyone. Incl themselfs....


This said, however, at some point when the controlling Leftists here, want to finally collapse what's left of our economy, a key indicator of this happening [That SO MANY PREP FOR] is LIKELY to be, an increase of rates.


Watch...  


However, the shallow analyses of MOST...

Seems ALWAYS to prompt them to believe the usual disinformation of the MSM.





This is another issue for folks to work themselves into a lather over, just like we did a few weeks ago over the Greek mess---

That one or two of us correctly predicted would be on the back pages in 2 weeks.  

Don't forget Rome and the denarius.  

Our military is exhausted, over-extended and scattered worldwide.  On top of that, it is being reduced in size.

We cannot take on and defeat one of the biggest producers of oil in the world: Russia.  

The hold of the petro dollar is tenuous.  A few years ago all nations used SWIFT for international trade.  Now 40% don't and when they trade, they trade in their own currencies.

Me thinks the US dollar has only half a year (or year at most) left.  Then it's hyper-inflation as all those overseas dollars flood home. Thank you Osama Ben Ber Nank and Yellen the Felon.

Russia is in no economic position for war.

We have taken down at least 2 me nations that decided to trade outside the dollar, probably more.


China is about to collapse economically too.


I think we will keep printing g monopoly money, near zero interest rates, and be the prettiest pig by comparison for I hope 5 to 10 more years.

Two scenarios both full of risk:

1) You figure out that the global economic system will collapse by 2017 so you go out and run up a huge debt load - buying a farm, 3 years worth of food stuffs, guns, ammo, gear, etc. all based on debt.... the flash crash comes and who is going to foreclose on you and with what army? You have possession of debt purchased stuff that - excepting the land and buildings - is portable.... so you can always drive out to your BOL and default on the loan.

downside...what if the world doesn't end? You spend a lifetime hustling to pay the mortgage and credit card bills risking having the cops come to seize all assets.


2) you figure out that the global economic system will collapse by 2017 but you wish to stay out of debt so you do what you can with what you have and basically boost your pantry to 1 year's worth of food, add some minor gear etc.

The flash crash comes and you still have a mortgage on the home and as one of the peons the bank seizes it by calling in the note. You are now living out of a car. The world becomes very dangerous in the suburbs and you have no job.... friends and family come calling and suddenly your cache of food will only last you 3 months.

downside.... what if the world doesn't end? You are still working a 5 year plan to eliminate debt and beef up your savings etc....

I'm of two minds.... the whole economy is telling us that growth is fueled by taking on debt....debt and risk..... but we are seeking to go the opposite way by paying off debt and thus limiting our growth (along with some but not all risk).

I've gamed this out for 10 years and as enticing as the scenario 1 is, I still think the people who survive are the ones who have as wide a network of friends and family as possible (including international friends and family) and not the people who simply have more 'stuff'. Ultimately there's safety in numbers of people widely distributed and in various levels of professionalism....

If we were Russian Christians in 1917 having a dacha and a million dollars worth of guns might not be as valuable to us as having an uncle in Poland who knows the border crossings....

if we were a German Jew in 1938 having a farm and a million dollars worth of guns might not be as valuable to us as having friends in Switzerland who can bribe the border guard to let us through to safety.

Do you really believe that enough to put money on it?

So you're telling me that the US is in debt and that will lead to our destruction???

OMG!

So I'm guessing that's your 'thing', hyperinflation will collapse us. Everyone always has their 'thing'...

IMO it's better to -not- have a 'thing'.

Complex failures are sometimes funner than simple failures.  Complex failures require a complex explanation with a hint of 'I told you so' and simple failures are more of an "I'll be damned'.

Macro-simple example: Economy collapse verses a meteor strike. Both have set precedent in destruction.  The real plan would be pain management and mitigation from the loss of food, shelter, and security.  

Micro-simple example: Keeping my finances in order and keeping food & supplies on hand make me feel better.

I have been putting money on it.

Good points.

Selco recommended the same.  Network of friends and family, plus beans 'n boolits.  Isolationist will be eaten up alive by gangs/groups/teams.  Good read on this is The Failure of  Civility.

BTW, if the IMF recognizes the RMB and declares it as an alternative to the USD as a reserve currency, it could send trillions home and give us hyper-inflation.

what am I missing? I don 't understand this comment.

the problem is that foreigners, at some point, will stop buying us debt.
this will mean the fed reserve system will have to buy it's own debt, which is the equivalent of running the printing press. It's already happening.

That's it.

OP I predict that you will go far in ARF-onomics.

Start off with wild, probably spurious, assumptions.  Follow that with a liberal dose of doomsday-ism & finish with wild predictions.

Even better, don't give a time or reasonable date for it to happen.

That's the part of the "prepper mentality" that turns so many people off. The nonstop end of the world predictions are counterproductive. Too many are based on what people want to pontificate about rather than an honest evaluation of the situation.

folks have been beating this dead horse for generations.   Just saying....................

I'm not convinced of any specific outcome other than our current course cannot be sustained. Since that which cannot be sustained will not be, it then becomes a question of how the current course will be corrected.

There is a possibility that a new conservative administration, washed in with a conservative majority of both houses, could turn around the death spiral. I frankly don't see that happening in 2016, probably not in 2020 either.

Another possibility is that countries around the globe could, suddenly, get their $hit together and become productive again. Economies would boom again and "growth" could alleviate the stress on the financial systems globally. I see this as very unlikely for a variety of geopolitical reasons.

If the present course is maintained, eventually, the interest on the massive US debt will be unsupportable by total tax revenues. If interest rates rise to historical norms of 5-6%, this will happen almost immediately. Even if the Fed keeps the printing press going to keep ZIRP, eventually it won't matter because even with near-zero rates, the debt will be so high as to surpass the ability of the nation to pay even the interest on the debt. If that happens, a default is inevitable, pretty much hosing over most of the planet.

Some predict that if our debt surpasses our ability to pay, that we become Zimbabwe in a hyperinflationary runaway mine train. Others predict if we default on our debt, or even if we run out of people/countries wanting to buy our debt, we will have a deflationary collapse that makes GD1 look like a Sunday picnic. In the first scenario, it makes the most sense to convert cash to tangible real assets as quickly as possible (buy low, sell high). In the second, selling assets quickly and holding a large cash stash will pay off handsomely by being able to re-aquire assets at a much lower price (sell high, buy low).

The problem as I see it is figuring out, in real time, which way the cookie is crumbling. Guess wrong and you're completely screwed. Guess right and you're much less screwed, but still likely messed up. Timing is also a huge issue since mis-timing the event horizon can cost you plenty, or, decisions will have been made for you at that point.

I'm sure my dad, who lived thru GD1, is spinning in his grave at all the (IMHO legitimate) talk about the collapse of the US economy.

If you live within your means, stay debt free and acquire tangible assets, you will do well in almost any economic event.

I'm betting my life and the lives of my family on that.

+1

And then WHAM! It turns out to be a pandemic (or nuclear attack, etc) after all. Then the people with that as their 'thing' luck out, but the rest of everyone who had a different 'thing' to believe in and prepare for are caught rather unprepared.

The fed does not have debt.

The US Treasury has debt. The fed buys that debt. It has been happening for 6 years. When there is more debt being offered for sale than there are buyers for, the rates of return would normally go up to entice buyers to buy. But that makes interest rates go up. So instead, the fed buys that debt at the low interest rates being offered.

You are missing one major piece of the puzzle.

The interest on the debt no longer matters.

The fed reserve has and will buy debt. When there are not enough buyers of US debt, instead of the rates of return going up to entice buyers, and raising rates, the fed reserve buys the debt, at the low offered rates. Problem solved. Since the fed is never audited and they create the money they need to buy the debt, they do not need to ever present that debt to the treasury upon maturity to be paid, because they created the money to buy the debt to begin with. That debt goes into a black hole never to be seen again. It is the ultimate QE since it does not get reported as QE, it just gets reported as debt bought.

So the interest rates on debt will never go up. In fact, that debt the fed buys will never have to be refinanced either, because it will never be presented to the treasury to be repaid, because the fed reserve does not need their money back, since they created the money they used to buy it and they never get audited.

As a result, rates will never go up on the debt, only a fraction of the debt will ever need to be refinanced, and we will have steady unreported inflation for decades to come.

Problem has already been solved and the solution has been executed now for 6 years.

China just stagnated their imaginary stock market by eating the dead paper it produced-

That kind of loss of faith can happen here- in two mechanisms: the libs redistribute wealth over 250k, and give you a structured retirement. - -Or - they start taxing the shit out of anyone selling or buying realestate. ( same as a death tax, but happens more often)

This.  

I'll also add I think this system will keep limping along for another 20 years.  While doomed mathematically (and historically) to fail at some point, so many people have such a vested interest in keeping it going it will stagger along on huge momentum.  I am teaching my kids from a very young age to be wary of the debt and consumer lifestyle.  The are more likely to deal whit the collapse then me at this point.

Have your kids listen to this too:  Richest Man in Babylon  They don't teach that stuff in school.

Interesting video. The lesson...


A person will never get to be a "Man of Means"

Pissing his life away -doing trivial things


That's why I have said here many times-

"Watch what the Sheeple do -and do the opposite"


This said, 99.9% will never do or understand

And why nothing has changed -since the time of Babylon


Or ever will --for most, there's no hope....

Unless you're fortunate to be one of the .1%er's

Thanks for the tip!  I'll take a look.  

Fortunately we home school with many other families and tutors so I am sure I can work this in somewhere.  

Is it your :Honest Evaluation : that the status quo will maintain  for another decade ?

I think the bigger worry is something coming out of left field (black swan event of some type) and making the fragile house of cards fall.  Without that outside push, the current status quo might go on indefinitely.