The possible coming collapse(s)
POSTED BY: SIGNYM
UPDATED: Friday, June 26, 2026 17:42
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I just wanted to share an insight and clarify my own thinking on the topic. Peter Schiff (the perennial gold bug) made a distinction between and financial collapse and a currency collapse. I think I heard it before, but it didn't stick.
So a lot of people tend to conflate economic collapse, financial collapse, and currency collapse; and while the three are interrelated they're not the same.
ECONOMIC COLLAPSE
What is an economic collapse? Well, I think in order to define that, you have to define "economy". At it's heart, an economy is the exchange of labor ... an exchange among people of goods produced (by labor) and services provided (by labor) so that people can take advantage of division of labor, economies of scale, and distribution of resources in order to have a better quality of life than can be provided by each individual attempting to produce their own necessities. Since I'm an advocate of economies being directed by democratic nation-states. I would judge economies nation-by-nation, not at some overall "international" level ... frankly, I don't care how well the Chinese are doing if Americans are suffering. So MY metric for judging the health of a (national) economy is by assessing the quality of life of its citizens AND its balance of trade.
If people are living a decent life and the balance of trade is near-neutral, I would judge that economy at doing a good job of providing for the needs and some wants of its citizens through exchange of labor within and outside of its own economy.
By that metric, the USA economy collapsed a long time ago. Our balance of trade went into the shitter around 1976. 
It's not for lack of resources, and it's not for lack of people, it's due to the economic policies of the government, which reflect the economic desires of the elite.
FINANCIAL COLLAPSE
Like an economic collapse, in order to judge whether the financial structure is collapsing you must for decide what "finances" are. Well, "finances" are the flow of money. There seem to be a lot of ways to judge the health of finances and financialism ... mostly related to stock, bond, or real estate speculation, or to the amount of money in circulation ... but best way to judge the flow of money is called the "velocity of money", which measures how often each dollar in circulation changes hands. When the flow locks up is when a crisis occurs.
This chart is continued here, but you need to click on the link
https://fred.stlouisfed.org/series/M2V
What the charts show is money velocity reached its peak in 1997 but has been dropping ever since. It took a precipitous drop in 2007, but has continued to drop like a stone ever since, reaching lows not seen... ever, in this chart. By THIS chart, the financial collapse hasn't even been solved yet.
Now, the solution to a financial collapse is to put more money into circulation. The Fed did a half-step in that direction: they bought a lot of banks' bad loans in order to refill their coffers with money and dropped interest rates to near-zero, but then they paid banks interest in order to keep that money on their coffers. So unless you were one of those lucky ones at the money-pipeline outflow and could access loans at near-zero interest rates (like corporations taking on debt for stock buybacks) that money never made it into widespread circulation.
CURRENCY COLLAPSE
This is an entirely different kettle of fish than a financial collapse. In a financial collapse, the flow of money stops. The answer is to "print more money" and lower interest rates.
In a CURRENCY collapse, faith in your currency collapses: Demand for government bonds drops because nobody thinks that you'll make good on your loans, or that if you DO pay on your loans it will be in currency t
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GE Powered the American Century—Then It Burned Out
How the company that was once America’s biggest, the maker of power turbines, the seller of insurance, the broadcaster of ‘Seinfeld,’ became a shadow of its former self
By Thomas Gryta and Ted Mann
Dec. 14, 2018 9:00 a.m. ET
www.wsj.com/articles/ge-powered-the-american-centurythen-it-burned-out
-11544796010
It is a complicated story about a group of American managers who aren't nearly as competent in real life as they think they are in their collective imaginations.
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at www.mediafire.com/folder/1uwh75oa407q8/Firefly
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Although America's economic malaise has been in place for decades, since labor is exchanged via "money", ANY sudden disruption of money flow or currency value will cause sudden kinks in employment as well.
A disruption in money flow because of financial crisis will cause unemployment immediately. However, loss of currency value will cause inflation and (in a panic situation) hyperinflation for the USA because we are dependent on imports for so many items.
It seems to me that our economic malaise (jobs shifting overseas and money being conveyored up to the elite and out of general circulation) was the approximate cause of financial crisis: To paper over (so to speak!) lost production/ lost wages the policy became an extension of credit/ creation of debt beyond all reason or hope of payback. When the presence of so many bad debts based on speculative values (of real estate in this case) came to a crashing halt was when money flow locked up.
This problems was "solved" by creating MORE debt. But it seems to me that the creation of debt is laying the foundation for a currency crisis, when nations, institutions, and individuals realize that they're holding instruments of debt that will never be made whole.
This is the crises that many people in the alt-sphere are worried about. And The Fed, by backstopping the banks and encouraging reserves above and beyond what is required by law, is fighting the last war but not 1) solving the problem or 2) preparing for the next crisis.
-----------
Pity would be no more,
If we did not MAKE men poor - William Blake
"The messy American environment, where most people don't agree, is perfect for people like me. I CAN DO AS I PLEASE." - SECOND
America is an oligarchy http://www.fireflyfans.net/mthread.aspx?tid=57876 .
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Quote:Sometimes I imagine that all reasonable people understand that an exorbitant National Debt is not sustainable. But then I observe Election results. The Department of Educamation has done a good job of dumbing down America, removing Math from the collective comprehension. And the Unions did a good job in the 70s and 80s of pushing jobs out of America.
Originally posted by SIGNYM:
Although America's economic malaise has been in place for decades, since labor is exchanged via "money", ANY sudden disruption of money flow or currency value will cause sudden kinks in employment as well.
A disruption in money flow because of financial crisis will cause unemployment immediately. However, loss of currency value will cause inflation and (in a panic situation) hyperinflation for the USA because we are dependent on imports for so many items.
It seems to me that our economic malaise (jobs shifting overseas and money being conveyored up to the elite and out of general circulation) was the approximate cause of financial crisis: To paper over (so to speak!) lost production/ lost wages the policy became an extension of credit/ creation of debt beyond all reason or hope of payback. When the presence of so many bad debts based on speculative values (of real estate in this case) came to a crashing halt was when money flow locked up.
This problems was "solved" by creating MORE debt. But it seems to me that the creation of debt is laying the foundation for a currency crisis, when nations, institutions, and individuals realize that they're holding instruments of debt that will never be made whole.
This is the crises that many people in the alt-sphere are worried about. And The Fed, by backstopping the banks and encouraging reserves above and beyond what is required by law, is fighting the last war but not 1) solving the problem or 2) preparing for the next crisis.
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Quote:Agreed.
Sometimes I imagine that all reasonable people understand that an exorbitant National Debt is not sustainable.
Quote:That's not the problem. We have been collectively propagandized into mass consumption, and beguiled into believing that debt doesn't count. It wasn't the schools that did that, but corporate and bank advertising, and the steady erosion of buying power over those decades of economic predation.
But then I observe Election results. The Department of Educamation has done a good job of dumbing down America, removing Math from the collective comprehension.
Quote:So, what is your solution, JSF? That we should be content to work for a smaller bowl of rice than the average Chinese or Vietnamese? That's what is called the "race to the bottom". Come up with a better idea.
And the Unions did a good job in the 70s and 80s of pushing jobs out of America.
-----------
Pity would be no more,
If we did not MAKE men poor - William Blake
"The messy American environment, where most people don't agree, is perfect for people like me. I CAN DO AS I PLEASE." - SECOND
America is an oligarchy http://www.fireflyfans.net/mthread.aspx?tid=57876 .
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Quote:May I suggest that the IRS force Americans to learn about their debts? "According to new estimates by the Internal Revenue Service, tax evasion is a pretty lucrative business, costing the federal government on average $458 billion per year between 2008 through 2010. That’s a slight increase from the previous estimate, issued in 2006, of $450 billion. The feds call that dollar figure the “tax gap” and say the rise is the result of better measurement rather than Americans engaging in more tax evasion."
Originally posted by SIGNYM:Quote:Agreed.
Sometimes I imagine that all reasonable people understand that an exorbitant National Debt is not sustainable.Quote:That's not the problem. We have been collectively propagandized into mass consumption, and beguiled into believing that debt doesn't count. It wasn't the schools that did that, but corporate and bank advertising, and the steady erosion of buying power over those decades of economic predation.
But then I observe Election results. The Department of Educamation has done a good job of dumbing down America, removing Math from the collective comprehension.
http://fortune.com/2016/04/29/tax-evasion-cost/
Maybe the IRS could teach them to engage in less tax evasion? It is better to learn that lesson late than not at all.
"The Internal Revenue Service (IRS) has identified small business and sole proprietorship employees as the largest contributors to the tax gap between what Americans owe in federal taxes and what the federal government receives."
https://en.wikipedia.org/wiki/Tax_evasion_in_the_United_States
The wikipedia helpfully estimated $3.44 trillion was Lost to Tax Evasion from 2001 to 2010. Getting that money back from the tax evaders would certainly teach them a hard lesson about too much debt, don't you think? Unfortunately, the IRS’s budget has been repeatedly cut since 2011, forcing it to reduce its enforcement staff by a third. The result? I.R.S. Tax Fraud Cases Plummet After Budget Cuts. Obviously, there are lessons not being learned nor being taught, even.
www.nytimes.com/2018/10/01/business/economy/irs-tax-fraud-audit.html
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at www.mediafire.com/folder/1uwh75oa407q8/Firefly
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Quote:???
Originally posted by SIGNYM:Quote:Agreed.
Sometimes I imagine that all reasonable people understand that an exorbitant National Debt is not sustainable.Quote:That's not the problem. We have been collectively propagandized into mass consumption, and beguiled into believing that debt doesn't count. It wasn't the schools that did that, but corporate and bank advertising, and the steady erosion of buying power over those decades of economic predation.
But then I observe Election results. The Department of Educamation has done a good job of dumbing down America, removing Math from the collective comprehension.Quote:So, what is your solution, JSF? That we should be content to work for a smaller bowl of rice than the average Chinese or Vietnamese? That's what is called the "race to the bottom".
And the Unions did a good job in the 70s and 80s of pushing jobs out of America.
Average annual income for Vietnamese: $1,800 in 2018.
Average annual income for Chinese: $4,700 in 2012.
About 11 years ago I recall the average income in America was just under $80,000. In 2017 BLS reported it was $44,500.
So your accurate analogy would be the Union demanding 10 Rice bowls for doing less work than the Chinese worker does for 1. Or demanding 25 Rice bowls for doing less work than the Vietnamese worker does for 1.
Your claim of Race To the Bottom does not hold up to mild scrutiny.
The Union demanding such exorbitant funds that it became actually cheaper to pay to ship all materials across the ocean to the opposite side of the planet, have the work or assembly performed there, then pay to ship the finished product back across the planet.
Genius.
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Quote:The Garment Workers' Union encouraged Americans with a song called "Look for the Union Label", but Americans look at the price, not who made the garment in what country. The Garment Workers’ Union had 450,000 members in 1969 and zero members today. The Union did not destroy those jobs. It was ordinary Americans who care only about the price on the label.
Originally posted by JEWELSTAITEFAN:
So your accurate analogy would be the Union demanding 10 Rice bowls for doing less work than the Chinese worker does for 1. Or demanding 25 Rice bowls for doing less work than the Vietnamese worker does for 1.
Your claim of Race To the Bottom does not hold up to mild scrutiny.
The Union demanding such exorbitant funds that it became actually cheaper to pay to ship all materials across the ocean to the opposite side of the planet, have the work or assembly performed there, then pay to ship the finished product back across the planet.
Genius.
https://en.wikipedia.org/wiki/International_Ladies%27_Garment_Workers%
27_Union
To give a specific example, I have two jackets to compare. 25 years ago I bought an L.L.Bean warm-up jacket that was Made in U.S.A. I bought another this Christmas, same size, color, quality but a lower price, made in Bangladesh. I think somebody lost a job in Freeport, Maine because of price.
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at www.mediafire.com/folder/1uwh75oa407q8/Firefly
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JSF ... we are not "at the bottom" but YOU propose that we head in that direction. And... we are!
So come up with a better idea besides competing on the basis of wages with the most-exploited peoples of the world. Because if we keep heading in that direction, eventually we'll ALL be at the bottom.
-----------
Pity would be no more,
If we did not MAKE men poor - William Blake
"The messy American environment, where most people don't agree, is perfect for people like me. I CAN DO AS I PLEASE." - SECOND
America is an oligarchy http://www.fireflyfans.net/mthread.aspx?tid=57876 .
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