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Message Subject Last minute tips for parents when the SHTF
Poster Handle Anonymous Coward
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Minor global economic collapse

Because US treasuries get downgraded, and thousands of municipal bonds follow suit, investors of major retirement funds, large mutual funds, other major governments, and the wealthiest 1% of families, look for places to park their money. Ordinarily cash is the safest place to park money. We assume that it sits in a bank in its most liquid form (it can easily be converted or moved).

Money is temporarily parked somewhere, usually cash or treasuries, due to liquidity, and then reinvested into another vehicle that makes a greater return.

Banks lend out far more than deposits. Many times more than 20 to 1 from reserves. Often in scarier amounts. You give the bank your money. Every dollar you give them, they loan out twenty. Surprised? They realize that less than $1 in 100 is used for transactions. Most wealthy folks don't need access to their money. May other investors based upon history also don't need their money right away. The bulk of the remainder of customers live week to week, hoping for new income to stave off creditors. Their money is not in the bank, they receive the loans.

Most of these customers have less than two months of income in an convertible form. Much of that is not very liquid. All of that is contingent upon continued employment or pensions received.

The banks don't have your money as cash. It's invested in someone's home, business, depreciable items, and their own investments in the market.

Real estate: both commercial and single-family dwellings plummets. Banks cannot loan money since while people have the desire to purchase things, their financial situation makes lending impossible. Lower demand = lower value. Other real estate investors with properties in construction phases have difficulty in making payments. These were almost always leveraged with bank money, but now that prices are falling, those investors decide to sell to stay afloat. Real estate prices fall in a cascade affecting everyone. No one wants theses properties. Owners become renters. The real estate collapse grows. Any occupation that has anything to do with banking or construction in any way has major unemployment.

Wealthy folks realize that their cash is NOT liquid. It takes progressively longer to receive cash withdrawals. Some investors desire to move their money to gold and silver. There's a big problem. There is not enough physical gold or silver to purchase. There are gold and silver deposits in the ground, but they must be mined, extracted, transformed and distributed. This takes time. Time is the enemy of liquidity. The traditional method of gold or silver purchase is through line entries or certificates. You give me cash or an electronic transfer of wealth, and I give you an electronic transfer of gold delivered on demand of physical metal.

The demand for physical gold and silver skyrockets. Any metal available now becomes more valuable than promises. It becomes very much of a multiple tiered system.

Special places outside of banks are created. They have security and vaults. They take hold of physical metal. People store metals in their homes. Robberies break out. Criminals of various levels steal them. All metal that is not secured is stolen.

Concern mounts on the value of the US dollar. Value is dependent upon demand. Lower demand = lower value. The average citizen realizes for the first time that the Federal Reserve and outside countries have been purchasing US dollars to artificially increase demand. Likewise, the US has been artificially purchasing other countries' currency to artificially increase demand. This realization take people aback. The majority of people are in a dim awareness of reality. They start to wake up.

There does exist one major demand for dollars. Oil. Oil largely comes from outside sources to the US. It mostly comes from Middle Eastern countries; countries that are terribly unstable. Russia has large reserves. Larges reserves exists in Venezuela and Mexico. China has some, but not per capita. Norway has a reserve that is high per capita.

Oil transactions happen in petro-dollars. The exchange of oil is transferred by purchasing dollars first, then oil. Middle Eastern countries work behind the scenes to gain more economic power due to their instability. Countries outside the US decide to switch to a different currency to denominate oil. Because of their bad experience with a single countries currency, a new currency arises.

While the US buys many outside goods and services, many of which are shiny toys, due to their instability to purchase those toys, they do not appear to be able to import items. Countries grow less concerned of any consequences of a switch from petrol-dollars to the new currency.

The value of the dollar plummets. Other countries do not artificially create demand for dollars. There is little reason to. To stabilize the dollar, the federal reserve purchases more and more dollars, each time with lesser effect. This creates inflation.

Prices rise for US goods since the dollar is weak. Most assembled goods, many agricultural goods, and other items like oil are transported to the US only because it is economically beneficial to those outside countries. This becomes very risky for them. The more risk = the higher the price.

Illegal immigration plummets. Less and less service industry or construction exists. Some are used in agriculture, those who cannot find these jobs return to their own countries. Those desiring to stay run into issues at the government level as state budgets are cut. Bad confrontation happen between illegal immigrants and frustrated fearful citizens.

Demand falls for shiny imported toys. The price of the toys, unemployment, the dollar exchange rate, transportation costs (mostly oil related), precludes a beneficial rationale for importing goods to the USA.

The low availability of goods + unemployment + loss of wealth + instability = chaos. It creates more unemployment as less service area workers are needed. {The service industries employ many of American works}. This perpetuates the cycle, cascading into other industry, snowballing into wide spread chaos.

The largest cities see riots. They last for a week, get extinguished, and break out in new metropolitan areas. Those without supplies die. Those who rely upon government income die. Utilities have difficulty operating. Military forces are transported to the hardest hit areas. Middle sized cities suffer since there are not enough military forces to divert to them.

Critical infrastructure laws are enforced. They had been written quietly with media knowledge during the pandemic scares. People in any occupation that is defined as critical have a loss of personal freedom, but a better chance of income and supplies. It is a rough marriage of convenience. Those marriages don't last since they are not based on love, affection, and trust.

In the absence of leadership in large cities, some gangs and organized crime loot supplies. Any cache of pharmaceutical drugs, weapons, food, camping supplies, etc are the new wealth sources. Few illegal drugs exist. They had often been imported or produced by hard to acquire chemicals, or diverted by willing physicians from legal drugs. Some had been grown locally and based upon season, those will remain. The drop in availability will occur for all of the same reasons that shiny toys don't sell, the same reasons affect illegal drug sales. What few illegal drugs are available are used to keep prostitution going. Criminal elements in other smaller cities get the same idea. Crime rises in areas with a power vacuum.

Military forces are called home. Many nations that relied upon US forces for economic reasons and political stability, may see crises particularly at borders. The returning military forces require supplies. These are commandeered. Drafts may be put in place for ancillary roles. Specialists may be drafted to fulfilled them. Some may initially come from metropolitan areas. The politicians of those areas will balk at this. Outside folks from progressively smaller towns and with technical skills may be drafted to assist the military. Those areas have low political power. Readers of my tale of history will see parallels.

Military forces engage criminal organizations. The effectiveness of the battles will be determined by superior firepower, command structure, transportation of supplies, and will. The worst battles are won, and intentionally communicated as a deterrent.

Many criminal or wannabees slip off with private caches of goods. They retreat at first to other areas of their cities. Some attempt to replicate their activities in smaller towns to evade the military forces in the larger locales. Many do not know the terrain, but are better armed. Skirmishes break out. Some areas already have their own criminal elements in positions of power. Unusually alliances of players will attempt to repel interlopers. The success of local skirmishes will be based upon the level of defense, local gun control, and will to repel. Supplies will get dramatically low, as less and less is available to steal that has any value.

The largest cities are occupied by the military. Some people within are put to work, to mobilize the forces, house them, feed them, and enable them to move inwardly. Something very analogous to the cavalry of pioneer days will be put in place. Smaller towns could see a return to medieval serfdom.

Owners of the new currency have massively increased wealth. The maverick investors with the disposable wealth who are willing to risk investing in the USA, purchase property and industry at greatly lower prices. They know that the US is capable of producing their own goods and services, it's systemic failure of leadership and fiscal responsibility that caused it in the first place.

As more outside countries send investors, those countries' policies may change. Large untapped resources, a literate but unemployed work-force, an infrastructure with excellent transportation and roadways, rail, or waterways, all help the outside investors and countries to make the decision. The most likely candidate will be countries will large oil reserves and hence more of the new currency, but having high stability.

Outside countries will have their own issues, all based upon the factors I illustrated prior. We cannot hope that other countries will come to our assistance. We had been the superpower for the longest time, a fact based upon a beneficial financial arrangement by the international power brokers and our military forces. I do think it's plausible though..

Petrochemical companies quietly begin to open oil reserves within the US in Alaska and other places that were quietly sit on. New construction of oil wells increase. Some workers in good health relocate to oil construction. Their salaries are entirely at the mercy of the petroleum companies as unemployment is high. The instability of the Middle East makes harvesting oil too dangerous.

The government drafts industrial leadership to retool factories. Those leaders will need construction workers and highly trained technical people to begin transforming old factories into ones that can as quickly as possible build essential items for the military and critical infrastructure for the largest cities. All of this will take painfully long, as very few items will be available, and materials will have to be mined, transported, and fabricated to make this a possibility.

This is a minor scenario of a global economic collapse, that doesn't include any outside disasters. Large drops in the population due to lack of food sources, medicine, clean water, and Hope will occur.
 
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