Yesterday we suggested that Treasury Secretary Tim Geithner has confirmed what some already know: We’re Literally On the Brink of Catastrophic Collapse. Doug Casey tends to agree with our sentiment and provides some of his views on why a complete collapse is unstoppable, what we can expect once it happens and steps to take to protect yourself:
Doug: You know I’ve been saying for years that the coming crash is going to be even worse than I think it’s going to be. The correction in 2008 was very scary, but minor by comparison. A warmup. Minor trembling in the ground, just before Krakatoa blows.
That the world financial system will have to face a reckoning day has been pretty much a given since the U.S. took the dollar, the world’s reserve currency, off the gold standard. Since then, decades of profligacy, not just in the U.S., but all around the world, have distorted the global economy to the breaking point. It’s only lasted as long as it has because of the great increases to productivity the computer and other wealth-creating technologies have created, and the fact that many individuals still produce more than they consume and save the difference â€“ even as governments have stepped up their efforts at wealth confiscation.
I thought things might go over the edge in 1980, but I was early. I underestimated how much wealth there was left in the world for the politicians to plunder. But now, while there is more physical wealth in the world, in the form of factories, homes, powerful technologies, etc., there is also massively more debt. Governments, first-world governments, not just banana republics, are sliding towards default, and in the West most individuals have little or no savings. In the East, many have savings tied up in a deflating gargantuan real estate bubble.
For all the reasons we’ve discussed in many different ways, the Greater Depression we’re sliding into is going to be catastrophic for the old world order.
Uneconomic patterns of production and consumption are going to be liquidated – they have to be – and that’s going to smash a lot of people’s rice bowls. In today’s richest societies, people won’t be able to move back to the family farm the way they did in the 1930s; there’s no farm left in most families. There’s not even that much family left in many families – instead of extended families that care for their elders, who educate the young while the able-bodied adults work, we send our elderly to fade away in institutions and our young to be indoctrinated in other institutions, and we barely know what our brothers and sisters are doing, let alone our other relatives. What happens to the huge masses of such people when unemployment benefits can no longer be extended?
Yes, “It can happen here,” and it’s going to. Maybe not this year, maybe not for several, but when the real crash gets underway, it’ll be unstoppable, and it will destroy the status quo with a speed that will leave most people still waking up to the danger after the harm has already been done.
Louis: Sounds like a sci-fi horror film!
Doug: I know, and it’s unsettling to sound the alarm. People dismiss you for being a Chicken Little. But the plain truth is that we’ve already gone beyond the point of no return. There is simply no way the U.S. government can pay all its obligations without defaulting or destroying the dollar – which is just a different kind of default. The same goes for a lot of other governments. There is no way out that does not force a lot of people to make painful adjustments.
Louis: Are you talking blood in the streets or something more like a chapter 13 bankruptcy, where everything gets sold off to satisfy creditors? Do you see the world of Mad Max ahead, or are we all going to work for the Chinese?
Doug: Both could happen, but I’m leaning toward the latter. I think most of the world’s wealth will still exist, but it will change hands. Better start learning Mandarin. You’ll need it to do business in the new world after the crash – or to get a job as a houseboy, working for those who do learn to do business in the world after the crash.
Louis: How else do we prepare, besides learning Mandarin?
Doug: You know my mantra: liquidate, consolidate, speculate, and create. To which I add and must emphasize again: diversify your political risk. I truly believe that increasingly desperate states will be the greatest risk to your wealth, going forward. The swelling masses of have-nots are going to turn their increasingly hungry eyes on the haves, and the politicians are going to pander to them – and these days, if you have any net worth at all, you’re a have. When the food riots start in New York, LA, London, Paris, etc., I want to be good and far away.
Source: Lew Rockwell
If things keep going in the direction they are, with more people dropping off of unemployment insurance benefits monthly, tens of thousands consistently being added to food stamp rolls, and jobs permanently disappearing across the country, then it is only a matter of time before we have riots in the streets.
For those with the ability to do so, get out of the city. If it were up to Doug Casey, he’d suggest getting out of the country altogether. While this is likely not possible for most of our readers for a variety of reasons, there are most certainly things you can do to blunt the impact of financial, economic, political and societal calamity.
We continue to recommend that you diversify your available assets and get busy preppin’:
Prepare now – or pay the price later.