What is an economic collapse?
To bring clarity to what we are about to cover, let’s define what an economic collapse is. Similar to a financial collapse, the great depression in the 1930s, an economic collapse is the total breakdown of a country, a region or even globally. An economic collapse is basically a severe version of an economic depression, where an economy is in complete distress for months, years or possibly even decades.
You will see civil unrest, extreme poverty levels, major disruptions to basic services such as electricity, water and food supplies. Looting becomes common essentially you can think of how things can be by checking out the movie Madmax.
The Mad Max Movie StoryLine: “Years after the collapse of civilization, the tyrannical Immortan Joe enslaves apocalypse survivors inside the desert fortress the Citadel. When the warrior Imperator Furiosa (Charlize Theron) leads the despot’s five wives in a daring escape, she forges an alliance with Max Rockatansky (Tom Hardy), a loner and former captive. Fortified in the massive, armored truck the War Rig, they try to outrun the ruthless warlord and his henchmen in a deadly high-speed chase through the Wasteland.”
Of course, the gee is not about the action, it’s about the setting of the movie and how chaotic things become after “the collapse of civilization”
Think this is far fetch?
This is already happening in Venezuela
Why are people in oil-rich Venezuela going hungry?
Riots hit Venezuela as food runs short
Venezuela descends further into chaos amid riots for food
Protesters clash with riot police in Venezuela.
This is what happens when people go hungry. You need to feed your family and yourself. Food shortages are the kind of things where people are forced onto the street – or die.
“Supermarket shelves in Venezuela are chronically bare, and power shortages are so severe that government offices are now open only two days a week. The health care system has collapsed, the crime rate is one of the world’s worst, and inflation is rapidly eroding what remains of the currency’s value.
“The economy has gone from bad to worse to horrific,” said Jason Marczak, director of the Latin America Economic Growth Initiative at the Adrienne Arsht Latin America Center, part of the Atlantic Council, a Washington-based research organization. “The Venezuelan government is doing a good job of leading itself into chaos.”
According to CNN Money, the headline cries:
“Venezuelans cried at the sight of fully-stocked supermarket shelves in Colombia.”
Pregnant women, children and even elderly Venezuelans crossed into Colombia on Sunday after the border was temporarily reopened, allowing them to buy basic foods and toiletries — rare commodities in their home country.
Tearful Venezuelans had gone weeks without basic food items like milk, flour and toilet paper. It’s a sad but common part of daily life today in crisis-ridden Venezuela, a country that has the world’s largest proven reserves of oil. Colombian officials estimate that about 100,000 Venezuelans crossed the border.
Venezuela is expected to dive deeper into the abyss this year, according to new projections published Wednesday by the International Monetary Fund.
“As Venezuela’s lines have grown longer and more dangerous, they have become not only the stage for everyday life, but a backdrop to death. More than two dozen people have been killed in line in the past 12 months, including a 4-year-old girl caught in gang crossfire. An 80-year-old woman was crushed to death when an orderly line of shoppers suddenly turned into a mob of looters — an increasingly common occurrence as Venezuela runs out of just about everything.
The extent of the country’s economic collapse can be measured in the length of the lines snaking through every neighborhood. The average Venezuelan shopper spends 35 hours waiting to buy food each month. That’s three times more than in 2014, according to the polling firm Datanalisis.
“As the economy breaks down, life is telescoping to be just lines,” said Datanalisis president Luis Vicente Leon. “You have masses of people in the streets competing for scarce goods. You’re inevitably going to get conflict, fights, tricks, you name it.”
What caused the crisis in? Hyperinflation in Venezuela
Hyperinflation is the main cause of the dramatic chaos in Venezuela, while we discuss the flyaway inflation on the internet, real people are starving and dying in Venezuela. Venezuela’s inflation is poise to hit 720% in 2016!
Hyperinflation means the $2 denominated Bolivar bank note’s value is the same or less than that of a napkin. A classic example of a fiat currency reverting back to it’s intrinsic value – ZERO!
In fact in April 2016, Venezuela does not have enough money to pay for its’ bolivar!
“The story began last year when the government of President Nicolas Maduro tried to tamp down a growing currency shortfall. Multi-million-dollar orders were placed with a slew of currency makers ahead of December elections and holidays, when Venezuelans throng banks to cash their bonuses.
At one point, instead of a public bidding process, the central bank called an emergency meeting and asked companies to produce as many bills as possible. The companies complied, only to find payments not fully forthcoming.”
Since 2014, Venezuela’s economic crisis has caused rising prices due to the increase scarcity of goods and their rapidly depreciating currency, price controls imposed by the government which in turn cause higher prices and even worse shortages. Basic commodities such as cooking oil, sugar, corn flour are not available in stores. The Cendas survey showed that over one third of food stuff are not available in supermarkets and basic food like vegetables are getting more expensive every month (by 32%). Prices of meat are going up 22% monthly. What used to be basic Venezuelan dishes (rice and beans) have turned into luxury overnight. On average, Venezuelans have to queue for over 8 hours per week on average just to get basic goods.
Venezuela Crisis Explained
The socialist government is one of the region’s most controversial. Since President Hugo Chávez’s death in March 2013, his successor Nicolás Maduro is now heading the government. While a lot of blame was placed on the declining price of oil – Venezuela’s most important export, fingers are pointing to Chávez’s policies which caused storages of food and other consumers products – and of course the government’s meddling of the currency control system.
How did such an oil-rich state collapse so badly?
The current Maduro government has blamed the US for its crisis but Maduro has actually inherited a state-run system from Chávez which was already in ruins. Chávez shore up his popularity primarily based on oil money and foreighn debts to fund consumption – he even nationalised more than 1,200 private companies which were deemed not be to acting in the public’s best interests. In 2015, oil price fell more than half and Venezuela’s reckless finances made it a high-risk debtor – which denies it access to international capital.
Print And Print
Without access capital from the international market, the Maduro government responded by printing more money – causing inflation. it was estimated that the basic groceries’ prices that keeps a family going for a week went up by over 25% between March and April then.
To made things worse, Venezuela rationed basic foodstuff and controlled the prices – instead of solving problems, the consequence of this policy was simply forcing goods into the black market. A classic replay by governments who have tried to print their way out of problems throughout history.
According to Transparency International, Venezuela is ranked the 9th most corrupted country in the world. The crisis is likely to get even worse in the near future.
Venezuela’s Crisis Explained
Can The Venezuela Crisis Happen In The United States?
Peter Schiff: Venezuela is Amercia’s Socialist Future.
Renown economist and author Peter Schiff believes that what’s happening in Venezuela can happen in the United States.
Talk of Global Worldwide Economic Collapse
At the end of FY 2016 the gross US federal government debt is estimated to be$19.3 trillion, according to the FY17 Federal Budget.
Can the US debt ever be paid off?
US federal debt is still a all time record high. Hitting a new milestone, the deficit has passed the $1tn mark. As of August 2016, the national debt stands at $19.3 trillion ($19,300,000,000,000)
The US has a population of 318 million people as of 2016. Divided by this population, on average each Amercian citizen owns USD$60,691.
How does the Us borrow money and get into debt? Mainly it’s through Treasury Bonds (a fanciful name for a government’s IOU when it borrows money). The US government issue government securities which other countries and financial institution buy and thus the US national debt is owned mainly in the US, the rest of it (over $5.4 trillions dollars) are owned predominantly by Asian economies.
So, how does the US borrow money? Treasury bonds are how the US – and all governments for that matter – borrow hard cash: they issue government securities, which other countries and institutions buy. So, the US national debt is owned mostly in the US – but the $5.4tn foreign-owned debt is owned predominantly by Asian economies.
Unlike an individual or a household who is in debt, there are 2 outcomes when one is in debt – 1. You pay it off over time or 2. You simply default on it.
The US government can technically keep printing and printing the USD dollars and print it’s way out of debt. (See example of Venezuela above). Unlike the Venezuela’s Bolivar, the USD dollar is the world’s reserve currency and inflation (caused by printing of US dollars) is exported to the rest of the world.
But the other countries are going to wake up and one way – they will refuse to play this game and accept the US dollar.
US America Economic Collapse
China Economic Collapse
Russia Economic Collapse
Preparing and Surviving The Economic Collapse