totally 'for what it's worth' - from
(snip)"I see the period after the various crashes very differently from those who anticipate immediate recovery symptoms. This is not because I imagine myself a visionary; my view is based on history. If we look at the economic collapses of the past, (inclusive of their possible knock-on effects, such as hyperinflation and destruction of the currency), from the fall of the Roman Empire to Weimar Germany, to Argentina and Zimbabwe - take your pick - the pattern is extremely similar.
So, let's have a look at that pattern and ask ourselves if the present situation might not play out much the same (except far worse and more prolonged, as the conditions that led to this particular depression have been more extreme). The various stages are likely to be a given, but the various factors within each stage are a bit more uncertain. In every major economic collapse, some combination of these factors takes place.
Also, consider that the stages themselves are like dominoes - they almost always fall in order. The reason? Details change in history, but human nature remains the same. The same knee-jerk reactions by people will repeat themselves over and over. (As an example, we are now experiencing a decline in exports from the First World. I believe that a repeat of the disastrous Smoot-Hawley Tariff of the 1930's will be passed in America, which undoubtedly would trigger increased hardship for Americans.)
Stages of The Crash
The stages are laid out below. The first three have already occurred.
1 INITIAL CRASHES
Crash of the residential property market
Crash of the commercial property market
Crash of the stock market
2 INITIAL KNOCK-ON EFFECTS OF CRASHES
Loss of homes
Loss of jobs
Inflation
3 IMMEDIATE ACTIONS BY GOVERNMENT
Bailouts for select groups
Dramatic increase of debt
Politicians going in the opposite direction of a real solution
The first knee-jerk reaction began immediately, with the Government attempting to "make the problem go away" as quickly as possible. Almost invariably, at this stage, the corrective strategy is hastily prepared and shortsighted, assuring further deterioration of the economy.
In this stage, the politicians on both sides fail to focus on a real solution. Instead, their primary focuses are, first, to avoid a painful real solution, and, second, to engage in finger-pointing, each political party blaming the other for the problem. The problem worsens steadily until one of the next series of major dominoes falls. This is usually sudden and triggers the toppling of other dominoes.
4 SECOND WAVE OF CRASHES
Major crash in stock market
Currency plummets
Increased bankruptcies
Increased unemployment
5 INTERNATIONAL TRADING PARTNERS REACT
Foreign countries refuse to accept more debt
Foreign trade slows dramatically
At this point, the Government introduces dramatic change, such as ill-conceived protectionism, which backfires almost immediately.
6 GOVERNMENT INSTITUTES DESPERATE SELF-DESTRUCTIVE MEASURES
Defaults on debt
Restrictive tariffs on imports
Currency controls
7 ECONOMY REACTS IN LOCKSTEP TO GOVERNMENT ACTIONS
Hyperinflation - dramatic increase in food and fuel costs
Massive unemployment
Extensive foreclosures
Extensive bankruptcies
At this point, the dominoes are tumbling quickly, and a rapid unraveling of control is about to take place.
8 SYSTEMIC COLLAPSE
Bank closures
Extensive homelessness
Food and fuel shortages
Electric power becomes sporadic, blackouts common
As these factors unravel, the public mood turns to a combination of blind fear and anger.
9 SOCIAL COLLAPSE
Crime rises dramatically (particularly street crime)
Food riots
Tax revolts
Squatters' rebellions
10 MARTIAL LAW
Creation of special army to address "domestic terrorism"
Random killings become commonplace
At first, the authorities focus mostly on violent subjugation and arrests; then, as prisons quickly become hopelessly overcrowded, camps become the norm. Soon, these too become unmanageable, particularly as a result of high cost of food and manpower. At that point, the solution turns to the killing of anyone who is suspected of a crime and, more frequently, anyone who is not submissive. (This will not resemble the Gestapo of the late 1930's. It will be less organized and more chaotic.)"(snip)



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