This actually might be a controversial article for some people and I hesitated to even go down this direction because of the possibility of backlash that might ensue with some of the more extreme readers. I decided to move forward with it anyways because I’ve found 99% of our readers to be critical thinkers that might appreciate this sort of open discussion.
Sinking at A Significant Rate
Something that has actually been on my mind for a while (even before the 2008 crisis) is how it would be possible for the U.S. just fall off the face of the map and turn into a third-world country overnight due to a currency crisis. People would tell me things like“Los Angeles is going to look like Tijuana after the collapse,” and it would put me back in my chair a bit. You mean a city that has major ports, businesses with high-rise skyscrapers and beautiful weather is just going to turn into a dump overnight? Something inside me said that there was a little more backbone keeping this system together than we want to give it credit for. It makes sense on paper and overtime that the U.S. will see a dollar crisis based on the facts that we know, but there is going to have to be a lot more damage done in Washington and other countries are going to have to step up in terms of their independence to allow the U.S to sink at any significant rate.
No doubt, the purchasing power over the years has been taken from the people, and Americans doing the same work now are likely living much lower standards of living than people enjoyed 40 years ago—so we know this country is heading in the wrong direction. But this notion that America will experience hyperinflation and essentially fall off the face of the earth and turn third-world while the rest of the world rises is unreasonable. This became very clear in 2008 when we saw the American economy slip into a recession/depression and the rest of the world soon followed suit dealing with the same exact problems– and even worse, in some instances. It was a chain reaction that took place and our collapse triggered the collapse of the rest of the world.
Most all of the major superpowers and groups of countries such as the Eurozone do not have the independence to sustain themselves at the moment without the infrastructure that comes from being tied to the U.S. in one form or another.
Allow me to use this analogy: at this point in time, all the rest of the countries are like businesses in a mall doing transactions and such side by side, but the U.S. is the actual mall that is housing the rest of the businesses inside. If, for whatever reason, that mall suffers, it brings down every single business inside that is doing business. This is as opposed to the U.S. just being another retailer inside of the mall that suffers and simply shuts their doors while the other stores absorb the business.
Right now, the U.S. has a military that is stationed all over the world and has the currency that is still the world reserve currency. These two aspects alone provide the U.S. with insurance that America will be a viable player in the global economy. When the rest of the world starts dealing with volatility, the knee-jerk reaction is still to put their money in American dollars and assets in the U.S.
Many people(myself included) back in 2006-2007 pre-collapse really thought that America was inevitably going to see a financial collapse and it would get crushed under rapid hyperinflation. Following this event, world superpowers such as China and countries in the Eurozone would absorb the business that was historically done in the U.S., and leave America living third-world for decades. It really seemed that as America was going to fall, the rest of the world would rise and squeeze the American economy in the process.
What has happened — and what will continue to happen for some time until China substantially grows and surpasses the U.S. — is this country will continue to be plugged into the infrastructure of the global economy and the rest of the world will be dependent on America to chug along – regardless of if it’s on air or true fundamentals.
The title of the article is “A Collapse in Relation to What?” This is a legitimate question because even if the U.S. gets reckless for the time being with government spending and money printing, a collapse in our system will only trigger the rest of the world to come down with it. The rest of the world has not decoupled itself from its dependency on the U.S. and unfortunately, our leaders have the ability to recklessly spend because of it.
I find that articles like this are helpful at times because it brings some middle-of-the-road sense to some of the extreme news that we all get into sharing with one another. Taking some of the more extreme information too far sometimes causes people to make unwise decisions and unplug from reality altogether, living in a bubble while waiting for the apocalypse to happen.
Plan for the best and be prepared for the worst!
Chief Editor at CrushTheStreet.com