Capitalist Eric

Truth is treason in an empire of lies.

Economic Collapse Scenario- My Best Guess

with 41 comments

There are plenty of prepper websites, books and discussion forums out there, all of them discussing SHTF/WROL survival.  Some of them, such as the forum at http://www.shtfschool.com, are very good.  And naturally, nearly all of them try to make a few bucks here and there, via advertising, selling books, knives, survivalist gear, “zombie” gear, and so on..  Great.  More power to them, in my not-so-humble opinion…  God help me, if I ever go mall-ninja-survivalist.

mall%20ninja

Today’s thoughts actually revolve around something that was asked of me to make, a sort of common-Joe’s view of what will happen should the Trans Pacific Partnership “trade” deal pass.  The truth is that nobody can do that, since the full details are held in strict secrecy (making me conclude that it’s NOT good for America, Americans or our wallets).   The TPP- like NAFTA and CAFTA- will result in the same thing:

Obama-BOHICA-re-election-logo-41937710031

Any questions?

Oh,  some details are leaking out- gun confiscations and ammo bans, the official torching of our Constitution and basically the end of America.  Our feckless leaders have sold out the country, and the only way to fix that fact, is with rope and lamp-poles.  Let’s face it;  the USA that we remember simply doesn’t exist any more.  Elvis has left the building, and we’re stuck picking up the tab.

And the tab, is what I can write about to some degree.  A little background on me: Bach.Sci. in Economics, MBA and a doctorate in Information Systems (not an IT degree, in reality it could be better termed “data analysis for command-and-control decisions).  Basically, I’m an economics geek, have been for 20 years, and the education really started when I finished school, and compared what is supposed to be, to what is.  No real surprise, the differences are stark.

I’ve discussed the Cyprus “bail-ins” that occurred a while back, in some detail.  The legal justifications have been adopted world-wide, and can be summarized as follows: “your money becomes the banks’ money as soon as you deposit it in your checking/savings account.”  You no longer own that money, you’re just an “unsecured creditor.”  So if the bank(s) get in trouble, such as during a bank-run, they can take your money, use it for whatever purpose they want (including nice bonuses to themselves), and you are now a stock-holder in a defunct/broke/zombie bank.  Kind of like this:

bail-in

The natural response to that is to pull your money out of the bank, right?  And I said in the Cyprus essay, if you pull your cash, and buy tangibles or precious metals, this will cause the entire economy to collapse.

How do they intend to get around this problem, and make it so that that can steal ALL of your money (aka “bail-in”)?  Simple: make it “illegal” to use cash.  So you will NOW have to do all transactions in digital cash, they’ll have access to it (read that as “the ability to steal it), and they pay 0.01% interest on your checking account.  So basically, you GIVE them your money, they give you no paper interest (and with real inflation running at 7%) and YOU are paying THEM 7% to have the right to gamble with your money, and the right to steal your money when their gambles go bust… And their gambles WILL go bust, because the five biggest banks have $40 TRILLION in bad derivatives hanging out there (GDP of USA is $15T).

Speaking of these big banks, don’t forget, they will happily snitch you out to “Big Brother” if you dare to retrieve an unusual amount of cash…  They do NOT want you to pull their gambling funds….

I’ve also discussed here, that the dollar WILL collapse.  Everything I mentioned in that essay has been going right on schedule, and we’re closer than ever to a SHTF event.  Indeed, all the signs indicate that the SHTF event has already started…  As I mentioned in my last post, the Chinese bank AIIB has already been adopted by everyone who has any kind of functioning economy.   Notice the USA and Japan are not included in that list of countries signing on to the AIIB, mainly because the American and Japanese economies are no more functional than Africa, Italy or Greece, for that matter…  Yes, we’re in that deep of trouble…

An interesting aspect is that China has been sitting on some $1 trillion of U.S. debt in a variety of debt instruments.  They’ve been slowly selling off that debt to other countries (for American dollars, which is why the dollar has enjoyed a recent resurgence in exchange-strength; since the debt instruments are denominated in dollars, you have to sell them in dollars, creating a temporary demand for them).  Then, they take the worthless dollars, and use them to buy gold from all over the world, in quiet cash-transactions.  In this manner, especially in the past year, they’ve acquired a significant amount of gold, estimated anywhere between 3,510 tons of gold to more than 30,000 tons of gold.  In contrast, the US Treasury claims to possess 8172 tons of gold, and the problem with this claim is that when several allied countries have asked for their gold back, the Fed basically told them “we’re not going to deliver.”  Which means, of course, that either the gold is gone- stolen- or it’s legally encumbered…  the latter being a polite way of saying, there are multiple players claiming ownership to the same gold bullion.

Why does this matter?  Because a gold-backed currency is always preferable to a fiat currency, backed by nothing but blind faith in the issuing government.  But to have a gold-backed currency requires the issuing country of that currency to have an overwhelming majority of the gold…   A gold-back yuan (or renmimbi) will further undermine and collapse the dollar; everyone wants an asset that holds its value, as compared to an asset that depreciates every year.  China has stated this is one of their goals, and now it’s happening, exactly as I’d previously described (nice to know that Forbes agrees with my analyses, LOL).

I apologize for the boring economic analyses, but I will quickly finish one last point, and then we’ll connect all the various dots, and extrapolate possible outcomes.  In a previous post I flatly stated that the prices of gold and silver are artificially suppressed to make the dollar appear more valuable than it really is.   If it was able to be freely priced in the market- assuming a free market actually existed- we need only divide the number the number of dollars in circulation by the number of ounces mined to find what the REAL price of gold is in dollar-denominated terms.  [Keep in mind, this simple model ONLY works if the USA has the largest gold-holdings on the planet.]   Total M3 money supply (dollars) is estimated to be $17 trillion, and total gold mined =174,000 tons or 5,568,000,000 ounces.  [Notice that we can only estimate M3 money supply, as the government decided to no longer report these numbers as of 2006.]  Using this metric, we can conclude the actual price of gold (in American currency) should be $3,053 per ounce.  Compare that to the current price of $1,223/oz; the perceived value of the dollar is overstated by 60%

Now just imagine what will happen to the perceived value of the dollar as China announces they have large gold-reserves, compared to the laughable claims by the US Treasury that America has any gold left…?  When it becomes clear that American the gold has been stolen, the treasury is empty, and we have nothing left to back the dollar….?  It’s going to be a very bad day, when China backs the yuan with gold, effectively killing the last perceived value of the dollar…  people will flock to the yuan, and rush to dump their dollars as while they still have some value left…  And the value of the dollar will become its’ intrinsic value; a piece of paper with ink on it.  I suppose it’ll be good to start up the wood-stove…

dollar-burning

So let’s discuss what will most likely happen during a collapse of the dollar, first as the worlds’ reserve currency, and then the complete devaluation of the dollar.  There are several different ways that China (and Russia) can torpedo the FRN:

  • China announces the yuan will be a gold-backed currency
  • China announces they will no longer accept dollars for international commerce
  • Saudi Arabia (now heavily backed by China) announces they will no longer accept dollars for oil
  • China and Russia announce they’re dumping all US debt instruments

Any one action will cause the slow collapse of the dollar; any combination will be an economic version of Pearl Harbor, but with far more devastating results.

There are many theories of what will happen, when the dollar falls.  At this point, I’m not going to link to them; they range from a hyperinflationary collapse and Mad-Max scenario, to deflationary depression of a similar nature to the Great Depression.  But either way, with most countries holding dollars as their foreign-currency reserves (especially the EU), the collapse of the dollar (or the Euro first, causing the collapse of the dollar) will be a cascading event that will wipe out the last vestiges of functioning economies throughout the Western world, and will most likely cause the collapse of the Chinese yuan and Russian ruble.  China, because their entire economy is built on manufacturing cheap shit that the Western world buys, and Russia because nobody will have money of any real value to purchase their oil and natural gas.

Any way it starts, prices for all consumable goods in the USA will go up by 300-400% almost overnight, as foreign exporters reject the dollar for trade.  Such exports will have to be purchased using other currencies, which will require increasingly valueless dollars to purchase so that the transactions can be made in a different currency.  Shale oil will suddenly become financially viable again (for a short time), as the price of oil will skyrocket.

Retail chains like Walmart will be crushed, as their prices will necessarily spike, and people revert to the basics; beans and band-aides.  Those who are on a fixed income (retirees, welfare and EBT recipients) will quickly discover that while they may still have money, it’s not enough to put gas in the tank of their car, much less food on the table for their kids or themselves, and be instantly impoverished.

The Fed will try to make the dollar attractive to foreign investors, by raising interest rates; a case of too little, too late.  This move will collapse the housing and stock markets, the latter losing 40-50% of their value over a period of maybe two weeks, fatally wounding the too-big-to-fail (too-big-to-jail) banks, who’ve relied on no-interest loans from the Fed to gamble insane amounts of “free” money in a vain attempt to earn a “profit” in a rigged market.  The skyrocketing prices of products such as food and gasoline, combined with the Fed raising interest rates, will result in the biggest real-estate crash in history, causing banks to repo homes from delinquent borrowers, in a vain attempt to recoup some cash.   This will be the coup de grace for the banksters, wiping them out as any REO properties will sell for maybe 20-30 cents on the book dollar, forcing the banks to document their massive losses.  The banksters will perform government-approved “bail-ins,” stealing depositor money in a vain attempt to forestall the inevitable, and the FDIC- assuming they haven’t already been wiped out covering the first losses- will look the other way, as the in-your-face banks thefts occur.

As the now-unwanted dollars come flooding back to America from all over the world, consumers will attempt to use them to purchase the necessities of life, driving the prices higher, and increasing the demand for more dollars from consumers.  This will quickly lead first to high inflation, and then to hyperinflation, as more and more dollars chase after a dwindling supply of goods.  The raising of interest rates by the Fed will not slow the stampede from the dollar; a gold-backed currency will be infinitely more appealing to the wealthy, than to even consider a collapsing FRN.  Instead, the increased interest rate (both Fed induced and market-induced) will cause the Federal government to be unable to keep rolling over their debt instruments as they mature, causing the government to default on more and more debt instruments; borrowing costs will go ballistic, until they quickly reach a point where total revenues collected by the U.S. government will be insufficient to pay the interest on existing debt, much less fund anything like Social Security, Medicare, government pensions or military/NSA/CIA activities.  Military service men and women will be left stranded in military bases spanning the globe with no funding, no food supplies and no fuel to get them home.

At home, riots will break out in every major city that has a significant population dependent on government handouts, as the handouts eventually stop, and the government defaults on the “entitlement” crowd.  In response, the government will attempt to crack down on agitators, “terrorists” and anyone else who doesn’t allow the government to “save” us with martial law, the confiscation of all assets, money, property and even your labor (in accordance with various Obama executive orders).  The collapse of all money-based commerce will lead to further riots, as the impoverished who’ve lost everything, demand vengeance, and this will lead to Civil War II.  It’ll be the government against the people (whoever hasn’t already died of starvation, in the riots or at the hands of government troops).

Contrary to the generally accepted idea that having no debts will save you, there will be a LOT of winners when the collapse of the dollar occurs; those individuals who were under the heaviest debt-loads, such as college graduates, home buyers who had mortgages, people who bought expensive cars on credit.  The massive amount of devalued dollars floating around in the market will allow them to easily pay off their debts, while those who diligently saved their pennies  will have their savings confiscated by the banks or watch the purchasing power of those savings reduced to absolute zero.  It will also hurt those who worked so hard to pay off their houses, as their perceived “investment” will be wiped out, and they will be on parity- if not worse- than those whose debts will be erased by the currency collapse.

Those who will fare best will be those who keep a large amount of cash in their physical possession so as to pay bills (such as a mortgage and property taxes) and keep your assets until the banks- and eventually the currency- collapse.  Until the currency collapse occurs, having significant cash in your possession (at least 4-6 months of your total current expenses) will allow you to purchase merchandise/food/ammunition/guns as needed; remember, the bail-ins will wipe out almost everyone else who was stupid enough to leave their money in the bank.

'... Well, if I were moving to Cyprus, I'd put all of my money into mattresses.'

After the currency collapses, I would guess that silver and gold will become the medium of exchange for larger transactions.  Gold will necessarily increase in perceived value per ounce, but silver will increase at least triple the perceived value increase in gold.  By that, I mean it historically took 15 ounces of silver to purchase what would cost one ounce of gold.  Right now, the silver/gold ration is 72:1.  So as markets revert to precious metals, those that rely on silver more than gold for a store of purchasing power will see an effective “profit” of at least 480%.  There are reasons to argue the silver price will achieve parity- if not exceed- the price of gold, due to a variety of factors.

The above snapshot is my personal opinion of the most likely outcomes, given my advanced education of economics combined  with extensive historical research, observing the behavior of our current crop of “representatives” in DC, objective analysis of both the Federal Reserve and of the Chinese banking systems, analyzing the moves they’re making, and extrapolating logical outcomes.

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Written by capitalisteric

May 14, 2015 at 12:53 am

Posted in Uncategorized

41 Responses

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    • The same dickwads that brought this upon us will certainly outlaw the owning of gold or silver.

      IP727

      May 16, 2015 at 10:21 pm

      • Yup. And that will be one of their last-gasp measures before the whole damned thing collapses on top of them.

        Hang the bankers.

        capitalisteric

        May 16, 2015 at 10:58 pm

      • in Connecti-cuit the .gov has “outlawed” unregistered combat rifles. Know what the non-compliance rate is? >90%. The current Regime (literally) is a paper tiger. I’m already in direct violation of at least 16 “gun laws” in my own state. It troubles me deeply. Not. Finally, the .gov is not going to “outlaw” my silver. It’s protected by lead. My silver is going to outlaw the .gov

        Haxo Angmark

        May 17, 2015 at 3:39 am

    • I’d like to ask this question: After the collapse occurs you mention silver could adjust up to 480% of its current value. How many ounces of silver (or gold) would you guess it would take to then buy a median priced house for after the collapse. I’m guessing a median priced house of $200k today.

      Richard

      November 4, 2015 at 6:22 pm

      • This is a great question!

        Unfortunately, the honest answer is “nobody really knows.” In an economic collapse, the prices for survival goods- food, weapons, water, etc.- will go up, while prices for things like cars and houses will go down, in relative terms. In other words, people will be more concerned about day-to-day living expenditures more than the acquisition (or sale) of houses, where nobody has “credit,” banks aren’t in business anymore, and so the ease with which one can purchase a house or property is no longer a “liar-loan,” where basically if you have a pulse you can finance a house.

        Those days are coming to an end.

        As well, actual ownership of such a piece of property becomes problematic; if you have a mortgage and your financial institution goes belly-up, WHO owns the property? How do you PROVE ownership???

        The bottom line from my viewpoint, is that this will be a very sticky situation which will discourage most people who might have the idea to buy a house. These questions alone would significantly drive the price of houses down. Combined with other effects (brought about by a national financial collapse) the prices could be driven down dramatically.

        Keep in mind, when we talk about “price,” there is an additional variable; what money are we using? If we’re talking about dollars, the prices for everything may well go to the moon, including houses. Keep in mind, a hyperinflationary collapse has the prices of everything moving up by significant amounts on a weekly or even daily basis. But if we’re talking silver or gold, the purchasing power of those precious metals, absent outside manipulation (by, say, the government?) will hold steady, if not increase, as those who want to acquire it finally recognize the true rarity of said metals. So, my guess is that the prices of silver and gold will spike up (in dollar terms) in a short period of time followed by a continuing increase as the dollar fades to black, while the prices of houses may at first collapse as the economy tanks, and later start to rise to infinity as hyperinflation sets in.

        ALL of this, of course, is speculation. Guesses, really. Going back to your original question, there are quite a few gold experts who claim that gold will reach anywhere from $15k-50k per ounce! Divide that by 15, and we’re now looking at the range that silver should be in… Doing the math, we therefore can conclude that a modest house of $200k could be had with 200 ounces of silver. That is, we assume at some point an ounce of silver will equal $1000 of purchasing power in today’s dollars. [And looking back through history, this is not an outrageous assumption.] This is my basis for silver acquisition and storage, estimating what my family will need in terms of costs of goods now, and extrapolating out how much I’ll need on-hand for six months of survival, or 12 or whatever.

        Anyway, I hope I’ve answered your question. Keep in mind, YMMV. 😉

        Eric

        capitalisteric

        November 5, 2015 at 3:53 pm

  1. The only possible effective US Government action would be to repeal the Feral Reserve Act, and issue US Treasury Silver and Gold Certificates payable to the bearer on demand. Federal pensions, SS, would have to be reconfigured for the new values. EBT an welfare to individuals and corporations would cease. Banks would have to be reorganized. The economy would reset to back to early 1900’s values of property, salaries, property, etc. Considering how “effective” the Feral Government is……TSHTF for a few years until the light of day dawns. This is an “Optimistic” view. The Darker view is that China and others come to collect their “collateral”.

    GenEarly

    May 16, 2015 at 3:49 pm

    • All true. Such an outcome, is difficult to contemplate.

      For now, all we can do is what we can do… The rest is left to God…

      capitalisteric

      May 16, 2015 at 6:51 pm

  2. I can understand the rationale to hold cash in a hyper environment. But its double edged, that $5 bill you are holding today will get you a big mac, but the day after the foreign USD flood home, that same $5 won’t get you a pack of french fries.

    drdog09

    May 16, 2015 at 4:08 pm

    • I agree 100%. But having operating cash when electronic money has evaporated will give a tactical advantage for the short term.

      How long that advantage lasts will be interesting to see…

      capitalisteric

      May 16, 2015 at 6:42 pm

  3. One of the first moves made by the banks once the dollar turns over will be an indexing of debts corresponding to the value of the dollar. Frankly, the beast will thrash around implementing rules trying to save their hegemony. Debtors will not get off quite that easily. Otherwise, nice work, so buck up, get prepared and get ready to be the salt.

    Jeff

    May 16, 2015 at 4:53 pm

    • I’ve no doubt they’ll try to maintain their advantage. But with contracts expressed in dollars, it’ll take years to either sort it out, or for banks to shift the game in their direction…

      I’m guessing they don’t have nearly that much time. Once the stampede out of the dollar gets rolling, it’ll take weeks to months before they’re DOA.

      capitalisteric

      May 16, 2015 at 6:47 pm

      • I understand that we need to prepare ourselves for what is to come which I believe will be very soon. I’m torn though regarding credit card debt. My debt only consists of a auto payment. However, my GF’s $1000’s and $1,000’s in credit card debt. The two scenarios I keep kicking around is first, should we do everything we can to pay off her CC debt, resulting in delayed purchasing power to help prepare for “when” SHTF. Or second, pay the minimum balance(s) each month while sinking the extra funds into the SHTF preparation? The right move maybe a little of both…..I just want to be all in with a decision…..any suggestions and thank you for listening.

        Witstur

        April 20, 2016 at 9:19 pm

      • There is no right answer to your question. Basically, these are the types of decisions we all end up having to make, sooner or later. YOU have to balance out your desire for cash-flow to preps, against your appetite for risk if thing move more quickly than you anticipated.

        All I can suggest is that you carefully weigh all options, make a decision, and then stay focused on that choice; don’t get side-tracked by second-guessing yourself.

        Good luck.

        capitalisteric

        August 8, 2016 at 7:18 am

  4. Yes, I hate to think it……but the acronym is appripo….
    Bend
    Over
    Here
    It
    Comes
    Again

    Jammer

    May 16, 2015 at 4:58 pm

  5. Reblogged this on Starvin Larry.

    gamegetterII

    May 17, 2015 at 12:28 am

  6. “The skyrocketing prices of products such as food and gasoline, combined with the Fed raising interest rates, will result in the biggest real-estate crash in history, causing banks to repo homes from delinquent borrowers, in a vain attempt to recoup some cash.”

    This will fail. The new paradigm of home ownership will be, “It’s yours if you live there.” Evictions will not happen, as armed homeowners tell the people attempting to evict them to fuck off or die. Homeowners already know or will soon, of the malfeasance of the bankers. They won’t take eviction lying down. The only thing that will get them out of those houses will be a fire resulting from a riot. But then they will simply find a vacation home and squat there.

    Paul Bonneau

    May 17, 2015 at 2:10 am

  7. If you’re still wondering what JH15 is about…

    StormyB4

    May 17, 2015 at 3:53 am

  8. I think you just flat out nailed it. Easily the best analysis I’ve read – this article needs to be spread around the country. Thank you for writing this!

    Jason

    May 17, 2015 at 2:14 pm

  9. So do you believe Patriots should be banding together now so they have the best chance of surviving when it hits…I read so many times that people believe that the worst is going to happen but still are living in areas that if what they foretell comes true will be truly screwed…

    lineman

    May 17, 2015 at 4:54 pm

    • The short answer, IMHO, is yes, Patriots MUST band together for mutual protection. The idea that a guy can take his family to some hidey-hole out in the middle of nowhere, isn’t realistic; you’ve gotta’ sleep sometime

      We need to band together for mutual aid and protection. The people that live in cities have an even greater need for this, as this will be the only possible defensive solution in urban environments, as gangs will spring up in the cities first… The irony is that while millions live in the big cities, they’re less friendly and not as close to their neighbors, defeating the purpose. I don’t know how to get around this problem.

      capitalisteric

      May 17, 2015 at 5:24 pm

      • Ask a gang Leader and his members. Why do they ban together? And recruitment doesn’t seem to be a problem! Seriously, ask people who are “successful”.

        GenEarly

        May 17, 2015 at 5:36 pm

      • The difference is that current gangs in big cities are together for mutual protection and to profit from “illegal” activities. Such gangs generally have no marketable skills, aren’t interested in working to better themselves, and think only of themselves. Families and patriots that band together for mutual protection, but the profit motive is missing. What IS present is the desire to protect your culture, your country, your family. The former is made of aggressors, the latter of defenders, so the comparison (while superficially similar) breaks down quickly.

        As to aggressor gangs…? How do they actually define “success?” Increased profits? More successful rapes and murders? Bigger riots (Baltimore)?

        capitalisteric

        May 17, 2015 at 5:59 pm

      • The people that live in cities should be getting out…They need to realize that if something happens that they are screwed…Read Selco even he said they wouldn’t of survived without the food drops…The thing about it is there is options to either get moved now or establish a relationship with someone in the country that you can preposition supplies at so when something happens they have somewhere to bug out too…People shouldn’t be given false hope that if the SHTF that they will be able to survive very long in the cities if there is no resupply… Before anyone jumps on that statement let me clarify SHTF means no electricity, no water, cities that are in chaos, buildings that are burning, people killing people for fun. etc…Even Katrina was not SHTF because there was outside influences…We haven’t even come close to SHTF over here…

        lineman

        May 17, 2015 at 6:33 pm

      • Easy beginnings, I recommend neighborhood Patriot BBQs, Patriot Hiking, Patriot camping. Just get to know your neighbors and start building trust and talking circles.

        George

        May 21, 2015 at 6:23 pm

  10. 1) Why would the Chinese and Russians attempt to destroy the US Dollar when a paragraph later you state it would be suicide for them to do so?
    2) You declare people holding massive amounts of debt to be “winners” after a Dollar collapse only two sentences after you state Civil War II would occur for the same reason. I’m not sure “winners” would be the way to describe educated suburban BMW owners living in McMansions when CWII breaks out.
    3) You bring up the 1:15 historical gold/silver ratio then state that silver may exceed the price of gold. Your logic here (and in huge swaths of this post) is baffling.

    Deadmeat99

    May 17, 2015 at 5:30 pm

    • 1. The Chinese are of the opinion that the 21st Century is theirs for the taking. The only requirement is knocking the dollar off, as the worlds’ reserve currency. Russia is now allied with China, forced into that position by the Obama administration and the obvious American goal of global domination, so this is a defensive response from their perspective. The reality is that with the majority of countries so heavily in debt, anything could cause the cascading default of debt. With banksters heavily leveraged, it doesn’t really matter which country starts it, once running it’ll continue until there isn’t anything left to collapse. The Chinese believe- incorrectly, in my view- that by becoming the new world reserve currency, they can attain the power that the USA enjoyed since the 1920’s. But it won’t work, due to those same debt-loads that all countries are now under (Keynesian economics writ large).

      2. Your point is well taken. The term “winners” here is a relative thing, and mainly with regard to debts. It may not- and probably will not- translate to survival after the currency collapse. We’ll see.

      3. The historical ratio of gold to silver has always been 15:1, due to the fact that this is the same ratio that it comes out of the ground. But gold is not used for anything except money and jewelry, thus it is not “consumed,” in a matter of speaking. Silver, however, has many industrial uses, including being a necessary component for solar panels, and displays for electronic goodies like big-screen TVs and I-phones, etc. After scrapping those goodies when they’re used up, the silver is never recovered. Thus, current estimates state that we’ll run out of all silver in ~8 years, at the current rate, and that the supply of gold is already higher than that of silver. So, in terms of precious-metal rarity, it is not difficult to extrapolate a price parity to gold and even higher, since silver has so many more uses in day-to-day life. Again, I won’t bother with linking; there are plenty of websites you can find easily that go into this particular aspect of PMs.

      I apologize if you find my logic baffling; hopefully you’ll see from my responses that while I may not explain everything in a detailed fashion, there is a “method to the madness” that I’ve posted. Thanks for the questions, and I hope it’s clearer for you now.

      Eric

      capitalisteric

      May 17, 2015 at 5:46 pm

      • 1) I can’t believe that the Chinese, who as a culture always play the long game, would cripple themselves by taking down the US Dollar. There is no one to replace the US as a trading partner and exports are the name of the game for China. I think instead they are trying to slowly inch away from the US in the event we kill ourselves economically. Their conversion to a gold-backed currency or jockeying to become a reserve currency would be a reaction to events in the United States, not a cause of them.
        3) Silver is a non-entity for nations and central banks, especially in Asia. Gold is what is being bought by the tons by every major nation and stored in central bank vaults as backing for trade (and possibly currency). Silver is a mere industrial metal that, while precious, does not have the cultural and historical significance of gold. Silver is a sideshow that may ride the coattails of gold but I cannot conceive of any scenario where silver is more coveted or valued than gold.

        Deadmeat99

        May 17, 2015 at 8:39 pm

      • I can’t believe that the Chinese, who as a culture always play the long game, would cripple themselves by taking down the US Dollar. There is no one to replace the US as a trading partner and exports are the name of the game for China.

        What you believe or not is pretty much irrelevant. The US is no longer China’s biggest trading partner, and that’s a fact. Which removes the incentive for China to continue accepting the US dollar.

        Silver is a sideshow that may ride the coattails of gold but I cannot conceive of any scenario where silver is more coveted or valued than gold.

        You don’t much about precious metals.

        capitalisteric

        May 18, 2015 at 6:32 pm

      • Gold is used in electronics applications because of its conductivity, ductility, and resistance to corrosion. It is used very sparingly because of its cost, but I wonder if its use in electronics relative to silver might increase if silver became much more expensive.

        Shrugger

        May 19, 2015 at 3:13 am

  11. Dear Capitalist Eric,

    I, along with most others in my shooter group, many from backgrounds and circumstances like me, have been waiting for this collapse to happen every year. Understand that we are not simply ‘trigger fingers’ and not a group of dummies.

    Most of us say the same thing. We fully expected the disaster to come in 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014 and now this year… 2015. Each year it was definitely going to happen.

    All that time we were reading articles similar to yours predicting disaster… but never coming to fruition. With all respect towards you and taking into consideration my personal economic situation has been a disaster so I’m not anyone of knowledge to discuss this other than someone who has an opinion, I disagree with your prediction.

    My wife and I are refugees from Las Vegas and she and her parents from Zimbabwe Africa. You all should know the latter story of Zimbabwe. My in laws got their money out before the SHTF there and moved to South Africa, which is heading for the same conclusion.

    In Las Vegas, we ‘owned’ 14 rental homes and a $600,000 house that we borrowed against and worked our chops off 25 years for.

    I mean worked for.

    My wife was a model in Africa, had bodyguards and servants and had never made a bed in her life, but could still be found with me putting a rock salt finish on a rental home concrete patio at 11 pm on a Friday night all while raising three little ones. All our rentals had small mortgages compared to everyone else as our goal was to have them paid off entirely by 2011 and we were more than half way there.

    They suddenly became worth about 25% and stayed around that level for the next 9 years. Las Vegas still hasn’t recovered despite the bright lights still being on, unless you can call 80,000 houses sitting empty and being paid for with TARP funds, recovery. If you disagree with that, you are buying into their bullshit.

    In fact, our domicile home sold for $206,000 eight months after we walked from it and got that price only because we spent a lot of our sweat and much money to make it as nice as it was.

    Rental house monthly’s turned to evictions because tenants couldn’t pay and rents went to shit. How are you supposed ‘slide’ with those tenants you cared about when they had no income. How are you supposed to work with that, for months on end?

    We were screwed despite owning at a very nice home we lived in and being very prudent with our money as we still owed mortgages and had debt. Unlike banks whose executives made disastrous decisions and who don’t have the business acumen to run a “for pay shit house,” they got paid huge bonuses for their incompetence and we, like most there, suffered a wipe out.

    Enough whining. Dry your tears.

    Zimbabwe is now a functioning economy again because of massive investment by China. Their former currency, the Zimbabwe Dollar, is defunct and unofficially replaced by the American Dollar and Yuan. Everyone with their butt into Zimbo Dollars lost every accumulated dollar’s worth of equity and value, be it real estate, savings or pensions. You can buy 100 Trillion Dollar Zimbabwe bank notes on EBay for $6.

    Gianormous and draconian controls were instituted by the governments (yes, the white government before the communists also, as currency controls have no ideology) and despite the talents of the citizenry in getting their money out of the country into safe currency, almost everyone, black and white, became financial hostages and destroyed. I lived there and could write a book on how crafty people are in devising schemes to sneak money out of a country locked down like that.

    If you ever fly into Harare Zimbabwe, look out the window as your airplane is on approach. You’ll see hundreds of yacht shells in every stage of completion in every back yard. Back then it was, mortgage your home to the max, build a concrete yacht shell and install the most exquisite woodwork and fixtures. Load all that means anything to you in life in the yacht’s hold, then truck transport the yacht to Durban, South Africa, walk away from your home, sail to New Zealand, sell the yacht for $400,000, buy a sheep farm, live happily ever after.

    So, now you know how to escape with what you worked so hard for here. You can mortgage your home, build an expensive yacht in your back yard, take it to Long Beach, CA and sail to, uh, well, that’s the problem now. Everyone is headed for the same level of misery, so sail to where?

    But the Zimbabwe economy still marches on and in fact is improving. We actually know a few fools born and raised there who had left that disaster and are now returning.

    I may be a financial and economics moron compared to you Eric, but my belief is that the world elitists who control the bankers, military and governments of ALL countries, will SLOWLY destroy our remaining American standard of living without creating massive unrest or a civil war here or economic disaster in the world. Americans have trillions in 401 savings and massive amounts of money that ‘our government’ can ‘manage’ for Americans, propping up this economy and paying the government ‘infinity of debts’ almost to no end. They will manage this 401 money like they managed Social Security. And the beat will go on.

    I believe that the world elitists will have international governments and banks work TOGETHER behind the scenes worldwide to keep an economic disaster from occurring, simply by cooperation and computer entries into the monetary systems of the world.

    While keeping things afloat, the lifestyle and independent thought and civil rights of Americans will slowly be destroyed as Americans are the last obstacle to complete control of the ‘cattle yards’ the elitists want. And don’t forget the localized wars, Breaking Bads and Bruce Jenner’s sex change that they will put front and center on the stage to also keep us entertained and preoccupied.

    Yes, I do agree with you that at some point the misery experienced by Americans will reach a level described by you. But I no longer think that there will be a massive confrontation of the powers to be by Americans, and when the critical mass of civil war does appear, there will not be enough real American left to fight the fight. They are four steps ahead of everyone. Keep listening to Fox News. Fox is different!?

    As much as I’ve rambled, my group still practices for disaster and self protection. We will never forget the “Las Vegas” experience each one of has had. I think you’re wrong Eric… I hope you’re wrong… I pray you’re wrong.

    Jackal

    May 17, 2015 at 6:47 pm

  12. Jackal, tell us more about wealth exfiltration techniques. We’re all ears.

    I’m like a lot of other folks here. I’ve been wondering just how high the Powers That Be can stack crap before it inevitably collapses. Apparently they have a lot of skill because it’s getting deeper than just about anyone ever imagined. I attribute a lot of that to the NLP programming and psychological conditioning exerted through the mass media by the PTB to extend the population’s normalcy bias to now fantastical extremes of cognitive dissonance.

    One thing I’ve noticed in every single EOTWAWKI post or article I’ve read is the failure to take all the US government’s income sources into account. Specifically I’m talking about oil and gas revenue. The federal government makes more money off of taxing natural resources than any other entity involved in bringing those resources to market. The .gov has none of the expense overhead either unless you count the trivial outlays for clerks who keep track of payments and the armed goon squads to enforce things. Every month Drudge posts that the FedGov has broken a new record for taking in tax revenues. What effect will this have on calculating when the wheels come off the economic bus? I can’t help but to think it will extend them A LOT longer if not for several more generations. I say that now because if you look at the REAL average intelligence/education level of the population the facts and trends are very, very grim indeed.

    I’m wondering if, instead of a total or very precipitous collapse, this country and probably western Europe become something of a hybrid Orwellian slum kingdom modeled after Saudi Arabia or any of the other dictatorial oil rich countries. Sure massive protests and unrest can and will happen. The government is banking on it’s ability to control/censor the media and other common means of communication. I strongly suspect that this summer will be a learning field exercise for the PTB to try and test these new techniques. If you have been paying attention you’ve already seen hints of these in other recent protests and events like Bundy, NV, Baltimore, Ferguson, etc… Activists complain of cell phones behaving erratically, getting bogus or psyop calls, getting messages from friends that turn out to be misleading or entrapment, etc… The .gov is also exploiting social networking and the Internet the same ways to exert control. Persistent aerial surveillance drones and planes are being used to record events and then pay 3 am visits to rabble rousers. Meanwhile in the mainstream press you hear not one peep of this reality. Even the victims are threatened into silence under threats of prison for violating “national security” or an ongoing investigation like they have done in the ongoing pogrom against conservative activists in Wisconsin who are being SWATed in midnight raids over alleged campaign financing irregularities.

    I can imagine in a few years things will have slid far enough down the rabbit hole that whole towns will be blacked out, cordoned off, and cleansed either partially or in totality from the face of the Earth. Meanwhile everywhere else life goes on one more squalid struggle of a day after another. Scoff if you like. The Russians and Chinese have been successfully doing so for at least the past 90 or so years.

    Look into the Chinese rocket explosion in the late 1990s when they hadn’t quite figured out all the new information that Bill Clinton gave them in return for their campaign pledges and help. A couple of villages just went *POOF!* and have never been seen, heard, or spoken much of again.

    The Macallan

    May 18, 2015 at 9:17 pm

    • Holy snikees Eric!

      Despite the differences of opinion… isn’t it amazing all the clowns that take a shot at what you put out on the internet.

      Makes you feel like a shot up target at the range.

      You illustrate some interesting scenarios… and you may be right.

      What will happen with silver if society goes cashless?

      Would like to communicate off your forum.

      Clown # 352
      Jackal
      JCL Para Commando at gee male period com

      Jackal

      May 23, 2015 at 10:15 pm

  13. […] reiterate from my last post, the banks and our alleged “representatives” are working to outlaw cash, make it so […]

  14. Great article. ..

    Ryan

    July 3, 2015 at 6:33 am

  15. I doubt that the government can be doing a good job, but we do have an open or freely traded gold market. The price of gold IS the value of gold. I can sell you some any day…

    The value or price of something is what people will pay for it. Period. There is no suppression of the gold price or dollar in terms of gold. What did happen is, long ago the government went off the gold standard and the start of the end of the reliability of US currency arrived. The dollar is now worth 1/20th or less what it was in the last century. Effectively, it is theft. Price of bread now? Maybe 4.00. 20 th century? 20 cents. Wake up people… we need smart smart people in office not people we like. I recommend voting for successful, high IQ private business owners, not people who went to public university and succeeded in the public arena.

    In public school one will be taught ideas and values that will continue and increase the spending and taxation, yes, confiscation, from the entire public for the benefit of public employees, such as teachers, and that sector. This weakens the nation and economy as the takers and government spending expand at the expense of the makers and healthy economy. Incidently, by allowing public employees to vote, and lawmakers to set their own salaries, etc., we have a growing cancer on society. We need to rethink the democratic republic to better protect us all, even you public wage earners. We must not view government as benign but as a necessary evil that, like a gaurd dog, can attack even a friendly neighbor or our children.

    HomeEconime

    August 21, 2015 at 8:59 pm

    • I doubt that the government can be doing a good job, but we do have an open or freely traded gold market. The price of gold IS the value of gold. I can sell you some any day… The value or price of something is what people will pay for it. Period. There is no suppression of the gold price or dollar in terms of gold.

      So sorry, but you’re dead-wrong. At a local level, the price is what a buyer and seller agree to. But at the macroeconomic level, the story is very different. Please read these two articles (here and here), and you’ll see how gold prices are manipulated, and more importantly,

        WHY.

      PCR is a very smart man, who doesn’t push the government propaganda. He’s a straight-shooter, and explains things in a way that most people can easily understand, even if they have no education in economics.

      We need to rethink the democratic republic to better protect us all…

      A common deception taught in public schools. We are NOT a “democratic republic.” We are NOT a democracy. Democracy is two wolves and a sheep voting on what’s for dinner.

      capitalisteric

      August 21, 2015 at 11:28 pm

  16. what happened to the world in the great depression?
    it isn’t hard to recruit desperate unemployed/unemployable people to take their chances in battlefields,especially if they feel the enemy is the one who stole their future.
    besides it wasn’t just SOME bankers and SOME ultrawealthy here screwing us up, MANY political parties were doing anything to get reelected by fools and multiple generation welfare recipients.
    i say the biggest blow was the public just buying cheap shit from walmart and cars made from chinese parts which deindustrialized the entire west-killing our own decent jobs, with of course trade negotiators being steered by geopolitical interests,
    remember starting after ww2 all the small nations across the eurasian continent and in africa getting taken over and/or invaded by sinosoviet backed forces?
    that is the reason why nixon started working with china to -split up that world marxist movement before all of asia was taken or worse ,a cold war turned into a 3rd world war.
    ironic it would be that since the old soviets are still running russia, unelected marxists run the EU and china never did get out from underneath their one party dictatorship-that a western alliance ends up in a third world war with the old marxist sphere after all.
    this article even touched on russia’s and china’s predicament-they won’t have customers to buy their shit anymore-which will pressurize them as well, putting each camp into a new isolation cold war, but with western society having much less to lose.

    dean

    February 3, 2016 at 9:47 am

  17. […] the coming economic collapse, WHY it is happening and what you can do to protect yourself, HERE and HERE. Since the fundamentals haven’t changed, I’m not going to rehash. It’s enough to say, if […]

  18. Coming late to this party……. Eric, I’m a dolt but trying to learn when it comes to this stuff, but so far, you’ve addressed the effects of your snapshot on (a) homeowners who are still in mortgage debt up to their eyeballs, and (b) homeowners who have worked hard to pay down their mortgages. Does your prediction vary at all for people who paid cash for their homes at the outset? We bought our first home in Pasadena, California in July 1999 for $170K, and sold it almost 7 years later in May of 2006 for $530K because we were relocating to Texas with my job. We left California with $300K in cash after having paid off the mortgage and various transaction fees associated with the sale; and paid $220K in cash…..well….a cashier’s check…… for a much larger, nicer, newer home here in Texas. So I haven’t had a mortgage for 10 years now, and I profited considerably more than I paid for the first house. There’s no question I own the home outright, and the only incumbrance upon it is our annual property tax bill.

    How will this pending financial collapse affect people who have owned their homes outright for a significant period of time?

    By the way, I have been stockpiling beans, bullets, and bandages, but arrived late to the idea of buying silver. So while I have some, I need more. At today’s prices, gold is frankly out of my reach. I’m in kind of an either/or situation. If I don’t buy gold, I can afford to buy everything else, silver included, over time. If I DO buy gold, I can’t really afford to do anything else. I have already put aside a few $1000 in cash on hand, and will continue to add to that in small enough increments to stay below the radar. But, my wife and I are now retired, and all of our income derives from various investment accounts from which we occasionally transfer funds into our main checking account….which is when I make the cash withdrawals.

    I wish I had picked up this mindset earlier in life and had the leisure of more time to prep my wife and myself for what’s coming, but I didn’t, and that’s the reality I’m facing. One of our not to distant future goals is the acquisition of rural land which can sustain us.

    Any words of advice?

    Chris

    August 11, 2016 at 1:02 pm

    • Like anything else in life, it comes down to balancing resources against your appetite for risk (whether physical, financial, political or something else). It’s a personal decision for each of us, weighing all the important factors in your own situation. Forgive me, but I’m not qualified to give any advice on such questions.

      capitalisteric

      August 20, 2016 at 5:36 pm


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