You could argue that we are already 6 months into a shattered economy. Towards the end of March nearly half of the nation was in some form of lockdown. From that moment the wheels of the economy began to grind to a halt.
Most Americans assumed that by the summer we would be firing the economy back up, people would be spending hard on big vacations after being locked up and the economy would bounce right back. Now we are back to making tough decisions as the first wave of COVID-19 creeps into new places and cases spike as people peek out into the world to see if all is clear.
In 1929 the ball started rolling on the great depression. Hoover came to power and took little action to assure the economy would remain sound.
It was clear that the stock market had peaked, and the roaring 20s growth had reached its limits
By 1930 Hoover was imposing greater tariffs on foreign nations which started to collapse international trade. There were massive bank failures that year and some of the nation’s biggest banks and their affiliates, many did not belong to the Fed. This meant they had to survive on their own cash reserves. Bank runs soon followed.
The first year into The Great Depression was punctuated by the Dust Bowl which was a tremendous drought that stymied food production in the nation. 23 states were affected and even farmers themselves were going hungry!
By the way, did you know that congress bailed out the banks in 1932 to the tune of 2 BILLION dollars! It is estimated that would have been a 30-Billion-dollar bailout in today’s money. Sound familiar?
Never has the world been run by a benevolent superpower. Just think about that for a moment. America is not out conquering, in the literal sense. Let’s not get into the semantics. We help people. We give money, we give our doctors, we render aid and we promote democracy. It may never be better than this.
America could be the first and last benevolent superpower on the planet.
If we face a longer period of economic depression there is no doubt that the world will suffer right along side us. Depressions lead to isolationist thinking. In 1931 Great Britain became the first nation to abandon the gold standard and abandoned their role as the world’s major international lender.
A world pressed into isolationist thinking will eventually result in war. The isolationist policies of the US, following the Great Depression, kept America away from WWII until Pearl Harbor. However, similar thinking lead to Japan moving into China and Germany into Poland.
The US Dollar
The state of the US dollar is an interesting thing because its value is all about confidence. Its about confidence in the constant progress and growth of the United States.
For years I have been listening to a mixture of scoundrels and economists, sometimes one in the same, proclaim that the death of the dollar was just around the corner.
Our nation has been burning through dollars as though its value were some strain of Pandemic more deadly than the Spanish Flu that needs to be burned out before it can spread.
We are pumping money into the banks, businesses and even the taxpayers are getting a sliver to assure they keep the machine alive.
If the rotors on the US economy were to slow down even more and imports dropped substantially, confidence in the US dollar would undoubtedly falter. Add to that a growing civil unrest in the streets and a government struggling to control it. It’s easy to see how other nations might present their currency as a viable replacement to the once unstoppable US dollar.
Of course, this would lead to real inflation and the nightmare we all hope to avoid.
As we speak there are serious food shortages affecting our nation.
The supermarkets are doing their absolute best to keep up with it but if the supply is not there than there is not much you can do. People are eating at home like never, in recent times, and many industries are struggling.
The largest brand in beverages addressed their issues on a social media platform:
“We are seeing greater demand for products consumed at home & taking measures to adapt, working to mitigate the challenge during this unprecedented time. We appreciate your loyalty to our beverages; please know that we’re working hard to keep the products you love on the shelves.”
You have seen the shelves yourself. Despite the fact that less people are working, and less people are traveling, there is less food than ever.
Big names like Conagra, General Mills and even Campbells Soup are working overtime to meet demand but falling short.
The streets are already alive on the topics of inequality and capitalism. I read that 1/3 of all restaurants in LA are going under no matter what happens. To understand the effect that has on the economy you must look at the restaurant supply chain on a hole.
1/3 of the employees in that market never go back to work, 1/3 of the orders placed by restaurants for food and other supplies will disappear affecting an already ailing restaurant supply industry.
This works its way back to factories and farms. A tsunami of layoffs and closures rushes through the restaurant supply chain.
This is just one industry.
People have to work. When people don’t have work and they don’t have money they go into the streets. They go there for answers. They hold up signs or burn down buildings. Depending on how bad it gets and how long it lasts, they might run up into homes and take what they need.
Civility in our nation will be at a breaking point if our economy suffers for a full year.
We like to think that our love and our families will get us through the hardest times. That might be true for some, but it has hardly been true for all through this lockdown and subsequent civil unrest. There has been a spike in all kinds of destructive behavior.
We saw domestic violence up as much as 27 percent through May. Drug overdoses also saw a significant spike. Divorces and custody battles were just another example of how being locked down and out of work can affect the family dynamic.
Those numbers came from just 2 months of struggle. Imagine what it would look like if people were out of work for a longer period!
A second American Depression would undoubtedly send the world at large into a tailspin. We buy everything! To be frank. Our tourism dollars are precious, and these are just examples of what we do from a consumerist perspective.
There is a chance other powers would step into the fold to take advantage of a weakened America. Would China finally have their chance? While it sounds like a nice plot, they stand to lose the most from an American Depression!
The time has come for you to build your own economies. You need local suppliers and businesses that you and yours can sustain through this dark time. It is a time for self-reliance and independence. It is a time for preppers to take advantage of all their hard work.
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