VANITY: What happens when an economy collapses? (Just for conversational purposes)

Vanity | 3-27-2010 | Vanity

[OKSooner]

Here's a question to open up conversation today:

What happens when an economy collapses?

Okay, hyperinflation causes money to no longer be worth even the paper it's printed on.

[madison10]

This isn't where I got the idea from, but it backs it up: What or Who is Driving up Prices?.

Here's what Mr. Biderman had to say: 'We cannot identify the source of the money that pushed stock prices up so far so fast.' More specifically, the source of about $600 billion net new cash necessary to lift the market's overall capitalization by $6 trillion last year could not be identified.'

Biderman continues, 'We know that the U.S. government has spent hundreds of billions of dollars to support the auto industry, the housing market and the banks and brokers. Why not support the stock market as well? The money did not come from traditional players.

One way to manipulate the stock market would be for the Fed or the Treasury to buy a nominal $60 to $70 billion of S&P 500 stock futures each month for as long as necessary. Depending on margin levels, as little as $5 billion to $15 billion per month was all that was necessary to lift the S&P 500 by 67% (statement was made on January 6, 2010).'

[madison10]

Sorry didn't get link to work: ETF Guide

[Nuc1]

This is when you will know the Republic is truly finished. This is the classic decay pattern of a republic. It is possible that the Strong Man will be magnanimous and restore the constitutional foundation of the nation and round up and eliminate its enemies, as did Chile under General Augusto Pinochet. There by giving birth to the Second Republic. Unfortunately the fundamental problem with our nation is its people. Far too many are immoral takers that give too little back in terms of work and wealth generation. This group of people are not capable of self government. They are essentially thieves. So an oligarchy is the more likely outcome IMHO.

[Oatka]

You are callin’ Central Virginia “down here?”
Hell brother, from where I sit, you are next-door nighbors to the Yankees!
(Just funnin’ you.)

Years ago, Readers Digest had a bit about "The Disappearing Yankee":
In Georgia, it was anybody north of them
In Virginia, it was anybody north of them
In Pennsylvania, it was anybody from New England
In New England, it was anybody from New Hampshire
In New Hampshire it was anybody from Vermont
In Vermont, it was anybody who ate pie on Sunday

[ClearCase_guy]

I do agree. On the other hand, a "worst case scenario" may be a massive die-off in the US in which the only survivors are self-reliant people who want the rest of society to just leave them the hell alone.

Did I say "worst case"?

[matginzac]

One congress critter (dim) actually raised a question abt the market manipulation that caused the “sudden crash” in Sept but was shut up real fast - can’t remember the dude’s name - the culprit was someone who had LOTS of dough who could put the screws to things very fast internationally - suspects were Soros and friends...

[matginzac]

Amen to that, patriot - from Tidewater VA

[matginzac]

Oh, boy - yurts and cow pies - I’m THERE!!!!!

[Tijeras_Slim]

So an oligarchy is the more likely outcome IMHO.

The argument could be made that we are already there with a incestuous top tier of governmental and business kleptocrats feeding unhindered at the public trough.

[matginzac]

‘We cannot identify the source of the money that pushed stock prices up so far so fast.’

Aha!!!!
The rats are international commies and very dangerous....
Remember, when Obummer decided not to take fed funds for his campaign, he had beaucoup bucks (all in small amts) raised from international sources...hmmm...

[mel]

Yes, I think that will be a closer model of what will happen, i am going to revist that time. thanks for reminding me.
melissa

[greeneyes]

The market had already factored in the likely passage of Obama care. There was no restraint on prices, hence Insurance companies stand to gain temporarily from influx of new customers, and ability to raise premiums. Hence, many insurance stocks rose.

[katykelly]

for later

[lucky american]

When Americans realize that their only tangible assets or “dollars” are only zeros on someones computer screen. Do you believe that will be deflationary?

If this government collapses, and people start taking their money out of their accounts, and find there is none. Do you really believe that will be deflationary?

Do you really believe that there are enough “dollars” to cover all of the money owed?

[lucky american]

Because insurance companies are set up to make billions on young and healthy clients. (able to pay many years without getting too much). Insurance stocks skyrocketed on Tuesday.

[AEMILIUS PAULUS]

When it is finally realized that the dollar is worthless there will be widespread misery by today’s standards. People will start to engage in barter to alleviate hunger. There will be some fighting in the streets. There have been many periods in history where currency collapse occurred; i.e. The United States at the end of the Revolution, France before their Revolution, Germany in the 1920’s. Simply read up on what happened during the aforementioned periods.

[TheDon]

Read up on the Great Depression.

[LongElegantLegs]

For later

[politicket]

But the currency would be worthless as it is established on the good credit of the U.S., which no longer exists.

That's not true. The currency will gain strength since there will be less of it.

Also, as bad as people think the US is situated, Europe is a lot worse. Fiat currencies hold "relative" values to each other. The US dollar will be desired by others.

Did you know that approximately 2/3rds of all physical US currency is currently held overseas? People trust it more than their own currencies.

[politicket]

Another factor to consider is that while things like housing may become cheap, holding on to that house may become quite expensive. Expect property taxes to increase substantially, as governments attempt to squeeze whatever is left.

This is true, especially if people hold mortgage loans. All loans will become harder to pay, due to reduced wages and benefits.