There Are 11 Stages of Economic Collapse – Where Are We Now? (+7K Views)

…If we look at the economic collapses of the past, from the fall of the Roman Empire to Weimar Germany to Argentina and Zimbabwe, the pattern is extremely similar. Let’s have a look at that pattern and ask ourselves if the present situation might not play out much the same…[albeit] far worse and more prolonged [this time round], as the conditions that led to this particular depression have been more extreme.

So says Jeff Thomas (internationalman.com) in edited excerpts from his original article* entitled 11 Stages of the Crash.

The following article is presented by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (sample here) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.

Thomas goes on to say in further edited excerpts:

While the various stages in every major economic collapse are likely to be a given, the various factors within each stage are a bit more uncertain although some combination of these factors always take place. Also, consider that the stages themselves are like dominoes [in that] they almost always fall in order… [because, while] details change in history, human nature remains the same. The same knee-jerk reactions by people will repeat themselves over and over.

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:

1. to avoid a painful real solution, and
2. 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.)

11) REVOLUTION

If revolution is to occur, it will happen at this point. Many people will feel that they have nothing to lose, and anger will be at its peak. If revolution does take place, it will not be an organized movement as such. It will be spontaneous, and breakouts will manifest themselves like popcorn popping, largely at random, with ever-increasing frequency. At some point, it may possibly evolve into something more organized.

Editor’s Note: It’s not all doom and gloom; the world is your oyster, and there are very attractive jurisdictions that are cause for optimism and that’s what International Man is all about—making the most of your personal freedom and financial opportunity around the world.

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://www.internationalman.com/articles/after-the-storm-the-11-stages-of-the-crash

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