The Collapse is the Easy Part


by John Galt
May 31, 2012 23:00 ET


Throughout the recent five years of American economic, political, and Constitutional crises the world chugged along with winners and losers selected by fate and foolishness as the erosion of our modern civilization continued from within. This system crash at all levels, morality, financial structure, religion, politics, and the viability of the nations impacted from this disaster is going to lead to some extremely long term changes in the world, some of which will shock the unprepared, and kill the unaware. There is, however, some good news:


The collapse is the easy part.


If one takes a moment to review modern history, the realization that the statement above is not a concoction of a historian from the skeptical point of view, but one of reality. The American people have been living in a bubble since 1991, created by politicians who over reacted to a garden variety slowdown in the business cycle by pressuring a then scheming Alan Greenspan into finding new ways to use the power of the Federal Reserve banking system to inflate and expand economic activity. Based on the charts below, the efforts of the political and financial elites was a resounding success until the end of the century.



Unfortunately for the proverbial powers that be, the effectiveness wore off when the bubble popped in 1999 and the theory that perpetual printing will cure all is beginning to lose out to the forces of natural business cycles, deleveraging, and economics.  Eventually, as consumers ran out of money and earnings failed to keep pace with real inflation as opposed to the hedonically manipulated C.P.I., the velocity of money began to decline which meant that credit was collapsing not just at the consumer level, but across the economy as a whole. The chart below continues to verify this decline.



Thus every effort to avert a deflationary economic depression has been met with half measures of so-called “Quantitative Easing” which has done nothing to offset deflationary pressure but instead created price inflation in the face of a continuing economic contraction. The Federal Reserve has put itself into a liquidity trap with none of the benefits from monetary printing filtering beyond the banking sector and into the general economy. If in fact this had worked according to theory, the graph above would continued with a move back above the 1.7 level; instead it has collapsed to the lowest levels in over twenty years. Yet this little tidbit is comforting in the fact that it only indicates a greater risk of economic collapse without providing a timetable or the consequences thereof.


In Europe, Greece is the closest example to a complete collapse in its government, economy, and as a result civilization. Middle class citizens have been wiped out financially. Families are abandoning pets in record numbers and children in lower, yet expanding numbers. The dramatic suicides are now becoming an almost daily occurrence with each event drawing more and more attention to the futility of thinking that there is a pension or retirement program for the elderly to rely on. The collapse has not hit Greece at this time, it is just now beginning to accelerate. The election on June 17th will determine its future and if the powers in charge are able to work with the financial elites and rig the election, odds are the transition will be worse as the European Commission attempts to paint a happy face on to a revolution. The revolt that can be expected in Greece will eventually follow in Ireland, Cyprus, Hungary, the rest of the Balkans and possibly even Italy and Spain.


When that happens, then the crisis hits America square in the eyes, causing a chain of irreversible events that will reverberate around the world back to the source causing even greater conflict and disruption. Then and only then can we call it a “collapse” in the true sense of the word.


How would such an event look to the average U.S. citizen comfortably tucked in their insulated video game on-demand movie world with guaranteed government benefits and little risk ever endured in their life beyond perhaps an amusement park ride?


Imagine a world where elderly parents commit suicide so the children will have some properties and material to inherit so they might have the ability to survive just a little bit longer.


Imagine a time where seven year old children are abandoned by their parents on the side of the road with the family pets so some selfish yuppies can maintain the facade of their prior lifestyle.


Imagine an era of American evil where neighbor turns against neighbor to benefit themselves by creating and bearing false witness against them so they may be rewarded by the state, much like the inhabitants of the old Soviet bloc.


Imagine one meal per day of 1000 calories to survive.


This might sound mildly horrific to some and comical to others, but the truth is as Americans are put on the street and forced to endure the hardships that other Americans did during the Great Depressions of our past, the political class will promise solutions designed to create a more solidified authoritarian state to lock in their power and wealth to the exclusion of others. The fact that individuals continue to claim that this can not happen here have failed to watch the deterioration of our freedoms and the willingness of the average soul to fight for them. The consequences of decades of inaction and selfish desire to preserve each citizen’s middle class McMansion fiefdom will supersede the Constitution because the government has ensured that Americans no longer review history or civics and thus the desire to preserve it.


Yet this is not the total collapse, this is still the easy part.


The hard facts which will emerge on the other side after a grand reset then trial and tribulation is the most difficult concept for most individuals to wrap their minds around. Throughout history this event has occurred over and over again, yet the same if not worse mistakes are made as societies emerge to the proverbial “other side.” Think about the prior collapses of major societies in recent history and the results:


In 1917, a Russian monarchy gave way to a Communist dictatorship. While the former was evil, corrupt, and incapable of exploiting the nation’s vast resources to recognize the era of the monarchies was coming to a close, the alternative as history has judged, was far worse committing and creating standards for atrocities that terrify sane men to this day.


In 1920’s Italy, the post war economic implosion opened the door to a quasi-Socialist who learned how to manipulate the media and financial elites to achieve power and introduce a reign that eventually killed thousands of his countrymen in a fruitless series of wars and eventual defeat. The ego of a dictator knows no bounds as fascism was an honorable term in both Europe and the U.S. at that time.


In 1920’s to 1930’s Germany, a Weimar Republic emerged, barely blunting the concepts of Marxism but eventually falling to National Socialism which killed millions and set the stage for the Pax Americana. Sadly the peace has been squandered.


In 1930’s America, the visions of a President with an obvious abhorrence for the U.S. Constitution and the rule of law lead to a dictatorship of “democracy” which almost destroyed the nation without external assistance. Thankfully some brave souls stood against this onslaught and prevented the collapse from expanding to the nation’s heart and soul saving the U.S. from a hybrid Italian-Germanic model of total dictatorship despite the 1932-1935 attempts to rule via edict and Executive Order.


In 1947 China, a nation was formed from nation states under the guise of “Communist Liberation Ideology” as I like to call it and the end results was a state which perfected the art of genocide so efficiently that even the Soviet Union was horrified.


The list is endless with example after example from Latin America to Africa and around the world again but the point is that the collapse while painful will not be the hardship that everyone envisions. The people who have prepared for such an event will survive and perhaps thrive for a period of time during the anarchy and chaos which may reign supreme in their part of the country. This will give way to a new, highly technocratic police state in some nations but I fear in others a perpetual state of civil war could occur; encouraged by outside influences so as to distract the domestic populations from their own hardships.


No matter what we witness, what happens in the weeks, months, and years ahead the title of this article should provide some assurance that each and every day which passes now could be construed as the good old days.


As tomorrow could be the nightmare others call dreams, and freedom a fleeting memory only in our hearts.


2 Comments on "The Collapse is the Easy Part"

  1. jcwatson | 01/06/2012 at 10:32 |

    I find some of the articles views to be slightly off, but not incorrect, but rather just lacking the full context of cause and effect. The underlying cause for our economic problems have their roots in the formation of the Federal Reserve and the fiat currency system we employ! Richard Nixon and the congress that took the Dollar off the gold standard [internationally] is a bit part of the cause.
    Going back to the original cause is ending the gold standard internally under FDR which was only possible because of the Federal Reserve Act. [so blame Woodrow Wilson and his congress]

  2. monkbiker | 02/06/2012 at 10:09 |

    It’s been said (more or less) that when people discover they can vote goodies for themselves out of the public treasury that that society is at an end. There are more ‘takers’ than ‘givers’; more and more people pay no taxes at all and the wealthiest individuals and corporations use tax loopholes to benefit themselves. This is destroying the middle class. Meanwhile unions drive entire industries out of business or make them uncompetitive. There are no easy answers and I’m certainly no expert but it seems to me that dumping the current tax code and replacing it with either a Flat Tax or Nat’l Sales Tax (with a cap!!) would be a good place to start. If EVERYBODY had to pay a Flat Income Tax of (pick a number, 10%? 15%?)a given rate then everybody’s got “skin in the game” is more likely to object to wasteful gov’t spending. Unions need to be brought to heel so they’re not killing the very businesses and organizations their members are serving. And public welfare programs should be means-tested. If you’re able to work then you should work. If you need gov’t assistance then you should also be providing some sort of service to your community. How about scrubbing graffiti or filling in potholes or sweeping streets or washing windows? We have entire GENERATIONS of families who collect public benefits and the number grows higher every year. We’ll be right where Portugal, Ireland, Italy, Greece and Spain are before much longer.

Comments are closed.

%d bloggers like this: