if the USD world financial/ economic sytem fell apart ?

What would be the outcomes if the USD world financial / economic system fell apart?
In case you think these outcomes are exaggerated, these are the things that happened after the French Revolution, the fall of the Roman Empire, The fall of the Spanish Empire, the Fall of Byzantium, the fall of the British Empire… etc.

The fall of the US economic system, the world USD system, and the US as a superpower won't be any different. Also, a lot of these outcomes happened during and after the Great Depression of the 1930's.

That all happened commensurate with the decline and fall of the British Empire and Pound that dominated world economies for 200 years, and eventually led to the USD system taking prominence after WW2 and the USD was used to stabilize the European currencies during the war.


Supposing the USD devalued by over 50 to 70% in a year's time, after endless attempts to save a collapsing world consumer credit economy, we may see:* First of all, the savings of the US would drop drastically in value.


That means everything from savings accounts to pensions would lose much purchasing power, and prices of every necessity would skyrocket.* Second, our major trade partner's economies would have to do massive readjustments. They are not in a good position to do that. We can take the present rapidly spreading economic weakness of the EU zone as an example. Asia will not escape either.


They will desperately try to keep their currencies from strengthening too much at first as the USD falls. This is why the USD seems to have 9 lives. These attempts to debase along with the USD allow the USD to stay higher than it would.*


World inflation will spiral out of control, lowering standards of living. Other major currencies such as the Euro and Yen will be heavily pressured as well. Until the world figures out how to actually delink from an imploding US economy, they will suffer along with the US's fate. So far, the delink theory has been shown to be completely wrong. Why? Because the world economy is tied at the hip to the USD (The delink theory is that other strong economies of Asia or the EU will be able to carry the world economy even if the US economy falls apart.


So far, that has been completely discredited in this latest world economic slowdown).* Big geopolitical turmoil as regimes combat out of control food and fuel prices.* A war in the Middle East over oil. The Iran / Israel situation might also be called a proxy war/struggle over Mid East influence for China, the US, Russia, the EU, and Asia because energy is so expensive.*


A very possible period of insurrection, riots, shortages, and chaos in large US cities. I also believe that the EU and China and India are at risk for this too.* A 10 year world economic depression, that China in particular cannot tolerate, as the world economy readjusts out of necessity into a totally new form, one that is less global and probably more warlike.* Debt deflation where a rapidly dropping USD effectively wipes out outstanding debts, while the population struggles merely to exist.*


Vast bank failures in the US and major Western economies, and likely China as well.* Efforts of world central banks to ‘bail out' ‘everything' resulting in their currencies falling drastically in value while inflation skyrockets, until either they learn better, or have hyperinflation and their own currency collapses after the USD falls apart.


In effect they will have to either ‘let go' of the USD or suffer the same fate.* Stock markets at 10% of where they are now in 3 or 4 years if the USD actually lets go by 50% or more in 09 (nominal stock prices might actually stay higher but the devaluation of the currencies would effectively cut the purchasing power in half anyway.)* Prices of most essentials effectively 4 times higher, worldwide.* Big increases in energy and food prices causes many other sectors of world economies to fall apart, as all ‘money' is used merely to survive.*


Gold at $3000to $5000 plus and oil at $300 plus putting a further huge crimp on world economic growth. Obviously if the USD did a real collapse, say to 10% of its purchasing power now over several years, gold is over $10,000 and in some areas you will buy a decent house for one ounce of gold. Oil will be traded/priced in other currencies, and probably rationed in the US at a cost of $20 or more a gallon. In this case, the present world economy that depends on cheap transportation totally devolves.


Globalization becomes de-Globalization, and China either figures out how to migrate to its own domestic demand or faces a huge collapse of their export economy.* Severe world currency restrictions and foreign exchange controls. You won't be able to move your money out of your country. Likely restrictions of withdrawals to monthly limits from bank accounts as governments attempt to deal with currency chaos.*


Rationing of necessities as the world economy enters paralysis and governments have no choice.* One bright spot for all, the return of employment to local instead of outsourcing. Production and consumption returns to local economies, as it should have been all along. That is a long 20 year process and involves a severe deep economic depression until the world economies/economy is rebuilt from scratch compared to what it is now. Debt repudiation on a massive scale as the world emerges from the ashes (hopefully not real ashes…)*


Many new governments worldwide after revolutions during economic collapses and or wars. Democracies falter worldwide, and more authoritarian governments appear to deal with the chaos as the democracies enter paralysis.http://marketoracle.co.uk/Article5509.html Read more on this article...
Posted by Pithaly at 9:19 AM 0 comments