Free - Beyond Collapse

Wednesday, December 17, 2014

Economic Collapse – This is What It Looks Like

Guest Post by John Little -

People always want to talk about a conspiracy, whenever things go bad. That is completely understandable, and there is some truth to it.

However, not everything is a conspiracy. Some events occur naturally, and you will find the most conspiracy amongst those who are trying to avoid that which is natural.

I like to think of it as jockying for the best position in the lifeboat.

Yes, there IS a conspiracy, and the conspirators are a foul, evil bunch that God is going to knock down, but that is a discussion for another day.

Now, where was I… oh yes …economic collapse.

Economic Collapse

An economic collapse comes from you and me. We Little people are the cause. (And yes, my last name really is Little.) And, we cause this economic collapse by the choices that we make.
When you don’t have very much money…

…you buy less.

When your neighbor loses his job, you get scared about your own job, and start saving money. Of course, saving money means…

…you buy less.

When you retire from your job…

…you buy less.

When healthcare costs go up…

…you buy less.

And, when you buy less… those who produce the stuff you buy… well …THEY also are forced to buy less.


Who do Americans buy from?


And, America is China’s biggest trading partner. So, when America buys less stuff from China… well …the Chinese buy less stuff from everyone else.

What do the Chinese normally buy?

From Saudi Arabia.

Saudi Arabia

China buys other stuff, but oil is a big one. And when Chinese companies have fewer orders, they consume less oil. Those companies also lay off their workers, which means that those workers ALSO consume less oil.
…and so on… 

…and so forth.

The next question is…
What does Saudi Arabia do about this?

Well, they ultimately find themselves with lots of extra oil, because China isn’t buying it. This means that they need to offer that extra oil to others. However, those ‘others’ won’t buy it for the same price that China is buying it for.

So, what does Saudi Arabia do?

They lower the price until people start buying.
They could lower production, and Saudi Arabia has done that in the past. But, the results of lowering production was a loss of market share, and they don’t want to do that this time. Also, the king of Saudi Arabia is on his last legs, and his vile little kingdom is in trouble.
So, to keep the masses happy and unwilling to revolt, the Saudis want to keep pumping their oil.
As Shakespeare said:

Uneasy lies the head that wears a crown.Henry IV

Please remember also that the Saudis have not increased production. All that they have done is maintain their production at previous levels. To put it another way, the only thing that the Saudis have done is… nothing.
Those of you who think that the Saudis have lowered their prices for any number of conspiratorial reasons are missing the point. The Saudis haven’t lowered their prices.
You have.

YOU are buying less oil, so they have no choice.

Remember this quote from the Washington AP bureau chief, in 1932:
All politics is localByron Price
(NOT Tip O’Neill)

The Saudi king is far more interested in his own ability to survive for the next few years than in destroying US shale oil production, hurting Russian hegemony or taking a whack at Iran. Yes, all of those oil producers are going to hurt, but the main focus of the Saudis is keeping their people from rising up and throwing them out of power.
Really. They hate that.


Unfortunately, this puts Russia in something of a bind, since half of all their income comes from petroleum and natural gas production. This means that Russia will not be able to fulfill all the promises that they have made. Lots of those promises were made to people outside of Russia, and lot of those promises were made to people inside Russia.
All politics is local

So, you can guess which promises that Russia is going to break:
The ones made to non-Russians.

Now, Russia is going to work hard to keep from breaking those promises, but she will ultimately be forced to.
What are those promises that Russia is going to break?

Bonds sold to foreigners.

Why ouch?

Financial Organizations

Because banks and institutional investors hold those bonds. And worse, there are lots of derivatives swimming around, ready to bite somebody. If enough banks and institutional investors get hurt by all this…

Well, do you know what happens when banks and investors get hurt?

They sell stuff. Lots of stuff.

This causes the price for ‘stuff’ to fall. Those investors who own the same ‘stuff’ lose money, and THEY are also forced to sell – especially those who bought investments using debt, also known as ‘margin’.

Have you ever heard of a margin call?

Yup. We’re going to get lots of those. And THAT means a collapse of the US stock market, bond market and… well …a LOT of other stuff.

It will be a ‘domino effect’ and it will sweep away a huge number of people that still have their money in financial institutions of ANY kind.
That means YOU.


If you have ANY money in an insurance policy, 401K, IRA, bank or any other company or organization… you will lose ALL of it over the coming months, if you do not get it out.

And, you will get NO warning.

Well, actually, that’s not true. What I’m telling you now is a warning. And, I’ve given you lots and lots of warnings in the past. And, you might have a couple more warnings before we’re done. But, it’s hard to say what your LAST warning will be.

Please. Do NOT try to figure out what or when your last warning will be. It will hit you when you least expect it, which is what the US government wants. They do NOT want you forewarned.

Please take your money out now, and buy something of tangible value. My preference is silver, followed by gold. But, you might think that something else will hold its value in the coming collapse. Food, water, ammunition and Bibles come to mind.
But, whatever you buy, it must be something that will hold its value in a collapse situation – which means that someone will want to buy it from you for at least a high fraction of the price you paid for it.

I really wish that this was some half-baked conspiracy theory that we could all wave away, but it isn’t. This is life and death.
And you are NOT ready for this.

I truly hope that you’ll be ready for this
(That’s a link. There’s not much time left.)

A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.Proverbs 22:3
note – I am not offering financial or disaster preparation advice in a professional capacity. These are merely my own thoughts on what I would do in these situations.
If you find a flaw in my reasoning, have a question, or wish to add your own viewpoint, leave a comment on the website. Your input is truly welcome.

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