(Image created by me)
While you’ll have to react appropriately to any financial meltdown, different scenarios can mean different things. Moreover, your immediate location will also have a significant impact on not only how you react to a disaster, but the threats you’ll face when the economy takes that final tumble and evaporates like morning mist in the sun. In this chapter, we’ll look at some of the potential disaster scenarios, as well as a few tips on how to handle them and what you can do to prepare adequately to avoid hazards and threats.
Is The Economy Going To Collapse Permanently?
That’s the $1 million question, isn’t it? Is the economy going to disappear? Will the world’s financial markets, vast and powerful as they are, fade away over night? There are thoughts on both sides. Part of the problem is that the financial world is unpredictable due to its synthetic nature. It’s a human construct with no actual basis in nature. As humans, we’ve set ourselves apart from nature for so long that we no longer recognize the fact that we are intrinsically tied to the wider world beyond human concerns.
The economic mess that is the global financial market is just one sign of how far we’ve deviated from that truth. Understand this – financial markets are intangible, and false.
They’re based purely on human actions and reactions, with little input from the real world. Certainly, disasters like earthquakes, floods and the like can have an impact on the markets, but only because of the fear those disasters create in humans.
Therefore, any market movement is due purely to human action or reaction. Being fallible, frightened creatures even at the best of times, humans often overreact, or choose personal gain over what’s right.
Those transient, ephemeral markets will be affected by several occurrences in the natural world, all of which are instigated by human beings. The first and most important of these is “peak oil”. Not sure what that means?
Peak Oil – All natural resources are finite. They have limits, beyond which there is no more left. That’s true for anything from wood to gold to oil. Some natural resources are self-replenishing. Trees produce seeds that grow new trees. Oil does not replenish itself, at least on a timescale that would do humanity any good. So, for all intents and purposes, oil is nonrenewable. That means once we use it up, it’s gone forever.
We’re rapidly approaching that point. Peak oil is the term used to describe the point at which our oil reserves begin to decline. It’s the point of no return, and many scientists expect us to hit that point far sooner than anyone might think (within our lifetimes).
Unsustainable Resource Use – Everything we rely on in our modern world is made using resources. Your tablet, computer or smartphone includes components made with materials harvested from virtually every continent on the planet.
A simple t-shirt requires the consumption of hundreds of gallons of water, not to mention the pesticides applied to protect cotton plants from insects. Even synthetic materials like nylon require the use of resources – notably, oil and petroleum industry products.
As the world’s population continues to grow exponentially, so does our demand for natural resources. Eventually, that demand will outstrip the supply. Not only will there be a dramatic cost increase for products, but also there will be a limit of availability. The world markets will first tremble, then come crashing down as modern commerce goes out the window.
Simple Human Greed – Many people view money as the root of all evil, but that’s actually a misunderstanding of the quote. “The love of money is the root of all evil.” It’s simple human greed; the desire to acquire more and more, to have and to stockpile even with no true “need”.
Why did the markets tank in 2008? If you look to the world’s economic experts, you get a lot of double-speak and runaround. But if you look at the evidence, it’s pretty clear. The market collapsed because of greed. Greedy investors began to exploit the lending system. Greedy banks seeking to maximize profits offered more and more subprime mortgages. Those mortgages were then sold and divided up by investors, each seeking to build his or her financial windfall.
The result? Financial meltdown.
All it would take for a repeat of the 2008 recession (or worse, a depression) would be a repeat of the same practices. We actually might be seeing just that, with many experts pointing a warning finger at the auto loan industry as the culprit this time. Once more, subprime loans and investor greed are the most prominent factors.
Government Failure – The prospect of government failure has been looming higher and higher with each passing year. The US seems almost evenly divided between conservatives and liberals as never before, but a closer look reveals that there are far, far more political, social and economic viewpoints at play here, far more than a two-party system could ever hope to represent.
The problem with government does not belong to the US alone. As of the time of this writing, France’s government has been completely erased as the prime minister seeks to form a more workable cabinet that will actually foster economic growth in a nation with mounting debt (France remains above the maximum national debt limit set by the EU, and Germany is not far behind).
Of course, there are numerous other examples – Syria, Iraq, Israel and Palestine. There are also hotbeds of disease and unrest in Africa where the Ebola virus has killed close to 2,000 people with no end in sight. The conflict in the Ukraine already threatens to pull the US and Russia into conflict, with the possibility of another world war looming large in the minds of most.
When governments fail to provide for the people, there will be costs to pay. When governments topple, financial markets follow. Moreover, just the threat of political unrest is often enough to disrupt a nation’s economy to the point of stagnation (and the US has barely moved past stagnation as it is).
Depending on the actual cause of the financial meltdown, there are a few different scenarios with which you might be faced.
Martial Law – Martial law can be declared in the US, and has been in a number of incidences ranging from the San Francisco earthquake of 1906 to Alabama in the 1960s. Martial law would most likely be the result of a governmental collapse, although it can be instituted for any number of other reasons.
Recent federal laws have drawn fire from many governors and watchdog organizations as making it easier to authorize martial law, including Section 1030 of the National Defense Authorization Act for Fiscal Year 2012.
Martial law would affect those in urban areas more, with suburban areas being somewhat less affected. Those in rural areas would be least affected, and if you were living completely off the grid, chances are good that you would see virtually nothing.
Societal Disintegration – Most people would term this “anarchy”, but that word has been misused for too long. Anarchy has nothing to do with the disintegration of society into chaos. Anarchy is actually more aligned with self-government, or small-scale local government without any overarching state in the mix.
Whatever term you prefer to use, societal disintegration would actually be more frightening than martial law in many respects, particularly in the form of looting, vandalism and potential for murder. These effects would be felt much more strongly in urban and suburban areas where the population density and scarcity of natural resources will play a greater role.
Again, those living somewhere off the grid would be in the best position to survive societal disintegration, simply because they exist on the very fringes of modern society in the first place.
In these scenarios, you’ll notice that those living closer to the center of so-called civilization stand the best chance of seeing harmful fallout. Those living farther away from the central hub will see less, and those choosing to go against the flow completely will generally see little to nothing.
Why is this? Simply put, the government doesn’t have enough resources to police and control every area of the country, despite the immense size of our military. In the case of a total meltdown, the government will act to secure main arteries across the country, and as many urban areas as possible. Thus, suburban areas will see at least some military presence, but rural areas are simply too vast and too unpopulated to make enforcing martial law practical or possible. Wilderness areas are completely out of the question.
Of course, this is only a general prediction. There’s no true way to guarantee who will and who will not be affected in the case of a financial meltdown, and a great deal depends on the nature, severity and duration of such a meltdown. Let’s take a closer look at that in the next chapter.