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What would economic collapse look like?

I guess it would look like photos of the likes of Madoff in newspapers, confessing what they did and how.
 
The 'smart money' would be running for the hills. The Bulls would be panicking and the Bears would be sharpening their claws
 
You know the economy is in trouble when you have
1. Large and rising unemployment with
2. Large and rising inflation with
3. Large government debt

The economy is even worse shape when you get large scale black market. Or transactions get common that are done using barter or foreign currency.

The government is close to collapse when there is a large disaster and it is not the government that provides the aid. Think Pakistan floods.
 
I don't think you can have true economic collapse as long as you have the resources needed to keep society running.

Economic collapse would look like everything grinding to a halt because of a lack of resources, and everyone migrating in search of food/water/jobs.
 
jimtron said:
This thread, "Looming Economic Collapse" got me thinking, if such a thing was happening, or about to happen, what would it look like? IOW, what would be a sign of a catastrophic economic collapse?
Click to expand...

Well, "economic collapse" is a slippery term. There are some pundits who seem to like to throw the term "collapse" around every time one of the major indices slips a point, and there are recent immigrants to the USA who would simply shrug it off if the entire world collapsed to Mad Max-style subsistence farming. ("Hey, this is just like when I grew up in Ruritania, except without the polio outbreaks!")

But I'd be inclined to recognized three major "stages" of (progressively worse) economic collapse.

* the disappearance of the unsecured-debt economy
* the disappearance of the secured-debt economy
* the disappearance of the currency economy

... because, let's face it, as long as I can hand someone a check and get food in exchange for a piece of paper with an arbitrary number written on it, the poor fool who accepted the check trusts that there's an economy and a system behind that check that will honor it. As long as I can show -- not even swap -- a credit card for food, the economy hasn't collapsed yet. But if you don't think that the VISA company is going to be able to honor or enforce its debts, then you're not going to accept credit cards.

We almost saw level two happen back in 2008 with the credit crunch. The banks had money, but weren't willing to lend it out, even to "good" customers. The effects would have been catastrophic; by good fortune or good planning by the government, the full collapse was avoided.

And of course, when you can't even trade dollar bills for food,... that's Mad Max.

But the effects even of a level one collapse would be pretty serious. Most of the businesses that we know and love would either disappear or seriously restructure, because suppliers wouldn't be able/willing to deliver goods for payment on sale. The local car dealer doesn't actually own most of the cars on his lot -- he's borrowed them from the bank and pays for them as he sells them. Most businesses today operate on a "deliver goods now, sell tomorrow, pay at the end of the month" credit-based cycle, and that simply wouldn't work if credit weren't available. Even electricity and water is generally delivered that way, on credit.
 
drkitten said:
But the effects even of a level one collapse would be pretty serious. Most of the businesses that we know and love would either disappear or seriously restructure, because suppliers wouldn't be able/willing to deliver goods for payment on sale. The local car dealer doesn't actually own most of the cars on his lot -- he's borrowed them from the bank and pays for them as he sells them. Most businesses today operate on a "deliver goods now, sell tomorrow, pay at the end of the month" credit-based cycle, and that simply wouldn't work if credit weren't available. Even electricity and water is generally delivered that way, on credit.
Click to expand...

I once worked for a restaurant that was teetering on the edge of bankruptcy, and thus got a taste of this on a small scale. Instead of the various vendors dropping off their product and saying "have a nice day", they marched straight into the office and demanded cash payment up front. Employees couldn't just put their paychecks in the bank and trust that the money would be there; they had to go to the bank the checks were drawn upon and cash them, then deposit the cash.

Towards the end, after I left for greener pastures, they stopped paying the employees altogether, promising that if they continued to work they "might" be payed in the future, but if they quit they would never see a dime.

In the end, the only employee who got paid was the accountant, who held the tax documents hostage until she was paid in full.
 
aggle-rithm said:
I don't think you can have true economic collapse as long as you have the resources needed to keep society running.

Economic collapse would look like everything grinding to a halt because of a lack of resources, and everyone migrating in search of food/water/jobs.
Click to expand...

Which resources are you referring to? For the sake of this thread, let's not presume that we'll always have those resources.
 
jimtron said:
Which resources are you referring to? For the sake of this thread, let's not presume that we'll always have those resources.
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What the hell does this mean? If we don't have those resources, that's a pretty good sign of an economic collapse. Conversely, as long as we do have those resources, that's a pretty good sign that the economy is NOT collapsed, because those resources didn't get here by themselves. If people in midtown Manhattan still have food to eat, that's because it was provided (and paid for) somehow via a functioning economic system.
 
jimtron said:
Which resources are you referring to? For the sake of this thread, let's not presume that we'll always have those resources.
Click to expand...

I was thinking specifically of a very advanced tribe of Native Americans in North America who had a thriving civilization before their supply of water dried up. The civilization collapsed and, even though it could have continued to operate with a smaller population, the city was abandoned.

For the modern world, that resource would be oil.
 
drkitten said:
What the hell does this mean? If we don't have those resources, that's a pretty good sign of an economic collapse. Conversely, as long as we do have those resources, that's a pretty good sign that the economy is NOT collapsed, because those resources didn't get here by themselves. If people in midtown Manhattan still have food to eat, that's because it was provided (and paid for) somehow via a functioning economic system.
Click to expand...

I didn't mean let's assume that the resources are not there, I meant let's not assume that they will always be there. I was referring to this quote, made earlier in the thread: "I don't think you can have true economic collapse as long as you have the resources needed to keep society running."

My point is, we can't know for sure that those resources will always be present, right? So if we're speculating on what collapse would look like, why presume that necessary resources will be present? Maybe economic collapse looks like dwindling resources?
 
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aggle-rithm said:
I was thinking specifically of a very advanced tribe of Native Americans in North America who had a thriving civilization before their supply of water dried up. The civilization collapsed and, even though it could have continued to operate with a smaller population, the city was abandoned.

For the modern world, that resource would be oil.
Click to expand...

So if we run out of oil, we'll likely have an economic collapse?
 
aggle-rithm said:
I was thinking specifically of a very advanced tribe of Native Americans in North America who had a thriving civilization before their supply of water dried up. The civilization collapsed and, even though it could have continued to operate with a smaller population, the city was abandoned.

For the modern world, that resource would be oil.
Click to expand...

Ah. So you're arguing that as long as oil exists, we can't have an economic collapse?

That seems, um, counterfactual.

The problem with resources isn't existence, but transportation and infrastructure; we could easily feed everyone in the world if the famine-ridden kleptocracies would just let the damn trucks in. We could easily innoculate everyone in the world against every disease for which a vaccine exists if the doctors could get into the jungles without getting shot.

What seems to cause economic collapse isn't the availability of resources, but the availability of a method to trade them. I won't sell to you if I don't trust your ability or willingness to pay; you won't buy from me if you don't believe I'll actually deliver. And neither of us will trade if there's a dragon on the road that eats trade caravans.

History does a very good job of suggesting that as long as the economy keeps functioning, the necessary resources will be there, because there will be someone who finds it profitable to supply those resources and develop substitutes as necessary. Unfortunately, it doesn't offer the same suggestion about the stability of the economy....
 
aggle-rithm said:
I was thinking specifically of a very advanced tribe of Native Americans in North America who had a thriving civilization before their supply of water dried up. The civilization collapsed and, even though it could have continued to operate with a smaller population, the city was abandoned.

For the modern world, that resource would be oil.
Click to expand...


Nope. It's still water.
 
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