Peter Schiff is a well-known commentator appearing regularly on CNBC, TechTicker and FoxNews. He is often referred to as “Doctor Doom” because of his bearish outlook on the economy and the U.S. Dollar in particular. Peter was one of the first from within the professional investment field to call the housing market a bubble. Peter has written a book called “Crash Proof” and a follow-on called “The Little Book of Bull Moves in Bear Markets”. He is the President of EuroPacific Capital, which is a brokerage specializing in finding dividend-yielding, value-based foreign stocks.
What Will Happen If the US Economy Collapses?
If the U.S. economy collapses, you will not have access to credit.
Banks will close. That means high demand, and low supply, of food, gas and other necessities. If the collapse affects local governments and utilities, then water and electricity will no longer be available. As people panic, self-defense becomes more important. The economy quickly reverts to a traditional economy, where those who grow food barter for other services.
A U.S. economic collapse would create global panic. Demand for the dollar, and U.S. Treasuries, would plummet. Interest rates would skyrocket Investors would rush to other currencies, such as the yuan, euro, or even gold. It would create not just inflation, but hyperinflation as the dollar became dirt cheap.
When Would the U.S. Economy Collapse?
Any of the following scenarios could create an economic collapse. First, if the U.S. dollar rapidly loses value, it would create hyperinflation. Second, a bank run could force banks to close or even go out of business, cutting off lending and even cash withdrawals. Third, the internet could become paralyzed with a super-virus, preventing emails and online transactions. Fourth, interstate trucking could be stopped, thanks to parallel terrorist attacks or a massive oil embargo. Grocery stores would soon run out of food. The worst case would be widespread violence, like the Watts riots in the 1960s, a civil war, or a foreign military attack.It’s possible that a combination of events could overwhelm the government’s ability to prevent or respond to a collapse.
Others believe that the Federal Reserve, the President or an international conspiracy are driving the U.S. toward economic ruin. If that’s the case, the economy can collapse in as little as a week. That’s because it’s run on confidence–that debts will be repaid, that food and gas will be available when you need it, that you’ll get paid for this week’s work. If a large enough piece of that stops for even several days, it creates a chain reaction that leads to a rapid collapse.
Will the U.S Economy Collapse?
The U.S. economy’s size makes it resilient. It is highly unlikely that even these events could create a collapse. The Federal Reserve’s contractionary monetary tools can tame hyperinflation. The FDIC insures banks, and the Treasury can print all the money needed to make sure depositors get their funds. Homeland Security can address a cyber-threat. If not, eventually the economy can always return to how it functioned before the Internet. The Strategic Oil Reserves can be released to offset an oil embargo. The U.S. military can respond to a terrorist attack, transportation stoppage, or rioting/civil war. In other words, most Federal government programs are designed to prevent just such an economic collapse.(source)