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Third Economic Downturn Will Be Our Undoing

One of the common questions posted on the forum is when will SHTF.  When is something big going to happen?

Rather than a turd hitting a fan, what if I told you it was more like diarrhea hitting the fan?  In the past 40 years we have faced 2 economic downturns that have had profound long term effects.  The effects have been so slow that they ave gone unnoticed.  Unnoticed that is until you look at the big picture.Kevin Felts blogger and survivalist

Economic Downturn #1.  Nixon took us off the gold standard, which caused rapid inflation.

For the most part people have no idea what the true value of their paper money is, as we have no tangible item to compare the value of paper money to.

Taking the U.S. off the gold standard has also allowed the Federal Reserve to print money out of thin air, which has also contributed to inflation.

Economic Downturn #2.  Losing our shipyards in the 1980s, and the free trade acts of the 1990s.  For the sake of discussion job loss will be combined into one category.

Gold Standard

When we were on the gold standard the United States government had something of tangible value to back the value of our money.

Once we were removed from the gold standard the federal reserve was free to print as much money as the government, wall street and the banks needed.

This ability to print money out of thin air drove rapid inflation in the early 1970s.

The money that is printed today is back by nothing more than a promise, a promise that the tax payers will pack back the national debt.

In other words, the federal reserve gets to print as much money money as they want and the tax payers are on the hook to pay it back with interest.

Job Loss

There was once a time when a young person could finish high school, go to work at a factory and make enough money to buy a home, buy a car and raise a family.  By the early 1980s that was pretty much a memory.

For example, in southeast Texas Bethlehem shipyard in Beaumont, Livingston shipyard in Orange Texas and American Bridge in Orange Texas closed their doors in the early to mid-1980s.  Within 5 – 6 years somewhere around 8,000 people lost their jobs in the shipyards and related industries.

When Bethlehem shipyard in Beaumont Texas closed its doors those welders, fitters and helpers had to find a job somewhere, so they turned to the local welding shops.  With an influx of thousands of new potential employees wages dropped like a rock.

Here we are 30+ years later and wages have yet to return to what they used to be.

It is not just the lose of jobs and oppressed wages, it is also our lost ability to produce needed items to keep our economy going.   When I was working at a certain welding shop in southeast Texas around 1993, the customer wanted the part made out of a certain type of stainless steel that was also made in the USA.  Come to find out, the requested size and type of stainless was no longer made in the USA.  We had to go with an offshore steel manufacturer in order to build the part.

Housing Crash of 2008

What about it?  The housing crash was a short term problem.  The market will make adjustments and sooner or later things will work its way out.

The difference between the housing crash and free trade is we still have the homes.  It’s not like the homes were demolished and sent to China.

If we wanted to compare the housing collapse to free trade, the homes would be demolished, shipped to china, then reassembled for Chinese families to use.

Government Says We Are in a Recovery

Without jobs to support the middle class there will never be a complete recovery.

Without factories and shipyards that employee thousands of workers, wages will never recover.

How can we have a recovery when young people go into massive debt for a college education that can take a decade to pay off?

There was once a time when a young man or woman should finish high school, get a good paying job and be on their way to buying a home and starting a family by the time they were 22 or 23 years old.

Today, young people are having to put off home ownership until their early 30s, much less starting a family.

What else do we have to give away

The United States government has given away control of our money to the Federal Reserve.

Our factories have gone to Asia.

We have already sold our money and financial markets, we have sold our factories,,,, what else can we sale to make a quick buck?  We have natural resources, timber, oil, technology (our tech toys are made in China), land,,,,.  What do we have that can be sold to make money?

Maybe its not a single market?  Maybe it is going to be a combination of selling our national debt to China, selling our land, selling our technology, corporate greed,,, that will cause the third and final collapse.

Economic hardship is the future of the United States

More people than ever before are drawing some kind of help from the government.

Corporations use tax loopholes to avoid paying their fair share.

Our bridges and roads are falling apart.

Corporations get massive welfare kickbacks from the government.

Jobs that once supported the middle class have been set to China and replaced with low wage jobs.

Wages have been stagnated since the 1970s.

Things are only getting worse for the working poor and the blue collar middle class.

Starting in the 1980s good paying factory jobs have been replaced with low wage retail jobs that carry little or no benefits.  Benefits would include cost of living raises to adjust for inflation, overtime, retirement, health insurance and paid time off.

Benefits provided through the employer in the 1970s are non-existent today.

The only long term economic option

The only option left to restore the economy of the United States is to have another World War.  A war in which all other first world nations are left devastated.

Times have changed since the 1940s.  No longer do nations have to have a navy to declare war on someone on the other side of the world.  All that is needed are some Intercontinental missiles and nuclear warheads.

After World War II the government of the United States changed its foreign policy.  It became clear that we would be dragged into the next global event.  Rather than waiting for some regional conflict to spread, the United States would enter the conflict early and put an end to it.  Korea and Vietnam were early examples of the United States early entry into regional conflicts.

But while the United States was busy in Korea and Vietnam, Russia and China were busy developing their nuclear stockpile.

With China increasing its military budget it is just a matter of time before we see a conflict between the United States and China.

A conflict with China and the United States would force us to spend money on re-building the factories that were demolished in the 1990s and early 2000s due to free trade.

Steel mills would have to be built, textile factories would have to be built, roads would have to be repaired, heavy equipment would have to be built,,, all in the name of winning the war, just like what happened during World War II.

Look at it this way:

1920s – Economic boom.

1929 – Start of great depression.

1930 – 1941 – Great depression, economic decay and stagnation.

1941 – 1960s – Economic boom with entry into World War II and construction projects after the war.

1970s – Stagnation in job creation and wages.

1980s – 2010s – Economic decay and wage stagnation.

Vicious Cycle

We are in a vicious cycle of war – boom – bust – war – boom – bust,,, repeat.

My personal opinion, some kind of war will start before we face riots here at home.  Once people start rioting over food and housing the civil unrest will spread.  But if we have a war, that is a rally point for the government.

Rather than having people rioting in the streets, send them to war and let the enemy kill them.

One day the cycle will have to come to an end.  The United States has not fought a real war in over 60 years.  Truth be told, do we have the stomach for it?

How would the public react if a major U.S. city were nuked and a million people died?  Would the public want to fight, or negotiate peace terms?

There was once a time when it took years and millions of people to fight a war.  Nuclear weapons changed all of that.  Now, wars can be fought in a matter of days rather than years.

The question is, will we face a third phase of economic downturn, or will we go to war to spur economic recovery?



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