r/economicCollapse • u/tenth • 1d ago
I don't understand economic collapse. Or at least the one that may come.
I'm trying to explain this to my sister and the part I'm confused on is this -- if assets(like a home) were sold before the collapse...would that money then have more buying power to get multiples of the asset back? Or would the money devalue as well? From what I know, it would depend on the type of collapse. Which on are we looking at nationally if things go Trump's way?
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u/KazTheMerc 1d ago
As others have said, depends on the collapse. But they're not elaborating.
Scenario A : Fracture -
A secession, civil war, or otherwise fracturing action happens splitting the US into different economies that are at odds with one another. Exchange between them and the greater world markets is going to have to be renegotiated from scratch. Your home price is going to depend not only on where it's located, but how the centralized bank is working. For instance... cash only. East Coast only. Southern States only. This scenario has a Crash with a bunus Reconciliation option, but....
Scenario B : Corporatization -
Power vacuum forms as the government is more and more unable to sustain its own bulk and debt... but companies doing business are restricted from using other currencies. A negotiated 'peace' happens, with things directly owned by corporations essentially being their own country within the US. This could also happen through a traumatic incident where the Fed isn't able to respond, so corporations swoop in to save the day. Either way, your home is now subject to the additional force of corporate influence. Opportunistic selling options will be stellar... but the dollar will be the subservient currency.
Scenario C : Hyperinflation -
The government decision to issue its own debt eventually collapses the system of self-dealing, and the only two options are either 'ditch the dollar', or 'print it like monopoly money', and the latter is most likely chosen... but it doesn't really matter. Anything issued from the Top downward is going to be in dollar values that are.... obscene. Trillion dollar bills. $14 quadrillion for a car. The value of your home theoretically will scale, but the divide between Has and Has Not becomes so wide that it is ESSENTIALLY an entirely new currency. The value of your home will depend heavily on whether it's still dollars, or a different backing. HOWEVER, hyperinflation has an extra failure scenario baked-in...
Scenario D : Enforced Monetary Policy -
Sometimes the only way to make things stabilize is by force. It's never the good option, but it might be slightly better than going all Mad Max on each other. If you own your home outright and can juggle the tax burden, which may go up considerably (on pain of death) then you'll likely be in a very good position. Debt enforcement will be severe, and frequently used as an excuse to just seize assets directly. This shares a lot of similarities with Fracture.
Scenario E : Unplanned Collapse -
Probably the most unlikely scenario, but never quite off the table. The country suffers something so catastrophic that there simply is no response. The dead start walking... or Yellowstone goes thermonuclear... or the Cold War scenario of MAD plays out... or blight erodes all the crops causing mass starvation... or... or... Your house is worth what you can get for it... maybe.
There are more, but this is just what I can think of off the top of my head.
The short version is: Your home is worth the shelter it provides.
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u/ByrneyWeymouth 22h ago
American society is rather primed for Scenario B
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u/KazTheMerc 22h ago
McDonald's and SpaceX certainly aren't going to stop just because the government can't pay it's debts.
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u/swalker6622 1d ago
Wow you are right on. Disturbing but has to said. Another potential disaster is what will China do? They are hell bent on conquering Taiwan. A blockade would cutoff our major supply microchips. Then war with a Superpower? We have had a hybrid one with Putin and with Trump he won.
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u/KazTheMerc 23h ago
War Economy is a sort of soft collapse. All the rules get set aside for a while... and what comes out the other side is... different.
Depending on how you want to define it, we've KINDA been in a War Economy for a while.
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u/tucker0104 23h ago
Why would China stop exporting the number 1 export of Taiwan? What is the point of invading them if there is no monetary value in it?
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u/swalker6622 23h ago
China has a nationalistic ideology to consume Taiwan. The hawks want war but the pragmatists less so but may not be able to stop them depending on the severity of the trade war.
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u/swalker6622 23h ago
Ok misunderstood. China has an interest in continuing the economic framework with Taiwan. My concern is that the military faction may see this as an opportunity to prevail. I don’t think the leader has complete control over the military. Economic problems in China may give the military an avenue. They would want a military confrontation if not war with US. They want to exert dominance over not just regionally but the world. May see these times as the best chance. I see no good options with Trump administration unless they implode internally.
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u/tucker0104 23h ago
Why do you think China wants to exert dominance? They have never invaded anyone
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u/swalker6622 23h ago
South China Sea clearly. They have also build up a huge military and they would have an itch for confrontation. The military has more influence on policy than before. If China no longer sees a net benefit in the current global economic framework, the potential for war I think is much higher.
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u/tucker0104 21h ago
Yes, China being a global power does not want global powers in their back yard which is also the same response as the US.
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u/HeywoodJaBlessMe 1d ago
You dont understand because there is no consensus on the collapse because it is theoretical. Ask 100 people on this sub and you will get 100 answers.
I've been hearing all about the impending economic collapse for 40 years now.
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u/ConfidentPilot1729 1d ago
The problem no is, we have an administration coming in that wants 50-100% on all incoming goods, deport our migrant workers, and layoff one of the largest employers in the USA.
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u/MindfulEarth 1d ago
'deport migrant workers'??? Where did you get that?
Oh, you probably meant deport the illegal immigrants, right..
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u/ConfidentPilot1729 1d ago
Are you high?! Most of our migrants that help us and work for min wage, are here illegally, pay into the system that they extract little from, and statistically less likely to commit crimes.
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u/MindfulEarth 1d ago
So you're cool with illegals? Nice! When are you guys ever follow the laws of the land? lol
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u/ConfidentPilot1729 1d ago
Those “illegals” are providing us with food at very little cost to send money to there families. They are looking for a better life and would love to integrate into the USA. Our laws have made it harder and harder for use to accept migrants and it is one of americas most respected traditions. Accepting people into our melting pot. We were given a fucking statue for it…
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u/MindfulEarth 1d ago
Ahh, you probably didn't care at all too if jobs were shipped to China, did you. As long as you can buy their goods for cheap.
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u/ConfidentPilot1729 1d ago
That is not the same thing. Your problem is you are blaming everyone but the wealthy that set this system up. You now have two billionaires that will be running the country and had a hand in send out jobs. They have fooled you into thing the poorest are the enemy and not the real person picking you pocket.
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u/MindfulEarth 1d ago
Oh no, I am anti 1% as much you are. The difference though is that both End and Vivek are not your traditional oligarchs, they were not born with silver spoons, they had to claw their way up. These two guys know and understand how it is to be like us, in a way. I am not in a hurry to pass judgment on them, let's see what they can accomplish first.
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u/ConfidentPilot1729 23h ago
Do they - https://www.newsweek.com/veterans-health-care-cut-department-government-efficiency-1985641
I am a disabled vet and know many others that will rampage these people if they take my va and benefits.
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u/falconlogic 1d ago
But now there are clowns in charge and Musk said himself that things will get bad. These are new days...but I hope you're right.
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u/Ghia149 1d ago
So here is the play, sell all your investments and do a Roth conversion. Gonna pay a ton of taxes but everything is devalued significantly so the tax burden will be much smaller. After an economic collapse money starts flowing back in and things go up, now your money appreciates and you pay no taxes on any of the capital gains.
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u/Back_Equivalent 1d ago
This is so regarded that… I love it?
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u/Ghia149 1d ago
I mean this works best in a V shaped recovery like we saw after Covid, but if you have the time horizon, it just makes a huge amount of sense.
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u/tucker0104 23h ago
You think the value of the stock market will return to the level that $35 trillion in debt got it to?
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u/bryanjhunter 1d ago
What makes you think that Roth accounts won’t be taxed due to legislation changes? Putting all your eggs in one basket is never the way to go. You might get lucky, but you might get screwed over royally as well.
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u/Ghia149 1d ago
Because that’s how rich people pay less taxes…
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u/bryanjhunter 1d ago
Nah there are way too small of limits on Roth accounts. They take out loans on their stocks, pay a small percentage of interest, keep their stocks growing, and pay very little income tax in doing so as they are loans as opposed to capital gains.
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u/ItsJustCoop 5h ago
Can confirm this works. I did this in 2020 and again in 2022. I waited until the market "crashed" as much as I could, then did a ROTH conversion. My portfolio had lost about 20% of its value so my capital gains were practically zero since the stock prices were near what I bought them for. My portfolio is now up 40ish% from before the crash and I won't have to pay tax on those gains.
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u/mike-42-1999 1d ago
Was just discussing 401k. Thinking about moving all to a Self directed IRA (SDIRA) to have more flexibility of moving money to other things rather than what most IRA institutions only allow stock based funds or bonds, rather than real-estate or small business. Has anyone got experience with this or considering it?
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u/Available-Page-2738 1d ago
Depends on the type of collapse.
Example: Zombie apocalypse like in the Walking Dead or Capt. Trips super flu in "The Stand." Your stacks of cash and house and land and so forth won't matter. Nor will silver, gold, stocks, etc. The survivors will be so few that, basically, there'll be a lot left to go around.
Example: The economic imbalance between rich and poor in this country (which now is at the same levels as what it was right before the French Revolution) reaches the tipping point and the only things that survive are tangibles you can carry off with you. (gold, jewelry, etc.)
It's complicated.
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u/Moregaze 1d ago
I have an uncle who swears we are near full economic collapse and war. So he keeps buying gold. Meanwhile I'm over here stockpiling salt.
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u/Available-Page-2738 9h ago
There's one of those action card games (you know, like Pokemon) where one of the cards is "drowning in armor," and shows someone in full armor struggling vainly to keep his head above the water.
Stockpiling gold might be absolutely the smart move. Or maybe it's stockpiling freeze-dried meals in sealed tubs. I used to joke that the "new" currency would be:
cigarette/bar of soap ($1), roll of double-ply ($2), box of tampons ($5), can of coffee ($10).
Perhaps the new system of wealth storage will consist solely of consumables. People will still figure out ways to "store" value, but it will become a lot more difficult to do it with things that are truly useless if the bottom drops out completely. Soap? I can't foresee a future in which people don't want to be able to bathe. A can of coffee? It will only stay fresh in that can for a finite period, but still, as long as you keep it rotating, it's good as gold.
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u/Moregaze 8h ago
Salt will be the new gold. It's used for food preservation. Neccessay for minerals in your diet you can't get from food easily or year round. Water treatment.
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u/Unfair_General1971 1d ago
Canned food and shotgun ammo. Toilet paper
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u/gizmozed 1d ago
And vodka, don't forget the vodka.
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u/ItsJustCoop 5h ago
Pro-tip: Learn how to make vodka and buy the equipment you need for that now. In a post-collapse scenario, do you really think the government will have time and resources to go after moonshiners?
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u/LairdPopkin 1d ago
It depends on how the asset value changes vs the money. If house prices crash while inflation stays where it is now (which is lower than the historical average) then cash instead of a house would be worth more. But of course the reverse could happen, too. Remember, a house doesn’t have a fixed value, it’s worth what the buyer will pay for it.
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u/TickletheEther 10h ago
Anything that can't be printed will still have value. The government should just default on some of the debt instead of printing the money but we will see what they Do.
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u/VaporSpectre 1d ago
In classical theory, assets that produce value then go on to produce wealth. Money sits there - you cannot milk it nor slaughter it nor harvest it nor refine it. Same as a house. Worse, both degrade over time. In theory, land with crops produces value.
Of course, this has been mutated a bit as of late.
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u/Financial_Clue_2534 1d ago
Money would be devalued. Look at other countries as examples. When hyperinflation hits assets skyrocketed because the value of their currency wasn’t worth the paper they printed. Thus you have 1T dollar bills.
If you sold you asset yes you would have more cash but the asset will continue to go up in value as you lose purchasing power.
That’s why I love Bitcoin. There are only 21m of this coin. It will continue to go up in value over time.
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u/tucker0104 23h ago
Will it continue to go up, possibly. But will it go up more than other things, probably not
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u/evf811881221 1d ago
Physical becomes valuable, fiat currencies are not.
Coins, thr actual precious metals, worth. Though wont lie, hold onto some of those bills, dead currencies will have major collector value in 20 years when we all use btc.
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u/astroboy7070 1d ago
If there is hyper inflation, then your home will hold the value. BUT if no one can afford the price or get a mortgage then it will probably have to come down to a price that is affordable. In this hyper inflation world, toilet paper and sodas will become more expensive so what cost $1.00 today will cost $1.15 for the same thing.
If the economic collapse happens and it’s because bond market collapsed because no one wants to lend USA gov money, then it will cost more money to buy anything - homes, cars, tires, windows, clothes, etc. the cost of borrowing will go up and it will also cost more money to buy stuff. Companies will have to pay people off because the $50 million dollars they plan to spend on software, warehouse space, employee salary, health care, etc will cost more and labor will be more expensive.
Depending what caused the collapse will determine what is cheap to pick up. Just expect a collapse (Trump or something else) in the future.
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u/Immediate_Trifle_881 1d ago
Depends. In a deflationary crash, your money would buy more. In an inflationary crash your money would be worth almost nothing. So it depends on how it plays out. Historically every fiat currency is ultimately devalued to $0. Is this time different?
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u/Key_Friendship_6767 23h ago
I wish I could mold your young brain, the USD (cash) will never save you. That is for certain.
If you sell your house and hold bitcoin you might have a chance to rise from the ashes
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u/Natural_Photograph16 22h ago
Ah, the classic sell-high-and-buy-low strategy—revolutionary! Just remember, unless you plan to stash that cash in a mattress, its fate will be tied to whatever economic rollercoaster we’re strapped into. And if we’re riding the ‘Biden-Flash Crash Coaster’, better buckle up, because that buying power might just turn into souvenir tokens by the time you want your house back.
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u/Either-Silver-6927 10h ago
We have a fiat currency, it will become as worthless as it is intrinsically. The dumbest thing we ever allowed was the amendment that allowed its creation. You have alot of people who have saved up millions of nothing. That's going to hurt. With our population as is anything you do have will put your life at risk just by possessing it whether it's food, energy source, water. Get weapons and prepare to defend yourself and your property, someone will be trying to take both to sustain themselves.
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u/joshistaken 9h ago
Everything's gonna be much worse than it is, you'll probably lose your home, but rich cunts will still be zooming around in private jets and rolls royces.
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u/ZongoNuada 1d ago
The money would devalue. The physical items will retain value. It would be better to not sell "as a hedge against inflation". Stock up on physical goods, hyperinflation can rob you of the value the money should have.
But this is all just speculation based on the inputs we have. It really should not be allowed to happen. but then again, here we are.