I am a firm believer that warning always comes before destruction. The Great Depression didn't just happen all of a sudden. There were certain things that lead up to it. And some of the same things that lead up to the Great Depression are currently going on right now in the American economy.
The first one being many banks failing or going bankrupt. In 1930, over 9000 banks failed. I am not sure of the exact number of banks that have failed during this current economic depression, but I am sure there have been thousands. Of course things are different now because we have the FDIC that insures a certain amount of our money.
But if you have been watching the news lately you know that the credit rating of America has been downgraded. All of this effects the money that we have in banks. When it boils down to it, the many bank failures is a sign of the coming economic collapse.
Another sign that an economic collapse is coming is that imports outweigh exports. In other words, there are more goods coming in then going out. And as more money in pumped into the economy, the stock market becomes saturated with investor money which just causes the bubble to get even bigger.
Unemployment is also very high right now. People are still getting laid off and people are still unable to find jobs. This directly affects the amount of money that is circulating in the economy. As money stops changing hands, more and more businesses will close down.
Those who do have cash will take it out the banks and store it else where. Banks will then try to limit the amount of withdrawals that can take place. People will paper money will get rid of it and instead opt to invest in hard assets. However, by this time hyperinflation will be a real threat because there will be more money in the market then goods.
As you can see its just a vicious cycle. One thing leads to another and before you know it, BOOM, the whole house of cards comes tumbling down.
I personally dislike the way the whole money system is ran. The Government has way too much control over what goes on with OUR money. I once heard Jesse Duplantis say that the easiest way to fix the economy is to stop making people pay taxes for a few month. All of that disposable income would flood right back into the economy which would ultimately create growth. You know what? I think he might be on to something.
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Source: http://newsandsocietyblog-economics.blogspot.com/2011/10/tick-tock-coming-economic-collapse.html
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