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11 scenarios of how an economic collapse in America could play out

A recession turns into a depression when the government intervenes. Looking back at history, this phenomenon is rather apparent, especially in times of economic downturns when the self-proclaimed crusaders of justice implement their Keynesian economic policies.

Of course, history has also proved that anything the government touches usually becomes worse. No matter how good the intentions may be of a politician, a public official or a bureaucrat, incompetence usually reigns supreme. Remember, the road to hell is paved with good intentions.

Since the last economic collapse that occurred in 2007/2008, the unemployment rate has remained just under (officially) eight percent, the Federal Reserve is pumping $85 billion each month just to keep the Dow Jones above 14,000, the federal government borrows 48 cents out of every dollar spent just to keep the doors of Congress open and the value of the nation’s currency persists in being debased.

For the past few years, a lot of adherers to gloom and doom have predicted complete collapse of the United States system. Although the U.S. is on life support at the present time, it still remains alive. The question is, however, for how long? Despite the disastrous policies imposed by the administration of President Barack Obama and the endless quantitative easing by Fed Chairman Ben Bernanke, how much longer can the U.S. keep the illusion up?

There are many scenarios to consider when the U.S. economy reaches its end point: from hyperinflation to astronomical tax rates to confiscation of private property. Here are 11 scenarios of what an economic collapse could look like in the United States.

1. If the Fed has the printing press going 24 hours a day and seven days a week or China and Japan demand its money back, this could lead to hyperinflation. What does this mean for Americans? Remember your history class that looked at the Weimar Republic and its citizens carrying wheelbarrows of money? Picture everyone walking around New York City doing the same thing. Indeed, there will be millions of Americans who will become “billionaires.”

2. The U.S. national debt grows $10 million each minute of the day. At the time of this writing, the national debt is more than $16.5 trillion. By 2023, the Congressional Budget Office projects the national debt to be $26 trillion. If the national debt grows at this rate, eventually, the federal government won’t be able to afford anything else other than a few budgetary items.

3. Most Americans and politicians are enjoying the benefits of low interest rates. Despite the heavy debt loads, the U.S. government paid $248 billion in the Fiscal Year 2013, which is roughly 1.5 percent. When interest rates soar, a considerable chunk of annual expenditures will be put towards interest payments.

4. National security is at risk because if the U.S. government can’t afford to allocate money to the Pentagon and the military then it can’t defend the nation’s borders – not just closing down U.S. bases in 132 countries. What if another country decided to invade the U.S. since it can’t protect its land because of insolvency?

5. Price controls have occurred in U.S. history and the unfathomable policy still takes place today (see Argentina and Venezuela). When the government decides to institute production quotas and price controls on everyday items, food, oil and even water riots could come to fruition.

6. No more forms of energy. Back in the day, households would have to go to bed early when night arrived. However, due to capitalist ingenuity, families could stay up late and do anything they wanted. When the economy collapses, there won’t be enough energy for anything, especially considering that Iran and Russia will control half of the world’s energy and China is buying up anything it can get its hands on.

7. The bankruptcy of states and cities. Already, cities have declared insolvency, while states are having a difficult time keeping afloat. Investors are bailing out of municipal bonds, while state and local debt accounts for nearly a quarter of U.S. gross domestic product (GDP).

8. When the U.S. can no longer afford its budget, it may turn to horrific tax rates. First, it will target the rich, but then the affluent will simply leave the country (as recent reports suggest is already taking place). Once the rich cannot be taxed then everyone else will experience the tax burden – Americans already pay nearly 50 percent of their incomes in taxes (federal, state and local).

9. In any crisis, the first thing that government does is confiscate private property. During the Great Depression, President Franklin Delano Roosevelt took away gold and silver from the people. In the aftermath of Hurricane Katrina, authorities confiscated civilian-held firearms.  Last year, the president issued the National Defense Resources Preparedness Executive Order, an order that has been described by some as authoritarian and totalitarian for peace-time martial law that could allow the government to confiscate private property.

10. What happens if social safety nets, such as unemployment, Social Security and Medicaid, suddenly vanished overnight? If the government can only afford interest payments and a few other budgetary expenditures then how could it afford these social programs? No longer would the jobless receive benefits. Little old ladies could become homeless because of no check. The poor would not be able to afford their healthcare.

11. As with other nations that suffered a tremendous economic collapse, the U.S. could see the rise of a new leader that is just as dangerous as Adolf Hitler, Joseph Stalin, Hugo Chavez, Robert Mugabe, Mao Tse-Tung and many other brutal dictators. Over the past few decades, the executive branch has garnered more and more power, which could mean it would be exploited by nefarious individuals in the future.

“There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible to live without breaking laws.” – Ayn Rand

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