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Economic Collapse
One key ingredient in the end times soup seems to be economic collapse, especially in the US. When the US collapses, it will likely plunge the rest of the world into a depression with it. Why is an economic collapse likely?
One reason for the eventual collapse is the trade deficit brought on by cheap imports, the outsourcing of American jobs, and the shutdown of American manufacturing. While this has allowed us to buy cheap goods at Wally World, it has been a bad idea for the trade deficit. Presently there is $10 trillion dollars in foreign hands --that's $30,000 for every person in the US. That represents a debt that we must pay off.
What? That's right, the money we gave the Japanese, the Chinese, the Germans, the Koreans, the Malaysians etc. represents a debt, not payment. The only thing backing American currency is... nothing except the governments ability to tax you.
When you pay someone $10 for a debt you owe them, the other person expects to be able to trade that $10 for something of value, like a pound of pork, or a carwash, or a screwdriver.... something real. Look at a dollar bill. It says: "Federal Reserve Note". A monetary note, meaning promissory note, is defined as:
A written promise to pay or repay a specified sum of money at a stated time or on demand.
So a Federal Reserve Note is nothing but a promise to whoever holds it that they will be able in the future to trade it for goods or services, its a debt. Who is this debt against? It is against whoever signed the note. That would be the Treasurer of the United States, and the Secretary of the Treasurer acting as agents of the US. In other words, the United States owes that money, and the only place the US can get it is from the citizenry. So, you are the one who has to pay it off through taxation on your income, and that taxation will reduce your wealth and standard of living. This is the trap of a trade deficit.
What do foreigners do with the notes we pay them? They loan them back to us, buy our financial instruments, and they buy our real estate, factories, and our resources. As long as the foreign holders of our money are content buying financial instruments with the promise of making interest, then we are ok for a while, but if they begin buying our capital in earnest, our means of production, we will eventually become no more than serfs, as that capital was our means of creating more wealth. Those financial instruments include the financing of our mortgage market, so they finance our mortgages for our homes, and our new cars. So who is going to own our homes when the economy goes bust, and we cannot meet our mortgage obligations? America will not be conquered, it will be foreclosed. Refusing to make good on our debts could provoke a global situation leading to war. There is no good way out.
"All Beijing has to do is to mention the possibility of a sell order going down the wires. It would devastate the US economy more than a nuclear strike." -- Asia Times, 2005If we were still a manufacturing giant, and competitively producing goods the rest of the world wanted, there would be no problem, as the dollars that we paid to foreign countries could be redeemed for things that they wanted. But since manufacturing has been leaving the US for countries with cheaper resources and labor rates, and we are becoming a service based economy, we have less and less to trade. Sooner or later, the debt of foreign trade must be paid.
On top of the trade deficit, we also have to deal with the national debt which is now over $8 trillion or another $24,000 for each person in America. Added to that, there are large amounts of unfunded future entitlements that must be paid for at some point. Either the tax rates will have to be raised substantially, or the currency inflated to pay this debt. Either way, the common citizen loses wealth and his standard of living. Inflation hurts those on fixed incomes, while high taxes hurts the working person more. Everyone loses. But this is the end times isn't it?