By Jeff Thomas,
featured writer for Strategic Wealth Preservation, Doug Casey’s International Man and 321gold.com
Since its inception, International Man has offered prognostications about what the future will bring – economically, politically, and socially. The principal writers of the publication have been at this for decades. Each one began by studying world economics and politics in order to make the best choices as to where to live, where to invest, where to store wealth, etc. Over the years, each one got better at researching, better at reading the signs, and, ultimately, better at predicting future events.
But, today, we’re approaching a worldwide crisis point and the study that we undertook decades ago has become important for literally hundreds of millions of people who, whether they realize it or not, will soon be impacted by events in a major way.
The foremost concern for readers of this publication is that the world’s leading governments have become decidedly fascist and are rapidly heading in a totalitarian direction. There are a number of facets to this development, all of them disturbing: the elimination of personal privacy, the creation of capital controls, confiscation of wealth, the conversion to electronic banking as the sole form of currency, international taxation standards, and the creation of a police state. (There are many, many more facets, but these few tend to be at the core of concern.)
We can expect to see all of these concerns come closer to reality in the near future. The events that bring them about will increase in both frequency and magnitude as we get closer. (Historically, this is always the case, as governments that are in trouble, race to get controls in place, as their continued ability to control events unravels.
In these pages, we do our best to provide projections as to “where it’s all headed” and how it will affect the reader. In doing so, we generally discuss events that we believe to occur sometime soon (within a year or two). Often, we delay discussing events that we’ve anticipated many years previously because they’d appear to most people as being so unlikely that their prediction would seem absurd.
However, we’re getting much closer to the crisis and, consequently, much of what once might have seemed absurd may now look quite possible to more people.
But, even now, we tend to confine our prognostications to the international crisis itself. We rarely discuss what the world will look like aftermarket crashes have occurred, and currencies have failed after governmental systems have broken down.
So, let’s have a snapshot look at what the overall landscape might look like after the dust has begun to settle. What will some of the greatest powers in the world look like in, say, five to ten years’ time?
To begin, we’ll assume that the more catastrophic events of economic collapse have taken place in the world and we’ll be observing the subsequent knock-on effects – the deterioration that would occur thereafter.
Historically, any government that’s leading up to a collapse invariably tightens controls to the max, as it’s aware that, following a collapse, it will lose control, either entirely or in part.
Once markets have collapsed, we can expect a deflationary trend that governments will respond to by creating massive inflation, very possibly leading to hyperinflation. At some point, we can expect to see a collapse in currencies, as a result of the unsustainable debt load – the heroin that has kept them going for decades. This is particularly important with regard to the US, as the US presently possesses the world’s default currency. A collapse in the dollar will send other currencies into a tailspin.
Following a currency collapse, it will no longer be possible for governments to continue to expand their debt loads, as there will no longer be any takers. In addition, government income streams will be diminished. As businesses decline, the tax revenue will be greatly diminished. Whether they like it or not, for the first time in their careers, political leaders will be forced to cut costs and cut them dramatically.
So, where will they cut? In the US, Social Security represents 24% of recurrent expenditure; Medicare and Medicaid represent another 25%; poverty entitlements are another 10% and a further 16% goes to “defense,” or more accurately, “foreign aggression.” Together, that’s 75%, yet, to diminish any of these (with the possible exception of foreign aggression) would make the blood of Americans boil.
Interest on national debt represents another 6%, but that would quickly be defaulted on. Next to be cut would be the “non-essentials” – the Departments of Agriculture, Education, Energy, Health and Human Services, Veterans Affairs, Housing, and Urban Development, and Immigration, plus prisons, drug control, conservation, and national parks. Cuts in each of these would cause less civil unrest than diminishing the “big four” that makeup 75% of the budget.
They would likely keep funding for Homeland Security, the IRS, and the Capitol Police and, in fact, would be likely to increase funding to all three. (Bear in mind that the Capitol Police is unlike any other police force; it is a virtual army, designed to protect legislators within the beltway from what will soon be classified as “domestic terrorism.”)
Along the way, those states that are net receivers of largesse from the Federal government will find their allowances cut dramatically. This will mean that, for state and city governments, roads, garbage collection and departments such as Fire and Motor Vehicles, will all receive cuts, along with state and city police departments. This latter move will not only result in increased lawlessness, but will result in police themselves becoming more lawless, or a law unto themselves, sometimes acting in sympathy with the public against the central government, sometimes acting with aggression towards the public.
But these cuts will only be the beginning, as they will be insufficient to address the shortfall. Confiscations of bank accounts will take place, but they too, will be insufficient. Cuts in Medicare and Medicaid will eventually be put into effect, along with cuts in Social Security (primarily through inflation). For the over 50% of people who are presently recipients of these mainstays of collectivism, the cuts will quickly create anger, unrest, then riots.
As stated above, veterans (some 10% of the population) will be unceremoniously dumped. They will react by joining those who protest the cuts. Those still employed in the armed forces and Homeland Security will be torn as to whom to side with. (Remember, the invasion of ancient Rome by the barbarians was made possible when the mercenary Roman soldiers simply walked away.)
In total, what we’re looking at is a government that will no longer have the level of control to operate an effective tax collection service, capital controls, or outbound migration, let alone continue to aggress against other nations. The US, more than any other nation, is, therefore, most greatly at risk of holding itself together following a collapse. As stated in “The Art of War,” by Sun Tzu in the fifth century BC, “those who are waging war should get rid of all the domestic troubles before proceeding to attack the external foe.” Essential advice today, as it was then.
As space here is limited, we can only offer a thumbnail sketch of these events; however, it’s not essential that we labor over the fine details of conditions that will exist after the collapses have taken place. A sketch suffices to allow us to plan our own agenda – to locate ourselves geographically away from the hot spots and shift our investments into those things that might be likely to be more depression-proof. And we can move whatever wealth we might have to jurisdictions where its safety is most assured. Those concerns are more urgent than ever and the time remaining is decidedly uncertain.
Jeff Thomas
International Man and Strategic Wealth Preservation
jeff.thomas1066@gmail.com
This article was originally posted in the Strategic Wealth Preservation Blog and copied here with the author’s permission.