How economies collapse

Discussion in 'Economics' started by zdreg, Jul 10, 2019.

Is a scenario below likely to happen in the US in the next 5 years?

  1. yes

    6 vote(s)
  2. no

    9 vote(s)
  1. zdreg


    Scenario -

    • Bad economic policies begin to extract a political cost
    • Instead of fixing the causes of the underlying economic problem, the government decides to attack the symptoms of the problem, such as inflation, slower growth, weaker currency and slowing investment
    • The real problems meanwhile are ignored and get worse. They include bad monetary policies, increasing interventionism, failure to develop local financing markets, overly low savings rates and bad foreign policies
    • The government also blames other groups instead of itself, because this works politically, but it only makes investors and businesses even more worried as Erdogan will need more and more scapegoats as the economy worsens
    • As the economic outlook worsens, investors and businesses begin to take action to defend their wealth and livelihoods. This results in capital flight, declining investment and other hedging strategies
    • The government starts to blame the private sector for bad performance, taking action to prevent their defensive actions. Enter capital controls, nationalization, forced conversion of contracts
    • Eventually the government has no financing, no growth, no future and plunges into a crisis"
    Think Venezuela for the last few years and Turkey now.
    Think US is on the same path?
    Last edited: Jul 10, 2019
    tommcginnis likes this.
  2. clacy


    The US is about to explode and stocks are breaking out to the upside. Relax and enjoy the ride
    dheagerty and nooby_mcnoob like this.
  3. bone

    bone ET Sponsor

    The US economy, Natural and Social Capital, legal system and political structure has absolutely NOTHING in common with Turkey or Venezuela. That’s just crazy talk.
    Nobert, jl1575 and clacy like this.
  4. tiddlywinks


    1, 2, 3, and 4...
    There is monetary policy and there is fiscal policy. Monetary being the Central Bank, fiscal in the domain of the Legislative branch of government in the US. On the fringe, adding sway to either or neither monetary and fiscal policies is foreign policy. With monetary being a-political, and fiscal being completely political, the intersection is called politics in 2019. Politics augments or diminishes robustness, effectiveness, and ultimately confidence of, or for, these policies.

    5 and 6...
    Being the USD is the worlds reserve currency, worldwide demand for USD essentially prevents capital controls. Although it is possible individuals within US borders could be targeted by newly crafted laws, this would severely erode confidence both domestically and abroad.

    IMO, you have been reading too many goldbug and crypto blogs. In your armageddon scenario confidence is gone, and barter is the way of life. But all it takes is a pen to outlaw or become non-convertible into your homeland equivalence and the IRS remains intact.

  5. Trump would not let the markets tanked not until he's re-elected (Nov 2020).
    yc47ib likes this.
  6. Unreal how people really believe that countries like Venezuela etc, are in the situation they are because of some internal political or economic mistake. Venezuela is in chaos because Maduro decided to stand up against the NWO big boys. Thats it. They came to Maduro and said: Hey, if you don't play according to our rules you can't sell your oil. Maduro gave then the finger, they stuck it to the man !!
  7. zdreg


    Speak your nonsense to the starving people of Venezuela.
  8. clacy


    Nonsense. The NWO loves Commies like Maduro.
  9. maxinger


    When economies blossom or collapse, it provides trading opportunities
    and traders flourish

    When economies stagnant, it provides zero trading opportunities unless you trade credit options early enough. But sooner or later there will be great famine and starvation.

    So traders, beware of stagnant markets.
    Last edited: Jul 10, 2019
    dheagerty likes this.
  10. Inflationary monetary policy is what causes bubbles period...
    #10     Jul 10, 2019