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Wednesday, December 24, 2014

Crunch time



It's funny how some folks think of a financial collapse as if it's the end of the world. It's not.

When a currency fails the economy stops working. Now since most goods and services depend on a functioning financial arrangement that's a very bad thing indeed. However, it's not the end of the world.

In a way, a financial collapse is a weird thing. It's the failure of an idea as much as anything. Currency is only as good as people's faith in it. When no one thinks money has any value, it doesn't.

The weird thing is that there are still factories, workers, supplies, and all the other necessary things are still there. All that's missing is the financial arrangements that allow goods and services to be exchanged.

When the Soviet Union collapsed some factories did elaborate barter agreements to keep functioning. Barter works, but it's not nearly as smooth as a working currency. The workers were often paid in things like big chicken dinners, so at least they didn't starve.

Some countries struggled on when their currency collapsed because they were already using a lot of another country's currency. In the recent past many held onto American dollars for that purpose, but that might not be a good bet these days.

When an economy can't find a way around a failed currency, things go from bad to grim. High unemployment becomes no employment. Services fail, everything from water to lights to Police and Fire.

Many countries, including the United States, have experienced currency failure. It's not pretty. At the very least countries go through a depression. However, a country in depression, while suffering, still sort of mostly functions. Rarely does everything totally fall apart.

Of course, it's been a long long time since the United States has experienced such a financial failure. The world is a different place. We are dependent on a web of global systems working well. It could get interesting.

-Sixears

8 comments:

  1. FOR TRADE CONSIDER SEA SALT, WHOLE PEPPERCORNS, MASON JARS AND LIDS

    EVER CONSIDERED TAPPING A DEEP EXCHANGE WELL FOR GEOTERM HEAT FOR YOUR HOME///

    ANYHOW MERRY XMASTIME TO YOU AND YOUR LADY

    KEEP WARM THOUGHTS

    Wildflower

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    Replies
    1. Keeping warm.

      Merry holiday making to you.

      Delete
  2. In this day and age, you can be sure that no lasing system will allowed to develop that isn't under the control of the big banks.

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    1. Hope springs eternal. After all, Iceland threw their bankers in jail after the 2008 meltdown.

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  3. This is off topic but I thought you would enjoy this article in our paper today. May keep you on the water longer!
    Enjoy and Merry Christmas to all :-)

    http://jacksonville.com/current/town/2014-12-19/story/engineers-dream-takes-sail-intracoastal-waterway

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    Replies
    1. Boats and solar are never off topic. :) good article.

      Merry Christmas to you and yours!

      Delete
  4. Paper as an exchange medium must be convertible, %100, with commodities (e.g., one beaver plew for one pound of lead)

    Our Constitution is clear in Article 1, Section 10, "...No State shall...make any Thing but gold and silver Coin a Tender in Payment of Debts..."
    Commies didn't, don't like the Constitution, they like communism and that's most people, hence our present situation.

    Save powder, primers, and the precious metals, lead, antimony, tin, zinc, copper, brass as cartridge cases, silver and a stake for the coup.
    Semper Fi

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    Replies
    1. I don't have much gold, but I do have some lead.

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