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pat gilbert

TEDCRED 100+

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If the economy in the U.S. and or Europe implodes how do you see this happening?

Some say deflation some say inflation some say both.

Only the oblivious can ignore the obvious.

Anyway it is hard to wrap my wits around a complete collapse.

The USSR had a complete collapse but the government was so dysfunctional that perhaps people already had created viable alternatives in place.

I would find it hard to imaging that barter could replace the money as there would be no way to have any large scale division of labor or trade. Would this be an opportunity for Bitcoin to replace the money system?

Or would just be a slow gradual decline into a 3rd world economy?

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Closing Statement from pat gilbert

Everyone who responded believes that it is going to happen. One stated it was not going to happen.

Some said it will be quick, one said it will be dystopian, some said gold would be money of choice not Bitcoin.

The thing I find interesting about this is the few who commented on this subject. Admittedly negative, but something that is going to change everyone's lives 180 deg gets few comments?

Yet equality or the environment will get hundreds of comments. Me thinks that people are apathetic about this subject.

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    Jun 15 2013: Pat, In a recent copy of entrepreneur was a story about all of the investigations underway on Bitcoin. I had not heard of this. I typed in Bitcoin Investigations and found that Senators, federal reserve, SEC, homeland Security, and a federal defense criminal investigation plus others are underway.

    IMO, Bitcoin has made a dent in the FEDS programs and they are begining to fight back. Interesting.

    Bob.
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      Jun 15 2013: I scanned the article in entrepreneur.

      It sounds like thieves (government does not want any competition) but since it is international I don't see how they can do much about it?

      Before the central bank the U.S. had 0 inflation. In other word if you buried a dollar in 1776 and dug it up in 1912 you could still buy the same amount of stuff with that dollar. Since 1913 with the "benefit" of the central bank we have had the great depression started by FED instigated deflation, exaggerated and prolonged bubbles and incessant inflation.

      Could we do worse without it?
  • Jun 3 2013: I think that the world is too connected for a catastrophic collapse to be a likely outcome in a well established economy like that of the US. Countries, through trade agreements at least, are invested in each other to a very large extent and do not like their partners to endure hardship because it also represents hardship for the investing nation.. So, economically speaking, globalization has something of a stabilizing effect, and that is why I think that economic decline most often happens relatively gradually. Not always, but most often. So yes, if a decline were to happen in the US or EU, I would think it would be mostly gradual until the very end when things would speed up...just like the death of anything in nature.

    Re: barter. I like the idea of barter, and with the internet connecting people, I think it may be easier to do than it has been in the past. However, money exists to make the exchange of goods easier, and it won't be going away any time soon. Digital currency is an attractive idea and I believe that Bitcoin, or something like it, may be on its [gradual] way. Again, however, countries are too invested in trading each other's currencies to allow an overnight transformation like this to take place. Not that they would be completely averse to it, but when it happens, each stakeholder in the currency system will have something to say that will transform it from its original conception into something with so many concessions added onto it that it is still uncertain to me how it would act in the open market.

    Inflation, deflation...it all makes things harder to buy, so does it really matter?
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      Jun 3 2013: The speaker in the above link thinks that most often it is sudden.

      Barter prevents a division of labor and makes trade impossible.
      • Jun 3 2013: Barter is a natural step in the development of an economy. In fact, it promotes a division of labour and is the first step in creating a trading environment. That is, people make something (or provide a service) and then trade it for something that they need. In all likelihood, most of us have engaged in a similar kind of activity as children. Ever read Tom Sawyer? Money is introduced at a later point to facilitate a greater trade of goods between people. Even so, it seems to me that barter still exists within a monetary context...I mean, what about currency trading? Is that not a kind of barter agreement?
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          Jun 3 2013: Barter requires finding someone who wants what you have to offer and you wanting what they have to offer in a quantity that is agreeable to both parties.

          Trade with other countries or large parties would be impossible.
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    Jun 2 2013: The question being, "how do I see this happening"? Inflation being: In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. Recession: In economics, a recession is a business cycle contraction, a general slowdown in economic activity. Macroeconomic indicators such as GDP, employment, investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise.

    By defination the US is experiencing both inflation and the on set of a recession. Either of which could cause major impact and both in the same cycle catastrophic failures.

    The folly of continuing the Keynesan economic model that allows spending to exceed GDP and accumlation of unpaid debits as acceptable and implementing social programs with no visable means of contiinuing funding ... should in even the most uninformed raise great concerns. The problem is not as much the unemployed, but IMO , a system that encourages unemployment through programs that provides for all needs and kills the incentive to find employment.

    We have the tail wagging the dog in the US with the Fed and Ben Berneke. He is not answerable to the people or congress. To continue to buy up acid loans, QE 3, continuing stimulus intervention for almost any / everything and printing of more money has again IMO given false hope. It provides a tempory and illusion of progress but has no long term benefits.

    Other factors such as long term political failures and bad decison making are contributors. To state it is the fault of any given administration would be unfair ... few administrations have controlled both the House and the Senate. The continuing path of all legislators to seperate themselves from the people and become elitists and vote themselves raises, perks, and lifelong benefits are suspect.

    Many factors are involved .. these are high on my list.

    I wish you well. Bob.
  • Jun 2 2013: Hey Pat,
    here in the Netherlands, we've got a disaster about to happen, in my opinion.
    We are trying to meet a budget deficit target of 3%, about 16 billion euro, and we're in the middle of our third recession in 5 years. Our government has been, for lack of a better word, shaky over the past few years. It collapsed last year, and there is not a lot of support or faith in the current leaders of this nation.
    People are being told by the government to 'tighten their belts', when they have nothing left. Costs have gone up, but everyone is encouraged to keep consuming - with what?! Their good looks??
    Vital aspects of the country like health care, education and culture and arts are suffering, or cut completely.

    This is all going very wrong, very fast. The Netherlands, I believe, feels it has a responsibility to Brussels to 'be a good example' and stay under that 3% budget deficit target. Unfortunately, this country's desired 'example' is going to be at the expense of its people.

    http://www.bloomberg.com/news/2013-05-29/eu-gives-the-netherlands-an-extra-year-to-meet-deficit-targets.html
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      Jun 2 2013: I read the link. I would think the austerity program would be good but as usual politicians make sure the austerity is disproportionately applied to the public that makes it the most visible.
      • Jun 2 2013: Indeed, sadly the gap between government and the people is wider than ever. Here is an interesting article about the Dutch view on austerity:
        http://online.wsj.com/article/SB10001424127887323741004578418333407266420.html

        The housing market has been killing the economy for years, and employment is an increasing problem. Social security is relatively fantastic (although, not what it was 2 decades ago), and unemployed are well supported in a fully integrated system, which unfortunately is abused as well.
        I just don't understand how the people in charge think that the people can come up with this amount of money, and still come out on top. Even in a socialist system like this, those with little or no means, literally pay the price.
  • Jun 15 2013: My lack of understanding of economics and distrust of those in power lead me to think this is all part of a master plan.
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      Jun 15 2013: I think you give them too much credit.
      • Jun 15 2013: I hope your right.
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          Jun 15 2013: Craig, First I agree with Pat ... but your comment made me start thinking ... your remark was "and distrust of those in power ". Just as an exercise ... who would you consider "in power" with the ability to effect change on a global basis or even a wide scale basis?
  • Jun 5 2013: If we look at Ricardo and therefore classical economics adding 100 million workers on top of getting rid of so much manufacturing cannot help.
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      Jun 5 2013: I don't understand, "adding 100 million workers "

      Getting rid of manufacturing is not really the case. The largest manufacturing country in the world is the U.S. by far, China cooks the books. Don't be miss led by all the bobbles you see at Walmart, the U.S. still manufacturers Jet airliners, big construction equipment, gas turbines, computer chips. This sector is as strong as ever.

      By virtue of your Ricardo's comparative advantage exporting some of the jobs creates more jobs and wealth here.

      The real problem as I stated before is that Bush and O and Benny have propped up business that desperately needed to die and especially O has made the prospect for small business look like the horror movie "Saw". ALL new jobs come from small business, and that leads us back to now and O's handiwork.
      • Jun 6 2013: All I know is that when I could keep my office open I keep seeing people let go to be replaced by a lower wage person. Being a human being I was concerned about my redundancy.. Real people also seem to have less money.
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          Jun 6 2013: That is a bit anecdotal. It is about the lack of new jobs being created and about inflation.
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    Jun 3 2013: The adhesive that holds entities like the US and the EU together is money. If money erodes into uselessness each of those aggregate entities (states in America and nations in Europe) will return to a decentralized autonomy. The One World people (Fed. Reserve, IMF, Tri-Lateralists, etc.) will try to blend-in to avoid being blamed for the collapse. Power struggles will ensue within each state/nation. Until civil stability is established might will be right. Jungle rules. Gold and guns will win the day. It will be the greatest adventure in human history. With enough time history will repeat itself. Bitcoin and the Internet will be among the very first fatalities.
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      Jun 3 2013: Russia did not abandon the Ruble or Argentina the Peso, or Zimbabwe their currency ?

      Gold is hard to divide into smaller units.

      I think Bitcoin has legs, think of how it would tip the scales.
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        Jun 3 2013: Pat, I am a baby in the economics world ... however, it is my understanding that after WWII the finance ministers from the leading nations gathered and chose to select the US dollar as the marker for all currency value. If this is true ... could the same thing happen again.

        If the nations got together for this type of decision again .... I can imagine Ben Bereneke being a primary voice and suggesting a vehicle of his choice.

        Since this is all my dream ..... I have a problem in what would Ben select and what would the advantage to the banking community be in his selection?

        Would the bit coin be a choice to the world banking community? How could the banks use this to their advantage? As always the bottom line is money and control ... especially in banking.

        Thanks. Bob.
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          Jun 3 2013: By definition money is a symbol backed by confidence. The U.S. is the reserve currency of the world because of confidence. Also Bretton Woods used the gold standard. Which was ended in 1971 by Nixon. And that is where the hockey stick on spending occurred.

          I read somewhere that Benny wants to create a world currency.

          The beauty of Bitcoin is that it is not controlled by anyone, just the market. Which means it will have bubbles but they would correct themselves quickly.
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        Jun 3 2013: The USSR was really an Empire composed of conquered nations, not a peaceful coalition of willing members. (Have the former USSR nations kept the ruble?). Also, Argentina and Zimbabwe are sovereign nations who have never been part of a unified nation/state arrangement. My point is that I think the disintegration of the union will happen immediately. The value of precious metals, especially gold, will float at first but will quickly be established as the trusted currency. Learn how to assay, weigh, and prepare gold and you will be in great demand in the Brave New World! Bitcoin's wagon is hitched to the star called The Internet, which will go all supernova almost coincidentally with the Disintegration.
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          Jun 3 2013: Yes they are still using the Ruble.

          It seems to me that gold would be unwieldy as it cannot easily be divided, easily stolen, etc.

          The problem is that no money means no division of labor or trade.

          I don't think the internet will go away it is too important.

          But maybe you are right.
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        Jun 3 2013: RE: "It seems to me that gold. . . " Only during the post-apocalyptic regrouping phase will metals and jewels be the best interim currency. Once history begins to repeat itself and the banking/lending/fiat money systems return then the comparative unwieldiness of gold will outweigh its benefits, I agree about that sir. Double Eagles, Si! Bitcoins No!
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    Jun 3 2013: Hi Pat.

    The banks will close on a bank holiday & not re-open. Savings will be used to offset debts & the whole system abandoned. We will be called to attend chipping stations to have implants. From then on all our transactions will be carried out via our implanted chips. Ps. It won't work.

    :-)
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    Jun 3 2013: ..
    .
    Yes!

    Money makes us greedy, which barter can’t.
    Greed makes the economy implode.

    Greed comes from the inability of our instincts (DNA) to detect harmful happiness.
    Then, we need to make a new instinct to detect and refuse it by:
    (1) Bio-evolution (adaptation, education, mutation, etc.);
    (2) Gene-technology.
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      Jun 3 2013: W what you say is weird. Quit waxing esoteric and talk plainly.
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        Jun 3 2013: I think W is not trying to be esoteric but is translating from Chinese.
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          Jun 3 2013: And how many times as he tried this without change?
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    Jun 2 2013: I think it's going to happen, it going to happen soon perhaps a total collapse within 15 years or something. With recession coming back quicker and quicker each time and also falling deeper and deeper many leading economists are in agreement that it won't hold that much longer.

    The USSR didn't have a backup in place, there was total anarchy for a while there and many died. It will be the same here.
    What happens when people can't get paid to go to the waterworks that provide water for a large city, what happens when this happens all at once everywhere?
    The only option as I see it is to be self-sustainable and to make sure that as large a portion as possible of people also are self-sustaining so that they don't come and kill you for food.

    Just like the last economic collapse or the one before that we won't see it coming until it's already too late (has happened).

    It's quite interesting what happens actually, every factory is still there, all the mines are as they were before the sun still shines on the fields that grow but from one day to the next everything can just stop working...
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      Jun 2 2013: The USSR was so dysfunctional that I would think people were already self sufficient.

      The U.S. and Europe may get hit harder because of this.

      It would seem that Russia is somewhat different in that it did not have a free economy in the first place. So it was starting from scratch.

      Argentina on the other hand has to deal with the debt. It might be easier for Argentina to default and start over.

      In the U.S. there was 0 inflation until 1913. Inflation or Deflation are not a natural occurrence.

      Debt is the problem with all of the above except Russia.
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      Jun 2 2013: Note to self, I'm not going to complain so much.

      It would be hard to have any economic activity of any size with barter. They don't have barter in Russia or Argentina?

      If bitcoin could gain wide spread usage why not use it? By definition money is a symbol that people have confidence in. They might have more confidence in Bitcoin than the Ruble or Argentinian Peso?
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          Jun 2 2013: I understand. When the USSR imploded they still used the ruble and Argentina the peso. They still had the internet. They have the internet everywhere and will continue to have.
  • Jun 2 2013: Very much like the alleged Great Depression but much larger. We are doing about the same and more. There are so many bubbles.
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      Jun 2 2013: Agreed so deflation or inflation?

      Because the dollar is the reserve currency of the world and because the ones who practice incest with Bernanke invest their free money in real wealth, inflation doesn't appear to be as bad as one would think. Deflation would be a simple thing for Benny to pull off? As they did in the 30s
      • Jun 3 2013: Pat the scarry thing is that during the Great Depression for awile people paid a premium - believe it or not- for government bonds e.g. a negative return Deflation Houses went down at times as did stocks
      • Jun 4 2013: Gee Pat Bush(43) and Obama(44) have whacked the economy hard with stimulus, and it hardly moved. It's almost scary.
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          Jun 4 2013: That is because it is phony, created through fake money.

          Economic growth is created by investment, economic downturns are created by over investment. Anything else is and illusion. In other words we are on the other side of the looking glass.

          The implosion will center around money maybe slow maybe fast, maybe deflation maybe inflation, maybe peacefully maybe violently, maybe soon maybe in a while, but it is coming.