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When You Hear the Word “Collapse,” Ignore It.

Written by Gary North on February 7, 2012

We hear the word “collapse” all the time. The word does not make sense in a free market economy. Collapses come all at once. Prices on a free market change, forcing people to adjust. We can get erosion. We can get recession. Short of a war scenario, such as biological pandemic, we cannot get a collapse.

I will cite an article that promotes collapse. I do not believe it for a minute. It is representative of what you should ignore.


The 5 Stages of Collapse: Where Are We Currently?

I light of the unfolding global sovereign debt fiasco that has turned out to be less of a waterfall and more of an avalanche [than anticipated I present below a description of the 5 stages of collapse and discuss our preparedness. If you haven’t read it yet, perhaps you should.] It has been read by 70,000+ people so far – and is still being read by an average of 1,500 people each month – on my site alone. Words: 2525

So says Dmitry Orlov (www.cluborlov.blogspot.com) in edited excerpts from his original article*. . . .

So far, [however,] little has been said specifically about the finer structure of these discontinuities. Instead, there is to be found a continuum of subjective judgments, ranging from “a severe and prolonged recession” (the prediction we most often read in the financial press), to Kunstler’s “Long Emergency,” to the ever-popular “Collapse of Western Civilization,” painted with an ever-wider brush-stroke. . . .

The 5 Stages of Collapse

Stage 1: Financial collapse. Faith in “business as usual” is lost. The future is no longer assumed [to] resemble the past in any way that allows risk to be assessed and financial assets to be guaranteed. Financial institutions become insolvent; savings are wiped out, and access to capital is lost.

Stage 2: Commercial collapse. Faith that “the market shall provide” is lost. Money is devalued and/or becomes scarce, commodities are hoarded, import and retail chains break down, and widespread shortages of survival necessities become the norm.

Stage 3: Political collapse. Faith that “the government will take care of you” is lost. As official attempts to mitigate widespread loss of access to commercial sources of survival necessities fail to make a difference, the political establishment loses legitimacy and relevance.

Stage 4: Social collapse. Faith that “your people will take care of you” is lost, as local social institutions, be they charities or other groups that rush in to fill the power vacuum run out of resources or fail through internal conflict.

Stage 5: Cultural collapse. Faith in the goodness of humanity is lost. People lose their capacity for “kindness, generosity, consideration, affection, honesty, hospitality, compassion, charity” (Turnbull, The Mountain People). Families disband and compete as individuals for scarce resources. The new motto becomes “May you die today so that I die tomorrow” (Solzhenitsyn, The Gulag Archipelago). There may even be some cannibalism.

Although many people imagine collapse to be a sort of elevator that goes to the sub-basement (our Stage 5) no matter which button you push, no such automatic mechanism can be discerned. Rather, driving us all to Stage 5 will require that a concerted effort be made at each of the intervening stages. That all the players seem poised to make just such an effort may give this collapse the form a classical tragedy – a conscious but inexorable march to perdition…Let us sketch out this process. . . .


As we can easily imagine, the default is cascaded failure: each stage of collapse can easily lead to the next, perhaps even overlapping it. In Russia, the process was arrested just past Stage 3: there was considerable trouble with ethnic mafias and even some warlordism, but government authority won out in the end. In my other writings, I go into a lot of detail in describing the exact conditions that inadvertently made Russian society relatively collapse-proof. Here, I will simply say that these ingredients are not currently present in the United States.


The last sentence applies not just to the USA but to the world.

Things will get bad. They will not get anywhere near as bad as the article indicates.

Continue Reading on www.munknee.com

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3 thoughts on “When You Hear the Word “Collapse,” Ignore It.

  1. Remember this quote Gary? "There is no means of avoiding a final COLLAPSE of a boom brought about by credit expansion." We are currently in the process of full throttle credit expansion as a response to a collapse in the housing and equity markets, which were formerly in a boom. Since we are continuing to expand credit, instead of allowing the bankrupt institutions to collapse, we will, according to Mises, eventually witness a destruction of the U.S. dollar. I would see that as a collapse.

  2. And by the way, we haven't had a free market economy since 1913.

  3. TheGovtIsNuts says:

    "The Black Budget & The Leveraged Buyout Of The World — Using Stolen Money"

    A conversation with Catherine Austin Fitts, forrmer Assistant Secretary HUD under G.H.W. Bush

    A Must Read, posted Nov 2011:

    "Catherine Austin Fitts said we are witnessing a Leveraged Buyout of the world that will permanently end democracy.

    "The elite has bought all the politicians and the media. They have stolen enough money to earn 2 trillion dollars a year from their investments.

    "She said 2 trillion dollars a year is sufficient to fund a world government.

    "Wall Street and the City of London have been given more money in Bailouts than the total amount of money the United States spent on all of its wars.

    "Wall Street was also allowed to steal 4 trillion dollars from federal spending that we are not allowed to audit. When she was Housing Commissioner in the first Bush administration, she once saw on one city block ten government guaranteed loans on buildings that never existed…

    "[Catherine] said we were all heartened when the House voted against the Bailout in 2008. [But] The bankers reversed that decision through three methods. They were able to donate money and give bribes which most voters are aware of.

    "[Voters] are not aware of Control Files which have all the blackmail information on politicians. But with government databases run by private military contractors and Smart Meters reporting on activities inside our homes to IBM the bankers now have Control Files on everyone.

    "They also have the right to kill anyone with impunity. Catherine said this right to kill with impunity must be taken away from them.

    "The hardest thing for her to accept is to live with people who try to pretend there is no Evil Force out there."