I get a lot of requests for economic collapse predictions. Of course, predicting what will happen to the economy can be challenging. But if you have a decent understanding of basic economics, especially from an Austrian school perspective, the reality of a total economic collapse becomes very clear. The following predictions are just a few of what I believe will happen to the economy in 2011.
The Federal Reserve seems undeterred to continue inflating under what they term “Quantitative Easing.” It’s really just an attempt to prop up the stock market and give the false illusion of an economic recovery. However, the continued devaluation of the dollar will just serve to perpetuate the economic collapse. In fact, an overdose of Quantitative Easing could cause hyperinflation, although I don’t expect to see that happen in 2011.
The economic collapse is posing an impossible fiscal situation to cities and municipalities. Tax revenues are not keeping up with the desired spending of these local governments. Their unwillingness to cut spending to balance their budgets is causing bond investors to leave the market in droves. So during the second half of 2011 I expect bond yields to rise and defaults to quickly follow.
Amid the economic collapse we are already seeing serious food inflation. I’ll bet you’ve noticed the rising prices at the grocery store. Some of that is due to decreased production of food and its consequent falling supply. And also, inflation tends to develop more in goods that people cannot cut back on, such as food. More dollars chasing fewer goods will always produce higher prices. And as food prices continue to rise, people will be stimulated to buy more food before prices go up any further, which will in turn drive them up even more. So it’s a good idea to stock up on non-perishable food today so you won’t have to worry if there is a food buying panic during the economic collapse, when it becomes evident that shortages are imminent.
Even though the Fed could be successful at stabilizing housing prices with its massive inflation, it probably will also be successful at destroying the value of the dollar and guaranteeing economic collapse. Ironically, this dollar devaluation will make it easier for homeowners to pay off their mortgages with cheaper dollars. However, homes prices are still likely to continue falling, while at the same time silver will be appreciating in price significantly. That will give people holding silver a tremendous opportunity of being able to purchase a home without a mortgage in years to come. It’s estimated that the median home price could go to as low as 4000 ounces of silver this year. But continued falling home prices combined with currency devaluation could send the median home price down to 500 ounces of silver this decade. Think about that. A $17,000 investment today could get you a $170,000 house within five years. If that interests you, I suggest looking more into silver investment.
Not very many Americans own gold, or even know what its price is. That will soon change. As the dollar continues losing value people will gravitate towards real money, which is gold. The media will continue saying there is a gold bubble due to its phenomenal gains in the past few years but right now that notion is just plain silly. Hardly any Americans currently own gold. When your friends and neighbors start telling you about all the gold they are buying, then you can worry about a gold bubble. And that will be the time you want to get out of gold and buy something else of value. But until then, buying gold should be at the top of your list (after food of course). It’s not cheap anymore but is still an excellent way to protect and enhance your future purchasing power and ride out the coming economic collapse.