What to Expect When the Dollar Collapses

[4dsc]

http://blogs.salon.com/0002007/2006/05/14.html

Where will you be when the lights go out??


Just as in 1929, we now live in an economy that is living wildly beyond its means, depending on greater and greater fools to keep bidding up governments', corporations' and citizens' paper wealth. Just as in 1929, everyone is borrowing to buy, either in the hope that they can sell later for a profit (because it is the only way they can hope to increase their net worth), or because it is the only way they can buy at all. And just as in 1929, it is unsustainable, and will lead to a sudden severe reversal followed by a decade (or more, this time) of ever-worsening conditions, except for upper-income (six-figure, this time) earners.

[Warpy]

1. Get out of debt any way you can

is the best advice I have to offer. Don't take on any debt right now, especially consumer debt for items that will be trash before they are paid down.

Empty houses and people living in the street. That's what we're about to see.

Don't expect any help from either party.

[Sammy Pepys]

3. That's the best advice bar none.

It's appropriate for any situation, really...but extremely important now. It's also the action that involves the least amount of risk.

[DBoon]

8. Why?

Why not pay off the debt with worthless dollars later, instead of more valuable ones now?

I'm assuming one still has dollars at that point....

[sable302]

10. Oh my Gosh, a voice of reason

If anything, take on all the debt you can possible afford and invest it in real estate, gold, or anything else that might ride the inflation wave. The fed has shown time and time again that they are perfectly happy inflating us out of any dollar problems.

It's people with all their assets in cash that will suffer most, because cash is not like land. They can always make more cash.

[moodforaday]

15. Are you serious?

Okay, I'm not in the US so please correct me if I'm wrong, but when you take a loan, is the interest unconditionally fixed? I.e., if there is a massive inflation, will interest on your loan not go up to make up for the creditor's loss? It does everywhere else.

[sable302]

16. My home mortgage is fixed for 30 years

Is that a good enough example?

[DBoon]

18. yes, the USA is different

people who owned assets during the inflation of the late 1970's made out very well.

[moodforaday]

51. Thanks for explaining this. But it also means

It also means that anyone who owes money to you - or your employer, for example - will not be paying it back in the "real" terms. It cuts both ways.

[DBoon]

52. it was a big political issue in 19th century America

Farmers borrowed money from large urban (mainly New York) banks.

The banks (Republicans) wanted to maintain a stable currency, so they would be paid back in dollars that would be worth the same or even more.

The farmers (Democrats or Populists) wanted to devalue the currency by supporting paper money or by free coining of the then-abundant silver.

[info being]

63. Exactly...what you don't want are savings.

[BooScout]

21. Mortgages in the States.....

are different than most of Europe and the UK. You can get a mortgage at a fixed rate for 15, 20 or 30 years. My last mortgage was for 15 years fixed at 5%.

[DoYouEverWonder]

32. It depends on the terms of the loan

Ajustable rate loans are the ones where the interest changes.

There are pros and cons to both types of loans.

[Theres-a]

14. Interest, maybe?

I'm thinking as interest rises,and it is harder to purchase things you really need(food,transportation,etc)the money spent on interest could maybe have kept a roof over your head.Especially with the new bankruptcy laws and rising unemployment. I could be wrong,I'm no economist,just a working class stiff,that reads these threads nervously.

[ayeshahaqqiqa]

17. You are assuming you'll have those worthless dollars

and you might not. After the crash, people lost a lot of money if they had stocks. Many banks closed, many never to reopen. Companies closed down, and banks forclosed on mortgages. Those who kept their jobs found their salaries slashed. I realize it is different now-in ways, I feel much worse. If you have a lot of credit card debt, you have to be very careful on making payments so as not to have your interest rates rise to usurous levels.

[DBoon]

20. You are right. I did make that assumption

There is always the survivalist strategy - learn to grow your own food, repair your own car, etc.

That would be prudent if we end up like the early 1930's

[ayeshahaqqiqa]

29. Not only that

but invest in solar power while you can. Make your networks. For example, my husband is a mechanic. We trade mechanical work for food. A person who raises heirloom plants (which means you can save the seed and plant them next year) trades plants for health care. We have the start of a really good network of people providing goods and services.

[Warpy]

23. That's the assumption you can't afford to make

because the first thing to go in a depression is the job market. It collapses completely. Prices reluctantly start to fall once the consumer base has evaporated and shop owners sell at a loss just to keep themselves fed for as long as they can.

Of course, if you're carrying $150,000 in debt with a $20,000 income, forget it. Just be prepared to kiss it goodbye when the time comes, invest in a tent.

[DBoon]

35. If you are in debt to buy a salable asset

then when you lose your job you sell the asset and use the proceeds to pay off the debt. If dollars are dropping in value, then the price of assets goes up to compensate (in general).

You buy a loaf of bread for $1 today, sell it for $5 tomorrow, because the dollar has dropped in value.

I don't have the stomach to follow this advice myself, though

[girl gone mad]

54. Yes.

If we are looking at massive inflation, which I think we could be, afixed rate mortgage is a good bet. Things like grand pianos made in China are a good bet. When the dollar is deflating, then almost anything is better than cash.

[garybeck]

34. student loans

I've avoided debt all my life. I pay cash for cars and I don't run up credit card debt. however I'm unable to avoid having mortgage, and I am about to take out a student loan for my son. what happens with student loans when the shit hits the fan? do they make your kid drop out of college?

[sable302]

2. I'm sorry, but hasn't the dollar

already lost something like a third of it's peak value? Do we expect it now to just lose the rest all at once, or at what point will we look back and acknowledge that it's already collapsed and just get on with our lives?

[pitohui]

27. you are correct

* announced we would follow the soft dollar policy some years ago

it takes awhile for people to catch up, i guess :shrug:

[idlisambar]

nope, sorry

An $800 billion current account deficit means the dollar has a lot further to fall. Count on it.

[idlisambar]

36. When the Current Account Deficit stops being huge

The dollar will go down much further, it is only a question of when and over how long a time period.

[Carla in Ca]

57. The government has been trying to convert us

to a cashless society for years. It may very well be their latest attempt to completely control us.
Our bank manager said she didn't think we would see it in our lifetime. I wonder.

[girl gone mad]

55. I don't think this is about..

just the value of the dollar versus the Euro or the Yen, I think it's about how much your dollar can buy you here, in the USA.

[Danascot]

59. The Decline and Fall of the US Dollar

http://www.kitco.com/ind/Barisheff/may112006.html

As measured by the US Dollar Index, the trade-weighted value of the dollar has declined by 25% from its peak in 2001. In gold terms, however, it has lost over 50%. Since mid-year 2005, all currencies have started to decline against the prices of gold, silver and platinum, signaling that astute investors are beginning to lose confidence in paper currencies and are turning to precious metals to preserve their wealth.

As even more credit money is created, global investors will begin to lose confidence in the US dollar and question whether the US is able to repay its massive debt obligations. The US federal budget deficit, trade deficit and current account deficit are already growing exponentially. Eventually, investors will be unwilling to purchase US debt as they have in the past. This will force the Fed to increase the money supply even further in order to purchase federal debt obligations that foreign investors are no longer interested in. As more money is created, the exchange value of the dollar will plummet even further, and foreign investors will suffer increasing currency exchange losses. Eventually they will begin selling their US investments and converting their US-dollar proceeds into other currencies and precious metals.

While the timing of a US-dollar collapse and the global currency crisis that will accompany it may be difficult to predict, it looms ahead nevertheless. There is little chance that the mountain of US debt will ever be repaid, or that the US trade deficit will be reversed. Without massive inflation, the US has no way to meet its $50 trillion Social Security and Medicare obligations. As global investors look to other currencies, they will realize they are not fundamentally any better. Most foreign central banks will attempt to debase their currencies to match the decline in the US dollar in order to stay competitive in exports, resulting in a round of competing currency devaluations where all paper currencies decline relative to gold, silver and platinum. Individual investors, institutions and central banks will turn to the historical safe haven of precious metals to protect their wealth.

Also see:

How the Dollar Will Collapse:

http://www.kitco.com/ind/AuthenticMoney/may082006.html

• As confidence is whittled away the currency appears relatively stable.
• Then a particular event will occur that triggers a breakdown and the currency drops suddenly, like falling off a cliff, until it finds a short-term bottom and it holds that level for a period as though on a plateau. The process then repeats itself.
• The degeneration then accelerates, so the fall from the cliff to the next stable plateau happens more quickly.
• Then the height of the cliff extends until it grows at an exponential basis.
• The final collapse will occur when the currency is completely discredited and used only by those unfortunate to have no other choice.

[Danascot]

60. Forces Behind the Collapse of the Dollar

This article argues for buying gold as a hedge against the collapse of the dollar, which you may or may not be inclined to do, but it also summarizes the forces behind the collapse:

http://www.kitco.com/ind/Edelson/may112006.html

Force #1
Skyrocketing Federal Deficits

The costs of 9/11 ... Homeland Security ... Afghanistan ... Iraq ... post-Katrina ... and the most aggressive economic stimulus packages of low interest rates and tax cuts in history ... have all come together to bust the federal budget and create a record-shattering $500 billion deficit.

And that’s after they’ve virtually confiscated hundreds of billions of dollars in surpluses from the Social Security Trust Fund.

When you include unfunded liabilities for Medicare and other obligations, all told, the U.S. is in debt to the tune of some $50 trillion.

Bottom line: The United States is effectively bankrupt. And that fact will continue to cause millions of jittery savers and investors to seek the safety and security that only gold can provide!

Force #2
A Tidal Wave of Newly Issued Treasuries Is Already Beginning To Crush the Bond Market

When the federal deficit surges, so does the quantity of bonds the government has to issue. And today’s record deficits mean record quantities of new U.S. Treasuries must be dumped on the market, even if willing buyers are becoming scarcer.

That inevitably causes:

A) Crashing bond prices, and

B) Explosive increases in longer-term interest rates — both of which have just now started.

A big deal for gold? You bet it is! The debt markets in this country are nearly three times larger than all the stock markets combined. If only 1% of that money ultimately finds its way into gold, that alone could propel its price up to my long-term target of $2,200.

Force #3
Foreign Bond Investors Are Sitting on a Hair Trigger

The same can be said for foreign bond investors — who now buy the majority of U.S. Treasuries and other U.S. bonds. They’re now getting hammered in three ways:

First, their principal — the market value of the bonds — is plummeting.

Second, after inflation, most of the bonds bought over the last three years pay next to nothing.

Third, the declining dollar is digging into their principal even further.

Sooner or later, foreign investors are going to have no choice but to:

- go on a buyer’s strike, effectively boycotting future U.S. Treasury auctions, or worse ...

- Start dumping some of their current U.S. Treasury holdings.

As the dollar collapses, foreign central banks would naturally be forced to slash the percentage of reserves they allocate to U.S. dollars, diversifying more into other currencies and gold.

We’re already seeing some preliminary signs of this, with Russia, Saudi Arabia, and even China rumored to be buying gold. But I think this is just the beginning of central bank gold purchases. Especially considering ...

Force #4
The Dismal Dollar

You don’t have to wait for foreign investors to begin dumping bonds before you see a dollar plunge. Just in the past month, the dollar has already plunged 5%.

This is no trivial event. For many months, most pundits had been proclaiming “the end to the dollar bear market.” They said the dollar wouldn’t fall any more because the Fed was raising interest rates. They said the dollar was going to be strong because the U.S. economy was doing well. They laughed when analysts like me recommended dollar hedges like gold.

Well, guess what: The Fed did raise interest rates. And the economy did improve. But the dollar fell anyhow ... and now nobody’s laughing anymore. Quite to the contrary, they’re quietly asking themselves:

If the dollar is already falling in the most favorable circumstances ... what in the heck is going to happen if those circumstances are not so favorable?

Currently, foreigners hold about $2.5 trillion in U.S. securities. When they begin cashing in, they’ll have to put that money somewhere — and you can bet your bottom euro that even greater chunks of it will move into gold.

Force #5
Washington Has Lit the Fuse on A Devastating New Explosion Of Domestic Inflation

Washington has been literally flooding the U.S. economy with brand-new paper dollars for nearly five years now.

The lowest interest rates in history ... the largest tax cuts in history ... the largest federal deficits in history ... plus ... massive expansion in the money supply represent a veritable tidal wave of newly created dollars and they’re already triggering the first big inflationary wave since the early 1980s.

The Consumer Price Index — manipulated by the government — doesn’t yet show it. But it soon will.

Commodity prices are blasting off everywhere — not just in oil, or gas, but also in copper, tin, aluminum, zinc, sugar, soybeans, wheat, and corn.

Consumer expenditures that are toned down or excluded from the CPI — or simply ignored by most analysts — such as for fuel, housing, college tuition, and others — are also surging.

And according to the recent Department of Labor report, even wage inflation is now starting to kick in — with wages up an astonishing .5% last month.

So watch out: Wage inflation is rocket fuel for the overall inflation rate.

Force #6
The War Environment

You don’t need a bloody war to frighten investors. Long before the first shot is fired, many are already seeking out gold as a hedge far more actively than ever before. And as the war drums beat louder, the gold rush could easily turn into a stampede.

Bear in mind that Iran is not just any developing nation; and the Middle-East is not like any other region. It’s at the core of the world’s most important commodity — petroleum.

Also please understand that most international investors feel and smell the threat of war from a very different perspective than we do. While we watch it all on the nightly news from our comfy family room sofas, millions in Asia and Southeast Asia see it on their doorstep.

[lpbk2713]

4. You think the finger-pointing after Katrina was bad?

There'll be finger-pointing galore when the economy goes under for the last time.

[Poll_Blind]

5. Well said! It'll be a world of pointing fingers at the US and in the US..

...there won't be enough fingers to go around!

PB

[lutefisk]

6. Finger Pointer in Chief

[lpbk2713]

7. Precisely.

"I got mine. The hell with you."

[Ilsa]

61. when was this? I don't remember the occasion. thanks. eom

[Ian David]

11. You know who we'll have to blame, don't you?

The gay-marrying flag-burning illegal immigrant baseball players on steroids singing The National Anthem in Spanish while refusing to say Merry Christmas, that fed Natalie Holloway to an alligator after playing violent video games.

[AnnieBW]

53. Don't Forget the Clenis!!!

You're forgeting your ABC's - Always Blame Clinton!

[CantGetFooledAgain]

9. Money market funds

Question: what will happen to the value of money market funds as the dollar decreases in value? I know that money markets are considered a safe investment as they normally do not lose value. But in the extreme case of a severely devalued dollar, will money markets start to lose value, or are they still "safe"?

[sable302]

12. interest rates will go up

because inflation will be horrific. Look to the late 70's early 80's as an example.

You could get double digit interest on a CD in those days. My home mortgage is locked in at less than half of what you could earn in a frickin' savings deposit back then.

[Buttercup McToots]

13. Please

I hope someone answers this question...

[EVDebs]

25. Inflation won't last that long since US buys most of world's goods

World GDP total $36 trillion (est. from World Bank); US GDP $12 trillion rounded both figures. With two-thirds of US GDP being 'consumption', that means that over 20% of the world's GDP is from US consumption. Who is going to make up for the lost consumption when the US economy declines...?

At that point of realization, either globalization and interest rates moderate or interest rates rise, US consumers stop buying the world's shit, and a deflation begins. Interest rates stablize but a slow downward spiral of deflation then begins as less and less of the world's production is purchased by US consumers who are barely getting by just paying the mortgage and food bills.

[girl gone mad]

56. Personally,

I do not think that Chopper Ben will ever allow deflation to occur. The elites who pull his strings have way too much to lose under a deflationary scenario.

[Iowa]

45. A few suggestions...

1. Nobody knows what will happen. NOBODY. There is an entire industry of people who claim to know - but their odds of getting it right are consistent with pure chance. Ignore all the background noise.

2. Diversify your investments. Don't plunge everything into one or a few assets classes. That is called "market timing" and there has been more money lost trying to time the market than most any other mistake you can make. Market timing is a losing proposition. Determine a reasonable asset allocation - preferably one that has held up well under a variety of economic scenarios historically. Hold stocks, bonds, cash, and real estate. Invest a good portion of your stocks internationally - I hold roughly 40% internationally - but do what makes sense for you. The WORST thing you can do is react to internet board recommendations that are based on fear. Keep your head when everyone else is running in all directions.

3. Avoid debt if you possibly can. Debt can be a good tool for some things, but it's generally a good idea to avoid it.

4. Control your spending. Live frugally. Some of the happiest people I know understand that it's important to put the brakes on standard of living improvements by making tiny, incremental improvements as you go. Buy used cars and drive them forever. Buy a smaller home than you can afford. Maintain your stuff so it lasts and lasts. LIVE BELOW YOUR MEANS. SPEND LESS THAN YOU EARN.

5. Regarding money market funds... Such funds are short term places to park cash you know you'll need in the next year or two. They typically keep pace with inflation (barely) which means they return ZERO in real dollars. I would not place a significant portion of my assets in MM funds. I keep roughly 2% in MM funds.

6. Read up on TIPS, I-Bonds, and short-term bond funds. These are probably under-utilized by most people.

7. Pay attention to investment costs. Don't use brokers or financial planners. Don't buy funds with loads - EVER. It's a waste of money. Keep your costs low. Mine are roughly 0.15% annually (fifteen one-hundreths of one percent) per year. People who use brokers and planners pay 20 times that while simultaneously taking on a whole boatload of other problems associated with the financial services industry. Don't do that.

8. The most important point to remember is this: There are consequences and downsides to every investment decision you make. There is NO magic bullet - if there was, everyone would go there and it would cease to be magic. Most people who understand the history of the markets invest in a well diversified portfolio, they keep their investment cost very low, and they don't let emotions, fear, or advice from self-proclaimed gurus cause them to veer from a historically sound and predetermined asset allocation. Make a plan and stick with it. And when everyone else is running for the exits, it's probably a good time to re-balance your portfolio and buy what the masses are selling.

These suggestions go against the grain of this thread, but considering all the other options, it will keep you out of the worst trouble. Remember - no magic bullets - those only exist in hindsight.

[CrispyQ]

58. #4 on your list is so important & probably the hardest for many

Americans to do.

Another suggestion, as silly as it may sound -- learn to garden, collect seeds & learn to can your harvest. Not up for an entire garden yourself? Check if there is a community garden in your area.

[Scriptor Ignotus]

64. best post on the subject

thanks for the tips.

[AnnInLa]

24. I Bonds.....am I correct

in thinking that I Bonds would be a good investment if inflation rises? The interest rate payable on the bond rises with inflation, over and above a set interest rate. Bonds should be held for 5 years tho.

Anyone know more than I do? (almost anyone)

[pitohui]

30. yes i bonds are good in an inflationary economy

you are confused because we have people arguing both sides of the mouth

the great depression was a DEFLATIONARY event, in event of deflation, you should not have debt because you will unable to get a job paying enough to pay off the debt, the value of your property such as land etc becomes worthless

in an INFLATIONARY event, such as the late 1970s, you do better to go into debt and pay back your debt for real property such as land in dollars that are declining in value, hence, the many middle class homeowners of the late 1970s who backed into becoming millionaires or nearly so because of inflation

debt is the best investment if you believe inflation the more likely outcome, as i do, stocks and real estate bought on margin can pay off wildly well in that circumstance

cash is the best investment if you believe deflation the more likely outcome

unfortunately if you bet on deflation and pay off your debts and live frugally, then INFLATION cheats you of your savings and of your one and only life while those who invested in debt and bought lots of property thrive around you (see under the 70s/80s where frugality was punished and buying lots of real property rewarded)

unfortunately if you bet on inflation and there is deflation, then of course you're equally screwed

life is risk

buy a crystal ball?

[AnnInLa]

38. Thanks for the clarification.....I think

On the advice of a so-called consumer advocate (Clark Howard), I did buy an I Bond a year ago. On exactly the same date, I bought a CD for exactly the same amount. Last week on the same day, I cashed both of them in. I had to take a penalty on the I Bond of 90 days interest. With the penalty (which I had previously factored), I earned exactly the same amount of interest. To me, this mean inflation is rising....correct?

[Iowa]

46. Not really...

Yes, inflation rose, but the amount you earned on your CD vs. your I-bond would not necessarily be an indication that inflation rose during the interim. The CD yields a fixed rate while the I-Bond has both a fixed rate and a fluctuating rate that is tied to the CPI. Apples and oranges. The earnings on your CD could have been more or less than the I-Bond - even with inflation.

Also keep in mind that the CPI may not reflect the actual inflation rate of your living costs. I happen to believe that the CPI is deliberately understated. Nevertheless, I do prefer TIPS and I-Bonds (I own both) over other types of bonds.

[Ksec]

19. Hey, its a credit card economy.

Its all based on percieved ability to pay back debts someday. Meanwhile everything on the positive side of the ledger just keeps going downward so you have to borrow more and more to live. Eventually the bottom drops out and the only ones who survive are the credit card companies and the banks who got guaruntees of a full return of their investment, written by our government. Notice how they are the only ones who have this guaruntee? Makes me think this is all a big plan.

[Ksec]

26. Oh btw, thats wealth redistribution

from us poor and middle class to the rich and comfortable.. Not like they normally say.

[EVDebs]

33. So, what are those 'rich' going to buy with their 'paper' money ?

Penalties upon early withdrawals...

[tigereye]

22. what?

that didn't strike me as proof of any such thing.

Yes, we are massively in debt on many fronts. But this is the first I have ever heard of the dollar collapsing.

[MadHound]

31. The dollar has lost roughly seven percent of its value in the past 2 weeks

Against other currencies. Some serious jitters that there's going to be a massive dollar sell off, bank run mentality. And one of the main props of the dollar, the petrodollar, is starting to go as Iran and other oil countries start dealing oil in euros rather than dollars.

Hell, even the Canadian dollar, the loonie, is worth $1.09 US.

It isn't looking good for the dollar at all. And a big part of this has been caused by the massive debt that this misadministration has run up.

[KurtNYC]

40. The loonie is $0.90 USD -- NOT $1.09USD

http://money.cnn.com/data/currencies/index.html?howmany=100&currfrom=126274&currto=126275&btn_calculate=Convert&calculate=true

[MadHound]

44. Beg pardon

I was going with two day old data. Still, even at ninety cents US, that's a big sign that the dollar value is declining:shrug:

[KurtNYC]

49. I think you read the rate backward perhaps

because right now the rate flipped over would be $1.09 Canadian equals $1.00 US (versus the other way: $0.90 US = $1CAD).

I am holding loonies I bought back when it was $1CAD= 72-cents USD. The Canadian government had a target of ~87-cents USD but it keeps going above that because of the price of oil (Canada is the largest foreign supplier of US oil). I expect when oil slides back to $50/barrel the loonie will level off around their target. Also Canada's economy is roaring - 8 years of government surplus and the highest employment rate in 30 years (thanks in part to low health care costs).

The Canadian dollar is strengthening and the USD weakening but both were lower against the Euro last year so I don't see the current situation as some kind of breaking point.

[Blackhatjack]

28. Credit cards are raising their interest rates to near default limits ...

... on some of their cardholders who have never been late on a payment, based upon their belief they may no longer be "creditworthy" --in some cases to 30% interest or higher. Raising over the limit fees, late fees, and restricting their store partners who utilize them for their store credit cards programs.

This is all on the heels of the change in the minimum monthly payments going up.

It is gonna be a mad rush by the credit card companies to collect all they can as quickly as they can, and the "new bankruptcy law" was not passed a minute too soon to protect them from all the defaults about to occur.

[robertpaulsen]

37. Yes, extremism is flourishing. Great last paragraph.

From the OP link:

Could this happen today, or are we more reasoned, better equipped, more suspicious of simplistic idealism and ideology? Is it already happening? Will the collapse of the dollar, precipitated by the staggering incompetence and fanatic, dim-witted ideology of the Bush regime, inevitably bring about the Fourth Turning? Or will our 21st century ingenuity, pragmatism, connectedness, collective wisdom, resilience, lead us to a quick and radical correction of the excesses that produce the coming Depression, and hence a rapid and relatively painless end to it? And is this all complicated by the fact that this time, unlike 1929, we are facing permanent, absolute ends to the critical resources on which our society relies for its existence?

Sounds like Part two will explain how the onset of Peak Oil could keep us in this New Great Depression for 20 years, per the Hirsch Report.

[catabryna]

39. Link to Part Two...

http://blogs.salon.com/0002007/2006/05/15.html

These two pieces are really great reads. Depressing, but still very thought provoking.

[KoKo]

41. interesting article. With some hopeful solutions at the end of the read..

thanks. :-)'s It was interesting to see the Great Depression's effect on Canada. I only know it from US perspective from my Grandparents and reading US history.

[robertpaulsen]

65. Great conclusion. Here's another interesting article.

It shows how Christian nationalism could take over in a societal breakdown:

The breakdown in the system could also be subtler. Many experts have warned that America’s debt is unsustainable and that economic crisis could be on the horizon. If there is a hard landing—due to an oil shock, a burst housing bubble, a sharp decline in the value of the dollar, or some other crisis—interest rates would shoot up, leaving many people unable to pay their floating-rate mortgages and credit card bills. Repossessions and bankruptcies would follow. The resulting anger could fuel radical populist movements of either the left or the right—more likely the right, since it has a far stronger ideological infrastructure in place in most of America.

Military disaster may also exacerbate such disaffection. America’s war in Iraq seems nearly certain to come to an ignominious end. The real victims of failure there will be Iraqi, but many Americans will feel embittered, humiliated and sympathetic to the stab-in-the-back rhetoric peddled by the right to explain how Bush’s venture has gone so horribly wrong. It was the defeat in World War I, after all, that created the conditions for fascism to grow in Germany.

Perhaps America will be lucky, however, and muddle through its looming problems. In that case, Christian nationalism will continue to be a powerful and growing influence in American politics, although its expansion will happen more fitfully and gradually.

The country’s demographics are on the movement’s side. Megachurch culture is spreading. The exurbs where religious conservatism thrives are the fastest growing parts of America; in 2004, 97 of the country’s 100 fastest-growing counties voted Republican. The disconnection of the exurbs is a large part of what makes the spread of Christian nationalism’s fictitious reality possible, because there is very little to conflict with it.

http://www.inthesetimes.com/site/main/article/2649/

[paparush]

42. Ok, I admit, I don't know dick about the stock market, but weren't

'protections' put in place to prevent another '29 style crash? Or is that just hype and BS. I don't own any stocks or bonds, but I'm sure my employer is heavily invested and would be hit hard if the markets really crashed.

[Iowa]

47. Yes, there are some things in place that serve to...

...make the market a more orderly place. But ultimately the price of a stock is dictated by the amount a buyer is willing to pay for it. The stock market as a whole could post massive losses - just as it did before.

[SidDithers]

43. What do I expect?...

Human sacrifice, dogs and cats living together - mass hysteria.

Long live Dr. Peter Venkman.

Sid

[godhatesrepublicans]

48. I'm looking forward to it actually.

The last time we went through this as a nation, we had a brilliant leader who surrounded himself with the greatest minds of the decade to get us all through it together.

This time we'll have to muddle through under the leadership of people who consider Jeb Bush a viable Presidential candidate. Then on the other side, we have people who consider Nancy "Impeachment is off the table" Pelosi as a tough leader for the opposition. (News flash; she's not.)

I predict that in 2008, the Class War will begin being fought with guns.

If anything gives us a few leaders to match FDR stepping up to the plate, that will.

[Rainscents]

50. If our worthless money claps and people can't pay their debts,

crdeditors... what the hell are they going to do? Creditor will claps and go bankrupt!

[4dsc]

62. Here, here

What's all the fuss about paying off you bill if this country goes bankrupt?? The creditor will be in the same boat with everyone else..