Guest Post: What Are The Social Implications Of Economic Collapse?

Tyler Durden's picture

From Simon Black at Sovereign Man

What Are The Social Implications Of Economic Collapse?

For the last few days, we’ve been having an important discussion
about the magnitude of the economic challenges in the west; if you
didn’t read yesterday’s letter,
I really encourage you to do so before proceeding because it’s
important to understand why the west has truly passed the point of no

Simply put, the United States and much of Europe are borrowing an
extraordinary amount of money now just to pay interest on the money
they’ve already borrowed. They cannot even self-fund their mandatory
entitlement programs without going into the hole, and their options are

Option 1: Continue borrowing, keep the party going.

As long as the government CAN do this, they WILL do this.  Regardless
of their intentions, though, more debt only worsens the situation,
creating higher borrowing costs in the long run, and even more debt. As
this happens, the pool of buyers begins to dry up, especially from

Option 2: Inflation

The more buyers stop purchasing Treasury securities, the more the
Federal Reserve will mop up the excess liquidity. In doing so, the Fed
essentially conjures up money and loans it to the government.

No matter what the government monkey statistics say, this is
inflationary, plain and simple. The more money they print, the greater
the level of inflation in the long-term. Meanwhile, as foreigners
simultaneously reduce their US dollar holdings, this inflation will
become more acutely felt in the US.

Option 3: Austerity

There’s going to come a time when the US government is forced to face
its economic reality and make some incredibly deep cuts that would be
felt across society, from Wall Street and the military industrial
complex to project housing on the other side of the tracks.

Option 4: Default

Eventually, the debt burden is simply going to be too much, and the
most obvious solution will be to default. Politicians will make China
out to be the enemy and they will probably invent a war just to have an
excuse to default on Chinese owned debt. Americans will wave the flag
and celebrate defaulting on their enemies.

Option 5: Economic Cannibalism

In the best traditions of Atlas Shrugged, the government will
continue its persecution of the productive class– professionals,
investors, entrepreneurs, and skilled workers. Existing taxes will rise,
new taxes will be created, trade barriers will be enacted, and a maze
of cost prohibitive regulations will be passed.

The first option (keeping the party going) is what has been happening
for years. Politicians make small concessions to show they’re “serious”
about fiscal discipline, cutting laughably small programs while dumping
hundreds of billions of dollars into wars and entitlement programs.

The worse the debt situation becomes, though, the higher the
borrowing costs become, and the worse the debt situation becomes. It’s
not an enviable position. Existing lenders will continue backing away
from the US Treasury market, giving option 1 a half-life measured in
months at best.

In the longer term, only options 2-5 remain: inflation, austerity,
default, and cannibalism. Each of these remaining options will shake the
financial system to its core. More importantly, each of these has the
power to create widespread social upheaval.

When inflation eats away at a family’s already meager standard of
living, when austerity eliminates the benefits to which recipients have
grown accustomed, when default vanquishes a retiree’s savings, when high
taxes make workers feel like they’re just government serfs– this is
when the real turmoil will begin:

  • Rising crime: devoid of a job or means to support their families, people will turn to crime out of desperation
  • Class warfare: with dividing lines drawn between have’s vs.
    have-not’s, it will become unpopular and even dangerous to be successful
  • Corruption: low-level public service officials will look to supplement their income through bribery and kickbacks
  • Black economy: An underground, cash-only (probably gold or foreign
    currency) economy will emerge with people getting paid in envelopes
  • Censorship: Of course they’ll blame it on national security, but
    the idea will be to prevent public disparaging of government policy
  • War: The government will need another major event to distract people from the real problems
  • Protests/Riots: This is when things turn bloody
  • Police state conditions: The government will close ranks and send
    the cops out to show all the little people who’s really in charge

There are a number of other manifestations, and many are already
showing signs of emergence. The US and European police states are alive
and well. Crime is on the rise.

In Europe, cops are doing battle in the streets with their citizens.
Think it can’t happen in the US? Remember tanks in the streets during
the LA riots? Remember New Orleans? Remember any number of G8/G20

Here’s the bottom line: all you have to do is glance at the headlines
to see what happens when you strip people of their livelihood, of their
ability to put food on the table for their families.


063 What are the social implications of economic collapse?

The US has been able to kick the can down the road with the most
blunt social implications simply because the country benefits so much
from a US-oriented financial system. This is coming to an end very, very

As a rule of thumb, the greater the economic distortion, the harder
the collapse. The US economy has been in a fantasy world for so long,
and when its dominant primacy is yanked away, the collapse will be at
freefall speed.

Listen… I’m not talking about the end of the world here, I’m talking
about difficult times ahead, and the things that go beyond economics.
It’s time to face facts and look at how society will change (and has
already changed).

Tomorrow, I’d like to write more about what we can do now. Meanwhile,
please tell me what you think about this– how do you see society
changing from this reset of the financial system?

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gwar5's picture

It's going to suck big time in the cities where people have lost their DNA for self reliance and coping skills and are semi-feral already. Detroit will do better than most because they've already been designated third world status. 

Robot Traders Mom's picture

"Semi-feral" implies that people in cities like LA have some sort of instinctual ability to fend for themselves. I don't think this is what you meant. LA is probably the last place you will want to be when SHTF. Imagine Katrina x100. Then you will see what going feral means in human terms.

wanklord's picture

Americans are a bunch of stupid animals easy to manipulate and subdue. If these savages try to revolt due to the ongoing economic upheaval, government has already prepared contingency plans destined to cope with this scenario. Educate yourselves about the NATIONAL SECURITY PRESIDENTIAL DIRECTIVE/NSPD 51:


(1) This directive establishes a comprehensive national policy on the continuity of Federal Government structures and operations and a single National Continuity Coordinator responsible for coordinating the development and implementation of Federal continuity policies. This policy establishes "National Essential Functions," prescribes continuity requirements for all executive departments and agencies, and provides guidance for State, local, territorial, and tribal governments, and private sector organizations in order to ensure a comprehensive and integrated national continuity program that will enhance the credibility of our national security posture and enable a more rapid and effective response to and recovery from a national emergency...

...(b) "Catastrophic Emergency" means any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions;..."




gwar5's picture

Yes, and pretty much sounds the same as Obama's executive orders for:

1. Interpol -- to arrest and detain, and seize property; with full diplomatic & FOIA immunity; and also immune from any other US constitutional restraints as they expand their current operations within the DOJ under the direction of the WH? Remember, interrogations are now done in the DOJ, not the CIA per Obama.

2. A new "Council of Governors" -- which will allow martial law by American and Foreign troops on US soil for suppression of any American civil unrest?


Basically, seems the pieces are already in place for an indefinite period of martial law. Which begs the question -- what do they know, when did they know it, and why can't they just be honest about it?  It must be pretty damn bad.


Crab Cake's picture

When martial law comes to your neck of the woods, understand that it is man vs man; not man vs government. Under this situation anyone telling you to lay down arms is telling you to lay down your life; take theirs instead.

CH1's picture

Wait! I thought angels from heaven gave them those uniforms and badges!

They are sanctified and superior, right?

I mean... we'll get in trouble with teacher, or go to hell or something unless we obey... right???


DosZap's picture



You will not be ahead of the game if you dare to be a member of the "Control Squads".

Anyone in any uniform, will be shot on sight, 24/7.

Esp Blue hats, or Foreign Troops.This will not be a repeat of Nazi Germany where the DNA deficient, and Patriots will lay down, and take it,assume the best will happen in the end.

The Jews made a horrible mistake by assuming they would be left ALONE if they simply went along.

Never Again.

Ben Dover's picture

sorry, but telling the truth violates the Prime Directive.

CrankItTo11's picture

This is the most important part of that whole page to me...

(e) "Enduring Constitutional Government," or "ECG," means a cooperative effort among the executive, legislative, and judicial branches of the Federal Government, coordinated by the President, as a matter of comity with respect to the legislative and judicial branches and with proper respect for the constitutional separation of powers among the branches, to preserve the constitutional framework under which the Nation is governed and the capability of all three branches of government to execute constitutional responsibilities and provide for orderly succession, appropriate transition of leadership, and interoperability and support of the National Essential Functions during a catastrophic emergency;

CrankItTo11's picture

Did you miss this part too?


(3) It is the policy of the United States to maintain a comprehensive and effective continuity capability composed of Continuity of Operations and Continuity of Government programs in order to ensure the preservation of our form of government under the Constitution and the continuing performance of National Essential Functions under all conditions.

DosZap's picture

Crank it,

Well, it all sounds so DAMN Constitutional, and patriotic.(give me a hanky!)

I would feel WAY mo betta, if the dikwads were abiding by those guidelines NOW.

They are so FOS, to think WE eat that crap!.

They totally ignore the very documents they are going to Boot stomp us with?.

Foreign troops?,my arse...........yeah, show me that in those beloved docs.

Evil,black hearted evil.

gwar5's picture

Well, exactly. Except I'm even thinking more like 'Escape from New York.'  

Semi-feral & feral in the sense that civil society will break down in urban areas enough that current gangs and other groups will become land pirates of the urban landscape and become the new alternative lifestyle. 


Not feral in the sense people will adapt like urban racoons.

AnAnonymous's picture

And the gangs will live off what?

Cities support themselves by importing from an exterior.

Gangs (criminal and current gangs) are going to be destroyed in the process of the common US city dweller plundering the rural areas.


Fall of civilizations (as in people building and living in cities) is nothing new and in the process, cities get deserted.

faustian bargain's picture

How are gangs going to be destroyed, and the common city dweller not? Gangs are just as likely to plunder rural areas as the other, probably less-resourceful and less aggressive, city dwellers. Not to mention gangs already have an organizational structure.

Not defending gangs, just saying they are not a non-factor.

Mad Cow's picture

True, but they will kill each other off to quite an extent before the remaining branch out from the inner-city. As usual, the first to get out stand the best chance of survival.

faustian bargain's picture

agree...the point being, cities are not a great place to be when trouble happens.

AnAnonymous's picture

agree...the point being, cities are not a great place to be when trouble happens.


It is too easy. Very few places are great place to be when troubles happen. So it tells very little.

The question is to know whether or not cities are on the average better places to be than rural areas when this kind of troubles happen. And yes, they are.


By construction, cities are more organized than rural areas when it comes to extract wealth from an area to support oneself.


When a city is supported by a large periphery (and the US is supported by the entire world), when the city capacity to extract wealth is diminishing, it means the strain is distributed on smaller surface. People in US rural areas will have to yield an equivalent of what the US has lost from outside the US. Much more strain put on rural areas. It usually goes with search of houses, confiscation of goods etc...

Now when a city loses its capacity to maintain this scheme, people do not stay in the city, they desert and invade the places they used to import wealth from. It has always worked this way and in times when people were more numerous in rural areas than in urban areas, showing how much superiorly organized urban people are when it comes to this game.


Freedom is relative in the US. Freedom achieved by the US is only a transfer of oppression. They moved oppression from one population to another, 'freeing' one population in the process. There has been an exportation of oppression onto the exterior.

When this capacity disappears, oppression will be re imported. And the places where the pain will be felt the most will be rural areas, not cities. 

ping's picture

I live rurally. 20 years ago the gubmint started importing crackheads into low cost housing around my home town, all paid for by welfare. We used to have one of the country's lowest crime rates. Now some local neighborhoods have higher crime per head than 99% of the country. Whenever there's a murder, it's the guys from the big city slums who did it. Every time. Heroin is cheaper here than Coke.

The gang types are thick as ****, can't work in the local economy, and can barely breathe without instructions - but they spread like cancer. They're at the hospital, clogging it up after drunken brawls. They're at the ATM, the supermarket. The kids playground. Wherever. 

The government will spread the problem. It always does.


Saxxon's picture

Well stated.  Are you in Kalifornia by chance?  Sounds like, well, 100 per cent of the state to me.

LowProfile's picture

I live rurally.

No...  You actually don't.

Rhodin's picture


Its true there are lots of definitions of rural.  this is my minimum definition.

1. If you stand on your roof with a rifle, you could usually fire it safely anywhere inside 300 degree arc without endangering anyone, alarming anyone, pissing off a neighbor, or breaking any laws.

2. It takes at least a bicycle or horse to get to town and back in the same (12 hour) day, allowing two hours for town.

3. Hearing gunshots is normal, hearing sireens is unusual and interesting.

4. It is at least one hour by car to the nearest incorporated city, and at least a half hour to the nearest full traffic light.

In addition to all four of the above, if you have more than four of the following, it only looks rural:  Paved road, sidewalks, zoning, building codes, cable, high speed internet, taxi service, airport service, UPS delivery, trash pickup, government water and/or sewer, pizza delivery.  My "looks rural" location now has three of these, it had none ten years ago.  I am currently looking for an actual "backwoods" rural location.

AnAnonymous's picture

Not to mention gangs already have an organizational structure.


City dwellers have no organizational structure? How do they live in cities? How do they import from the exterior?

The gangs action is publicized and made transparent. A difference.

 Gangs are just as likely to plunder rural areas as the other, probably less-resourceful and less aggressive, city dwellers.


They are as likely but will be outcompeted by the other city dwellers. Like telling that in a war, gangs do the most of the plundering, over the regular armies. Gangs have their share but it is minor.

LowProfile's picture

Y'all make me laugh with this "Gangs plundering rural areas" bullshit.

Three words:  Visual Identification Only

chet's picture

Cities will become less safe, with property crime and more petty personal crime.  There will be a return of some flight to the suburbs.

But overall I think this will play out as more of a long sad whimper than a post-apocalyptic "bang".  The Great Depression didn't lead to a collapse of society or zombie hordes in the street.

There may well be class warfare, but it will mostly play out in Washington, ala FDR and the New Deal.

Basic questions of how to care for old people and children in a time of austerity will come to the fore.  Many of the political battles of today reflect that we still have the luxury of being decadent and wasting time.  These battles-of-choice will recede as real problems become immediate.

Robot Traders Mom's picture

I'm really not sure how you can compare people of the Great Depression to people of today??? I wouldn't even call it apples to oranges, more like apples to pineapples.

Either way, if you don't think there could be such thing as "zombie hordes in the street," check New Orleans after Katrina...Although I wouldn't call them zombies, but something else.

chet's picture

Not sure that Katrina was as bad as people made out, though there was definitely a lack of law and looting.  Seems like a lot of the violence came from hysterical police officers gunning people down.

Stories about the violence and predation in the Super Dome turned out to be mostly b.s.

A lot of this "societal breakdown" talk is just code language for an irrational fear of black people that goes back hundreds of years.

Robot Traders Mom's picture

Ha ha ha, I'm sure the blacks in New Orleans would have given you the shirt off their back after Katrina.

Good luck in the real world, kid.

chet's picture

The real world tends to be incremental change and shades of grey.  Even when Eqypt was in revolution, there were people sitting at cafes a mile from the square reading about it in the paper.  I was in Seattle during the WTO "riot" and wasn't effected at all.  Read about it the next day.

Between me and someone who expects reality to play out like a bad summer movie, I think I'm the more realistic.

AnAnonymous's picture

Good luck in the real world, kid.


But the real world delivered many examples, following the same pattern.


People who have to fear in case of collapse, are people living in rural areas.


Cities are places supporting themselves by draining wealth from an exterior. The capacity to drain wealth and gather it in a place was an triggering enabler of the foundation of cities.


Now, in case of collapse, people in cities will try to drain even more their surroundings to support themselves. (If the US loses the capacity to plunder its distant periphery then cities will have to drain their immediate peripheriy more to compensate)


If the immediate periphery is not able to support cities, then citizens (as inhabitants of cities) desert the cities to pour into the rural areas. The shock has never been soft on rural populations.

It is border line to sell that gangs will become the major threat in this kind of scenario while the common US citizen living in a city will be the major threat. People might bite the bait. 

faustian bargain's picture

Have you put some thought into the density of the rural countryside? Look at a population density map. Cities are measured in people per square feet. States like Wyoming are measured in people per acre. How are these hordes of plundering masses going to strip the rural countryside of its resources? The logistics are really difficult.

The cities and suburbs are going to eat themselves, and then refugees will follow 'channels of drift' outward, until they run out of energy.

Treign's picture

Our downstairs neighbors got robbed last week, everyone assumes it was the next door neighbors who are all unemployed and now party every night, but they "didn't see anything unusual" when questioned. This all happened in a reasonably nice area of Seattle.

Crab Cake's picture

Got dogs and guns? Police write reports and are generally useless at preventing squat even in the best of times. A man must protect his home and family = dogs and guns.

Seer's picture

"until they run out of energy."


Rural people tend to be termed "poor" and that's because they live leaner (read "more sustainable)- slim pickings out there.  Lots of energy will be expended for next to NO gain.  Only small bands of marauders will be able to have any meaningful semblance of success (and many will run into rural buzzsaws).

CH1's picture

The cities and suburbs are going to eat themselves...


The welfare class will burn down their own neighborhoods and perhaps government buildings. The productive city people will go through a rough period, but they will mostly adapt... and eventually shoot at looters, etc. The welfare class will lose. (Not sure how much damage they cause before then.)

Almost the same will happen in the suburbs, but in different patterns.

It's all about production or parasitism: Life strategies make for life choices.

All city boys are NOT the same.

AnAnonymous's picture

It's all about production or parasitism: Life strategies make for life choices.


Production of what? the human activity named production is a great consumption feast.

It is somehow strange to think that people who are used to consume a lot (productive people) will not react to a loss of their consumption capacity while people with low consumption capacity will react strongly.


Like claiming that the US revolution was not a story of middle class wanting to throw out the dominant class, the nobles.

AnAnonymous's picture


Cities are measured in people per square feet. States like Wyoming are measured in people per acre. How are these hordes of plundering masses going to strip the rural countryside of its resources? The logistics are really difficult.

The cities and suburbs are going to eat themselves, and then refugees will follow 'channels of drift' outward, until they run out of energy.


What logistics? Either the cities manage to support themselves, meaning city dwellers find a way to squeeze what they need to sustain themselves from their exterior or cities collapse.

In case of collapse, cities dwellers will desert the cities. They wont stay in the cities. They will move where the resources are. And the resources are located in the rural areas.

Civilizations have fallen. Cities have gone deserted. People moved to rural areas.

The logistics question is irrelevant as it has been in each occurrence.

Raynja's picture

Historically, its the rural areas that well will turn on urban centers when they stop delivering food. Stealing the good isn't as simple as robbing a grocery store. Besides that people in the country are more likely to have firearms to protect themselves and their property.

On a separate point hunting, farming, and fishing all require knowledge and specific tools. This will limit the ability of people in urban areas to provide for themselves in the country.

AnAnonymous's picture

Historically, its the rural areas that well will turn on urban centers when they stop delivering food. Stealing the good isn't as simple as robbing a grocery store. Besides that people in the country are more likely to have firearms to protect themselves and their property.


Historically, in case of civilization collapse, cities are no longer able to sustain themselves and city get deserted and city dwellers move to invade places where the resources are located.

Nothing surprising. Cities are places that import to sustain themselves from an exterior. They have little resources on their own. Either the supply lines are maintained, either they are not. When not, city dwellers move to rural areas, where the resources they used to import, are located.

Ben Dover's picture

Couple things to consider - 

Fishing and hunting will only take you so far. There are way way too many people to be supported by wildlife in most areas.

Once the water purification plant shuts down, is looted and burnt to the ground get ready for dysentary and other lovlies. And that's if you live near water to start with. Otherwise your existing water supplies will be worn through quickly

land is intensely farmed to feed a ton of people per acre. Once this style of farming falls apart - along with its support mechanisms (everything from getting seeds to acquiring fertiliser to shipping it out) - I would think there would be a fast and huge drop in the American population. 

I'm just remindin

tmosley's picture

You have no idea what a total loss of capital looks like.  Yes, a lot of violence came from police officers drunk on power.  More came from the paramilitary forces that went door to door collecting weapons.  It was complete and utter insanity, the result of a cowed population, and an overbearing government.

You want to know what societal breakdown looks like?  Look at this:

Then imagine ten times worse, as ours will be combined with hyperinflation.

Sure, the looting will start at the stores, but as the weeks go by, and production shuts down everywhere, they will move to smaller and smaller stores, and then they will become refugees, looking for food and a better life somewhere, ANYWHERE.

I would suggest you be ready.  If you don't wanna, then fine, but you'd better be ready to leave where ever you are with nothing.

hedgeless_horseman's picture

I know firsthand that Argentina has ALWAYS had the best polo players, polo ponies, and dove hunting, even during their collapse, which I believe is Chet's point.

magis00's picture

Wow.  Amazing the story of the Argentinian collapse, and more amazing how little we heard about it here in the States.


Money quote:  "Malnourishment is a political and a socio-economic disease.  The only way to fix it is to get every man a job.  Notice he didn't say 'Give everyone food'." -- A doctor working in an infirmary filled with 4-month old starving children.


Veerrry interesting, as the Vampire Squid was sucking Argentina dry from 1994 on ... looks like the West is up next!  -- F me.

magis00's picture

Wow.  Amazing the story of the Argentinian collapse, and more amazing how little we heard about it here in the States. Thanks for the link.


Money quote:  "Malnourishment is a political and a socio-economic disease.  The only way to fix it is to get every man a job.  Notice he didn't say 'Give everyone food'." -- A doctor working in an infirmary filled with 4-month old starving children.

( @ 6:15, 7:38 )


Veerrry interesting, as the Vampire Squid was sucking Argentina dry from 1994 on ... looks like the West is up next!  -- F me.

knowless's picture

i got a ride from a trucker who informed me of his participation in a racial death squad post-katrina, he claimed to have literally gone hunting blacks.


I think you underestimate humanity in this regard chet.

jerry_theking_lawler's picture

ah, Katrina, my dear friend......i was in bay st. louis/kiln, ms 3 days after the storm. stayed for 14 days. south MS was somewhat subdued (because alot of people were 'prepared' for a few days without necessities). but i did see/experience alot of interesting events. a semi-state of martial law (curfews, etc), many citizens carrying weapons (i say this because it was literally assault rifles down to knifes), and alot of focus on basics (fuel, food, BEER).

what i learned/gleanned from the event.... i know people laugh at this type of chatter on ZH, however, it is FACT if something big does go down. food, water, fuel/energy, barter, protection/weapons (ie.guns), friends.

i had friends from the area. we stayed at their  friends house with about 10-15 other people. they were fortunate. they owned a small gas/grocery store that allowed them to have extra fuel (for generators) and food. since we had alot of necessities, the guy that owned the place told me that noone was to be there except this group of people. we had a protocol, if anyone else came up there was to be a few people at the house with guns and one person to go ask what they were doing there. no one was allowed near the house unless the guy that owned the place came and escorted them up...plain and simple. there were signs everywhere stating looters/trespassers would be shot and they really meant it.

i have lived a 'mini-event'. i know what is needed in the future. i am prepared and not afraid of anything that will come. like the prepared.

LowProfile's picture