The world is currently in a relatively peaceful state with billions of people
living under a comfortable roof and feels warm enough during winter nights.
Many do not suffer, but it is very possible for all
these things to be flipped over in a matter of days.
The economy and ‘peaceful’ nations that we see today are not forever.
Take Greek, for example, a nation that used to possess the
highest level of civilization is now drowning in debt.
The extractive economy (a system that relies on
harvesting and exporting raw or low-processed materials)
that various countries fall into due to lack of means
to process raw materials are signs of the danger.
It is a vicious cycle that was pointed out by Daron Acemoglu in his
book ‘Why Nations Fail: The Origins of Power, Prosperity, and Poverty’.
And this is only the tip of the iceberg that might
surface anytime soon according to the book.
A look into the economy of some countries tell
us that many are in a stable condition, but
it wasn’t so for Argentina which had its nation
turned upside down in a matter of months.
Starting with the Great Depression of America, we take a look into a quick history of
financial crisis and downward fall of nations,
learning the causes and impacts as we do.
In the 21st century where war is no more a common problem, we learn
how some countries had an economic meltdown from various causes.
Zimbabwe is a lesson the world has been learning since their
hyperinflation in 2008 that topped any other country.
Zimbabwe abandoned its currency in 2009.
Afterward, countries like Venezuela, Argentina, and Greek follow
suit with some of these countries experiencing emergency situations
with the lack of basic needs and little to no buying power for its people.
Greek was trapped with a lot of debt, requiring
numerous bailouts to save the country.
2007-2008 is a year that hit America hard, a big
recession that certainly slaps the officials awake.
If let on for too long, the recession will soon turn into financial
crisis and cause the economy to collapse for a few months.
The image will be similar to what happened in
Venezuela: people losing buying power, money
becomes worthless, many are forced to relocate
to places where they can find basic needs.
A lot of regions will not be supplied for weeks and
electricity as well as the Internet won’t be provided.
If USD becomes worthless from hyperinflation, countries that
owe US debt will suddenly lose it all and become poorer.
The economy will be shocked, causing acrisisin several countries, although
not all will be affected as much, there will be some kind of consequences.
For example, US people will try to flee the
country, seeking asylum in neighboring countries.
There are also immigrants who are already
residing and are now forced to move away as well.
According to Why Nations Fall by Daron Acemoglu
and James A. Robinson, the extractive economy is
the key ingredient to stagnation that will quickly
lead to the financial crisis of a country.
At the same time, it also points out to the
fact that there are countries who experience
bursts of advancements with the extractive
economies, such as Germany during its Nazi regime.
Adolf Hitler became the center of that storm,
stirring people around him to advance further.
This pushed to several industrial and technology
development, such as the creation of jets as well as GPS.
This further pushes the questions if it does
differ between countries, between leaders.
However, like cooking, there may be few ways to reach
good cooking, but you can go around 1000 ways to ruin it.
Several countries after Zimbabwe still experience a financial crisis that has let to
anarchy as well as emergency situations in the countries show similar characteristics.
Many of them employ officials and government policies that are not
beneficial to the people in the long-term or in a broad sense.
Zimbabwe’s policy that allows land to be forcibly
taken from the white minorities to be equally
distributed to the black has only brought negative productivity impact to the country.
It is a major reason that the country’s financial situation is picking up slowly as
lands that used to be productive are now empty with no meaningful activities occurring.
Venezuela has many potentials to become a thriving country,
but corruption runs deep, causing its people to suffer.
Many had to scrape for food and other things in the dumpsters, supermarkets shelves are
empty and while they have smartphones, electricity
and Internet are only for the elites.
It is not Africa, but it has similarly concerning the situation
with starvation and epidemics worsening the situation.
Seeing these countries, we cannot imagine how
superpower countries such as Japan and America
can ever be hit, but the 2007-08 recession reminds
us that it is possible for that to happen.
In the future, the possibilities of the same
thing to happen are there and in fact, 2019
and 2020 are projected by many to be the year
where global economic slowdown will happen.
Can the US economy collapse?
Yes.
There are many possibilities, for instance, the
current unsustainable fiscal policies area
strong sign that growth cannot be maintained, but inflation is above the target level.
The country only needs a single trigger to shatter the economy.
A major natural disaster that causes enough loss and
damages to not just assets but also the people.
Terrorists attack big enough to shake the people
and prevent investors from coming to the country.
The impact will be disastrous.
It will only be the peril of one country if a financial crisis hit it,
but it is the peril of the whole world if we’re talking about America.
If inflation causes USD to lose value, a number of countries are going to
face sudden loss of asset due to the debt America has to these countries.
Superpower countries sum up to half the GDP of the world and the
fall of them may even mean a revolutionary shock to the economy.
Not just that, the world will fight over who the
next UN leader should be if it’s the US that falls.
If it’s a country with minor international impact, there will be demonstration and
anarchists forcing the government to change the
person in the hold of the legislative power.
The world as we know today can change in a matter of seconds.
Back in the days, we tend to think that the years during World
War I, II and the Civil War are some of the worst times.
But today, we have so much technology advancement good
enough to eliminate a city in a matter of seconds.
We have volatile land that sends quakes and
tsunamis twice as many times as of recent years.
With trade wars, Brexit and so many possibilities,
it doesn’t seem like a weird notion or
story to tell in movies about the nations’
failure and even the fall of human civilization.
Nation and economy have long failed in many senses if we are to look at history.