Sanctions and Economic Instability

Last year, a reader asked me if I thought that we are on the “verge of a global economic collapse” and what to expect if this were to happen. I replied that I didn’t know the answer to this question.

I commented that the US economy has been distorted for many years. The Global Financial Crisis did not resolve the problems because the Fed and the Treasury rescued the financial sector and covered over its problems. These easy money solutions have now created a share market and housing boom that has further distorted the economy.

The US economy is weighed down by a massive overhang of debt. The United States has a huge number of political problems and a culture that is tearing itself apart. The whole thing should probably fall to pieces, but it probably won’t, because the Fed and the government will keep patching it up and covering over the problems. I have no idea of how long they will be able to keep doing that. I suspect they will go on propping the economy up for a very long time.

I have explained how to deal with an economic crisis at economic crisis and social collapse.

Now, although they are immoral, the United States is slamming economic sanctions on everything. Unfortunately, in the modern world, everything is interlinked, so all restrictions on trade harm the world economy. Europe has extensive trade with Russia. German industry, which is the economic powerhouse of Europe, depends heavily on Russian gas, oil and minerals. Even if they can buy these from elsewhere, they will be more expensive. Increases in the price of oil wish contribute to price inflation everywhere.

I am not sure, but massive economic sanctions against Russia could be the trigger that brings down the economic house cards that the US has created.