Economic collapse III

• Austerity measures. “So do austerity measures work in real economies? I would tend to say they do not. Austerity has been a disaster for Great Britain and Europe, yet many leaders are demanding more of the same. They are often ignoring the approaches that have worked in the past, as in the Great Depression: Invest in short-term growth which gets the work force back into employment, and then address long-term deficit issues once the economy is back on its feet,” Economic Austerity explained by an Economic Nitwit, Wortpresse.

“If austerity measures cause lower economic growth, the government will also see a fall in cyclical tax revenues. e.g. increasing tax rates, should increase revenue. But, if higher taxes cause a recession, there will be less people working and so income tax revenue may actually fall. Also, if austerity measures cause unemployment, it will require higher government spending on benefits,” How Does Austerity Affect the Economy?, Economics Help.

“The world risks falling back into recession if developed countries embark prematurely on fiscal austerity measures according to a United Nations report […] which recommends additional stimulus measures as well as more forceful international coordination to stimulate job creation and investment […] fiscal austerity measures implemented in developed countries and elsewhere in response to high levels of fiscal deficit and public debt are further weakening growth and job prospects”, UN report calls on affluent countries to halt austerity to avoid double-dip recession, United Nations News Centre.

• Misery index. It is the unemployment rate added to the inflation rate. It represents a measure of economic well-being or economic hardship for a country. “In a memo to clients provided to Secrets, David John Marotta calculates the actual unemployment rate of those not working at a sky-high 37.2 percent, not the 6.7 percent advertised by the Fed, and the Misery Index at over 14, not the 8 claimed by the government,” Washington Examiner.

“Everybody knows we have a dangerous level of debt. Everybody knows the Fed has recklessly printed trillions of dollars. These are secrets to no one,” he said. “But all signs are now flashing bright red that our chickens are about to come home to roost.” During the discussion, Rickards shared a series of dangerous signals he fears reveals an economy that has reached a super critical state. One of the signals the CIA is most concerned with is the Misery Index," Money Morning.

• Unemployment. “Unemployment in many European countries has risen sharply due to the credit crunch and global recession. The worst hit countries include Spain and Greece, who both have unemployment rates of over 24%. […] European policy makers have always given the impression they are more concerned about appeasing bond markets and low inflation than tackling the more pressing problem of unemployment.” Besides, many of the new created jobs are part-time and low-paid. Finally, technology will replace many workers as it becomes cheaper, more versatile, convenient and energy efficient.

• Economic collapse is always accompanied by social chaos, civil unrest, and could trigger nuclear war. Unfortunately, the Cold War is back.

• It leads to rising protectionism and trade wars. Trade wars usually morph into currency wars and then eventually evolve into hot wars.