Gold After the Dollar Collapses
GramsGold.com
12/27/2015
Jeff Nielson from Bullion Bulls Canada describes gold’s role after an economic collapse. “The first thing which we can rely upon is the instant creation of some form of “blackmarket”. This does not necessarily imply a criminal basis of operation, but merely a parallel system of commerce for that economy.
The reason this must come to pass is obvious: the official paper currency immediately becomes effectively worthless. This means that merchants do not want to sell much of (if any) of their merchandise using this near-worthless paper – since they can’t even replace their inventories with it, because in the time between when a customer makes a purchase and the retailer orders new inventory, the paper has lost so much value that it won’t even replace (at a wholesale level) what was purchased at a retail price.
This automatically means that most members of the society will have to find alternative means of making payment. To some extent, this can be done through barter, however (again) merchants will be very likely to avoid such a form of trade because they can’t replace their inventories with a pig or a bushel of wheat.
This means that citizens must find an alternative currency to survive – and here is where things get very scary for Americans.
In Zimbabwe, when their own gross economic mismanagement eventually caused this extremely resource-rich economy to descend into hyperinflation, the inhabitants were able to fall-back on the U.S. dollar – the world’s “reserve currency”, and (by far) the most abundant form of paper on the planet.
If (when?) hyperinflation hits the U.S., what will U.S. citizens use for currency? Canadian dollars? Mexican pesos?
The obvious problem is that relative to the U.S.’s huge population (and economy) there is far too little of these currencies (or any other, one currency) – especially in actual, paper form – to supply more than a small fraction of the need for any smoothly-operating blackmarket in the U.S..
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