Economy is COLLAPSING!! - Here's how to stay positive in this CHAOTIC ECONOMY

The global economy is collapsing, and neither the banks nor governments can save it

• With interest rates rising, markets are waking up to what central banks already know: that inflation isn’t coming down and there won’t be a swift return to easy money

• This policy unravelling is going to be painful but may be necessary to purge the worst excesses of the past decade

An economic collapse is a breakdown of a national, regional, or territorial economy that typically follows a time of crisis. An economic collapse occurs at the onset of a severe version of an economic contraction, depression, or recession and can last any number of years depending on the severity of the circumstances. An economic collapse can happen rapidly due to an unexpected event, or it may be preceded by several events or signs pointing to fragility in the economy.

Understanding Economic Collapse

An economic collapse is an extraordinary event that is not necessarily a part of the standard economic cycle. It can occur at any point in the cycle, leading to contraction and recessionary phases. Economic theory outlines several phases that an economy can go through. A full economic cycle includes movement from trough to expansion, followed by a peak, and then a contraction leading back towards the trough. Although an economic collapse should be more likely in an economy that is already contracting, black swan events or trends in the global economy can override any point in the cycle to set off an economic collapse.

Unlike contractions and recessions, there is no agreed-upon guideline for an economic collapse. Instead, the term economic collapse is a label that may be applied by economists and government officials—and it may be applied months or years after the actual event. Governments also tend to speak in terms of economic collapse when crafting large-scale stimulus during market panics. The threat of economic collapse is raised in order to make the case for intervention in the economy.

Responding to Economic Collapse

Although economies can and still do experience economic collapse, there is a strong incentive for national governments to attempt to stave off or lessen the severity of an economic collapse through fiscal and monetary policy. An economic collapse is often combated with several waves of interventions and fiscal measures. For example, banks may close to curb withdrawals, new capital controls may be enforced, billions could be pumped into the economy through the banking system, and entire currencies may be revalued or even replaced. Despite government efforts, some economic collapses result in a complete overthrow of the government both responsible for and responding to the collapse.

Following an economic collapse, there are almost always a number of legislative changes aimed at avoiding a similar situation in the future. These changes are usually informed by a post-collapse analysis aimed at identifying the key factors leading to the collapse and integrating controls in new legislation to mitigate those risks in the future. Over time, the appetite for these financial controls can weaken, leading to the regulation of risky market behavior being relaxed as the memory of the economic collapse fades.

There are many examples of national-level economic collapse throughout history. Each economic collapse typically has its own special circumstances and factors, although some share triggers as with the Great Depression. Oftentimes these factors are mixed with many of the macroeconomic factors that occur in contractions and recessions such as hyperinflation, stagflation, stock market crashes, extended bear markets, and unbalanced interest and inflation rates. Of course, economic collapses can also occur from extraordinary factors like disastrous government policies, a depressed global market, or the old standbys of war, famine, plague, and death.

In the United States, the 1930s Great Depression remains the prime example of an economic collapse, ranking as both the greatest in terms of damage as well as the longest from which to recover. The 1929 stock market crash was a key catalyst for the collapse, but the problems were compounded by policy responses and systematic weaknesses. The multi-year economic collapse of the U.S. economy was followed was sweeping regulatory reforms affecting the investment and banking industries, including the Securities Exchange Act of 1934. Many economists have blamed the economic collapse that began in the 1920s on a lack of government involvement in the economy and financial markets.

The 2008 financial crisis is not considered an economic collapse in terms of the American economy, but a collapse was believed to be imminent at the time. The freezing of the credit market may well have resulted in a more severe situation if not for the liquidity provided by the Federal Reserve.


Currently, with prices of the stock market, crypto, real estate and precious metals down and the government aggressively increasing interest rates, the economy has already fallen into recession and the global supply chain has not resumed to its full capacity after the COVID lockdowns, the inflation rate has skyrocketed. And with the ongoing Russia-Ukraine war the price of fuel has been through the roof. Due to this gas prices in Europe have already increased by 140%. And with the onset of winter and the increase in demand of gas, the price is only going to increase as Russia cuts down its supply of gas slowly to the European markets. This would result in an economic disaster for the European countries as they are already facing an energy shortage. This would have a ripple effect across the world causing an economic collapse.

So, what should you do as an individual to survive this economic collapse?

1. Have an Emergency Fund

If you have plenty of cash lying around in a high-interest government insured account, not only will your money retain its full value in times of market turmoil, but it also will be extremely liquid, giving you easy access to funds if you lose your job or are forced to take a pay cut. And also during recessions like this governments are forced to increase interest rates so keeping them in a high interest savings account is a safe way to guarantee that your money isn't loosing value. Especially when all the other investments are collapsing.

Also, if you have your own cash, you will be less dependent on borrowing to cover unexpected costs or the loss of a job. Credit availability tends to dry up quickly when a recession hits. Once these things happen, use your emergency fund to cover necessary expenses, but keep your budget tight on discretionary spending in favor of making that emergency fund last and restoring it ASAP.

2. Live Within Your Means

If you make it a habit to live within your means each and every day during the good times, you are less likely to go into debt when gas or food prices go up and more likely to adjust your spending in other areas to compensate. Debt begets more debt when you can’t pay it off right away—if you think gas prices are high, wait until you’re paying an extremely high-interest rate on them by fueling up on a credit card.

To take this principle to the next level, if you have a spouse and are a two-income family, see how close you can get to living off of only one spouse’s income. In good times, this tactic will allow you to save incredible amounts of money.

3. Have Additional Income

Even if you have a great full-time job, it’s not a bad idea to have a source of extra income on the side, whether it’s some consulting work or selling collectibles on eBay. With job security so nonexistent these days, more jobs mean more job security. Diversifying your streams of income is at least as important as diversifying your investments.

Once a recession hits, if you lose one stream of income, at least you still have the other one. You may not be making as much money as you were before, but every little bit helps. You may even come out the other end of the recession with a growing new business as the economy turns up.

4. Invest for the Long Term

So what if a drop in the market brings your investments down 15%? If you don’t sell, you won’t lose anything. The market is cyclical, and in the long run, you’ll have plenty of opportunities to sell high. In fact, if you buy when the market’s down, you might thank yourself later.

That being said, as you near retirement age, you should make sure that you have enough money in liquid, low-risk investments to retire on time and give the stock portion of your portfolio time to recover.

5. Diversify Your Investments

People say don't put all your eggs in one basket. If you don’t have all of your money in one place, your paper losses should be mitigated, making it less difficult emotionally to ride out the dips in the market. If you own a home and have a savings account, you already have a start: You have some money in real estate and some money in cash.

In particular, try to build a portfolio of investment pairs that aren’t strongly correlated, meaning that when one is up, the other is down, and vice versa (like stocks and bonds). This also means that you should consider asset classes and stocks in businesses that are unrelated to your primary occupation or income stream.