300$-kollaps

Trist, men sant, vår sivilisasjon faller som en helt allminnelig, kjedelig konkurs. Glem alle Hollywoods dramatiske skildringer av verdens undergang. Hva som trigger kollapsen vil være en sperre på kontantuttak over 300 $. Latterlig trivielt og hverdagslig. Men så holder vi oss da også med en patetisk sivilisasjon. Lusne 300 dollar eller 2493 norske kroner. Så var det hele over, og den industrielle sivilisasjon forbi. Gail Tverberg beskriver scenarioet i detalj i denne kommentaren:

I am expecting that credit markets will lock up, either because of debt defaults or derivative defaults causing problems in banks. At first, there may be one big bank that is mostly affected by big losses, but gradually this will spread.

Lousy 300$ might make our mighty industrial civilization go in black

The government may spend a while trying to figure out what they are going to do, but will quickly discover that if, say, Citibank is affected, authorities can’t just sit around and talk about the problem, or depositors will pull their money out of the bank. If they announce that depositors cannot withdraw funds from Citibank in excess of say, $300 per day, then depositors will start getting afraid to leave their money in all of the other big banks with similar exposure. A $300 per day cap may temporally save Citibank, until authorities can figure out what kind of haircut to deposits will be made, but depositors will pull their money out of JPMorgan Chase, Goldman Sachs, Bank of America, and Morgan Stanley, for example. In not too long, regulators will figure out that they have to put controls on the money that can be withdrawn from essentially any bank, if they plan to haircut deposits of depositors of any major bank.

Trying to limit withdrawals from banks would be a disaster, in terms of the money citizens will have to spend. The number of new cars purchased would drop greatly, for example, even if a way can be found to exempt payroll funds from limitations. Because of the difficulty of running the country without cash, governments will try to figure out ways around the problem. If the problem is very major though, governments will quickly discover that haircutting deposits works even worse than what was tried in 2008. I suppose that there may be more attempts at money printing to prop up banks, so that they can continue to operate as usual.

Somewhere along the line, when governments try to prop up banks, governments will start encountering the issue of foreign deposits and foreign loans. Do governments issue money to cover the losses of depositors from abroad (the Iceland bank situation a few years ago)? How about protecting banks from debt-related losses coming from loans made in $ terms to other countries, or related to foreign issued bonds held on the balance sheets of banks? Should banks be allowed to continue to issue letters of credit related to international trade, especially if there are problems with other countries actually paying for the goods that they order? How about issuing new international loans?

Even if governments figure out a way to prop up their own banks, with respect to transactions inside the country, they are likely to cut back on what they do internationally. These cutbacks internationally will have a very adverse impact on foreign trade. Other governments will retaliate by similarly not offering international services. Businesses with international ties will have a real problem doing business. Foreign made goods will gradually disappear from availability. Without foreign trade, the whole system will collapse, because practically everyone needs replacement parts and imported oil. Large businesses depend on export markets as well.

With lower dollar value of trade, commodity prices will tend to fall even lower, contributing to the collapse in commodity production.