Wednesday, January 18, 2006

Envisioning US Economic Collapse

Catastrophism studies are a favorite pastime of the black economist, particularly during this time of "terror." The question of total economic collapse due to a terrorist attack is provocative to say the least. To accomplish this the terrorists would have to do one of three things, cause a shock to supply, demand or both. Disrupting the supply chain of an input critical to the economies' functioning (oil maybe?) would accomplish a supply shock. Infecting the country with a lethal, highly contagious organism would create a demand shock as people would avoid one another at all costs.
Thus, the original question melts away and we see that these shocks (economic collapse) take place frequently (Argentinian peso collapse, New Orleans hurrican, Russian political collpase, Toronto SARS, Hong Kong SARS) and that it is a question of how long they last and what happens within them that should concern us. In other words it is not a question of if the economy can collapse but when and what will you do to survive?

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