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Friday, March 18, 2011

The United States is Just Five Days Away from Crisis

The United States is Just Five Days Away from Crisis

By day 5 of the earthquake/tsunami/meltdown disaster, significant parts of Japan are experiencing shortages of food, fuel and water.

This isn’t Chile, China or even Haiti. We’re talking about one of the world’s most advanced economies with arguably the best distribution networks in existence. Japan also exhibits among the most law-abiding and orderly cultures in the world.

This disaster underscores the dire circumstances every Westerner could find themselves in with even a minor sustained disruption of food, gas or water supply.

Simply put, almost no one living in the United States or Europe is at all prepared for more than a few days of slowed or halted supply of staples. That’s the nature of the modern consumer based distribution system we have in place. And while that system isn’t necessarily broken, it’s hard to say the same thing about the fiat currency system that it runs in tandem with.

But we don’t have to turn the pages of history too far back to see that Westerners in general and Americans in particular are not so well behaved when normalcy becomes disrupted.

My point isn’t for you to run out and buy supplies to earthquake proof your home. My point is that the same circumstances we see in Japan could easily replicate themselves in the United States or in Europe even without a natural disaster.

People don’t have to start going hungry in order to start getting rowdy or panicky.

What might cause a supply squeeze? Well, it doesn’t take too much imagination to figure that food and fuel shortages might arise in the event of a reserve currency crisis.

As I’ve pointed out many times, over 40 million Americans are currently on food stamps. That’s over 10% of the population that ostensibly already can’t afford to feed themselves. What happens if food outlets stop accepting food stamps and instead demand ever higher amounts of cash for their goods?

What happens if civil war continues to spread from Libya and Bahrain into Saudi Arabia? What happens if just one or two of the countries in the OPEC decide they’d prefer to settle oil contracts in Japanese Yen or Chinese Yuan – or maybe even gold instead of dollars? It’s certainly not outside the realm of possibility. Any new regime that would replace a current regime in almost any of the OPEC bloc would be comprised of people who hate or at least distrust America.

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