I'm a newbie to the Austrian School of economics and have only been studying it occasionally by listening to audio and video clips from Ron Paul, Peter Schiff, Tom Woods, Marc Faber, and Jim Rogers but I don't know enough to possibly know what the future could entail while being a community-college student.
I've heard from many previously mentioned figures above that the US dollar will eventually collapse due to QE3 and lead to hyperinflation and thus I need to purchase gold and/or safe currencies for financial security.
My question are the following:
1) When the US dollar collapses, what will happen to the money in peoples' bank accounts? Will it be completely worthless and incapable of buying anything?
2) What will happen to electricity-dependent homes? Will there be any power or will they need to rely on themselves and their personal resources to develop lighting, heating, or anything that is provided by a company?
3) Will cell phones and web providers cease to function or function dismally during or after the financial collapse?
Please answer the above questions reasonably and from an Austrian School viewpoint.
I am genuinely scared of the the future and what chaos chould ensue.
Welcome aboard, Marketeer.
marketeer:1) When the US dollar collapses, what will happen to the money in peoples' bank accounts? Will it be completely worthless and incapable of buying anything?
If the collapse is complete, then yes. Otherwise, it will just be able to buy far less than it is now.
marketeer:2) What will happen to electricity-dependent homes? Will there be any power or will they need to rely on themselves and their personal resources to develop lighting, heating, or anything that is provided by a company?
That depends. As the dollar collapses, the division of labor will collapse too. At some point, there will be too many people trying to find basic things like food, water, clothing, and shelter to bother with more advanced things like electricity.
marketeer:3) Will cell phones and web providers cease to function or function dismally during or after the financial collapse?
More than likely, if the dollar collapses dramatically or completely. Again this is due to a corresponding collapse in the division of labor.
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1. Thats what happened in Zimbabwe and in Germany and in Argentina.and who knows where else. If it happens here depends on how soon public outrage forces politicians to stop printing money. Good luck with that.
2 and 3. This depends on how soon the govt abolishes legal tender laws and allows payment in anything without having to pay a tax for not using paper money. And for contracts made under such conditions to be legally binding. A company can't do black market business, right?
In any case, where would their customer base come from? Who would have anything valuable enough to use as payment for electricity and cell phone use?
You remember that in Germany workers got paid twice a day, because once a day meant too big a loss for them, as prices climbed constantly.
Be nice if you got some marketable skill, like maybe being an electrician or something, so you could trade work for food.
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Keep things in perspective.... Realisticly the chances that the monetary system will collapse is unlikely. Most likely some political arrangements will be made to replace the current monetary system with another system. Keep in mind that this is not the first currency crisis the we have seen. After WWII all of the world powers got together and created the Bretton-Woods agreement (http://en.wikipedia.org/wiki/Bretton_Woods_system)... thirty or fourty years later they got together again and replaced that system with our current system(http://en.wikipedia.org/wiki/Bretton_Woods_II). They will do it again.
Whether or not the new system is better.... doubt it.
If for some reason they dont or cant.... well then we are all screwed and there is little we could do to protect ourselves.