A US civil war

[Reality Check]

Most of this discussion has focused on only one, of two, threats to the very existence of the United States.

The elephant in the room that no one is talking about is unsustainable deficit spending in Europe and the United States.

Both proposed solutions to this are no solution at all.

Austerity means you starve the economy, GDP shrinks and both the deficit and the debt reaches the tipping point as a percent of GDP. A world wide depression is the unavoidable result. Greece over the past three years is the poster child for this outcome. The Greek economy shrank by more than 5% a year for the past three years. It would have been worse if not for bail out monies from the rest of Europe.

Higher taxes and deficit spending as a stimulus only works as long as the Europeans and the United States continue to print money and buy European and United States government bonds with the printed government money. Europe and the United States are both doing that to a substantial degree right now and in Europe it is failing. Only massively increasing the printing of money in Europe will kick the can down the road and avoid an economic collapse in the next few months.

Massive hyper-inflation in Europe and the U.S. appears the best outcome for the world out of many, many horrible outcomes.

Of course hyper-inflation in Europe and the United States would wipe out the middle class in Europe and the United States and if that does not lay ground work for civil war then nothing will.

[Marc]

Thanks, Reality Check, for the additional insights. My own take here on what I feel is more likely to happen is that the central banks of the United States, of the EU, and elsewhere will indeed continue to print money for as long as they can get away with it — but are apt to back off of this tactic as a key solution to avoiding financial Armageddon once it seems apparent that there is a risk of hyperinflation. Hyperinflation could still possibly happen due to a loss of control of the economic system, but more on that in a bit.

If the US seems to be on the verge of hyperinflation, I am willing to bet that the Fed and/or the US Treasury will find some political way (as tough as that can be) to devalue the currency. It probably wouldn't be a huge devaluation carried out all at once, but enough (probably in repetition) to avoid having to use the printing presses all at once in a way that would lead to hyperinflation. However, a potential problem with this is that as Americans and others using US dollars become attuned to devaluations going on, this can lead to people trying to spend money as fast as possible in order to avoid having to spend "watered-down money" that is worth less than before. This spending pattern would likely be highly inflationary when it occurs. As the months roll by, there could be a money-printing/devaluation "dance" going on that is meant to save the day and save the banks, but in where confidence is gradually lost in the stability of the currency. The endgame of this loss of confidence, however, doesn't necessarily spell a huge bout of hyperinflation; it could, for example, cause a huge triggering of credit-default swaps and other financial derivatives which cannot be paid out, and thus cause a huge deflationary element injected into the economy.

However, to deal with this if it should happen, there could be a gargantuan money-printing event to slow down deflation — and we could have the scary outcome in where no one really knows, even by a reasonably accurate measure, how much money is out there, so to speak. What's now happened is a disaster regarding our currency not entirely in the sense of its use as a store of value, but as a unit of account. (Maybe at that juncture, the "1 percent" will finally get its come-uppance, and we'll see a temporary return to the gold standard just to bring stability and faith to the currency again. And, this sort of financial Armageddon, I feel, is more worrisome in regards to what it could militarily activate in China as opposed to risking any sort of civil war in the US. But, that's just my humble opinion there.)

Again, thanks, Reality Check and others, for the great insights; it is all very interesting to discuss and contemplate. —Best regards, Marc

[Higgenbotham]

A highly organized civil war doesn't seem likely at this point. Events seem to be shifting from the organized to the chaotic - flash mobs, flash crashes. Even stock market "crashes" lately are far more chaotic in nature than they have been in the past. Several weeks ago, I linked to an article about a 10% "crash" on the Indian Sensex exchange that was over in a matter of minutes. Someone mentioned civil unrest. That seems probable to me. We've seen bits of that with the flash mobs. We may see spontaneous civil unrest that hits with great force, then disappears as fast as it came about. Several months ago, I quoted some history from an incident in 1571 where a mob of Crimean Tatars looted and burned Moscow over a period of 3 hours with about 100,000 casualties. Excerpt:

Within three hours, Moscow burnt out completely. In one more day, the Crimean army, sated with its pillage, left on the Ryazan road to the steppes. The Ottomans placed into slavery 150,000 Russians. Contemporaries counted up to 100,000 victims of the invasion in 1571. Papal ambassador Possevin testified of the devastation: he counted in 1580 no more than 30,000 inhabitants of Moscow, although in 1520 the Moscow population was about 100,000.

I think it's possible incidents like this will be seen during the next crisis that hit almost out of nowhere and are unpredictable as to exactly where they hit. Last year I believe I linked to a flash mob incident after the Wisconsin State Fair let out. The end of the article showed a list of about 100 reports of violence that occurrred over a short time, which then ended quickly. We may see things along those lines but orders of magnitude more intense as the crisis wears on. 46 million people in the US are on food stamps - it's almost unthinkable.

[Trevor]

Well, according to the list, the 1571 burning of Moscow happened in the middle of a crisis war, the Livonian War. I don't expect anything like that to happen, but it is quite possible to see riots, arson, even terrorist attacks. It's happened in Europe and shows signs of coming here.

[Higgenbotham]

There was mob violence and massacres throughout Europe at that time. The St Bartholomew's Day Massacre occurred a year later (1572). I think that massacre also occurred in the context of a war. I'd suppose if we see massacres occurring with greater frequency and intensity during this crisis, it will escalate into something that might be recorded as a war. I'm not sure whether I expect it or not, but the ingredients are present and if there's to be something in the US that is recorded as a civil war later, this is how it will probably occur. It could start with a flash mob attacking a suburb, a university or an event killing and injuring hundreds or more and escalating from there. I was given this link the other day: http://www.canadafreepress.com/index.php/article/46516 Not sure if I believe it, but it's "out there". "During this call, he said that the DHS is actively preparing for massive social unrest inside the United States. He then corrected himself, stating that “a civil war” is the more appropriate term. Certain elements of the government are not only expecting and preparing for it, they are actually facilitating it, stated my source."

Edit - I had previously stated that the St Bartholomew's Day Massacre was a one day event. It spread outside of Paris to the provinces and lasted for several weeks.

[John]

The St Bartholomew's Day Massacre was fought along the fault line of
Catholics versus Huguenots (French Protestants).

What would be the fault line along which a U.S. Civil War would be
fought?

John

[thomasglee]

The St Bartholomew's Day Massacre was fought along the fault line of
Catholics versus Huguenots (French Protestants).

What would be the fault line along which a U.S. Civil War would be
fought?

John

Interesting question.... the obvious answer would APPEAR to be along the lines of "socialists" versus "capitalists", but neither side would likely accept the labels placed upon them. It will be those that expect the government to become the source for all sustenance and those that want to take care of themselves. Would it break down to be along religious lines? Possibly, and it might make for strange allies (Christians and Muslims actually coming together; for example???)

[Trevor]

I find a civil war in the United States to be very, very unlikely. True, the political fighting is very bitter, but that's par for the course in a period like this. We saw it in the years prior to the Second World War and prior to our civil war.

Of course, we're going to have some spillover once things in Mexico fall apart. It's even possible to have a three-way conflict in places like southern California between natural-born citizens, immigrants who now consider themselves American, and ones that still consider Mexico to be their primary identity.

Speaking of them, we actually fought Mexico in what was a crisis period for us, 63 years after the end of our revolution. I wonder why it didn't spiral into a new crisis war.

[thomasglee]

I find a civil war in the United States to be very, very unlikely. True, the political fighting is very bitter, but that's par for the course in a period like this. We saw it in the years prior to the Second World War and prior to our civil war.

Of course, we're going to have some spillover once things in Mexico fall apart. It's even possible to have a three-way conflict in places like southern California between natural-born citizens, immigrants who now consider themselves American, and ones that still consider Mexico to be their primary identity.

Speaking of them, we actually fought Mexico in what was a crisis period for us, 63 years after the end of our revolution. I wonder why it didn't spiral into a new crisis war.

I also think full scale civil war in the US is unlikely. But what about in the EU? Would a war between EU countries really be considered a civil war??

[Trevor]

No, the EU is 27 different countries, so it would be an external war. of course, for all we know, Europe could end up as a single nation after the conclusion of this war.