How U.S. collapse may end civilization

The situation is different when it is the U.S. dollar and it is the backing for most of the currencies of other nations. One nation like Argentina in 2000 can undergo collapse without it affecting the rest of the world much, and enable them to recover in a few years, after a period of misery and social breakdown. That is also a very different situation than prevailed in 1931, when national currencies were still officially backed by gold. It only takes a widespread expectation of collapse to cause one, and that could happen next month. It would proceed as a kind of "panic", with people everywhere abandoning currencies of all kinds except gold or silver, or reverting to barter in commodities. A gallon of gas could become the new dollar.

As in 1929 the harbinger could be everyone trying to sell their assets denominated in dollars and other national currencies, and trying to convert into tangible commodities in their possession. As currencies lose value, people will likely pay off debts in now worthless currency on things they want to preserve through the depression, and walk away from everything else. The result will be a general collapse of banks and investment institutions like pension funds and insurance companies. Suddenly investments held in the form of financial assets will become worthless. Countries less dependent on such assets would suffer the least, but even they might experience unemployment of more than 50%. For the wealthier nations like the U.S., Europe, and Japan, it could go to more than 80%. For those countries that have to import most of their food, it could literally bring famine and widespread death.

The recovery from the Great Depression was made possible by the industrial capacity of the U.S. and by the availability of cheap natural resources, especially oil. If the coming collapse brings the deterioration of that industrial capacity beyond a certain point, the world may enter a situation in which economic growth is "behind the power curve", meaning that no amount of kind of investment of effort can revive it. That could mean a dark age from which we would never recover.