Throughout history, there are no real examples of worldwide economic collapse. While some nations or cultures are in ruins, others often flourish. In modern times, every nation depends on the global economy to a point that would make a global financial meltdown much more likely.
What is total economic collapse?
"Economic collapse" is a broad term, which could be defined in many ways. In this article, we are looking at "total economic collapse". For the sake of consistency, we will define this as follows:
- Complete shutdown of financial institutions.
- Complete lack of government.
- Absent, or non-functioning public infrastructure.
- Non-existent social programs.
Examples of economic collapse
We can look at history for past examples of economic collapse. Although, none of these examples represent worldwide collapse.
The fall of the Western Roman Empire
Even though the Western Roman Empire had been in decline for decades, the official date of its collapse is 476 A.D. On a local level, for many decades after the collapse, trade continued much as before. Coins bearing the Emperors images still circulated. Taxes were still paid to local chiefs and lords. Farmers still produced, and merchants still sold.
It took about a century before the effects could really be distinguished. By this point, most coinage in circulation had deteriorated to an unrecognizable level. Constant civil unrest and wars left the population scattered. Merchants and farmers began to rely on barter much more than currency. People valued food, land, and strong metal for weapons much more than coins with faces of long-dead emperors(often left un-distinguishable from wear).
Germany After World War 1
Germany had removed FIAT from the gold standard in the years during the war. This combined with the fact that the Weimar Republic had chosen to borrow huge sums to fund the war, led to what is called hyperinflation.
Chart Credit: Delphi234 - CC0, https://commons.wikimedia.org/w/index.php?curid=37268736
The economy in Germany crumbled. It is often speculated this was one of the leading causes of World War 2. Hard currency and foreign currencies were in such a high demand, the value of the paper Mark collapsed. By the end of 1923, 1 Gold Mark = 1,000,000,000,000 Paper Marks(it was 1:1 in 1918)
The Great Depression
The Great Depression, while not a full-on worldwide economic collapse, it is the closest humankind has ever been. Some scholars hypothesize that the human race was just inches from a full on economic collapse, possibly leading to another "dark age".
Gold Value During Economic Collapse
Will gold and silver increase in value if the economy collapses again?
Well if we look at past examples of regional economic collapse, then the answer is yes. Precious metals will increase in value compared to FIAT, at least for a little while. But, depending on the severity, and length of the economic collapse, it may eventually go out of circulation in favor of more useful resources, such as: bullets, gas, and seeds.
Crypto Currencies
How about Bitcoin, Ethereum, and Steem?
Once again this depends on the severity of the collapse, but even more, Crypto-Currencies depend on a working network of computers. If public infrastructure collapses, the World Wide Web will fail. If enough people have access to electricity, a p2p network could be set-up, but this depends on many factors. Short-term speaking, Bitcoin and other cryptos will probably not retain any value.