The Second Great Depression: What the Future May Hold for America

There is evidence to suggest that some elements of all 5 stages of economic collapse have already occurred in America. The trigger that brought us to Stage 1-Financial Collapse, occurred in 2008 with the banking bail out and creation of the Troubled Asset Relief Program, known as the TARP fund.

As chronicled by Russian engineer, Dmitry Orlov as he observed the collapse of the former Soviet Union, the 5 Stages of Economic Collapse are:

Stage 1- Financial Collapse
Stage 2- Commercial Collapse
Stage 3-Political Collapse
Stage 4-Social Collapse
Stage 5-Cultural Collapse

In drawing his comparison between the United States and the former Soviet Union, Orlov writes,

"Because Stage 1 is pretty far along. Stages 2 and 3 - commercial and political collapse, are driven by financial collapse, and will overlap each other."

"States are already experiencing massive budget shortfalls, laying off state workers, cutting back on programs, and are starting to beg the federal government for bail-out money."

"Even though the various stages of collapse drive each other in a variety of ways, I think that it makes sense to keep them apart conceptually. This is because their effects on our daily life are quite different. Whatever constructive ways we may find of dodging these effects are also going to be different."

There is substantial evidence to suggest that our financial crisis was, in part, due to the removal of government regulations as it relates to lending practices, and the sale of mortgages as investment securities.

"Some stages of collapse seem unavoidable, while others may be avoided if we put up enough of a fight." said Orlov.

Since the implosion of our financial system, which required massive government intervention to stabilize, significant legislation to prevent the repeat of another collapse has not been implemented. Now there is a sub-culture of private investors popping up to fill the void where there is demand for lending.

According to some local realtors, including Ken Thorpe, with ERA Pearson Realty in Florida, potential buyers are looking with more frequency toward private lenders for home financing, because traditional institutions are still not making home loans.

A private lender can be any individual with enough cash to pay for a house. These people are not subject to the same rules as lending institutions. They can "hold paper" themselves or include an option to sell your loan to someone else.

Multiply this practice on a nationwide scale and what we are setting ourselves up for is another collapse. Only next time when homeowners default, their property will be taken over by a small group of essentially unregulated, wealthy individuals. The ultimate "bad landlord" could be in control of housing all over America.

What do you suppose that will do to this country?

Orlov says, "A great many people in the US insist that they do not need government help, and that they would do just fine if only the government would leave them alone. But this is really just a pose; there is a great deal that government does to make their lives possible."

In the 1930's, President Roosevelt implemented many programs designed to not only keep Americans from starving to death, but to give them temporary housing, jobs, and most of all, hope for the future.

Not all of those programs were popular among politicians. But something had to be done. The government had no choice but to step in and do what it saw fit to keep people alive and maintain order in society.

In today's political atmosphere, government intervention is seen by some as an intrusion on their freedom.

As Dmitry Orlov points out, "In the United States, the federal government keeps many people alive through programs such as Medicaid, Social Security, and food stamps."

"Local governments provide for trash removal and water and sewer line maintenance, road and bridge repair, and so on. Police departments try to defend people from each other."

The very essence of "civilization" demands that government play a crucial role in providing stability, assistance and services to its citizens in different ways. Some take the form of social programs, others involve law enforcement and public services, like electricity and mail delivery.

"When all of that starts to unravel, it is likely to do so from the bottom, not from the top." Orlov said.

We have already seen what happens when the government gives too much freedom to investors. Those policies have brought us financial collapse, massive debt, and a housing crisis that has already been going on for years, with few signs of stabilization or significant improvement. It may even get worse in the coming months, as unemployment continues to climb.

It is impossible to say at this point whether or not there is anything the government can do to keep America from complete economic and social collapse. Our system is riddled with loop holes for corruption and favoritism that does not necessarily protect the masses.

"Aside from the big government programs, (like Social Security & Medicare) there is little available in the US to help those in need. Again, Americans make a big show of their philanthropy, but, compared to other developed countries, they are in fact quite stingy when it comes to helping those in need." Orlov said.

If we took a picture right now of millions of people who are unemployed, hungry, sick and can't get healthcare, or are homeless due to foreclosure - and the caption on that photo didn't tell you where it was taken, how many of us would believe that it was taken in America in the 21st century?

Yet, that is our picture. That is what America has become under the collapse of our economy. Whether it will get better or worse is yet to be seen. Our self-inflicted wound is still bleeding.

If we do nothing, the economic snowball we have begun rolling down hill may run over America, leaving in it's wake, a country that is unrecognizable to the next generation. Perhaps, that is indeed the chapter we are writing ourselves in history.

Even now, it is much harder to find a picture that depicts the country we once called - America the Beautiful.