The Police State Economy

By: Tom Chatham – Author of The American Dream Lost

It is important to talk about a possible currency collapse given the current financial conditions in the U.S. The people need the conversation to help prepare for the challenges that would immediately follow. Government control following a collapse would further degrade quality of life and personal freedoms. It would be a troubling time to say the least. Those that feel the need to prepare already know what the government is about and what it is capable of. They know it will be a long time following a collapse before any semblance of civilized society might return to the country, if it ever existed to begin with.

A police state economy can be identified by shortages, poverty, misery and brutality. The population has no drive for productivity and no chance for wealth creation or incentives for new product creation. The whole system breeds stagnation throughout the country insuring future generations will have a lower standard of living. People will do the minimum work necessary to survive as anything more will create no excess for them to keep and use.

A good question they might ask themselves now while they have time to ponder it is, what will the government use to pay its minions to carry out its plans after a collapse has destroyed the dollar. The sociopaths that fill the government ranks will no doubt do as they are told but at some point they will expect to get paid for their services to purchase the necessities their families need. What might this situation look like?

In normal times, a currency collapse would be followed by government reforms and possibly replacement of politicians by an angry populace. The government would issue a new fiat currency and the citizens would be slowly conned by the politicians to accept it. The game would start anew until the next collapse. In the case of the U.S. the populace at large is learning how the game is played and they won’t want any part of a new fiat currency by choice.

The emerging problem with the U.S. is that the politicians don’t care what the populace wants or is willing to accept. The fact that the U.S. is becoming a police state gives some indication of what a post collapse situation would look like. Being that the major banks own the government, in practice if not in name, the industry and resources seized by government will provide securities for recapitalization of the banks following repudiation of the dollar.

Immediately following a collapse of the dollar in the U.S. the government would seize control of all production capability and resources. It would have no choice because they know a new fiat currency would not be accepted by the working class and businesses. They would issue a new currency probably in connection with a type of debit card that government employees and those that support the government would get. The government would want to control every sector of society in order to ensure finished products are available to the selected groups. Everyone else would either have to fall in line and work as they are told to receive goods or be removed as a threat.

A barter society would arise quickly to provide the needs of communities but this would be a threat to government control so expect them to react against this activity very quickly and harshly. Any barter activity that eludes government scrutiny would need a medium of exchange outside of government control such as precious metals, diamonds or other hard commodities. All industries would have to be controlled by government in order for the new fiat currency to be accepted and used for commerce and to insure continued production of products. Any type of small business that is hard to regulate or control would be shut down by government officials. This would cause a severe backlash by the population and the critical infrastructure would have to be guarded by heavily armed government personnel to maintain control and prevent interference by citizens. This would require a large army with weapons and lots of ammo that will obey all orders from government officials.

The government may claim the new currency is backed by gold reserves but if it is not directly convertible into gold a gold backing will mean nothing. This would be one way to attempt to appease citizens into accepting a new paper currency. The prevention of barter or alternate currencies would be enforced with brutal force by the government acting in a totalitarian way to ensure its total control over the society. Currency controls would be such that officials would be able to prevent the accumulation of wealth by individuals. The absolute control of resources will ensure most of the population will submit or do without.

In the opening hours of a government takeover, the only way for citizens to prevent totalitarian rule is the acquisition of critical infrastructure and resources by force before government personnel can secure it. As the old saying goes, possession is 9/10 of the law. The acquisition of resources is only the initial problem that the citizenry would face as government forces attempt to take control away from citizens. The difficulty would come in restarting commerce with a hostile government still in place. Those that depend on the government would likely support any measures that would keep resources flowing to them. The large populations in the urban areas would be easy for the government to manipulate due to the need for a continuous flow of resources to those areas.

Citizens that can control the resources in the rural areas will curb government control as long as those areas can be held. Once government forces have complete control of industry and resources it would be very difficult to remove it from their hands. It is a historical fact that once a totalitarian government takes control, it is very difficult to end it. The regime in North Korea is a good example of what to expect if the U.S. ever goes down this road.

An informed and vigilant citizenry is the only defense against this type of scenario and judging from current events, Americans have little or no defense at this time. Once a total government takeover has occurred, nothing short of war will likely correct it. There are nonviolent actions that can topple a government, but only if the population acts in unison for a common goal, which is unlikely given the divisions we currently see in the U.S. The current course of the U.S. is troubling and barring a significant event that alters this course, the American people have some very difficult times ahead of them. When this paradigm shifts, the citizens that do not have supplies or local production capability will become beholden to the government for their every day existence and it will not be benevolent in its actions.


Posted on August 28, 2012, in Economics and tagged , , . Bookmark the permalink. 3 Comments.

  1. another insightful post, tom. fully agreed on your assessment here.

    btw, i’m looking to find a place to contribute. it’s hard to find people who are awake to what’s going down, and it seems everyone will just wait for SHTF and be caught totally unprepared. denial is much easier in the short run, but a bad plan for the future.

    as you’ve noted, community will be key. i’m looking for a community of likeminded people where i can put my skills to use (which are illustrated at my website). if you know of anywhere/one seeking assistance, i’m ready to get at it (been ‘wwoofing’ for about a year in search, no luck yet).

    regards, gregg

    • Good morning Gregg, I know what you mean. When the vast majority finally accept what is happening, it will be too late to acquire the resources they need to live. Its like something I wrote in another article, human nature will cause people to deny everything until they suffer enough pain, either physical,financial or mental. Until they suffer that pain they will not be motivated to do anything.If you’re looking for like minded people in your area you might try American Preppers Network or Alt Market which lists barter groups around the country.If you have a site I’d be interested in taking a look, I’m always looking for more knowledge. Have a good day.


  2. thanks for that info, tom. i’ll check in with them.

    sorry, i should have specified, click my name to visit my site, or,

    not much info up right now. it used to be a commercial site when i used to have clients (chuckle). now it’s in flux, as am i. but, it may still be worth a look.

    best regards, g

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