The coming economic collapse and its impact on India

We had the dot-com bubble. We had the real-estate bubble in many parts of the world. Now, we are in a fiat currency bubble. When this bubble bursts, a financial collapse will occur. It will burst sometime between 2013 and 2016. Here are the main events that I expect in this financial collapse:

1. Many middle-eastern countries will be handed over to “Muslim Brotherhood” or some other fundamentalist Muslim organization. This will probably happen before the collapse, so that USA can keep its army in middle-east and thus retain control over oil. Whosoever controls the oil, controls the world.
2. Derivative market will explode. Major banks and hedge funds will not be able to meet their obligations. They will declare bankruptcy.
3. Interest rates will rise in USA. Major banks in USA will declare bankruptcy. USA government will default on its debt. The bond holders will lose a lot.
4. US Dollar will be backed by gold and silver to protect its fall. USA will confiscate GLD and SLV assets and give pennies on the dollar to shareholders. The price of gold and silver will sky-rocket.
5. Stock markets, world-wide, will collapse in value.
6. Paper assets will disappear because the counter-party is bankrupt.
7. Indian rupee will depreciate a lot e.g. say from Rs 55 a dollar to Rs 550 a dollar. Everything in India will become expensive overnight. Inflation will be in triple digits.
8. Indian government will be forced to subsidize essentials like food, fuel, power, water, etc. Export of these goods will be restricted, to keep prices down in the country.
9. Indian government will have to increase taxes, to make up for huge additional subsidies. Income tax, Excise tax, Service tax, etc rates will go up.
10. Indian government will have to confiscate wealth of “rich” people holding stocks, fixed deposits, PF, PPF, NSC, gold in bank lockers, etc. The confiscations will be done under the guise of helping “poor”. Actually, the corrupt government will fill its own coffers and pockets.
11. Interest rates will rise in India to stop the runaway inflation.
12. People working in Indian public / private sector will find that their salaries are not growing as fast as inflation. Inflation will wiping out their savings in PF, PPF, LIC, Fixed deposits and other long term instruments.
13. Many people in Indian private sector will lose their jobs.
14. There will be bank runs. The government will put in restrictions on withdrawal of cash from banks. People will not be allowed to break fixed deposits. Every measure, which prevents cash in hands of people, will be implemented to reduce inflation.
15. Stocks and Real estate are supposed to be profitable during inflation; but not during hyper-inflation. e.g. If a stock prices becomes 10 times due to inflation, but government imposes a tax of 90% on sale of this stock, then the investor does not benefit from rise in stock prices. People mostly purchase real estate on credit, but banks refuse to give loans during hyper-inflation; so the price of real-estate never rises fast during hyper-inflation.

The only people who can save their wealth in this coming collapse will be people, who have gold / silver in their hands. They will be able to sell precious metals for cash. So government will have difficulty in taxing them. Hence, physical precious metals are the only shield for protection in the coming collapse.

Remember, only the bottom of the pyramid survives; everything else evaporates.

The economic collapse will cause shortages of essential goods. So as soon as the derivative market explodes and economic collapse is about to begin, Indians should stock safely essential items like:

• Toothpaste, tooth-brush, shaving cream, shaving blades, medicines, toilet paper, cosmetics
• Soaps, shampoo, floor cleaners, washing machine soaps.
• Clothes, under-garments, shoes, socks, handkerchiefs, umbrellas.
• Batteries, candles, torch, emergency lights.
• Charge mobile phones and fix rates for next 1 year under a plan.
• Food grains, canned food, can opener, water filter.
• Get car serviced and keep the fuel tank full.
• Lock all loans on a fixed rate of interest for next few years.
• If you have given any residential property on rent, then serve eviction notice to the tenant because later on Indian government is likely to prohibit eviction by law. Ideally, you should have sold off this property earlier and invested the proceeds in precious metals.