Economic Collapse: Can It Happen Here?

100 dollar bills

It seems like everywhere I turn there are doomsayers predicting an economic collapse. I’ve heard these predictions for years, but to be honest we did come close in 2008 in the United States. That, along with the situation of our national debt, plus conditions in Venezuela and other countries, have given me pause to ask myself if there isn’t some truth to what the doomsayers are saying.  I mean, could it happen here? I decided to find some answers.

There have been many occurrences―both recent and otherwise―where entire countries have collapsed financially, it seems no country is immune. So I believe the short answer is Yes!  It can happen here. But what is the cause of these catastrophes and can anything be learned from them?  More specifically, what can we do to prepare ourselves and our families, so that if it does happen we will be minimally affected, or at least be able to survive it?  These are questions I will address in this article.


There are many examples to choose from, but I chose to highlight the financial collapse of Germany (which took place during the years of 1919–1923), The Great Depression of 1929–1939, The economic collapse of Argentina in 2001 (and it’s threatening to collapse again), The 2008 collapse in Iceland, and the current day crises in Venezuela and Zimbabwe.

News Articles of these events:

Venezuela: In 2017 CNN wrote “Venezuela’s economy: ‘It’s at the point of no return'” and “There are people in Venezuela who are literally starving. This is apocalyptic stuff.” Quoting the International Monetary Fund, VOA News last month said that “Venezuela is in a state of “economic collapse” with hyperinflation not seen since the middle of the last century.”

Zimbabwe: 2007-2009: Huffington Post said “More than 3-million Zimbabweans live in extreme poverty,” and the country experienced a rapid collapse in its economy – “Inflation is in triple digits; the local currency [lost] 99% of its value and more than a quarter of its citizens have fled the country.” Quartz reported that Zimbabwe’s financial system increasingly resembles a house of cards, and if one card were to give way “the entire edifice would collapse.” It got to the point where 10,000,000 Zimbabwean dollars would not buy a single wooden match stick.

Argentina: BBC News said “The Argentine peso has lost more than 40% of its value against the US dollar this year and inflation is rampant. Everyday life is getting more expensive for Argentines, as the prices of many goods and services still bear a close relation to the US dollar.”

Iceland: Again, BBC News said “The 2008 global financial crisis hit Iceland hard. The currency crashed, unemployment soared and the stock market was more or less wiped out. But unlike other Western economies, the Icelandic government let its three major banks fail” and then “went after reckless bankers.” Many senior executives were jailed and even the ex-prime minister Geir Haarde was put on trial.

The Great Depression: The exact cause of the Great Depression has been widely debated. There seems to be no one cause, but several events that took place.

The stock market crashed in October of 1929. Nearly 700 banks failed that year and more than 3,000 collapsed in 1930. There was no FDIC and so when the banks failed people just lost their money. This caused people to panic and make “bank runs” to withdraw their money from the remaining banks. This action caused more banks to fail. By 1939 more than 9,000 banks had failed. Surviving banks became unwilling to lend money, which made the situation worse, by contributing to less and less spending.

When people lost their savings and their credit they stopped spending, which caused companies to lay off workers en masse. As people lost their jobs they could not make payments on their loans, so repossessions and evictions from homes became common. In fact, nearly 750,000 farms were lost through bankruptcy or sheriff sales. The unemployment rate rose until it was over 25%, which caused even less spending—wow, talk about can’t win for losing!

GermanyArticle about economic collapse in The Improvement Era, Vol. 36, October 1933, No. 12This last example, Germany’s economic collapse, was described in the October, 1933 issue of The Improvement Era.

“Vampire” Currency: A Million for a Loaf of Bread


Normal [Exchange Rate]: 4.2 marks for $1.00

  • January, 1919—8.02 marks = $1.00
  • January, 1920—49.8 marks
  • January, 1921—75 marks
  • January, 1922—188 marks
  • June, 1922—273 marks
  • December, 1922—7,650
  • January, 1923—7,260

At this point a recovery was anticipated, however, they were wrong:

  • June, 1923—75,000 marks
  • August, 1923—1,100,000
  • September, 1923—9,700,000
  • October, 1923—242,000,000
  • November, 1923—130,000,000,000 [billion]
  • December, 1923 (the lid blew off)—4,200,000,000,000 [that’s trillion]

(All of the above was equivalent to $1.00)

The article describes Economic Collapse from Hyperinflation:

“Could inflation or other conditions ever raise the price of bread in the United States to one million dollars a loaf? “Impossible!” you cry. “Why, that’s absurd.”

“Yet twenty years ago [prior to World War One] to have said in Germany that a loaf of bread would soon cost four million marks would have brought forth equally emphatic protests.”

As the mark decreased in value wages doubled, but food and commodities jumped more than 5000 percent. “Bank clerks and other white-collar employees found that although their wages had been increased many times the pre-war rate, they were still unable to purchase sufficient food for their families, let alone clothing and other necessities.”

1922 German 10,000 mark note showing a vampire at the throat of a workman

German Mark “Vampire Note”

The German people found that the purchasing power of a 5000 mark note had decreased so much that it would barely purchase a loaf of bread, . . . in response “the government issued a new 10,000 mark note.” The engraver of this new banknote cleverly etched the face of a vampire with her mouth at the throat of a working man, insinuating that the issuance of such inflated currency was literally “draining the life blood of the worker.”

“Trebor H. Tims, an American traveler, related his experience while visiting Germany during the period of great inflation” in 1922 and 1923. Among other things, he reported the following: “I saw former professional men, doctors, lawyers, and even ministers anxious to carry our luggage in the hope of earning a tip of 100 marks or so (less than one cent) which represented to them a good day’s pay.”

Mr. Tims also spoke of “elderly persons who had scrimped throughout their lives to save sufficient to live a meager, but independent, old age. Finding, say 20,000 marks left in the bank, they found this sum insufficient to purchase even a slice of bread.”

I cannot refrain from relating one more experience of Trebor Tims. When he and his wife arrived at a hotel in Leipzig on a cold January day in 1923, the hotel rooms were very cold and the water was not heated either. Mr. Tims’ wife was ill and so he asked the proprietor to turn on the heat. He was told that they were unable to afford to turn on the heat as it was too expensive. The hotel only had central heating and would require all the rooms to be heated. Mr. Tims asked how much it would cost to heat the whole hotel and he was told it would be a terrible expense, that “it would cost as much as 500,000 marks.” After mentally calculating that it would cost “about $1.00 at the prevailing rate of exchange” he paid the proprietor and asked him to “hurry with the heat.”

The Cause

In my research, one word showed up again and again—hyperinflation.  That begs the question “What exactly is hyperinflation?”  Well, hyperinflation is basically when money has become worthless.

You see, our money is fiat money, which is currency that the government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money comes from the relationship between supply and demand rather than the value of the material that it’s made from. Today’s money is just paper, or numbers on a screen. Since it has no real value backing it, it only has value if people accept it as having value. In other words, you only accept money for your services and goods because you know other people will do the same. Now, if the government prints too much money, a lot of money will be in circulation but there’s only a limited amount of goods, so the value of the money goes down along with people’s confidence in it. A loaf of bread could go from costing one dollar to over a million dollars. Eventually, no matter how many zeros you add to the money nobody will want it.

This video explains it very well:

Neil H. Leash commented on the threat of economic collapse and the conditions in the world today:

“We read and hear news reports of economic difficulties, but they seem so far away or so academic that we never personalize the problems. Yet, economic disasters affect real live people—people just like you and me. These people never believed it could ever happen to them, but it did, and similar experiences will continue to happen to others…Of course we hope nothing similar will ever happen to any of us, but that wish may not necessarily come true, for no one’s world is ever absolutely safe… 

“As we witness the current economic turmoil in the world about us with its riots, starvation, and political upheaval occurring in nation after nation, many of us are completely oblivious to what the average individual in those nations is truly experiencing. Most of us have no real appreciation as to what it feels like to truly be without food, shelter, clothing and the basic necessities of life, and further, no place to turn for help. Reading about another’s life experiences can add a dimension to our understanding, but it will be nothing like having personally lived through such [an] overwhelming crisis.” (Prophetic Statements on Food Storage for Latter-day Saints, pp. 165, 166)

I’m reminded of something Ezra Taft Benson once said:

“Too often we bask in our comfortable complacency and rationalize that the ravages of war, economic disaster, famine, and earthquake cannot happen here. Those who believe this are either not acquainted with the revelations of the Lord, or they do not believe them. Those who smugly think these calamities will not happen, that they somehow will be set aside because of the righteousness of the [members of the Church], are deceived and will rue the day they harbored such a delusion.”

How to Personally Prepare for Economic Collapse:

Should We Save Our Money or Buy Food Storage?

We have been counseled to establish a financial reserve by saving a little money each week and gradually increasing it to a reasonable amount. As important as it may be (and it is important) to have some cash in reserve for unforeseen emergencies—you cannot eat money! Please keep this in mind when preparing for the future. As we have learned previously in this article when an economy collapses money loses its value, so I believe it is more important to prepare oneself with food, water, and other supplies that will keep us alive. (See this related post describing how F. Enzio Busche survived days of starvation after World War II in Germany.)

Some people believe they’ll always be able to just go to the grocery store. But did you know that grocery stores never stock more than three days supply of food? Think about what happens when a natural disaster or a big storm hits—Grocery stores get emptied in a matter of hours. Grocery stores don’t stockpile food, they keep their inventory to a 3-day supply. But that really only matters if you can AFFORD to buy it. During hyperinflation, the value of your money will be insufficient.

I like to think of food storage as an investment in commodities. Food storage “commodities” will feed you and keep you warm and provide things that you can use to barter for other items. These commodities will only increase in value during an economic collapse.  Is it too late to prepare?  I don’t know how much time we have before the band-aid gets ripped off our economy. However, Any Preparation Is Better Than None At All!

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