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Comment: Collapse Scenario

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Collapse Scenario

1. Japanese liquidity crisis leads to foreign U.S. Treasury run
2. Fed Reserve/Plunge Protection Team monetize massive debt purchases to hold interest rates down
3. Dollar confidence fails, dollar plunges, import prices rise radically
4. Corporate expenses explode, NPV of future cash flows go negative, markets go limit down.
5. Bank balance sheets erode. Runs ensue. Holiday declared
6. Fed begins swap arrangements, taking on bank assets with monetized debt.
7. Fed begins actively propping up the futures market with monetized dollars
8. Pensions confiscated, reinvested in Treasuries.
9. Domestic confidence fails. Prices surge.
10. Markets try to survive with alternative currencies and secured IOUs but congress intervenes. Congress enacts anti "gouging" laws and price controls. Massive shortages and supply dislocations result.
11. Shortages lead to rioting
12. Congress enacts gun confiscation
13. National Guard, then Army and Marines used to restore order in ghettos as government assistance payments no longer buy anything.
14. Massive layoffs trigger nationwide middle class protests
15. Government disperses the demonstrations. Many civilians killed by military.
16. Military has massive defections. Their operational effectiveness is compromised. Many junior officers are elevated in rank to fill the gaps.
17. A military coup is attempted but fails. Executive branch becomes paranoid, aggressive. The assert that the established order must be preserved at all costs.
18. Country dissolves into chaos with police departments and military divided between loyalists and localists. Economy goes completely underground.
19. Federal government funds itself exclusively by the printing press. Dollar is utterly destroyed.