Economic downturn leads to a laundry list of negative impacts

Potential Economic Consequences So, what’s the worst that could happen? While we can’t say for certain—there are too many unknown variables at this point and time—there are some consequences that often follow economic discontent and collapse. Hyperinflation The greatest worry most have is hyperinflation. This occurs when inflation rises rapidly each month, with the percentage rise being as high as 50% or more. Post-WWI Germany is a good example of hyperinflation. Another recent case is Venezuela. While the country has experienced double-digit inflation rates since the early 80s, poor government policies and socioeconomic stressors transformed regular inflation into hyperinflation. The ongoing political crisis and several policies, including evaluating the bolívar and lowering the minimum wage, led to inflation rates as high as 1,000,000%. Ultimately, hyperinflation leads to individuals being unable to buy anything. As prices eventually come down, so do wages, leading to an economic depression. Depression Economic collapse could lead to a full-scale depression—few jobs and little pay. While there are many examples of an economic depression, the collapse of the Soviet Union in the 1990s highlights what an economic collapse could mean. Poverty in the Post Soviet States increased 10x. Russia’s GDP was halved. Smaller states also saw their GDP plummet; some, such as Georgia, Kosovo, and Tajikistan, never recovered. The economic chaos also facilitates a rise in organized crime, mass migration, and extensive poverty. More Bank Failures It’s perfectly possible that an economic collapse—especially those under Project 2025—could lead to a complete collapse of the banking system. With many Americans using credit cards and payment methods, this could mean being locked out of their accounts. An increase in bank failures leads to further investor distrust of the economy. Even if the situation can be controlled, losing faith in the financial system and currency can lend itself to additional problems. Banks considered stable may go under if a panic ensues. Currency Devaluation Another significant consequence of economic collapse is that currencies are devalued. This can lead to hyperinflation or a currency crisis, further devaluing money—namely, the U.S. Dollar. It also further devalues the currency. If hyperinflation were to devalue the U.S. Dollar, the currency would become less favorable worldwide. Investors at home and abroad may prefer to trade in another, more stable currency. In other words, the US Dollar would no longer be the world standard in the international market. Lopsided International Agreements With an unstable economy, fewer countries may be willing to sign new trade agreements. Furthermore, increased economic stressors at home may result in officials signing deals that are not beneficial to Americans. As an economic powerhouse and superpower, the United States has been able to successfully advocate for its interests abroad, whether that be in diplomatic missions or trade agreements. If an economic collapse leads to a depression, currency devaluation, or other ills, our government may have less leverage in future deals. Lack of Infrastructure An absent economy translates into less spending, not just for people but for the government. Infrastructure projects will likely remain stagnant. Depending on how long it takes for the economy to bounce back and the effects of the collapse, funds on a state and federal level will be incredibly limited. As a result, money will likely be used only for emergencies or immediate needs—not on improving or repairing infrastructure. Furthermore, as climate change continues to fuel natural disasters worldwide, not to mention changes in flora, fauna, and resources, the government may not have the agility or financing to respond effectively. What Could This Look Like in Reality? It’s entirely possible—although unlikely—that none of the above consequences occur under an economic collapse. In addition, many of these consequences wouldn’t necessarily happen immediately.