What happen when economy collapse

If the U.S. economy collapses, you would likely lose access to credit. Banks would close. Demand would outstrip supply of food, gas, and other necessities. If the collapse affected local governments and utilities, then water and electricity might no longer be available.

All of this would happen

Explanation: The honest-to-gosh answer is… no one really knows and anybody who has any insight into what it might like doesn’t want to find out. It would be very ugly, not only for the U.S. but for most of the developed and developing nations.

That said… the answer to your question depends on what you mean specifically by “collapse”. The global financial system came very near to collapse in 2008–2009. If the governments and central banks hadn’t stepped up to bail out the financial institutions, the carnage would have been a lot worse.

Even the Great Depression of the 1930s would have been worse were it not for the fiscal stimulus of Roosevelt’s New Deal. (NB: Some conservative economists would challenge that assertion.)

However… all economies recover to some extent and over a certain length of time. How long it takes to recover depends upon the extent of the damage done to the economy during the collapse. It also depends on the ability of the government and the central bank (Federal Reserve Bank in the case of the U.S.) to stimulate the economic recovery.

There are multiple theories on how to stimulate economic growth. Some would argue that the austerity programs of the last decade have been a brake on economic recovery. Others would dispute that argument.

In any event, economic recession can inflict great privation and hardship on the average citizen. Most governments make some effort to cushion the blow for the most vulnerable but their ability to do so is often limited by fiscal constraints. The United States has been fortunate to have the ability to issue debt obligations and other monetary policy techniques (e.g. Quantitative Easing) to cushion the effects of economic recession and stimulate the economy along the road to recovery.

A true economic collapse would occur if the government and the central bank were unable or unwilling to intervene to soften the blow of economic recession and provide economic stimulus.

And… no one knows what would happen in such a hypothetical scenario. But consider this… the French revolution, the rise of the Nazi party (NSDAP) and the Bolshevik party all occurred during times of great economic crisis. And they were reactions to civil strife caused by the economic suffering of the average citizen.

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