Prepping blogs often talk about big disaster scenarios, where a major event causes major damage to society. What I’d like to discuss in this post is lynchpin disasters, where a minor event causes major damage, or where an event in a distant part of the world causes major damage here. How can this be? Let’s examine some possibilities.
Panic buying is one type of lynchpin disaster. The modern economy works on a “just in time” basis. Stores must be commercially competitive, so they cannot buy a large supply of each item, and store it long-term, until it is needed. They buy as much as they think they can sell until the next shipment of those goods. If people suddenly decide to sharply increase their buying of any item, the system cannot adapt quickly enough.
This next story is not a disaster, but an example of panic buying. In 1973, panic buying of toilet paper caused stores across the nation to sell out, because of a false news story about a toilet paper shortage. Snopes, a website dedicated to figuring out which internet stories are true and which are false, has this to say:
“In December 1973, Johnny Carson made a joke during his opening monologue of The Tonight Show about an upcoming toilet paper shortage. While Carson was not the first to comment on the situation, the talk show host’s joke was blamed for causing a nationwide toilet paper shopping spree.”
“1973 was a time of a shortages and Johnny Carson’s audience found the joke frightening instead of funny. In the following weeks, stores were flooded with customers looking to buy up the last remaining rolls of toilet paper. But since stores were not prepared for the sudden rush of sales, many people found themselves staring at empty shelves. This reinforced the idea that America was truly running out of toilet paper.”
This was an amusing and brief misunderstanding. But you can imagine the same process occurring with other, more important, goods. What if there was panic buying of food? The shortage caused by the panic buying might become self-perpetuating. The buying causes a real shortage, which stokes fear and therefore causes people to continue to empty store shelves, as fast as they can be restocked. A serious disruption in the food supply could result. And panic buying is not necessarily based on any real danger.
Similarly, there could be a panic run on the banks. This is happening in India right now. The government decided that to thwart crime and tax evasion, they would withdraw certain large currency bills and place restrictions on cash. The result was long lines at banks and ATMs and economic confusion:
“The sudden withdrawal of 86 per cent of India’s currency has left cash in short supply, retail sales stumbling and wholesale markets in turmoil.
That’s just the immediate fallout from Prime Minister Narendra Modi’s surprise effort to stamp out corruption by making cash hoards in large denomination bills worthless. But what lies ahead could be even worse, some analysts say.
“Basically, you’ve created chaos,” said Steve H Hanke, an applied economist at Johns Hopkins University in Baltimore and a global authority on currency policy.”
One mistake by the government and economic chaos results. And don’t think it couldn’t happen in the U.S.
The gasoline supply is another possible lynchpin. If there is an upheaval in the Middle East, fears of an oil and gasoline shortage could create long lines at gas stations, just as did occur in the 1970′s. It might take a major event to cause this type of crisis, but since it happens overseas and out of our control, it is still a type of lynchpin.
The U.S. economy has become interwoven with the entire tapestry of world economics. This presents some advantages, since our good are easily sold worldwide. It also creates some dangers. Not so long ago, the economy of Greece was on the brink of collapse, and it had major repercussions in markets around the world. If their economy had collapsed, the result could be a recession (or worse) in the U.S. And again it is something outside of our control, in a distant nation. Yet it can cause a major SHTF disaster stateside.
The final example I’ll give is from agriculture. California has been under a severe drought for a few years now. This cannot go on much longer without a collapse of agriculture in that large and important agricultural State. We are at a tipping point now. Any additional stress on the farming system in California could put that industry in that State over the brink. The result would be rising food prices nationwide, and a greater reliance on imported food. And this could lead to a worse disruption of the food supply further down the road.