America does not run on cash. It runs on credit. In theory, America’s line of credit is unlimited. But in practice… it can get complicated, fast.
The US is the first and largest economy ever to function on credit.
Americans have 3.75 credit cards per person. They do some 60 million credit card transactions every day: 67% of gasoline purchases are done with credit cards, 62% of travel expenses, 67% of clothing.
About 40% of low- and middle-income households use them to pay basic living expenses – rent, mortgage, groceries and utilities. And more and more shopping is done online – 100% of it with some form of plastic.
Today, less than one-third of all commercial transactions are settled in cash. The rest are on credit. When the credit cards stop working, the economy stops.
Everything Breaks Down
Listen closely to your car radio after the crisis begins:
The financial crisis took a turn for the worse today. Governor Christie of New Jersey and Governor Brown of California announced emergency measures to force gas stations to continue accepting credit cards. But commuters in Northern New Jersey as well as Southern California found local gas stations closed this morning.
Whether they closed to avoid having to accept credit cards… or whether they actually have no more gas has not been established.
Our news helicopters reported many abandoned vehicles along commuter highways. Apparently, drivers simply ran out of gas.
When a money system breaks down, everything breaks down.
Again, let’s listen to the radio of the future:
Las Vegas receives almost all of its food deliveries by truck and the truckers say they don’t have the cash to pay for fuel. California governor Brown had ordered the gas stations to accept credit cards, but the stations say they don’t have the fuel to sell.
With food deliveries slowed… and in some places, stopped altogether… shelves of many grocery stores are bare. For the moment, it’s calm here. Emergency supplies – usually made available only in the event of a natural disaster – are making their way to Las Vegas neighborhoods. But those will soon be depleted.
The financial shock seems to have reached far beyond Las Vegas. Reports coming into the newsroom tell us of desperate people all over the country… food riots have broken out in several places. And in Denver, what can only be described as a “money riot†left two men dead, after a crowd stormed a money changer’s van and overturned it.
The worst thing is that the chain of supply that fills shops, supermarkets and gas stations seems to have come to a stop.
Experts say the gas stations are running out of fuel because they can’t settle their accounts. That is, they can’t buy more fuel because they don’t have the money to buy it. And the truckers don’t have the money to buy the gas even if the gas stations had any. It looks like the whole system is breaking down.
If this continues for more than a few days, we could be seeing some serious problems… the economy seems to be coming to a halt. And people need food.
