Global trade has been the engine of the world economy for decades, connecting countries and cultures through exchanging goods and services. However, this highly interconnected system is also vulnerable to disruptions that can have significant global consequences. A disruption of international trade, whether caused by geopolitical conflicts, pandemics, natural disasters, or changes in trade policies, can (and will) trigger a cascade of effects that impact multiple dimensions of economic and social life.
Sadly, I must say, this is the most immediate threat I can see on our horizon. Both in Venezuela (for obvious reasons) and the rest of the world.
I believe the complexity of the whole scenario is way too long for such limited space.
However, I believe that something will happen in the near future after analyzing the movements in the Asian and Middle Eastern chessboards and the events in our own yards.
Hence, let’s focus on the preparation and mitigation process.
The most immediate consequences that come to mind are:
Economic Consequences
- Increased inflation: Shortages of goods and services caused by trade disruptions can create inflationary pressure as consumers compete for limited products. This is the most harmful effect. We experience hyperinflation, and although it’s not like the USD is going to collapse (not too soon, at least), the consequences were enough to make me fly away. The manageable aspect of all this disaster is that the only thing losing value is usually the national currency. The fiat money. The paper and the electronic “backup”. This being said the best value storage happens to be the goods, and (for those in the business) some precious metals (and PLEASE don’t mention lead and copper – that is ancient history. If there is a national-wide/worldwide conflict, and martial law is issued, the minute someone finds out you have 40 or 50K of rounds somewhere, you’re history too). Any military in any part of the world would be panicked, knowing that civilians can stand their ground and shoot back with everything they have. You know already how I know this first hand, right?. Then, you need spare parts for your household, vehicles, consumables to keep your business running, etc. That’s where the real value is. We are experiencing a rise in the prices in USD, which is unbelievable in the first place. There is no reason for prices to go up other than that the mafia wants to start draining the currency out of the laundry machine. This means they will unchain chaos, launch a power blackout, and run to their planes in “secret” airstrips outside Venezuelan islands in Coche or Cubagua to head somewhere with the transponders off.
- Decreased economic growth: International trade is a key driver of global economic growth. A sudden disruption in trade will unleash a widespread economic slowdown as businesses lose access to inputs and markets, reducing production and employment. The consequences of this in the medium to long term are the ones I’m living: no jobs for qualified people because most of the industry is kaput. All the formerly vibrant industrial job markets where even a newbie could get a decent, underpaid-but-enough-to-live-job are now gone for good.
- Financial market volatility: Uncertainties related to global trade can lead to increased volatility in financial markets, affecting investments and the value of currencies. Those with their money invested should have a couple of backup plans. This, among other effects, affects banking services and neutralizes the capabilities of getting loans, for instance.
- Deindustrialization in some countries: Countries highly dependent on exports may experience accelerated deindustrialization as they lose their traditional markets. As a matter of fact, this is already happening in more areas than we are aware of.
- Increased inequality: Trade disruptions can exacerbate existing inequalities, as poorer and less diversified countries are more vulnerable to external shocks. This can (as it already happened) bring along politicians trying to use nationalism and set on fire the relationships with other countries to avoid turmoil and unrest within their borders…With all the logical consequences for the most vulnerable civilian population.
Social Consequences
- Product shortages: Consumers may face shortages of basic goods, especially those imported from countries affected by trade disruptions. We saw it happening and suffered this in Venezuela as well. The black market generated was designed structurally to provide an illegal flow of money to the hands of those controlling it: the NG. This is still happening with the gasoline. They need to keep well-stocked up the jungle labs in Colombia and the illegal mining operations in El Callao, where they are extracting the gold to send it to their cronies: Iran, Turkey, China, and Russia.
- Meanwhile, they control the Dust Routes to keep pumping the dust into the nostrils of the addicts worldwide and especially the US society…but that is a different facet of the problem. Do you remember when they used to say that the white dust (cocaine) was “the poor man’s atomic bomb”? Well, we’re all living through the fallout now.
- Increased unemployment: Decreased production and business closures can lead to a significant increase in unemployment, which can lead to social unrest. This means unhappy, underpaid people without expectations of getting “out of the rat race”. Let’s face it: that is what the leadership in many countries craves. No matter whether this leads to vice or crime, That is manageable with repressive measures and doesn’t affect them.
- Decreased standard of living: Shortages of goods and services, rising prices, and job losses lead to a general decline in the standard of living. This is related to the previous point: being underemployed means that your standard of living is not the same as you once had.
- Geopolitical tensions: Trade disruptions can exacerbate existing geopolitical tensions and lead to new conflicts. This is probably one of the most serious consequences. Some kind of attack would very probably cause any serious interruption; this would lead to a conflict that could escalate to levels that nobody could ever predict.
Environmental Consequences
- Environmental degradation: The search for new sources of supply can lead to increased exploitation of natural resources and environmental degradation. This could affect our surroundings in unpredictable ways. Imagine that if, for some reason, 18-wheel truck tires stop arriving and beef (among other items) goes in short supply. Every Joe Sixpack in the cities with a hunting rifle and a license will jump on their trucks and head for the hills with their well-stocked coolers and beverages in the back. Very likely, with a wife and kids back home, they will try to stretch the boundaries. We know already enough to avoid dismissing what people with an empty plate on the table can do when under serious stress.
On the other hand, the oil grab that these thugs have been doing generated extremely serious damage because of oil spills on our shores.
Historical and Current Examples
Throughout history, trade disruptions have had a profound impact on the global economy. The Great Depression of the 1930s, partially caused by trade protectionism, is a classic example. More recently, the COVID-19 pandemic has revealed the fragility of global supply chains and underscored the importance of international trade to the world economy.
We are not ready for yet another serious disruption. Especially not for one with an unknown duration.
Mitigating the Risks
To mitigate the risks associated with trade disruptions, governments and businesses can adopt several measures, such as:
- Diversification of supply chains: Reducing dependence on a single supplier or geographic region. Investing in increasing inventories is surely a good idea if the physical plant and the money management allow it.
- Increasing the resilience of infrastructure: Investing in critical infrastructure to ensure the continuity of operations. Yes, we can (and should) improve our place with chickens and hens! Something so simple is out of the question. Raising some corn as our grandparents did if there is enough land. Adopting small-farm habits even if we live in a city? Sure. Canning, for instance. Or smoking and curing meats.
- Strengthening cooperation: Promoting cooperation between teams to manage risks collectively. Collective efforts will always be worthy.
- Developing industrial policies: Fostering domestic production of essential goods. This includes hardening your customer portfolio.
A disruption of global trade will bring serious consequences for the global economy and society. The societies of the countries that can work together and rebuild a resilient, sustainable trade system will be much less stressed out.
Additional Considerations and Expanded Points
- The role of technology: Digitalization of trade can increase resilience and create new vulnerabilities. For example, cyberattacks on critical infrastructure could disrupt trade flows.
- The impact on developing countries: Developing countries are particularly vulnerable to trade disruptions as they often rely on exports of a few commodities and have limited capacity to diversify their economies.
- The role of international institutions: International organizations like the World Trade Organization (WTO) play a crucial role in promoting free trade and resolving trade disputes.
- The rise of regional trade agreements: Regional trade agreements can help to mitigate the risks of global trade disruptions, but they can also lead to trade fragmentation.
- The need for sustainable trade: As the world grapples with climate change and other environmental chhaveallenges, there is a growing need for trade policies that promote sustainability.
By exploring these additional dimensions, we can gain a more comprehensive understanding of the complex challenges and opportunities presented by global trade.
Homework tasks:
- Do you have a list or inventory of ALL your tools? Is the list physical or digital?
- Do you have a checklist for inspecting ALL your common devices? Freezers, furnaces, generators, cars, ATVs, bikes, bicycles, horse carts, PCs, peacemakers, Teslas (well, maybe these don’t apply), whatever you have that is not produced locally. Let’s see what surprise you bring along in those comments.
Thanks for your reading, and your much-needed donations and sponsoring.
Stay safe, and keep tuned.
J.
What do you think?
Are you concerned that global trade disruption is on the horizon? What do you think is the best way to prepare for that? What do you think will be the cause of it?
Let’s discuss it in the comments section.
About Jose
Jose is an upper middle class professional. He is a former worker of the oil state company with a Bachelor’s degree from one of the best national Universities. He has an old but in good shape SUV, a good 150 square meters house in a nice neighborhood, in a small but (formerly) prosperous city with two middle size malls. Jose is a prepper and shares his eyewitness accounts and survival stories from the collapse of his beloved Venezuela. Jose and his younger kid are currently back in Venezuela, after the intention of setting up a new life in another country didn’t go well. The SARSCOV2 re-shaped the labor market and South American economy so he decided to give it a try to homestead in the mountains, and make a living as best as possible. But this time in his own land, and surrounded by family, friends and acquaintances, with all the gear and equipment collected, as the initial plan was.
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First, I’d like to say that I think you’ve covered most of the situations/consequences pretty thoroughly. A disruption in the supply chain, for any reason, or for any length of time, is a precursor to SHTF. You have listed a lot of the possible situations, but the one thing you didn’t really delve into is the consequences of all of these things occurring at the same time – which they will.
Once the supply chain is disrupted literally everything begins to unravel. In many countries we work on the JIT inventory/delivery system for everything from food to semi tires. Once those quit flowing businesses go broke which will lead to financial crisis, if not outright collapse. Once financial collapse happens governments lose their tenuous hold on power and the cycle of riots, protests, and even civil war erupt as different factions vie for the dwindling resources available. As you pointed out, countries go to war in an attempt to secure the resources they need for their country to survive. It devolves into dog-eat-dog on an international level, a national level, a state/provincial level, and even at a local level. It may not be as dramatic as a nuclear war, or an EMP but the results are the same – it just takes a little longer. Once we lose the technology that allows our present society to function as it does – it ceases to function period.
We have built ourselves a very intricate house of cards with our present technology, but it is very delicate, and what may seem a small issue at the time may in fact bring the whole house crashing down. Remember that the EMP commission continues to report that in an EMP/grid-down situation that approximately 9 out of 10 Americans would be dead within a year. Our goal as preppers in to NOT be one of the nine.
A “not” goal is not a goal. The actual goal is TO BE one of the tenth who do survive. That is likelier if you form teams in your local community and work together. That way, there may be TWO tenths, or three or eight who survive. And that is even better.
Dear Lone Canadian,
Thanks for that comment! Quite accurate indeed. Actually, the scenario you mention is material for yet another article (not so especulative) which I am already working on, added to a couple of different variables that I could research locally and originated interesting situations.
Cheers,
J.
There’s little that the individual can do about global policies, but it is possible to mitigate the consequences of foolish policy.
Identify the crucial things that YOU need to survive.
What if you can’t get your crucial items, or can’t get them regularly, or the quality declines or price increases?
You have several choices-
learn to make/grow your own (herbal remedies, for example)
find viable substitutes that are less dependent on an uncertain supply chain (like a local chicken farmer to supply eggs)
find a way to avoid dependence on the item (like losing weight and exercising, to correct high blood pressure and eliminate dependence on meds)
stockpile necessary items that you truly need, if possible.
You know what things you need to survive.
Figure out coping strategies NOW, before the next Big Disruption (‘member Covid?) occurs.
Dear Val,
It’s almost impossible to predict the next big disruption; but we do can imagine some options about the general direction the shots will come.
The most possible is China joining (finally) forces with the other rogue states and start a full throttle military adventure; an EMP attack, or another much more deadly virus this time, with the consequent excuse for the adoption of a world wide martial law. If someone can carve a pocket and grow a guerrilla garden in a place near a stream, could be left alone for a while.
Just the other day I read an article on food prices globally have reach a all time high according to the UN. We dont think a whole lot about it, as we cannot imagine people rioting over food prices or we would of already seen them with the shocking inflation rates here in the US over the past three years. But civil unrest due to food costs are a real thing in some regions.
We are very lucky here. We may not like the increased cost, but generally we are still able to live and eat – although it is becoming more difficult for some. I just don’t think that our inflation rate has been that shocking, I remember, and I’m pretty sure you remember, the rates we suffered in the 70’s and the 80’s. It’s just that we have had inflation and interest rates manipulated by the FED for the last couple decades – to a point where we actually believe that 2% inflation and 3% mortgages are the norm.
We live in a land where even our homeless have a better life that the citizens of many countries. Food riots do scare me, but what scares me even more is when the riots stop. That’s when you know the pot is about to boil over.