The recent warnings of an imminent collapse in the U.S. aren’t paranoia or typical doom saying by writers warning of crashes for three decades. These warnings are just common sense. Take a look at the news reports quietly being published in mainstream outlets and see for yourself.
The United States is heading toward massive economic shocks
America is about to see a drastic rise in the price of consumer goods from food to technology. I’ve written a great deal about the coming food shortage and the increase in prices for essential items. However, much less attention has been given to the rise in other items.
One potential problem is the cost of semiconductors. Unbeknownst to many Americans, and this is partly why consumer spending is doing as good as it is (though doing terribly), there has been a recent semiconductor price surge. The cost of semiconductors is going to begin showing up in other consumer products. Which will, of course, send shockwaves through the economy as consumer confidence and spending will start to drop even further.
Want to learn the history of semiconductors and the extraordinary growth of that industry? Check out “The Microchip Revolution: A brief history” by Luc Olivier Bauer and E. Marshall Wilder.
Microchips are the brain of basically every electronic device, and we’re running out of them.
Global chip shortage is a massive problem for a world increasingly dependent on technology
For the United States, the chip shortage is a huge problem. Currently, the surge in chip prices has not affected consumers directly. The stimulus money being injected into the economy has been able to keep spending up as well. But that’s going to change.
While the average person may not see the importance of semiconductors and their prices on the economy, both Trump and Biden’s administrations have acknowledged the issue as one of National Security. In July 2017, Trump signed an Executive Order regarding the security of U.S. supply chains caused by decades of deindustrialization, Free Trade, and lopsided trade policy.
Shortage prompts Biden to order $37 billion to review supply chain shortages
President Biden recently signed an executive order calling for a review of the global supply chains. Below are his comments at the signing regarding the semiconductor shortage.
This semiconductor is smaller than a postage stamp, but it has more than 8 billion transistors — 8 billion transistors, 10,000 times thinner than a single human hair in this one chip. These chips are a wonder of innovation and design that powers so much of our country. It enables so much of our modern lives to go on — not just our cars, but our smartphones, televisions, radios, medical diagnostic equipment, and so much more.
We need to make sure these supply chains are secure and reliable. I’m directing senior officials in my administration to work with industry leaders to identify solutions to this semiconductor shortfall and work very hard with the House and Senate. They’ve authorized the bill, but they need (inaudible) $37 billion, short-term, to make sure we have this capacity. We’ll push for that as well. But we all recognize that the particular problem won’t be solved immediately.
Manufacturers can’t keep taking the blow for consumers
Manufacturers have been eating the increased costs keeping the increase in prices from reaching consumers. But chip prices are expected to rise every quarter this year. Most companies are not likely to continue to hold back the costs, especially with tighter and tighter profit margins for themselves.
Manufacturers generally order semiconductors six months in advance. Choke points in the supply chain are driving up prices and creating shortages. In the third quarter, when the orders to replace inventories are finally delivered, that’s going to change, according to Andrew Zatlin, founder of SouthBay Research.
The semiconductor shortage will heavily affect the auto industry
Automakers are going to struggle. For example, at General Motors around 5% of the cost of goods sold comes from semiconductors. G.M. only has 11% margins, and a surge in chip prices will cut into that margin significantly. Smaller businesses that sell to Amazon and Walmart will be hit with tighter retail margins and forced to raise prices even higher.
From there, the shockwaves will spread. And, although the Fed is hoping the jump in inflation will be “transient,” there isn’t any reason to believe it will be. Every single manufacturer with tight profit margins is going to have to raise its prices.
In other words, the world should prepare for serious sticker shock.
And it isn’t just the sticker stock that could be an issue. Getting your vehicle repaired at all could become an issue as more and more systems become reliant on electronic components. A Jeep driver in North Carolina reported:
“When I was leaving for a long trip, the Bluetooth on my vehicle stopped working. The service department told me that the repair was under warranty but the only problem was that the part had already been back-ordered for 5 months. They didn’t foresee getting the part within the year and ended up having to repair my vehicle using aftermarket parts, and even those took several weeks to acquire.”
At this rate, we may not have to wait for an EMP or CME to render our late model year vehicles useless.
Reliance on Chinese suppliers could lead to defeat for the U.S.
Loren Thompson of Forbes points out:
“The moment is fast approaching when America’s military will be unable to equip itself for modern warfare without relying on Chinese suppliers. So if the war is with China, there’s a good chance the U.S. military would be defeated.”
Biden’s Executive order mentions semiconductors specifically, as Forbes reports:
Semiconductors. Semiconductors are ubiquitous in advanced technology, from smartphones to smart bombs. A generation ago, about a third of global semiconductor production occurred in the U.S. Today. However, the U.S. still accounts for a third of global demand, its share of production has fallen to 12%, and virtually all packaging is concentrated in Asia. U.S. semiconductor companies such as Nvidia NVDA +6.9% and AMD have increasingly outsourced fabrication to Asia. The world’s emerging leader in advanced processors is Taiwan Semiconductor ON +4.7%, a key supplier to China and is located on an island claimed by Beijing as part of greater China.
As I wrote previously, our reliance on China is an outright national security crisis.
A semiconductor apocalypse looms on the horizon for the U.S.
Suppose the recent tensions between the U.S. and China are growing worse by the day. In that case, any confrontation between the two could see the U.S. at a distinct disadvantage, with the U.S. military being unable to procure the necessary materials to operate sufficiently and the majority of the American public, whose society has become so dependent on semiconductors to function.
Whatever happens, it’s advisable to start making preparations now to deal with what’s coming. If you’re a serious prepper, you’ve got your work cut out for you. What’s your next step? How will you prepare for the economic shockwave headed your way? How will you manage as more and more devices and vehicles on which we rely become either obsolete or impossibly expensive? Let’s talk about it in the comments.
Robert Wheeler has been quietly researching world events for two decades. After witnessing the global network of NGOs and several ‘Revolutions’ they engineered in a number of different countries, Wheeler began analyzing current events through these lenses.
It is with many other things an accordion issue as we come back out of non productivity.
It’s customers that need to modify spending habits armed with this knowledge.
Dodge stated that they would make a low end truck without them. Perhaps you should look harder at the Chevy “custom” rather than LT and likewise with other models. The less bell n whistles the better. You’ll survive just fine without the split level heated seats. Or take the gamble that your LT might become a “custom” and your$9K difference didn’t pay off.
Ole dude in the jeep will have to hold his phone. Not a crisis. Not being able to drive to work might be. The world has gotten spoiled in not having to wait. Get on the wait list, take a breath and be glad it wasn’t the transmission.
TP, canning lids, Dr Pepper, lumber, barbed wire are all on a growing list of consumer items that have experienced the accordion squeeze.
Yeah, I would actually not mind a non-chipped truck.
As I understood it, when buying my 2016 F150, it was to be the last year with a CD player.
And I do not use the bluetooth enabled feature on it. I just dont answer the phone when driving.
I know of more than a few farmers who would like a back in the good ol days when they could still work on their tractors and not have to have a John Deere certified software engineer to come out to service their tractor.
Man that ain’t no kidding. John Deere is high $$$$$$ and they got ya locked down
Even for an oil change, from what I’ve read.
I figure my smartphone will be worthless when TSHTF, so I keep a set of two-ways and a base station in aluminum suitcases, occasionally brought out and run and recharged. The bigger issue is what to do as the awestern world turns into Brazil.
Personally, I’m a tech junkie with drawers full of parts, including SMDs (Surface Mount Devices … microchips and components), some bought as spares when repairing small electronics and others I have cannibalized from electronics on their way to the junk yard. Sometimes the only thing I throw away from a piece of gear is its chassis. I’ve built up quite a collection of pdf spec sheets for all the crap I’ve squirrelled away.
I’ll hope that I’ll be the guy local farmers will be trading food with in exchange for electronic equipment and repairs.
One example in doing this is figuring out useful things, like how to take the inverter out of your power system by delivering the right voltage straight away rather than it dissipating a large amount of your solar cell power.
@The Alarmist, Do you have a website where you sell or give away your collection of pdf spec sheets? Maybe sell them on ebay on DVD or USB drives. How can I get a copy from you?
Not yet … will give it some thought.
One thing you have to consider in electronically-controlled equipment is ASIC – Application-Specific Integrated Circuit. You see, it’s much cheaper and better to develop an ASIC to control something that you are going to make a million-plus of something instead of using discrete building blocks (CPU, RAM, ROM, I/O drivers, etc.). So, squirrelling away old/dead equipment’s components only go so far.
If you have a few thousand of something you are making that is electronically-controlled (a John Deere tractor comes to mind, also…) then you don’t have many (if at all) custom ASIC’s involved in the controller. Having said that, even the embedded controllers usually don’t have the ICs that interface to the Real World integrated instead into them (the CPUs or ASIC controllers), so when something breaks you can replace the interface chips and the system comes back up.
I speak from experience here – I’ve repaired LOTS of electronic equipment over the 50+ years I’ve been pushing electrons. I’ve seen the trend go to more and more embedded controllers for devices getting more and more “feature-rich” (complex!) because that’s what the Great Unwashed Masses want. For example, I’ll take a simple toaster from the ’50’s any day, it could be easily fixed! Distributorless ignition systems are a Godsend for reliability and efficiency, but a coil-and-distributor engine will keep running AFTER a CME or EMP.
WHEN (not IF) society crashes it’s going to be interesting to see just how many survive, because we will have to go back to basics. And I mean BASICS. Know how to garden? Preserve foods? Build a shelter? Basic sanitation? Emergency medicine?
I know I’m preaching to the choir here, but when the SHTF only the prepared and knowledgeable will survive, thrive, and prosper. The rest of you, good luck ’cause your gonna need it!
That is all.
Great post Igor.
I agree with you about going back to the basics and going low tech or no tech.
There were predictions of this crisis 40 odd years ago. Like other aspects of industry and our lives, so much is imported. We no longer have the ability at hand, to produce these products domestically. Retooling to produce domestically is cost prohibitive and a questionable investment.
Sad fact is, we shot ourselves in the foot when companies were forced overseas. We can thank our elected idiots for that.
Sad fact is, we shot ourselves in the foot when companies were forced overseas. We can thank our elected idiots for that.”
this was all hashed out in the ’90’s – remember perot? it was a big deal and buchanan weighed in too. yeah the (((deep state))) pushed off-shoring real hard, but the voters pretty much approved it overall.
now it’s all gone.
As for automobiles,it is time to go back to old school.No electronic this or computerized that.A generator instead of an alternator for the charging system,which will keep the vehicle systems running even w/out a battery.A carburetor to deliver the fuel,points and condenser to deliver the spark to the plugs,and learn to drive a stick shift vehicle,which can be push/roll started.As for electronics,tube type receiver and transceiver radios are still available or build a Marconi radio.The Boy Scouts remember building this simple non electronic radio receiver.Going back to old school will take some getting used to,but is well worth it.Think about not having to take your car/truck/motorcycle/electronics/etc. into the shop to get repaired,when you or someone you know can make those repairs.When stuff goes sideways,we will be on the barter system. Having skills in vehicle repair,primitive electronics repair,plumbing repair or any other type of repair will make you a valuable asset.Having all around gardening skills is also a valuable asset.Hows that for thinking outside the box,Daisy?
Agreed. A couple of steps back from complexity to simpler systems would go a long way to making us all more resilient.
Makes you wonder what caused that fire at the Taiwanese factory.
I miss the simpIe systems I grew up with. Anyone couId be a shade tree mechanic. I bought 1940s Harleys with the oId style suiside shifts. Simple to work on and not bad riding. I was in my 20s before I owned a car. I’d love to have old vehicles that I could work on.
I have solar panels for home power. WhiIe I do have batteries and power inverters I also have 12v lights. Many were saved from used vehicles. My planned on fridge is an older 3 way one from an old overhead camper. Its 110v, propane and 12v. My lovely reading corner in the livingroom is all 12v lights. Cheap car Iights from eBay and a bright headlight with a toggle switch. A car radio is my next item to find. 12v power. A simple older antenna.
You guys can surely do things for your homes and vehicIes. Good luck on modern parts if they aren’t available.
I’m starting garden seedlings infront of windows.
There’s a lot we can do. Mostly we have to want to. I’m a 74 year old great grandma. Knees hurt. Husband has alzheimers and I’m his caretaker. Still I read and learn to keep doing more things for myself.
Actually I’m doing this to survive on Social security. I also grow a large garden and study to find fruits and vegetables that get by with less water. Thankfully I’m living rural but when I lived in a city to work and was away for 12 years.. I grew veggies in flower beds. Neighbors had chickens. I was going to get rabbits and cages and ducks but instead I was able to come back home. Rabbits and ducks because they are quiet. Meat and eggs. I now have those and chickens. Chickens and a rooster out here are wonderful but in town chickens brag when they lay egg and roosters crow. Some cities allow that but some don’t.
I beleve we must each do the best we can inorder to survive.
As for shortages, I think we will see many. We’ve not been a nation of producers for a while. We need to again be independent of such dependance. Factories could be providing both goods and jobs. We used to make the products we need. American cars used to set the standards.
Durning Covid it became evident not all our medical supplies were made here. Sad.
Every time I read a response from you, I am impressed! Some folks talk the talk-but you live it! I wonder what treasures hide in junk yards? When I was younger-and more impressionable- I bought LG front loaders for a w/d combo. They lasted about 18 years. The washer went haywire so I paid $150 to a repairman to get the washer fixed. Well, it seems the selenoid is burned out, and it’s now trash. Mind you-this “trash”-cost me $1200 each, 18 years ago. The $150 to the repairman was nonrefundable, as that is just what they charge-whether something is fixable or not. My next purchase will be a run-of-the-mill Maytag with absolutely no bells and whistles. I bought a drying rack that is large enough to handle sheets and towels. (We can’t have clotheslines in our area.) Something as simple and 3rd world as doing laundry has become an extravagant experience. It really is time to go old school.
So, I thought the Organic prepper was from Venezuela. All the posts I have read are people living in the USA. A lot of people are thinking about hard times ahead with the CCP trying to take over the world. Everybody should snuff out buying from China and FAST. When you do without and choke out the seller, they go bankrupt or to other markets. WE NEED TO NOT BUY FROM CHINA.
So, is it a good idea to save old phones and laptops for the computer chips inside?