What happens at the end of an economic collapse? People in Iceland today awoke to a currency that has hyper-inflated to the point that it is unable to trade on the spot market. The currency, the krona, has ceased be traded in the world currency market and was last traded at 340 kronas to 1 euro.
The banks have failed, their economy is at a standstill, inflation is expected to jump 50-75% in the coming months, and all trading in the equity market has been suspended until October 13th.
Oct. 9 (Bloomberg) — Iceland’s government seized control of Kaupthing Bank hf, the nation’s biggest bank, completing the takeover of a financial industry that collapsed under the weight of foreign debt.
Iceland is guaranteeing Kaupthing’s domestic deposits and taking control of banks in an attempt to provide a “functioning domestic banking system,” the country’s Financial Supervisory Authority said in a statement on its Web site today.
The debts of the Icelandic banking system are too big for the government to repay…
“There is no way that the Icelandic population can assume responsibility for the private debt” that the banks have built up, Haarde said yesterday.
Other countries are in a better situation. The U.K.’s banks will get a 50 billion-pound ($87 billion) government lifeline and emergency loans from the central bank after the freeze in credit markets threatened to bring down the financial system.
The Federal Reserve, the European Central Bank and four other central banks lowered interest rates yesterday in a coordinated effort to ease the economic effects of the worst financial crisis since the Great Depression.
Read the rest of the Bloomberg article here or see the bank’s press releases and news articles here.
Let’s not forget how all of this relates to an agrarian life. When you produce your own food, own your own land, and are able to live independently of the world economic system, you are not dependent on the stability of your currency. You are still connected to it, but not dependent on it. There is a big difference.