American Civil War II's Closer Than You Think

A couple of years ago, the great hedge fund manager Ray Dalio predicted a 30% chance of a civil war here in the U.S. Ray has now raised that probability to 40%. The movie "Civil War" about a second U.S. civil war became a big hit. This morning, I want to do a simulation of how such an event could take place. I conclude that actual deaths would be much lower than in American Civil War I. Property damage would be much lower than in 1861-1865. The economic consequences for the US and the rest of the world would be devastating beyond belief. It all centers around the U.S. national debt and the status of the U.S. dollar as the world's reserve currency. Right now, we in the U.S. figuratively have a credit card without limit with low interest rates to service the massive $35 trillion debt. A default on that debt could come about if a civil war breaks out. Here is how I see it falling apart. It starts with the massive program to round up between 11 million and 15 million illegal immigrants here in the U.S. When President Trump comes to power, he is going to direct massive resources to this undertaking. He will deputize law enforcement agencies in the states. He will call up national guards in all states. He will mobilize the U.S. military. He will get intense resistance here because US military personnel are prohibited by law from operating against US citizens in the US. The military will be allowed to put guards on the border, provide logistical support, provide temporary housing for illegal aliens rounded up, give medical care to illegal immigrants detained, and provide transport planes to send aliens back to their country of origin. The Red States will eagerly respond to Trump's call for full mobilization, while Many Blue States will strongly resist this call. Let us focus on California, which has the fourth or fifth-largest economy in the world and could resist this command for a full mobilization. Trump would respond with threats of criminal prosecution under Title 8 of the US code and cut any money going to California. Governor Newsom could mobilize the California National Guard, California Highway Patrol, and local law enforcement agencies to resist this order. Trump could not send battalions of US Marines, for example, to force compliance with his orders in California. He would assemble Red State National Guard units from Idaho, Wyoming, Montana, etc. to come to the California border. A confrontation would follow. Miscalculations happen when large groups of heavily armed people face each other. Firefights could break out. Then the civil war starts. Financial markets would panic and crash. It could reach a point where California secedes from the US and declares itself "The Republic of California." Most likely Oregon and Washington would follow them. Some other Blue States could also "come to the party." With these states away from the United States, the tax base would erode. There could be a default on the national debt. The US dollar could go from being the reserve currency of the world to a currency like the Argentine peso or the Russian Ruble. If you are living in one of the Blue States no longer part of the US, you would suffer grievous economic consequences. Any payments you were receiving for Social Security, disability, health care, military retirement, etc. are gone. Your 401(K) would crash as the dollar crashed. This new country would have to be the most innovative and start using cryptocurrency. Let your imagination run wild here! The conclusion is that a civil war must be avoided at all costs.