How to Survive an Economic Collapse

How Canadians Can Protect Their Assets If an Economic Crash Happens

With the U.S. imposing more tariffs, Canada is being forced to become less reliant on the American economy. While this may seem like a challenge in the short term, it could actually work in Canada’s favor. By diversifying trade partnerships and strengthening domestic industries, Canada might be in a better position to weather a potential financial storm, especially if the U.S. experiences a major economic collapse (which I think will probably happen). Other businesses are already preparing for a coming crash such as Dallas Maids describes in their insightful article on surviving this brave new world.

If the U.S. dollar crashes and the U.S. defaults on its debt, Canada would most likely experience high inflation rather than deflation in the short and mid-term. Here’s why:

1. Initial Shock: Inflationary Pressures Dominate

Currency Devaluation: If global investors panic and move away from North American currencies, the Canadian dollar (CAD) could lose value, making imports (especially from Europe and Asia) much more expensive.
Energy & Commodity Price Surges: Historically, during major financial crises, investors move into real assets like oil, gold, and other commodities. Since Canada is a major commodity exporter, this could push domestic prices higher, leading to inflation.
Government Stimulus & Bailouts: The Canadian government would likely respond with massive stimulus spending (just like during COVID-19), further increasing the money supply and driving inflation.

2. Mid-Term: Stagflation Becomes the Biggest Risk

Rising Costs + Falling Economic Growth: The combination of inflation and a slowing economy creates stagflation—where people are paying more for goods and services while wages and business growth stagnate.
Housing Market Correction (But Not a Deflationary Collapse): Higher inflation would push the Bank of Canada to raise interest rates, which would slow down real estate demand, but a complete collapse would be less likely due to foreign investors seeing Canadian assets as “safer” than U.S. assets.

3. Long-Term: Inflation Stabilizes but Economy Adjusts

As the economy diversifies away from the U.S., Canada could see inflation slowly stabilize, though at a higher baseline than before.
The loonie may recover if Canada’s trade relationships with Europe and Asia strengthen, but in the long term, inflation will have already reshaped wages, prices, and economic expectations.

Conclusion: Inflation Is the Most Likely Outcome

Short-term: Rapid inflation due to supply chain disruptions, weaker CAD, and global commodity price surges.
Mid-term: Stagflation (higher prices + slower growth).
Long-term: Gradual stabilization as Canada adapts to new economic realities.

How to Protect Your Wealth

If Canada faces high inflation and stagflation due to a U.S. dollar crash and default, here’s how you can protect your wealth and even position yourself to benefit from the economic shifts.

1. Preserve & Grow Wealth with Hard Assets

💰 Gold & Silver:

Precious metals have historically held value during currency devaluations and financial crises.
Gold is the safest hedge, while silver has additional industrial demand (and could rise faster in inflationary periods).

🏡 Real Estate (But Be Selective):

Farmland and rental properties will continue to generate income and appreciate in value.
Avoid speculative investments in overheated housing markets (like downtown Toronto condos), as rising interest rates could cause a correction.
If buying property, lock in low, fixed-interest rates ASAP before inflation drives them higher.

🚜 Commodities & Resource Investments:

Oil, natural gas, agriculture, and mining will likely surge as global investors flee to hard assets.
Consider ETFs or direct investments in Canadian energy, agricultural, and resource stocks.

2. Diversify Currency & International Holdings

💱 Hold Some Non-Canadian Currencies:

The Swiss Franc (CHF), Norwegian Krone (NOK), and Singapore Dollar (SGD) are historically stable during crises.
The Chinese Yuan (CNY) may rise as China’s global influence increases.
You can hold foreign currency in multi-currency bank accounts or ETFs that track them.

🌍 Invest in Global Markets:

If the U.S. and Canada struggle, emerging markets like India, Brazil, and parts of Southeast Asia may grow faster.
Look for non-North American ETFs, foreign dividend stocks, or real estate in politically stable countries.

3. Protect Yourself from Rising Inflation

🛒 Stockpile Essentials Before Prices Soar:

Buy non-perishable goods, household supplies, and tools while prices are still stable.
If inflation spikes, basic goods will appreciate faster than cash sitting in a bank.

💡 Invest in Inflation-Protected Securities:

If available in Canada, Real Return Bonds (RRBs) adjust with inflation and protect purchasing power.
Consider stocks in companies that can pass inflation costs onto consumers (e.g., utilities, food, and healthcare).

4. Secure Your Income & Financial Position

📈 Own a Business or Inflation-Resistant Income Source:

Service-based businesses (like home cleaning 😉) often adjust prices with inflation, making them more resilient.
If employed, consider side hustles, freelancing, or investments in income-generating assets.

💳 Pay Off Debt with Fixed Interest Rates:

If you have a low-interest, fixed-rate mortgage or loan, inflation will make your debt cheaper over time.
Avoid variable-rate debt, which could skyrocket if interest rates rise.

5. Be Prepared for Worst-Case Scenarios

🔒 Keep Cash & Emergency Reserves:

If the banking system is unstable, keep some physical cash for short-term expenses.
Have an offshore bank account or second residency option in a politically stable country for ultimate protection.

🛠️ Have Skills & Tangible Assets:

In worst-case economic collapses, practical skills (carpentry, farming, security, repair work) become more valuable than money.
Invest in physical assets like tools, equipment, and even barterable goods.

Final Thoughts: The Key Is to Act Before the Crisis Hits

Convert some savings into hard assets (gold, silver, real estate, commodities).
Diversify into strong foreign currencies and international investments.
Protect against inflation by owning businesses, stocks in essential industries, and inflation-protected bonds.
Pay off high-interest debt and lock in low, fixed rates before they rise.
Prepare for uncertainty by having emergency cash, essential supplies, and practical skills.

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