Recognizing and Surviving Financial Disasters...
Economic Global Disasters are Evolving Steadily and at an Unprecedented Level…
A number of economic disasters have been globally advancing on a daily basis with many governments facing huge deficits that will probably end in sovereign defaults after all of the attempted bailout efforts fail to bare any solutions. Western governments, including the U.S., are dancing on the edge of a fiscal cliff and politicians refuse to become fiscally responsible believing that they can "spend themselves rich".
The first geographical region to be impacted will be the advanced economies of the Western World, exclusive of Canada, Australia, and Switzerland. The chain reaction has already begun in Europe. And, as these Western economic disasters occur one by one, they will then begin to affect the Eastern World in a negative way also, but at a later time much like the "domino affect".
However, even China is trying to get their inflation and real estate bubble under control to keep from falling into a recession and increasing their base of unemployment. For them, unemployment means significant social unrest.
Below is an excellent graph put out by the IMF Analytics Group and the Congressional Budget Office recently which displays the relative sizes of structural debt facing the governments of the West and Japan. (Notice that these graphs don't show the huge bailout charges of trillions of dollars being accumulated by the various countries but rather just the evolving nature of the existing national debt that will accrue due to approved expenditures for entitlements like Medicare, Social Security, government pensions, and now, national healthcare.)
The second related graph reveals the historical and projected deficit pattern for the U.S. from 1940 to 2035. Notice the enormous increase in projected debt that has resulted from the insane spending over the last two years by the current progressive administration.
The Federal Reserve Bank continues its money printing ways but the major banks still refuse to lend money. Medicare, by itself, will bankrupt the U.S. to say nothing of Social Security and both are in the red and have been for sometime forcing the Federal Government to borrow to keep them funded. Now, the current administration desires to add yet another medical healthcare boondoggle that would certainly increase the velocity of the U.S. towards fiscal default, mass inflation, and quite possibly, hyperinflation.
Economics and politics have been facts of financial life for man since his existence in one form or another. But, destructive economic trends like hyperinflation and depressions seem to have become more prevalent in the last 300 years. It is believed by many that this is due to centralization of government powers and their desire to "manage" economies for their various political agendas.
Politicians have become an unnatural driving force behind economics distorting the "free enterprise" system by distorting the "invisible hand of markets". In just the last 80 years alone, the frequency, duration, and intensity of harmful economic conditions has increased dramatically.
Not since the dawn of time have so many countries been faced with the same type of economic destruction. Few Western countries will escape being impacted. What is most unusual and disturbing about the forthcoming economic tsunami is that ALL levels of public and private entities are being impacted-individuals, companies, cities, counties, provinces and states, and nations. There seems to be no answer except to "bite the bullet" of fiscal balanced budgets. When someone suggests this, the Keynesian economists begin screaming-"No! Flood the market with liquidity"! And, this is music to the ears of a politician is it not? (They seem to forget how we got here.)
Only, the central governments can print money and all lower level governments must cut spending and/or increase taxes. Printing money and raising debt levels will ultimately lead to hyperinflation and then an enormous depression far greater than the last one which spanned 1929 to 1941.
We hold that most of these ugly economic conditions, if not all, are due to:
- Centralization of banking and governments,
- Globalization and integration of economies and trade,
- Removal of the gold standard behind fiat money,
- Lack of moral leadership at all levels of society,
- Corruption in business and government,
- Mentality of political leaders to "kick the can down the road" rather than balance budgets,
- The drift towards socialism in terms of entitlements and a welfare state,
- Luxurious union and government pension benefits.
First, Iceland, then Greece, then the UK, and now Tunisia have all undergone labor and student protests over bank defaults, dropping of their currency values, food shortages, social unrest, and price increases on services and goods. The leader of Tunisia fled the country with his wife and family taking with him 3,000 pounds of gold!
The Great Depression spanning 1929 to 1941 in the U.S., marked the most significant economic disaster for America. Now America is again looking at another Great Depression that will quite likely be far worse in depth and scope than the last one.
"Those who cannot remember the past are condemned to repeat it", George Santayana
In the 14 years of the existence of the Weimar Republic (German Empire), its people suffered through hyperinflation, political extremists, and crude treatment by the victors of World War I. During this economic disaster of mass inflation and then hyperinflation, its currency became totally worthless. For example, a German 50 million mark banknote was worth about one U.S. dollar in 1923. Nine years earlier it had been worth $12 million! It required a wheelbarrow load (not kidding, there are pictures) of marks to buy a dozen eggs towards the height of the hyperinflation period. Here is a graph displaying this historical reality:
From 1999 thru 2002, Argentina also went through a major economic disaster of hyperinflation. We have read the diary of a family that suffered through this period. It wasn't pretty and the stress on their lives was enormous-something they will be scarred with for life, no doubt.
More recently, the South African nation of Zimbabwe, in the early 2000s, began an almost unparalleled period of intense hyperinflation with their currency, the Zimbabwen dollar, which became worthless. They finally seized printing it and began adopting the use of the South African rand and the US dollar for exchange purposes. Their dollar suffered from an inflation rate of 90 sextillion percent!!! (No, we are not exaggerating!) This economic crises was triggered by the confiscation of white-owned farmland and its repudiation of debts to the International Monetary Fund. (IMF). Some people worked all day for an ounce of gold to exchange for a loaf of bread! If they could not find an ounce of gold each day because they couldn't work, they starved.
"The Euro zone is worse off than even the US at this point because they lack a single fiscal authority. Difficult to implement a federal/super-sovereign approach in the Euro zone due to the challenge of implementing a single taxing authority with supervisory and enforcement powers."
- in Seeking Alpha, from a Dr. Marc Faber. Luncheon - January 11, 2011
Today, we have the European Economic Community (EEC) or the European Common Market as it is also known, which is coming apart at the seams with Greece teetering on the edge of default, and now Ireland needing a swift bailout. Waiting in the wings of sovereign default are Portugal, Spain, Italy, and the UK. The only countries not having financial problems currently in the EEC are Germany and France which are being looked at to provide funds to loan to the beleaguered nations who have lived beyond their means far too long. But, if these two nations attempt to bail out the EEC nations in financial trouble, they too will most likely be forced into default. The German citizens in particular are most vocally opposed to these bailouts.
Then we have the U.S. with a deficit so large that it will not be able to grow its gross domestic product (GDP) fast enough to every get out of debt. Even if the Federal government were able to tax every household 100% of their income, the U.S. still won't be able to get themselves out of debt in time to prevent defaults on entitlements and services in the not too distant future. The rollover interest rates will simple become too much of a burden and unsustainable.
But, don't take our word for it. Take a look at the U.S. national debt and revenue figures and observe the dynamic rates of change for the world, federal, and state levels by studying the link immediately below.
The red numbers equal debt except for the statistics on the right. The green numbers equal various levels of revenue. The grey numbers are for budget items, money creation, and trade.
The Federal Government numbers are in the upper left side. The individual state numbers are details under the State button in the top left corner along with world debt on its right.
Study the Federal entitlements regarding social security and medicare. Sorry to say, but that is the trap for the U.S. Citizen. (As you float your cursor over each box, its explanation of the contributing components will appear in the main header box at the top.)
U.S. Debt Clocks:
Please listen to the astute lecture by Niall Ferguson, a Harvard History professor, who has gone everywhere in the world recently to give the following well crafted and articulate warning to anyone that will listen. He speaks about how America's empire status as a superpower is coming to an end and it could come as swiftly as the USSR's. Empire demise used to take years now they can take days.
(When the Council of Foreign Relations invites Professor Ferguson to speak several times to their members and they pose no arguments, you know this individual has an definite handle on an eerie reality that even they must agree with. This group of elites are highly troubled at the events occurring in the Western World at large and in America, in particular.)
"He gave this speech at the Peterson Institute for International Economics. For years, Peterson officially ran the Council on Foreign Relations. He is a billionaire. He is extremely influential."
Dr. Gary North, Economic Historian.
The video is here:
Niall Ferguson's Oral Presentation-Peterson Institute:
The speech begins about 8:30 minutes in. Watch the Q&A session that follows it. It begins automatically at the end of the speech. There, he really gets hard-nosed. He said that we need a new currency based on a commodity: oil or gold.
The transcript is here, if you prefer to read it:
Niall Ferguson's Printed Presentation:
To view the slides accompanying Niall Ferguson's lecture, visit:
Niall Ferguson's Slides
Economic Calamities at Multiple Levels within Countries Including the U.S.
To compound matters even more, many of the state governments within the U.S., are on the verge of default-47 to be exact. Within each of the most troubled states we have counties and municipalities suffering just as bad.
It is important to note that most of the states in severe trouble are the "blue" coastal states such as California which is in far worse shape than Greece many economists say. New York, New Jersey, and Arizona are not too far behind. Only the governor of New Jersey is actually cutting expenses without resorting to tax hikes and getting nose to nose with unions.
Some states, such as Arizona, are turning to selling their buildings and property and leasing them back to increase revenues enough to get out of immediate debt! They also passed another 1% sales tax and have closed many government facilities like parks and recreational areas and even rest stops with bathrooms! The city of Detroit, Michigan is considering shutting down half of their public schools.
States are not allowed to print their own money as the Federal government can. But that is a good thing as long as these states can't borrow money from the Federal Government. Loaning states money would not be fair to the states with balanced budgets or not in the hole as much as others. It would just avoid the problem and would increase the size of the financial devastation in the future. It's time to "man up" and "face the music" folks! Stop buying drinks for drunkards!
Printing your own money in quantities beyond the volume of production of goods and services of an country, ultimately moves an economy towards inflation, then mass inflation. If not brought back into balance, the excess available fiat money will trend towards mass inflation and then hyperinflation.
Our central banks have printed an enormous amount of fiat currency and have decided to do another round again. They call it Quantitative Easing (QE2)! It is nothing more than transferring bad private debt for risky business decisions to the public taxpayers back and future generations.
In the U.S., the only thing preventing mass inflation, at the moment, are the large regional banks that were given large sums of money by the Fed. They have instead chosen to put it on the central bank's balance sheet as excess reserves collecting .25% interest. THEY ARE SCARED TO DEATH of the future.
If the banks ever start loaning out all of this QE1/2 money they have in their name, the "money multiplier" connected with fractional reserve banking will greatly increase the velocity of money in the economy resulting in mass inflation and if left unchecked, eventually hyperinflation.
HOW ARE ECONOMIC DISASTERS CREATED TODAY?
We believe from our assessment, most economic disasters in the past come about through these basic components:
- The use of fiat money (money not backed by a scarce commodity),
- Centralized banking to manage economy and print fiat money,
- Government laws, policies, regulations or lack of,
- Questionable design of debt instruments like derivatives and bundling,
- Type of government or political system,
- Type of economy-free enterprise, mercantile, etc.,
- Economic theories in play (Keynesian, Austrian, etc),
- Unchecked/unpunished greed and corruption-banking, business, government, people,
- High speed technology and international transactions.
Today, with the velocity of money and the inter-mingling of economies through high speed computers and transmission technologies along with international transactions, you now have nano-second based economies where just one little clerical or program error can destroy people and companies in seconds or minutes-potentially even a government.
Now, instead of an economic event happening more slowly giving economies time to resolve the problem locally, we have transactions occurring in micro-seconds around the world which magnifies cross defaults which can snowball small problems into much larger ones in the matter of minutes.
Types of Economic Conditions
There are 4 primary economic cycles with several other variations such as stagflation, mass inflation, hyperinflation, double-dip recession, etc.
(This site topic is not intended to be a course in economics. However, we will provide some basic definitions of economic cycles that we experience across our lifetimes. Should you care to understand them more completely, the credits section below can be used. In fact, Wikipedia gives a fairly balanced and unbiased treatment of defined economic concepts and thought leaders in economics. We only stop to define our terminology for those not familiar with them to ensure more accurate communication).
Here are the basic definitions of the four primary types of economic cycles:
The economic state most feared by America's Federal Reserve Bank. It is a decrease in the general price level of goods and services. Deflation occurs when the annual inflation rate falls below 0% (a negative inflation rate). This causes the price of goods and services to decrease. (i.e. Negative Consumer Price Index [CPI]) Deflation represents increasing purchasing power.
An economic recession was once said to be a time when.. "my neighbor loses his job. A depression is when I lose mine!" Recessions typically occur when an inflationary bubble bursts and the business cycle contracts. There is a slowdown in economic activity within a country. The government typical identifies and defines a recession over a period of time which spans more than two consecutive quarters in economic downturn.
In the U.S., there exists a Federal government group in charge of declaring when a recession started and when it has ended. This is a backward-looking exercise. (Lately, the output from this group has become suspiciously positive suggesting some conflict of interest between politicians and hard numbers. This group uses many macroeconomic indicators to gauge production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation decline. Of significance for the public, during a recession, the number of bankruptcies increases and the unemployment rate rises.
Recessions generally occur when there is a widespread drop in spending often following an adverse supply shock resulting from an economic bubble deflating like the recent real estate debacle. The central banks of governments usually react to recessions by increasing the money supply, increasing government spending, and decreasing taxation. This usually stimulates business expansion and growth, thus increasing employment and reducing bankruptcies.
In general, inflation represents an increase in the general level of prices for goods and services in an economic environment over a period of time. The increase in the general prices of things results in the consumer buying less quantity per currency unit. Inflation represents falling purchasing power.
Some mild inflation is viewed by some as being positive in that it represents a slight excess of capital and an expanding economy which leads to higher wages and standard of living.
But, when inflation begins to move higher than 1-2%, problems begin to occur for the private sector's consumers and businesses. Inflation between 10-30%, you get what is known as mass inflation brought on by too much money being created by central banks and put into the monetary system. Inflation above 30%, identifies the beginning of hyperinflation and money tends towards becoming worthless.
Inflation is technically broken down into price inflation and monetary inflation. The latter refers to the rise in the supply of money or the depreciation of currency which ultimately leads to the former which is price inflation or rising prices for goods and services.
The U.S. government produces an index to monitor states of the economy called the CPI or Consumer Price Index. There is also a more muted version offered which is the modified CPI which tends to be more stable form of monitoring. The issue with the CPI as produced by the Federal government is the constant changes to the content components making it difficult to stay with the same comparison over time creating an 'apples and oranges" comparison. For example, food and fuel use to be included in this monthly index but has been dropped out. These are the two most important indicators to the consumer because of their constant need. (This ensures that the COLAs or cost of living adjustments are kept low so the government won't have to increase the amount of payments to their entitlement programs like Social Security). There is an economist, John Williams, that makes a good living by recalculating the Federal numbers back to the same basis as they were before. He runs a site called ShadowStats.
Give it a visit. He provides visitors some free economic graphs. For example, the U.S. Government says that we are running less than 2% inflation but calculating it as originally defined by the Federal Government, Mr. Williams says we are running over 4% inflation! (12/2010).
For unemployment, the U.S. Government says we are officially at 9.6% and Williams shows that we are running at 22.5% ! (12/2010).
It appears to us that Americans are being deceived!?
Depressions are one of the two economic conditions most feared by the public as well as politicians. It is a long downturn in economic activity affecting several economies at the same time. Some suggest that a depression is a more severe recession that lasts much longer and is much deeper in terms of the impact to the public and private sectors.
With a depression there is:
- An abnormally large increases in unemployment,
- Unavailability of credit- often due to some kind of banking/financial crisis,
- Shrinking output and investment,
- Large number of bankruptcies-including sovereign debt defaults,
- Significantly reduced amounts of trade and commerce-especially international,
- Volatile currency value fluctuations,
- Price deflation,
- Diverse financial crises continuously,
- A high percentage of bank failures
In economic and government circles, there is no agreed upon definition of an economic depression! This is due, in part, to the several schools of economic theory. In America, the National Bureau of Economic Research group (NBEC) is chartered with determining when we enter the various types of economic states but they do not declare depressions.
One proposed depression definition would invoke these concepts--
- A decline in real Gross Domestic Product (GDP) of a country exceeding 10%
- A recession lasting 2 or more years.
One would think that economists could access the attributes of the 1930's Great Depression and come up with a fairly safe and sane definition.
HOW LONG DO ECONOMIC DISASTERS LAST?
It depends on the type of economic condition that a government and its citizens find themselves in and what policies a government institutes to get out of that particular condition and into a more favorable one. (At least for a season!)
The type of government may vary from communist dictatorship, mercantile, democracy, or a republic. The dictatorship definitely has more control than republics and democracies, but usually the wrong decisions are reached due to greed, lack of wisdom about markets which results in centralized planning and blind micro-management. (Think USSR)
But, it would appear that it is the type of economy, economic philosophy, market system, and banking structure that guides a government's policies in addressing an economic problem. The summation of these components produce the policies which direct a country's economy and are the key factors of how well an economic disaster or emergency is met and navigated towards a better economy and business environment.
One famous global investor once said, "I don't care what kind of government a country has, I just want to know if their economic policies are effective and consistent. That is what drives capital investment".
Businesses need to be able to plan forward a reasonable amount of time. If situations are unpredictable because of government indecision, then paralysis sets in for businesses, investors, and consumers.
Some economic conditions, although not necessarily disasters, can last up to a decade or more such as Japan's "lost decade" where it has meandered along with very slow growth greatly affected by its central banking policies.
The Great Depression in the U.S. lasted over a decade from 1929 to 1941 only to be shortened by World War 2.
HOW DO YOU PLAN AND PREPARE FOR ECONOMIC DISASTERS?
Again, this depends on the type of economic disaster in play. Each type of economic trend requires specific actions at the appropriate time.
- To protect your well-being and family assets you must accurately monitor the economic conditions and trigger events created by banks, governments, and people starting now and "staying in the know".
- You need to educate yourself on economic fundamentals, politics, investment, safety precautions, etc.
- You must find trustworthy and reliable sources of advice and carefully monitor what is being said on a near daily basis. No one is a prophet about the future economically and politically. But, some experts have a more superior track record than others over time and have proven themselves more accurate in their predictions historically. These are the ones you want to seek out and listen to carefully.
We have slowly come to accept the wisdom of a few experts that we have proven to be fairly accurate primarily because they have an excellent grasp of history and a certain practical economic theory that they base their principles on. We have utilized several of these experts for a decade now and we feel confident and more secure at this time. We never thought we would be as financially secure as we have become simple by taking and sticking with the advice from these people. You need to do the same as soon as possible.
You will need to stay in an education mode until the economic danger disappears or occurs. You'll continuously work on your plans adjusting them as you learn more information. Finally, you'll fine tune your asset acquisitions and storage methods waiting for the moment you need to act.
Keep in mind, this kind of preparation is never a loss because it is for your security and well-being. Most all of the items your purchase can be used up over time in the event that nothing serious occurs. It's kind of like a gun-it's better to have one and never need it, than to need it and never have one.
The bottom line is that by the time you have reached a reasonable level of readiness, you'll feel the stress drain from you mind and body. It's knowing about this potential danger and knowing you are not be prepared, that creates mountains of uncertainty and stress.
The following is brief topical synopsis of what to expect in each of the economic cycles below:
Not too much of a worry for the consumer because prices are falling. Unemployment may rise a bit, so protecting your job would be something to attend to keeping pink-slips out of your world for the time being.
The American government's central bank literally hates deflation and will do just about anything to prevent one from occurring. In fact, one economics expert claims that historically the U.S. has very seldom experienced a deflation for any length of time before the Fed's start printing money and lowering interest rates. This is the economic cycle you need not be too concerned about.
Since recessions typically are the "bust" phase that occurs after inflationary bubbles have burst within a country, we all pretty much know what the results are and what occurs having gone through a very severe one these last 4 years-unofficially.
The government says we are through the worst and that a double-dip recession will not occur. I'm not so sure of either statement and would prefer more time to see if that is true.
In the 2006-2010 Recession, we had and still have, very high unemployment similar to the Great Depression. Millions of Americans have lost their jobs and many of these jobs have gone overseas to stay. So, income levels for families have plummeted even though they still have high mortgage payments and they owe more on their homes than they are worth by over 30% and their values are still falling in many cities. (The wise ones saw the bubble coming, prudently sold, and went to renting for a lot less money and saved their loss of home value).
The combination of unemployment or under-employment has created a whole class of middle income and lower income people with the inability to keep their homes resulting in sky-rocketing foreclosures and bankruptcies. The end is not in site, folks. There are more resets coming on residential mortgages and the commercial real estate failures are about to begin to reach full speed.
Many businesses, especially in real estate, are stuck with loans on assets they paid too much for, can't sell, and are unable to use them to create business to pay their payments. They are unable to get continued financing to roll their loans over and have been declaring Chapter 7 and 11 bankruptcy proceedings since 2007 or so. The graph on the coming commercial foreclosures looks a lot worse than the housing real estate and the amounts are in the millions not the thousands!
A little inflation is not hard to live with even though it is a delusion that things are on the upswing in business sales, wages, consumer goods, and real estate values. But, as the former Chairman of the Fed, Alan Greenspan, has stated: "…deficit spending is simply a scheme for the confiscation of wealth…" by governments.
But, when inflation continues to increase beyond the 1-2% range and reaches more than 10%, citizens begin to be challenged by the increased costs of goods and services. Future planning becomes compromised and at 20%, it becomes futile in the minds of the public to plan for much of anything long term.
Governments secretly love inflation and see it as a way to pay off their deficits silently-high priced debt instruments paid back with cheap or inflated money. (Keep in mind, you can play this game too if you "keep our powder dry.")
If governments continue to print money into the private sector, mass inflation kicks in at 20-30%. This is the harbinger of hyperinflation coming unless the government quickly tightens its monetary policy and greatly reduces the amount of available money. During the Carter administration we experienced 18% inflation. A new Fed Reserve Chairman by the name of Paul Volcker came in at the beginning of the Reagan administration and raised interest rates sky-high and stopped the currency flood. He was one of the few Chairmen to accomplish slaying the inflation dragon before it got to hyperinflation.
So during moderate inflation, employment prospects rise, business sales are excellent, business expansion becomes a hotbed, tax revenues increase, COLAs increase for entitlements, stock market indexes rise constantly and consumer spending escalates. Then suddenly, hyperinflation begins and people lose the value of all fiat currency and the value of their assets plummet against hard currencies such as gold and silver. In Germany in 1923, a grand piano would buy a dozen eggs! Farmers became wealthy. Food became king.
As inflation increases higher each year, the average person needs to:
- Stock up on food and goods now to avoid shortages and daily rises in prices,
- Get out of cash and acquire some hard assets especially some silver or gold bullion coins to preserve buying power, (gold is up 350% in 10 years and silver has doubled in just 1 year).
- Buy ONLY essentials to preserve their livelihood and protect their future,
- Stop all unnecessary spending and start saving things that don't lose value,
- Get a garden going for long term food needs,
- Get self-reliant as fast as possible,
- Begin building a second source of income especially a personal business that is inflation and depression proof.
For an excellent book on surviving economic cycles may we recommend one of the best books known: The Alpha Strategy, The Ultimate Plan of Financial Self-Defense by John A. Pugsley, 1980. (When printed, dry food storage mechanisms were not as advanced as today. Many types of food can now be stored with much longer shelf lives.)
You can get a digest version of the book for free here:
The Alpha Strategy:
"Game Over?". This occurs when government policies fail to effectively address hyper-inflation, deflation, or recessions. If left unresolved, or the wrong approach is used, or the right approach is used too late, countries end up at the bottom of the barrel. Very high unemployment and under-employment occurs, business and personal bankruptcies become commonplace. Bank and business failures become rampant. Wages drop significantly. The value of government currency decreases greatly. Crime and civil unrest rise to new levels. Shortages of food and supplies become most frequent. The stock markets tank even though they go through ups and downs for a period before they take their final "swan dive". Governments try various ways to control shortages, unemployment, etc. but without much success.
All is not glum though if you are prepared! My brother's father-in-law in Wyoming told him that as a youth, his family farmed and ranched along the North Platte River during the depression and they were hardly aware of the Great Depression. They had plenty of food, water, and fuel. In fact, they were happy times for the family. Wow! So, there's proof that you can choose not to participate in these economic downturns if you prepare properly.
As for my family ancestors, they were lumber people in the Black Hills of South Dakota. My father's family had 6 children to support. It was a lot tougher for them because they had to garden potatoes, corn, carrots, and plants that could exist in a short growing season because the winters were hard. The forests provided plenty of firewood for staying warm in the winters and cooking throughout the year.
For protein, they depended on chickens for eggs and meat and wild game, which was mostly deer. Milk came from several dairy cows they had. No refrigeration or electricity but they had good well water. Dollars were hard to come by. The sawmill paid their log cutters with flour, salt, and beans! That was it and they were glad to get it. Transportation was by foot, horse, or horse and wagon.
ACTIONS TO TAKE DURING AN ECONOMIC DISASTER
If you've planned, prepared, and acquired appropriately, you just need to execute your plan on a daily basis watching your "burn rate" for your supplies and assets.
During severe recessions, heavy duty inflation, or depressions, you will want to be able to protect your family and your possessions while still being in a position to help your neighbors. We will detail this in the other areas of this website. But, for now,
- Get your short term and long term food supplies acquired,
- Establish a good source of drinking water or reserves,
- Get a savings stash established with different forms of currency on hand and bullion coins. Get most of your cash out of investment vehicles like CDs, savings, etc.
- Get backup energy sources established,
- Secure a guaranteed shelter or a safe place to reside that you won't be displaced should your money run out too soon,
- Establish garden plots with appropriate types of seeds (non-hybrid) and available low water engineering. (More on this later)
- Acquire personal protection-appropriate guns, mace, home security, dogs, family training.
- Acquire communication devices for trouble times.
This is a short list to get started working on as soon as possible while you continue learning and planning. Again, we will detail this out much more in the not too distant future.
ACTIONS TO TAKE AFTER AN ECONOMIC DISASTER
Replenish your supplies and take a break getting ready for the next economic condition since they typically come in a fairly predictable fashion. There will always be something coming but not always as severe, fortunately.
Start rebuilding for your future as soon as possible!
ADDITIONAL ECONOMIC REFERENCES:
Let us preface our comments above by saying that we are not economists but I have studied it seriously both in college and life. We have read and continue to read widely both the historical and current works of many economists, investors, and political analysts.
We prefer to take the advice of experts that have a proven track record and similar economic and world views. We are fairly persuaded that the best experts lean strongly toward Austrian economic theory as related to free enterprise, market driven systems.
We much prefer gleaning facts from reliable reports and not the opinions of "talking heads" on the news that have conflicts of interest. It is true that we have made a lot of money listening to these types of experts and we have avoided enormous losses by acting on their cautions and advice.
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