Surviving an Economic Crisis

[Rick]

This is a very recent article and a pretty good read. My point in posting this is to remind folks that when product demand is high the cost is generally inflated. Look for those items that can serve your needs but aren't necessarily main stream. For example, we've talked about using beer cans for cooking pots instead of buying titanium ones. Learn to manufacture as many of the items you need as possible. You CAN replace MREs, for example, with home canned products even if you don't have a garden. Purchase veggies at a farmer's market or help a neighbor that does have a garden. You can make a knife just by putting a sharp edge on a piece of metal. It cuts and that's what you want it to do. A hatchet from your local Ace Hardware can often be cheaper than a "survival" hatchet offered by a brand name sports manufacturer.

Look for bargains by shopping around. You can easily do that today by surfing the net to find the best bargain. And don't forget local merchants either. They will often work with you simply because they do compete with net only companies.

Finally, don't get swept up in the current fad. Do what is right for you by purchasing products that you need or use.

http://www.wnd.com/index.php?fa=PAGE.view&pageId=90947

[Sourdough]

Now I really am freaked out, the day that Rick starts talking about the remote chance of an Economic Crisis. So it befalls me to say, the bottom is in, stocks can only go up from here, two chickens in every pot, full employment by mid April, Dow 19,500 by end of the year.

On a more serious note, it is interesting, and telling that a year ago the members of the forum were outraged at the subject of anything economical related. How time change.

Good post Rick, you "Doomer" you.............:):smash::):smash::)

[Rick]

I've always agreed it was a crisis. What I don't believe in is the economic collapse of the economy/society/civilization/Mayan temples/or twinkie manufacturing in general.

If have also always stated that if you are financially prudent and manage yourself then lean times need not be the end of life as you know it.

I'm still outraged I've just become accustomed to everyone else being wrong.:punk:

[crashdive123]

On a more serious note, it is interesting, and telling that a year ago the members of the forum were outraged at the subject of anything economical related. How time change.I don't know that I would call it outrage, but rather being tired of the same posts over and over again ad nauseum with no solutions other than the offerings that we should be buying gold and that how we were all idiots if we did not agree with the posts. Some of his advice was very sound (get out of debt, etc.), but to say the same thing in eight different posts every day - well it got a bit tiresome.

[Sourdough]

I don't know that I would call it outrage, but rather being tired of the same posts over and over again ad nauseum with no solutions other than the offerings that we should be buying gold and that how we were all idiots if we did not agree with the posts. Some of his advice was very sound (get out of debt, etc.), but to say the same thing in eight different posts every day - well it got a bit tiresome.


Agreeded.......

[Sourdough]

Sad that Uncle Ben, took the U.S. Dollar out and shot it, yesterday. Down 5% in two hours trading.

[trax]

Monday should be interesting

[Pict]

My whole life depends on the exchange rate between the US Dollar and the Brazilian Real. By the time we left Brazil in August the exchange had fallen to a little over R$1.5 to $1, from where it had been for a long time at 3.5 +/- to 1. Now that the Fed just created another trillion dollars I'm expecting it to fall drastically again and if people holding dollar reserves decide to sell... Mac

[wade]

What I don't believe in is the economic collapse of the economy/society/civilization/Mayan temples/or twinkie manufacturing in general.

If have also always stated that if you are financially prudent and manage yourself then lean times need not be the end of life as you know it.



I think you are wrong Rick. If a country has no economy or an extreme bad one then the country will cease to exist. It is just like any company, once a person or company buys over 51% of the stock then that company does not exist anymore, it becomes what ever the person who owns the most of it wants it to be. Kind of like China is doing now. Buying and loaning the US money, once it owns the most then the US will become part of China. Kind of a weak example but maybe it will work.

[Rick]

Wade - A country is nothing like a company. The mechanics are entirely different.

The same panic and attitude occurs every time there is a downturn in the economy. I've lived through several. The country has even made it through no less than five (5) depressions. And we'll get through this crisis just fine. No country can continue on an upward spiral. Corrections have to occur and that's exactly where we are right now. Even if this were to deteriorate into a full depression, we'll come out just fine on the other side.

Anyway, the point of the post is to think before you buy. Don't get caught up in the "rush" and wind up paying premiums dollars for items.

[Revelation1412]

OP: You make some good points, but don't you see where some people might disagree with you?




-

[Rick]

ME? People would dare disagree with me? (walks off shaking his head and chuckling). That's just crazy talk.

[trax]

OP: You make some good points, but don't you see where some people might disagree with you?-

Note: disagreeing with Rick and finding Rick disagreeable are not the same thing.

[wildography]

Yeah, the economy is rough all over; I'm looking at a "being homeless" situation come April... but, it is what it is... that's part of the reason that I'm spending quite a bit of time here... preparation and learning and doing the best that you can... that's all that you can do...

[wareagle69]

my favorite saying"it is what it is"
i hope i have followed my own advice closely enough and prepared all ways, main reason for the mmassive hours i have worked latley and linda is back to work also. if i can stay employed thru the end of the year then i can live almost a year w/o a job and that should bring us close to the other side of this, i hope. still learning lots and i am not the paranoid freak that some are (tho some may dissagree) but i think the community that i live in will pull together most of my neighbors are older(over 40) and many are farmers. this is not luck as many have stated before this is many years of careful deliberation i have lived all over the states and choose to move where i am now to ride out the future both good times and bad, all can make the same choice most just choose not to

[Rick]

i am not the paranoid freak that some are

No one said you were paranoid.:whistling:

You and I think a lot alike. It is what it is and you simply adapt no matter what the subject is. In this case, you either prepare yourself by increasing your income (as you've done), decreasing your expenses or both. Do that and you put yourself in great financial shape to ride out the bad weather. :thumbup:

[wareagle69]

my ex used to say that i was paranoid, prepared but paranoid. guys at work laugh when i talk to them of being prepared, we all see the end coming, but as yet it is not a reality so they ignore it, too bad....i too have cut my spending as well as increasing my income, used to think nothing of going to the hotdog cart or buying something from the vending machine, also only purchase gas and my weekly lottery ticket now. i have already bought all the books i need, although when i come across a new one it is hard to resist, funny i used to think nothing of going out to eat now we only go once a month to our favorite chinese buffet and then go at lunch as it is cheaper

[Sourdough]

It is interesting the degree to which we humans loath change, positive or negative. We would generally stay in a bad relationship, personal or work, rather than change. The older we get the more we want nothing to change. Old people do not want the sofa moved, different food, to have to move to a new location, etc.

I got my first experience with PANIC yesterday, herd Panic, Humans panic procurement of firearms, ammo, and all components (brass, power, primers).

It was scary, and I felt disoriented, and confused. and the baldfaced fabricated stories by friends in gun stores was painful to experience.

Most of the gun stores were nearly out of inventory.

[wareagle69]

we have become such a selfish society-" ain't no one gonna get my stuff, they gots to kill me first". we have blockd ourseives off from our neighbors and become jealous of thier possesions. sad very sad. most folks do not know how hard it is to kill someone, and them to live with that, i hope that most of you never have to live with that. so many are afraid to change, well as tommy lee jones once said, "can we agree that what ever is going to happen it is inevitable?" try to resist all you want only makes it harder , give in make comprimises and you will win in the end

[Rick]

I think we have some very romantic notions that in a SHTF situation everyone would be in great peril except "ME". "I" would be able to withstand the roving gangs or whatever the peril is. I don't have any such romantic notions. It would be very interesting indeed to see just how many would cave when confronted with someone that wanted their X.

You're right, Hopeak. We are uncomfortable when placed outside our comfort zones even if it's a good thing. If you don't believe that take a look at how many lottery winners are now broke and/or in jail.

Let's just hope they forgot to reorder. (cringe)

[Sourdough]

Let's just hope they forgot to reorder. (cringe)


That is what is unnerving.....they claim they will have product next week. They say that every week, now customers don't shop, they take off work on Tuesday at 10:AM and go to the gun stores and wait for product to be restocked, and then buy all of it.

I have to admit that the default is to be a pig. I found 6 cases of 9MM auto, at $179.00 per case of 500 rounds. Yesterday being Thursday the shipment had just come in. I bought one case, and left 5 cases, but it was hard. The only .22LR in town was $39.99 per brick. Was $12.49 last fall.

If it happens with FOOD, it could happen overnight. It does not need to make sense, it only needs to happen. It is like a run on the bank. Once people freak out, they will just keep buying food, any food, and others will starve.

We are all animals, each of us........if we are uncomfortable with our own behavior now, what will our discomfort be if the Poop does hit the fan.

[laughingbeetle]

I have to say that none of the panic buying seems to be happening in my area. Not sure why. So I just keep on my usual routine. I don't buy much for luxery items. Coffee, creamer....................smokes................. ... I have not stepped up and started panic buying... my fellows in the area havent either. Maybe a bit more in the grocery dept. The economy is really taking a hit here in Northern New York. I havent seen any news reports involving panic buying of arms and ammo for the region. Then again most everyone up here is already armed and licensed. A lot of people hunt, garden, buy local, avoid wallyworld in favor of the local mom and pop shops. there are a lot of small hunting and fishing shops up here, and some not so small ones... It seems that the focus is more on surviving in the local political and economic climate. there isn't much said about things on the national level...except for the bernie madoff situation...A lot of people got screwed over big time on that one.

[Rick]

Same here, LB. The good news in buying all the ammo is they keep the money circulating.

[laughingbeetle]

Yeah, that's true...

[endurance]

As a little background before I ramble, I've been prepping since the mid to late 1980s, fearing nuclear war with the Soviets, then armageddon emerging from the gulf war, then whatever the flavor of the month fear was until about 1998. I don't know what happened then, but I stopped prepping until Winter 2008 when I read my first article on peak oil and started freaking out again. I already had the basics laid in. Wheat, sugar, salt, pasta, corn--all left over from my days of being married to a Mormon in the early 90s, but there were so many things I "had to have" that I went a little nuts for a while over the summer, throughout the fall and until recently. I've managed to stay out of debt, but still, my purchasing wasn't well planned, nor sustainable.

However, in the last few weeks I've had several D'oh! moments that have made me rethink a lot of things. Most importantly was a conversation with a friend and coworker from Argentina. Anyone who's done any research on economic collapse knows that Argentina is in many ways a model of what we may have to face in the coming years if everything goes bad that can go bad. That said, her family is fine. Despite being in his 80s with dementia, her father is doing well. While none of them have been victims of violent attacks, they've been swindled, their bank accounts plundered, a few burglaries, and they've struggled since the 2001 collapse.

The rule of law still exists. Nobody walks the streets with rifles across their backs, but some people conceal a pistol. It's far from everyone, but it's enough to make some criminals think twice. Talking to her brother, a former Navy Captain, he says the key to survival is finding ways to cut your expenses to half what you earn. With 100% inflation per month, nobody has any savings. They were descimated early on in the crisis. Credit is very tight and when you find it, the interest may be 150% per month or more. Cash is king and you spend it as fast as you can before it loses more value on something you will consume, need or can barter. There's an active grey and black market.

Things are still pretty rough down there, but life goes on. Her father can still get medical care. Water still comes out the tap. Power isn't 100% reliable, but it's good enough that the food in the refrigerator rarely goes bad because of extended outages.

So that's now what I'm planning for. To me, that means forcusing on compromising a shorter commute to save gas and take advantage of public transportation while getting a bigger yard for a nice garden so I can cut down on my fresh food bill. Ideally, I'd like a place that I can raise chickens, too. Rather than stocking up on 5.56 rounds, I'll probably take advantage of the fear factor and sell my AR. I could use the money to buy a couple more solar panels, which can help reduce my utility bills or maybe I'll get that nice wood burning stove instead. In any case, I'm done letting fear of the unknown guide my decisions. I'm ready to hunker down, work so hard at work that I'm indispensible, and cut my expenses to the core so I can weather this long emergency.

[crashdive123]

Endurance - you may want to check out this thread. http://www.wilderness-survival.net/forums/showthread.php?t=6229

[Rick]

Think about it. How does that differ from life in the US? Except for the 150% interest rate. Most of the stuff you posted is pretty typical of life here. It's just life.

Remember that there is also a cultural difference between Argentina and the US. And the economic history is much different as well. There is a good chance that Argentina would not have seen the chaos they have seen had they not devalued the peso.

It's hard to look at another country and say we would react in the same way. There are just too many variables. I'm not saying we would NOT act that way. I'm just saying I'm not about to base my planning on what happened in another country. Would you be willing to do so based on what's happening in Darfur or Serbia or Iceland? Iceland's economy has collapsed. If the answer is no then why would you want to base your planning on what's happened in Argentina?

[Sourdough]

Remember that there is also a cultural difference between Argentina and the US. And the economic history is much different as well. There is a good chance that Argentina would not have seen the chaos they have seen had they not devalued the peso.


We just devalued the U.S. Dollar.

It's hard to look at another country and say we would react in the same way. There are just too many variables. I'm not saying we would NOT act that way. I'm just saying I'm not about to base my planning on what happened in another country. Would you be willing to do so based on what's happening in Darfur or Serbia or Iceland? Iceland's economy has collapsed. If the answer is no then why would you want to base your planning on what's happened in Argentina?


I think the lesson from Ferfal, is the life continues, it is just not safe, and you never get to relax. That the amount of kidnapping, robbery, home invasion, corruption, kick backs, payoffs, etc. just drastically lowers the quality of life, but there is still a functioning system.

[Rick]

Yes, but the Argentina peso was devalued against the US dollar. They did not have enough US dollars in reserve to support the value of the peso. You could argue that had the government purchased more dollars for their reserve they would have avoided devaluing the peso. That would have kept the exchange rate high, retained individual buying power and kept imported goods cheaper.

[Sourdough]

Yes, but the Argentina peso was devalued against the US dollar. They did not have enough US dollars in reserve to support the value of the peso. You could argue that had the government purchased more dollars for their reserve they would have avoided devaluing the peso. That would have kept the exchange rate high, retained individual buying power and kept imported goods cheaper.

Rick, you have an impressive grasp of world economics. You keep escaping from every box I try to put your estimated skill set into. Which illustrates my faulty judgment. Your trust of economic engineering may prove to be misplaced, but you grasp of the interrelated complexities is to be applauded.

[Ken]

Rick, you have an impressive grasp of world economics. You keep escaping from every box I try to put your estimated skill set into. Which illustrates my faulty judgment. Your trust of economic engineering may prove to be misplaced, but you grasp of the interrelated complexities is to be applauded.

You won't be naming him Secretary of the Treasury, will you? :gagged:

Maybe a job as an FDA bacon inspector, but NOT SecTreas.......

[Ken]

Yes, but the Argentina peso was devalued against the US dollar. They did not have enough US dollars in reserve to support the value of the peso. You could argue that had the government purchased more dollars for their reserve they would have avoided devaluing the peso. That would have kept the exchange rate high, retained individual buying power and kept imported goods cheaper.

I may be off on this, (and I don't believe that you would propose this) but your theory seems to support the concept of a one-world currency. :gagged: After all, it would eliminate the need to invest in the currency of other nations and would keep things more stable.

A better approach is a complete overhaul of the entire system. Reign in the international banks and currency traders (who are making a fortune) who have played a key role in creating the international economic mess we now face. International bailouts, foreign debt forgiveness, foreign subsidies - virtually all of these programs have failed and most of the dollars spent on such "programs" have been stolen by the ruling elites of other nations.

Hmmmm. Aren't we now repeating those same mistakes ourselves right at home?

[Sourdough]

You won't be naming him Secretary of the Treasury, will you? :gagged:

Maybe a job as an FDA bacon inspector, but NOT SecTreas.......

No.....however in a coma, Rick could have done less damage than Hank Paulson.

A lot of people talk about economic stuff they hear on talk radio, and they are just parrots. Few people have the grasp that Rick does. Which when you think about it, is kind of sad, given that economics permeates most of your daily life.

[endurance]

Thanks for the referral to the other thread Crash, I missed that one somehow. I'm going to try to get my coworker's brother to take a look at ferfal's blog and give me a BS sniff. I don't get the sense that he feels he can never let down his guard 24/7. My impression is that there's people you learn to trust and relax around and there's people that you do business with that you must, but you never do it alone.

@ Rick: How is the federal reserve's release of $1 trillion US dollars to buy treasuries and infuse into the banking system this week different than the Argentinian's devaluing the peso? I'm not challenging you, I'm curious, it seems the same. If there's $X in the world and you add $1t to the world, doesn't that dilute the value of the dollar by a factor of $1t/$X?

I guess that for me it's a look in a fresh mirror. My prepping in the past assumed some type of total collapse, but what's total collapse? Argentina represents an intermediate benchmark between MadMax and life as we know it that I hadn't planned for. I've said it before and to some degree it was about myself, too; there's a part of all survivalists that are looking for a way to get out of things we hate in today's world (jobs, routines, debts, etc.). Having the insight that my job may be my greatest survival asset, above any knife, gun, or kit on my belt, is something that I think is important to come to terms with. It doesn't have the shine or allure of a new piece of gear, but it may well be reality.

That said, I don't feel absolved from prepping either. I still believe that sooner or later the wilderness survival kit in my camelbak will make the difference, once again, between life and death. I still believe that the best insurance against hunger is a well managed store of food and the ability to acquire more on your own. I still believe that every citizen is responsible for taking care of their own butts in a natural disaster, at least for the first week or two. It's just a change in focus from planning a new career for after the crash to planning to do everything I can to keep the one I have.

[Ken]

No.....however in a coma, Rick could have done less damage than Hank Paulson.

A lot of people talk about economic stuff they hear on talk radio, and they are just parrots. Few people have the grasp that Rick does. Which when you think about it, is kind of sad, given that economics permeates most of your daily life.

Ahhhh. But were does Rick do his research? :innocent:

http://faculty.plattsburgh.edu/richard.robbins/political_economy_of_twinkies.htm

See also: The economics of Twinkies v. Hohos

http://74.125.47.132/search?q=cache:MiKEoZLK9aUJ:www.econ.utah.edu/slee/teaching/econ2010summer2005/Econ2010_05_1st_Exam_and_Answer.doc+price+of+twink ies&cd=14&hl=en&ct=clnk&gl=us

[endurance]

Ken, why are you always hackin' on Rick regarding his twinkie habit? I see it as just smart prepping that he's a twinkie addict. It creates room for the inevitable Twinkie Defense (http://en.wikipedia.org/wiki/Twinkie_defense) if he ever just goes off and kills someone. Surely you don't want to be the last man standing between a man and his last chance of staying out of prison!?!

[Ken]

Ken, why are you always hackin' on Rick regarding his twinkie habit? I see it as just smart prepping that he's a twinkie addict. It creates room for the inevitable Twinkie Defense (http://en.wikipedia.org/wiki/Twinkie_defense) if he ever just goes off and kills someone. Surely you don't want to be the last man standing between a man and his last chance of staying out of prison!?!

Thanks! I'm gonna' save that link just in case he goes over the edge and needs to retain my services. :)

[Rick]

Jeepers. So many questions and so little me.


Your trust of economic engineering may prove to be misplaced

Perhaps. Time will certainly tell that. Most countries don't collapse because of their economy. They most certainly go through some very bad times (look at Iceland right now) but, in time, they pull through. It's not like some other country will repo them. The World Bank is plenty of proof for that. We've been through 5 depressions and we keep coming back. There's no reason to think this will become a depression but even it if does history says we will rebound.


your theory seems to support the concept of a one-world currency.

I don't know that one currency would be a bad thing. We have a national currency that covers all our states, possessions and territories. Europe did just that and it's working quite well. Getting the world to agree on a single currency would be something else entirely.


A better approach is a complete overhaul of the entire system

Man! Define the logistics for that. An overhaul of the US financial system would probably be the final blow for world economy by destroying what very little confidence is left in the dollar.


How is the federal reserve's release of $1 trillion US dollars to buy treasuries and infuse into the banking system this week different than the Argentinian's devaluing the peso?

The dollar had a great run in January and February so it wasn't (shouldn't) have been a huge surprise when it nosedived. The Feds actually did it themselves by announcing they were going to buy up about 3 billion in Treasures. Still, if you look at over the last year, the dollar is still fairly strong. And..a weaker dollar helps our lousy trade imbalance by making out exports more competitive. Argentina thought similar actions would not only lower labor costs but, likewise, improve their export position. The difference is that Argentina's move caused folks to unload as many of the pesos as they could prior to them being devalued. That threw a glut of pesos into the world market further driving down the price. Businesses stopped doing credit and credit card business because they feared they would sale an item at one price and receive a much lower price when the transaction went through if it processed after the devaluation. In short, it threw the country into economic turmoil. You won't see that with what the Feds are doing.


If there's $X in the world and you add $1t to the world, doesn't that dilute the value of the dollar by a factor of $1t/$X?

Well, it's not a 1 to 1 ratio but, yeah, it's certainly inflationary. Any time you print more money, inflation has to increase.


I don't feel absolved from prepping either

Of course not. Economic tough times HAVE to be planned for because they occur on a more or less regular cycle. Mark my words, once we get through this mess we'll get to do it again in 20-30 years. That's just the way it works. In addition, a bad economy is not the only thing we need to prepare for. There are plenty of natural disasters that will test our strength. We can even get into trouble just going out on a day hike.

The rest of that paragraph is spot on!


why are you always hackin' on Rick regarding his twinkie habit

Truth be told, I haven't had a twinkie in probably 30 years. But....

Yeah, Ken. Layoff. For all you know I have a Twinkie army!

Whew...I thinks that it. I think I'm pretty close on all my answers. At least to the extent I understand everything. If someone thinks my facts are wrong, just let me know. I don't mind learning stuff, either.

[Ken]

Truth be told, I haven't had a twinkie in probably 30 years. But....

Then, ....... it's all been one big lie? :confused:

[Rick]

Lie? I'm not the one talking about it. It's all of you. I just haven't bothered to refute any of it. Besides....define "lie".

[crashdive123]

....besides - being addicted to Twinkies is not unlike being an alcoholic. Just because you haven't had a drink in 30 years.......pass another Twinkie please.

[Rick]

Hey! Do I look like I need help over here? (lowers voice) Could you move that twinkie to the other side of you, please? That's a lot of temptation.